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Exhibit 10.2
ArcLight Energy Partners Fund I, L.P.
ArcLight Energy Partners Fund II, L.P.
c/o ArcLight Capital Partners LLC
200 Clarendon Street, 55th Floor
Boston, MA 02117
April
2, 2008
Bridge Facility Commitment Letter
Patriot
Coal Corporation
12312
Olive Boulevard, Suite 400
St.
Louis, Missouri 63141
Attention: Mark
N. Schroeder
Ladies
and Gentlemen:
You
have advised ArcLight Energy Partners Fund I, L.P. and
ArcLight Energy Partners Fund II, L.P. (collectively,
“
ArcLight
” or
“us” ) that Patriot Coal Corporation (the
“ Borrower
” or
“you”) intends to acquire (the “
Transaction
”) Magnum Coal Company ( “
Magnum
” ) pursuant
to an agreement and plan of merger dated as of April 2, 2008
(the “Merger
Agreement” ). In that connection, you
have requested that ArcLight commit to provide to the Borrower
a subordinated second lien bridge loan facility in a principal
amount of $150,000,000 (the “Bridge
Facility” ).
ArcLight
is pleased to advise you of its commitment to provide the
entire amount of the Bridge Facility upon the terms and
subject to the conditions set forth or referred to in this
commitment letter (the “ Commitment
Letter ”) and in the Summary of Terms and
Conditions attached hereto as Exhibit A
(the “ Term
Sheet ”; capitalized terms not otherwise defined
herein shall have the meanings set forth in the Term
Sheet). You and ArcLight have discussed the desire
to have other lenders participate in the Bridge Facility and
ArcLight agrees to assist you in your efforts to obtain
commitments from other potential lenders approved by ArcLight
for the Bridge Facility.
In
connection with the Bridge Facility, you agree promptly to
prepare and provide to ArcLight all information with respect
to the Borrower, its subsidiaries and the other transactions
contemplated hereby, including all financial information and
projections (the “ Projections
”), as we may reasonably request in connection with the
Bridge Facility. In connection with the Bridge
Facility, you hereby represent and covenant that to the best
of your knowledge (a) all information (other than Projections)
provided to ArcLight, including any updates and supplements
thereof (the “ Information
”), when taken as a whole will be correct in all
material respects and will not, when taken as a whole, contain
any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements
contained therein, not misleading in any material respect
under the circumstances under which such statements are made
at the time such statements are made, and (b) the
Projections that have been
or
will be made available to ArcLight or any of your
representatives have been or will be prepared in good faith
based upon reasonable assumptions (it being understood that
the Projections are as to future events and are not viewed as
facts and that actual results during the period or periods
covered may differ significantly from the projected results
and such difference may be material). You
understand that ArcLight and any other potential participants
in the Bridge Facility may use and rely on the Information and
Projections without independent verification
thereof.
As
consideration for ArcLight’s commitment hereunder, you
agree to pay to ArcLight the non-refundable fees set forth in
the Fee Letter dated as of the date hereof and delivered
herewith (the “ Fee
Letter ”).
ArcLight’s
commitment hereunder is subject to (a) the absence of a
Parent Material Adverse Effect (as defined in the Merger
Agreement) as of the date hereof, (b) the negotiation,
execution and delivery on or before September 30, 2008 of
definitive documentation with respect to the Bridge Facility
reasonably satisfactory to ArcLight and its counsel on
Acceptable Bridge Terms (as defined in the Term Sheet) and (c)
the conditions set forth herein and in the Term
Sheet. Notwithstanding anything herein to the
contrary, ArcLight agrees that the execution and delivery of
the Merger Agreement and consummation of the transactions
contemplated thereby shall not constitute a material adverse
condition or a material adverse change
hereunder. Those matters that are not covered by
the provisions hereof and of the Term Sheet are subject to the
approval and agreement of ArcLight and the
Borrower.
You
agree to indemnify and hold harmless ArcLight, its affiliates
and its respective officers, directors, employees, advisors,
and agents in their respective capacities as the provider of
the Bridge Facility (each, an “ indemnified
person ”) from and against any and all third
party claims, damages and liabilities to which any such
indemnified person may become subject arising out of or in
connection with this Commitment Letter, the Bridge Facility,
the use of the proceeds thereof or any claim, litigation,
investigation or proceeding relating to any of the foregoing,
regardless of whether any indemnified person is a party
thereto, and to reimburse each indemnified person upon demand
for any reasonable legal or other expenses incurred in
connection with investigating or defending any of the
foregoing; provided
that the foregoing indemnity will not, as to any indemnified
person, apply to losses, claims, damages, liabilities or
related expenses to the extent they are found by a final,
non-appealable judgment of a court to arise from the willful
misconduct or gross negligence of such indemnified
person. No indemnified person shall be liable for
any damages arising from the use by others of Information or
other materials obtained through electronic,
telecommunications or other information transmission systems
other than where such damages are found by a final,
non-appealable judgment of a court to arise from the willful
misconduct or gross negligence of such indemnified person, and
neither you nor any indemnified person shall be
liable for any special, indirect, consequential or punitive
damages in connection with the Bridge Facility.
This
Commitment Letter and the Fee Letter shall not be assignable
by any party hereto without the prior written consent of the
other parties hereto (and any purported assignment without
such consent shall be null and void), is intended to be solely
for the benefit of the parties hereto and is not intended to
confer any benefits upon, or create any rights in favor of,
any person other than the parties hereto. This
Commitment Letter may not be amended or waived except by an
instrument in writing signed by you and
ArcLight. This Commitment Letter may
be
executed in any number of counterparts, each of which shall be
an original, and all of which, when taken together, shall
constitute one agreement. Delivery of an executed
signature page of this Commitment Letter by facsimile
transmission shall be effective as delivery of a manually
executed counterpart hereof. This Commitment Letter
(including the attached exhibit) and the Fee Letter set forth
the entire understanding of the parties hereto as to the scope
of the obligations of ArcLight under this Commitment
Letter. This Commitment Letter shall supersede all
prior understandings and proposals, whether written or oral,
between ArcLight and you relating to the Bridge Facility or
the transactions contemplated under this Commitment
Letter. This Commitment Letter shall be
governed by, and construed in accordance with, the laws of the
State of New York. To the fullest extent
permitted by applicable law, the Borrower hereby irrevocably
submits to the non-exclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and the
United States Federal District Court for the Southern District
of New York and any appellate court from any thereof in
respect of any suit, action or proceeding arising out of or
relating to the provisions of this Commitment Letter or the
Fee Letter and irrevocably agrees that all claims in respect
of any such suit, action or proceeding may be heard and
determined in any such court. The parties hereto
hereby waive, to the fullest extent permitted by applicable
law, any objection that they may now or hereafter have to the
laying of venue of any such suit, action or proceeding brought
in any such court, and any claim that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum. THE PARTIES HERETO HEREBY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS COMMITMENT
LETTER OR THE FEE LETTER.
This
Commitment Letter is delivered to you on the understanding
that neither this Commitment Letter, the Term Sheet or the Fee
Letter nor any of their terms or substance shall be disclosed,
directly or indirectly, to any other person except (a) that
this Commitment Letter and the Term Sheet may be disclosed to
your and your affiliates’ and Magnum and Magnum’s
affiliates’ officers, directors, employees, agents and
advisors, including your bank group who are directly involved
in the consideration of this matter or the Merger Agreement
(or both) ( provided
that this Commitment Letter and Term Sheet may be disclosed to
your bank group only upon the condition that you shall direct
such bank group to keep this Commitment Letter and Term Sheet,
and all of the terms and the substance contained therein,
strictly confidential) or (b) as may be compelled in a
judicial or administrative proceeding or as otherwise required
by law, including applicable securities laws (in which case
you agree to inform us promptly thereof).
The
confidentiality provisions contained herein and in the Fee
Letter shall remain in full force and effect notwithstanding
the termination of this Commitment Letter or ArcLight’s
commitment hereunder. Notwithstanding the
foregoing, all obligations of the parties under this
Commitment Letter, shall automatically terminate and be
superseded by the provisions of the definitive documentation
relating to the Bridge Facility upon the execution thereof,
and each party shall automatically be released from all
liability in connection therewith at such time.
This Commitment
Letter has been and is made solely for the benefit of the parties
hereto, the indemnified persons, and their respective successors
and assigns, and nothing in this Commitment Letter, expressed or
implied, is intended to confer or does confer on any other person
or entity any rights or remedies under or by reason of this
Commitment Letter or the agreements of the parties contained
herein.
If
the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof and of the Term
Sheet and the Fee Letter by returning to us executed
counterparts hereof and of the Fee Letter not later than 5:00
p.m., New York City time, on April 2, 2008. The
commitments and agreements of the parties hereto will
automatically expire (a) at such time in the event ArcLight
has not received such executed counterparts in accordance with
the immediately preceding sentence, (b) upon termination of
the Merger Agreement and (c) on September 30, 2008 (the
“ Termination
Date ”) if the Closing Date has not yet
occurred. Each party hereto may terminate their
respective commitments and agreements under this Commitment
Letter at any time if any material breach or material default
that, in each case, is not capable of being cured occurs in
the performance of any of your obligations to any of the
parties hereto with respect to the Transaction. You
may terminate your agreements under this Commitment Letter at
any time prior to the Drawdown Date upon written notice to us,
in which case ArcLight’s commitments and agreements
under this Commitment Letter will automatically expire;
provided
, however ,
that all amounts due and owing under the Fee Letter shall have
been paid in full.
[REMAINDER
OF PAGE LEFT BLANK INTENTIONALLY ]
ArcLight
is pleased to have been given the opportunity to assist you in
connection with this important financing.
Accepted
and agreed to
as
of the date first
written
above by:
PATRIOT COAL CORPORATION
By:
/s/ Mark N.
Schroeder
Name:
Mark N. Schroeder
Title:
Senior Vice President & Chief Financial
Officer
Exhibit
A
to the Commitment Letter
BRIDGE
FACILITY
Summary of Terms and Conditions
April 2, 2008
Capitalized terms used and
not otherwise defined herein are used with the meanings
attributed thereto in the Commitment Letter dated April 2,
2008 (the “ Commitment
Letter ”), from ArcLight to the Company, of
which this Summary of Terms and Conditions forms an integral
part. For the avoidance of doubt, it is understood
that the Bridge Facility Documentation shall be on (a) the
terms and conditions set forth in this Term Sheet, the
Commitment Letter and the Fee Letter, and (b) such other
terms and conditions not materially less favorable, taken as
a whole, to the Company than those set forth in the Existing
Credit Agreement (collectively, the “ Acceptable
Bridge Terms ”).
Appendix 1
to the Term Sheet
Representations and Warranties to be Incorporated
into the Bridge Facility 1
Below
are the representations and warranties set forth in
Article V
of that certain Credit Agreement, dated as of October 31,
2007, among the Company, the lenders party thereto, and Bank
of America, N.A., as administrative agent thereunder, as
amended as of the date hereof (the “ Existing
Credit Agreement ”). Capitalized terms used and
not otherwise defined herein are used with the meanings
attributed thereto in (i) the Commitment Letter dated April 2,
2008 (the “ Commitment
Letter ”), from ArcLight to the Company, of which
this Appendix
1 forms an integral part, or (ii) the Existing Credit
Agreement, in each case as appropriate. All section
references set forth below, or any use of the phrases
“herein,” “hereunder,” or similar
phrases, shall refer to the relevant sections of the Existing
Credit Agreement. For the avoidance of doubt, it is
understood that the representations and warranties contained
in the Bridge Facility Documentation shall (i) with respect to
the matters set forth below, be in the form set forth below,
with such modifications as shall be necessary to give effect
to the terms and conditions set forth in the Term Sheet, the
Commitment Letter, the Fee Letter and, where applicable, to
permit and give effect to the existence of the Existing Credit
Agreement, and (ii) in the case of all other matters, be on
Acceptable Bridge Terms.
The Borrower represents and
warrants to the Administrative Agent and the Lenders
that:
5.01.
Existence, Qualification and Power . Each Loan
Party (a) (i) is duly organized or formed and, validly existing and
(ii) in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and
authority and all requisite governmental licenses, authorizations,
consents and approvals to (i) own or lease its assets and carry on
its business and (ii) execute, deliver and perform its obligations
under the Loan Documents and Related Documents to which it is a
party and consummate the Transactions, and (c) is duly qualified
and is licensed and, as applicable, in good standing, under the
Laws of each jurisdiction where its ownership, lease or operation
of properties or the conduct of its business requires such
qualification or license; except in each case referred to in clause
(a)(ii), (b)(i) or (c), to the extent that failure to do so could
not reasonably be expected to have a Material Adverse
Effect.
5.02.
Authorization; No Contravention . The execution,
delivery and performance by each Loan Party of each Loan Document
and Related Document to
1 To conform to final amendment to the Existing Credit
Agreement upon satisfactory review of the same by ArcLight and its
counsel.
which
such Person is a party, (a) have been duly authorized by all
necessary corporate or other organizational action, and (b) do not
and will not (i) contravene the terms of any of such Person’s
Organization Documents; (ii) conflict with or result in any breach
or contravention of, or the creation of any Lien (except for any
Liens that may arise under the Loan Documents) under, or require
any payment to be made under (A) any Contractual Obligation to
which such Person is a party or affecting such Person or the
properties of such Person or any of its Subsidiaries or (B) any
order, injunction, writ or decree of any Governmental Authority or
any arbitral award to which such Person or its property is subject;
or (c) violate any Law, except in each case referred to in clause
(b)(ii) or (c) to the extent that failure to do so could not
reasonably be expected to have a Material Adverse
Effect.
5.03.
Governmental Authorization; Other Consents . (a)
No approval, consent, exemption, authorization, or other action by,
or notice to, or filing with, any Governmental Authority and (b) no
material approval, consent, exemption, authorization, or other
action by, or notice to, or filing with any other Person, in each
case, is necessary or required in connection with (i) the
execution, delivery or performance by any Loan Party of this
Agreement or any other Loan Document or Related Document, or for
the consummation of the Transaction, (ii) the grant by any Loan
Party of the Liens granted by it pursuant to the Collateral
Documents or (iii) the perfection of the Liens created under the
Collateral Documents (including the first priority nature thereof),
(x) except for those approvals, consents, exemptions,
authorizations or other actions which have already been obtained,
taken, given or made and are in full force and effect, (y) any
filings required to perfect the Liens created under the Collateral
Documents and (z) those landlord consents required with respect to
the leasehold mortgages required to be delivered
hereunder. All applicable waiting periods in connection
with the Transactions have expired without any action having been
taken by any Governmental Authority restraining, preventing or
imposing materially adverse conditions upon the Transaction or the
rights of the Loan Parties or their Subsidiaries freely to transfer
or otherwise dispose of, or to create any Lien on, any properties
now owned or hereafter acquired by any of them.
5.04.
Binding Effect . This Agreement has been, and
each other Loan Document, when delivered hereunder, will have been,
duly executed and delivered by each Loan Party that is party
thereto. This Agreement constitutes, and each other Loan
Document when so delivered will constitute, a legal, valid and
binding obligation of such Loan Party, enforceable against each
Loan Party that is party thereto in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other Laws relating to
or affecting creditors’ rights generally, general principles
of equity, regardless of whether considered in a proceeding in
equity or at law and an implied covenant of good faith and fair
dealing.
5.05.
Financial Statements; No Material Adverse Effect
. (a) The Audited Financial Statements of the
Borrower and its Subsidiaries (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein; (ii) fairly present in
all material respects the
financial
condition of the Borrower and its Subsidiaries as of the date
thereof and their results of operations for the period covered
thereby in accordance with GAAP consistently applied throughout the
period covered thereby, except as otherwise expressly noted
therein; and (iii) show all material indebtedness and other
material liabilities, direct or contingent, of the Borrower and its
Subsidiaries as of the date thereof, including material liabilities
for Taxes, material commitments and material
Indebtedness.
(b)
The
unaudited consolidated balance sheet of the Borrower and its
Subsidiaries dated June 30, 2007, and the related consolidated
statements of income or operations, shareholders’ equity and
cash flows for the fiscal quarter ended on that date (i) were
prepared in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted
therein, and (ii) fairly present in all material respects the
financial condition of the Borrower and its Subsidiaries as of the
date thereof and their results of operations for the period covered
thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal year-end audit
adjustments.
(c)
Since
June 30, 2007, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably
be expected to have a Material Adverse Effect.
(d)
The
consolidated pro forma balance sheet of the Borrower and its
Subsidiaries as at June 30, 2007, and the related consolidated pro
forma statements of income and cash flows of the Borrower and its
Subsidiaries for the six months then ended, certified by the chief
financial officer or treasurer of the Borrower, copies of which
have been furnished to the Administrative Agent, fairly present in
all material respects the consolidated pro forma financial
condition of the Borrower and its Subsidiaries as at such date and
the consolidated pro forma results of operations of the Borrower
and its Subsidiaries for the period ended on such date, in each
case giving effect to the Transaction, all in accordance with
GAAP.
(e)
The
consolidated forecasted balance sheet and statements of income and
cash flows of the Borrower and its Subsidiaries delivered pursuant
to Section 4.01 or Section 6.01(d) were prepared in good faith on
the basis of the assumptions stated therein, which assumptions were
believed to be reasonable in light of the conditions existing at
the time of delivery of such forecasts.
5.06.
Litigation . There are no actions, suits,
proceedings, claims or disputes pending or, to the knowledge of the
Borrower, threatened, at law, in equity, in arbitration or before
any Governmental Authority, by or against the Borrower or any of
its Subsidiaries or against any of their properties or revenues
that (a) purport to affect or pertain to this Agreement, any other
Loan Document, any Related Document or the consummation of the
Transaction, or (b) except as specifically disclosed in public
filings prior to the date hereof, as to which there is a reasonable
possibility of an adverse determination and that could reasonably
be expected to have a Material Adverse Effect.
5.07.
No Default . Neither the Borrower nor any
Subsidiary is in default under or with respect to any Contractual
Obligation that could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse
Effect. No Default has occurred and is continuing or
would result from the consummation of the transactions contemplated
by this Agreement or any other Loan Document.
5.08.
Ownership of Property; Liens; Investments
. (a) The Borrower and each of its
Subsidiaries has good record title to, or valid leasehold, easement
or other sufficient real property interests in, all real property
necessary or used in the ordinary conduct of its business, except
for such defects in title as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(b)
Schedule
7.01(i) sets forth a complete and accurate list as of the Closing
Date of all Liens on the property or assets of the Borrower and
each of its Subsidiaries, showing as of the date hereof the
lienholder thereof, the principal amount of the obligations secured
thereby and the property or assets of the Borrower or such
Subsidiary subject thereto.
(c)
Schedule
5.08(c) sets forth a complete and accurate list as of the Closing
Date of the locations of all mines owned or leased by the Borrower
or any of its Subsidiaries.
(d)
To
the best knowledge of the Borrower, the legal description attached
as Exhibit A to each Mortgage accurately and completely describes
the Mortgaged Property intended to be covered thereby.
(e)
Schedule
7.03 sets forth a complete and accurate list as of the Closing Date
of all Investments held by the Borrower and any of its Subsidiaries
on the date hereof, showing as of the date hereof the amount,
obligor or issuer and maturity, if any, thereof.
5.09.
Environmental Compliance . Except as disclosed in
the Borrower’s most recent annual and quarterly reports filed
with the SEC or on Schedule 5.09, or as otherwise could not
reasonably be expected to have a Material Adverse
Effect:
(a)
The
facilities and properties currently or formerly owned, leased or
operated by the Borrower or any of its Subsidiaries (the
“Properties”) do not contain, and have not previously
contained, any Hazardous Materials in amounts or concentrations
which (i) constitute or constituted a violation of, or (ii) could
reasonably be expected to give rise to liability under, any
applicable Environmental Law.
(b)
None
of the Borrower nor any of its Subsidiaries has received any notice
of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of the Properties or the
business operated by the Borrower or any of its
Subsidiaries
(the
“Business”), or any prior business for which the
Borrower has retained liability under any Environmental
Law.
(c)
Hazardous
Materials have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location which
could reasonably be expected to give rise to liability under, any
applicable Environmental Law, nor have any Hazardous Materials been
generated, treated, stored or disposed of at, on or under any of
the Properties in violation of, or in a manner that could
reasonably be expected to give rise to liability under, any
applicable Environmental Law.
(d)
No
judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened under any
Environmental Law to which the Borrower or any of its Subsidiaries
is or, to the knowledge of the Borrower, will be named as a party
or with respect to the Properties or the Business, nor are there
any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other similar
administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the
Business.
(e)
There
has been no release or threat of release of Hazardous Materials at
or from the Properties, or arising from or related to the
operations of the Borrower or any of its Subsidiaries in connection
with the Properties or otherwise in connection with the Business,
in violation of or in amounts or in a manner that could reasonably
be expected to give rise to liability under any applicable
Environmental Laws.
(f)
The
Properties and all operations at the Properties are in compliance
with all applicable Environmental Laws.
(g)
The
Borrower and each of its Subsidiaries (i) hold all Environmental
Permits (each of which is in full force and effect and is not
subject to appeal) required for any of their current operations or
for the current ownership, operation or use of the Properties,
including all Environmental Permits required for the coal
mining-related operations of the Borrower or any of its
Subsidiaries or any pending construction or expansion related
thereto; (ii) are, or have been, in compliance with all
Environmental Permits; and (iii) have used commercially reasonable
efforts to cause all contractors, lessees and other Persons
occupying, operating or using the mines on the Properties to comply
with all Environmental Laws and obtain all Environmental Permits
required for the operation of the mines.
(h)
To
the knowledge of the Borrower, none of the Properties have any
associated direct or indirect acid mine drainage.
5.10.
Mining .
(a)
The
Borrower and each of its Subsidiaries has, in the amounts and forms
required pursuant to Environmental Law, obtained all performance
bonds and surety bonds, or otherwise provided any financial
assurance required under
Environmental
Law for Reclamation or otherwise (collectively, “Mining
Financial Assurances”).
(b)
There
have been no accidents, explosions, implosions, collapses or
flooding at or otherwise related to the Properties that have,
directly or indirectly, resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
5.11.
Insurance . The properties of the Borrower and
its Subsidiaries are insured with financially sound and reputable
insurance companies which may be Affiliates of the Borrower, in
such amounts (after giving effect to any self-insurance compatible
with the following standards), with such deductibles and covering
such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities
where the Borrower or the applicable Subsidiary
operates.
5.12.
Taxes . The Borrower and its Subsidiaries have
filed all Federal, state and other tax returns and reports required
to be filed, and have paid all Federal, state and other Taxes,
assessments, fees and other governmental charges levied or imposed
upon them or their properties, income or assets otherwise due and
payable (other than those which are being contested in good faith
by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with GAAP),
except where the failure to do any of the foregoing could not
reasonably be expected to result in a Material Adverse Effect; no
material tax Lien has been filed and, to the knowledge of the
Borrower, no material claim is being asserted or audit being
conducted, with respect to any material Tax, fee or other charge of
the Borrower or any of its Subsidiaries. There is no
proposed tax assessment against the Borrower or any Subsidiary that
would, reasonably be likely to have a Material Adverse
Effect. Neither any Loan Party nor any Subsidiary
thereof is party to any tax sharing agreement, other than the Tax
Separation Agreement. The Spin-Off will not be taxable
to the Borrower, Peabody or any of their respective Subsidiaries or
Affiliates.
5.13.
ERISA Compliance .
(a)
Except
as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, each Plan is in
compliance in all material respects with the applicable provisions
of ERISA, the Code and other Federal or state Laws (except that
with respect to any Multiemployer Plan which is a Plan, such
representation is deemed made only to the knowledge of the
Borrower). With respect to each Plan, no
“accumulated funding deficiency” (within the meaning of
Section 412 of the Code) has occurred, and no application for a
funding waiver or an extension of any amortization period pursuant
to Section 412 of the Code has been made.
(b)
There
are no pending or, to the knowledge of the Borrower, threatened
claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that could reasonably be
expected to have a Material Adverse Effect. There has
been no nonexempt “prohibited transaction” (as defined
in Section 406 of
ERISA)
or violation of the fiduciary responsibility rules with respect to
any Plan that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(c)
Except
as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect: (i) No ERISA Event
has occurred or is reasonably expected to occur; (ii) no Pension
Plan has any Unfunded Pension Liability; (iii) neither the Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) neither the Borrower nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
5.14.
Subsidiaries; Equity Interests; Loan Parties . As
of the Closing Date, the Borrower has no Subsidiaries other than
those specifically disclosed in Schedule 5.14, and all of the
outstanding Equity Interests in such Subsidiaries have been validly
issued, are fully paid and non-assessable and are owned by each
Person in the percentages specified on Schedule 5.14 free and clear
of all Liens except those created under the Collateral Documents or
permitted by this Agreement and the other Loan
Documents. Schedule 5.14 indicates which subsidiaries
are Loan Parties as of the Closing Date showing (as to each Loan
Party) the jurisdiction of its incorporation, the address of its
principal place of business and its U.S. taxpayer identification
number or, in the case of any non-U.S. Loan Party that does not
have a U.S. taxpayer identification number, its unique
identification number issued to it by the jurisdiction of its
incorporation.
5.15.
Margin Regulations; Investment Company Act
. (a) The Borrower is not engaged and will
not engage, principally or as one of its important activities, in
the business of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin
stock. Following the application of the proceeds of each
Borrowing or drawing under each Letter of Credit, not more than 25%
of the value of the assets (either of the Borrower only or of the
Borrower and its Subsidiaries on a consolidated basis) subject to
the provisions of Section 7.01, Section 7.04 or Section 7.05 or
subject to any restriction contained in any agreement or instrument
between the Borrower and any Lender or any Affiliate of any Lender
relating to Indebtedness and within the scope of Section 8.01(e)
will be margin stock.
(b)
None
of the Borrower, any Person Controlling the Borrower, or any
Subsidiary is or is required to be registered as an
“investment company” under the Investment Company Act
of 1940.
5.16.
Disclosure . No report, financial statement,
certificate or other information furnished (in writing) by or on
behalf of any Loan Party to the
Administrative
Agent or any Lender in connection with the transactions
contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document, taken as a
whole with any other information furnished or publicly available,
contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
materially misleading as of the date when made or delivered;
provided ,
that with respect to any forecast, projection or other statement
regarding future performance, future financial results or other
future developments, the Borrower represents only that such
information was prepared in good faith based upon assumptions
believed to be reasonable at the time such information was prepared
(it being understood that any such information is subject to
significant uncertainties and contingencies, may of which are
beyond the Borrower’s control, and that no assurance can be
given that the future developments addressed in such information
can be realized).
5.17.
Compliance with Laws . The Borrower and each
Subsidiary thereof is in compliance in all material respects with
the requirements of all Laws (including any zoning, building,
ordinance, code or approval or any building or mining permits) and
all orders, writs, injunctions and decrees applicable to it or to
its properties, except in such instances in which (a) such
requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently
conducted or (b) the failure to comply therewith, either
individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
5.18.
Intellectual Property; Licenses, Etc . The
Borrower and each of its Subsidiaries own, or possess the right to
use, all of the trademarks, service marks, trade names, copyrights,
patents, patent rights, franchises, licenses and other intellectual
property rights (collectively, “IP Rights”) that are
reasonably necessary for the operation of their respective
businesses, except where the failure to own or possess the right to
use such IP Rights could not reasonably be expected to have a
Material Adverse Effect. To the best knowledge of the
Borrower, the use of such IP Rights by the Borrower or any
Subsidiary does not infringe upon any rights held by any other
Person, except for any infringement that could not reasonably be
expected to have a Material Adverse Effect. Except as
specifically disclosed in Schedule 5.18, no claim or litigation
regarding any of the foregoing is pending or, to the best knowledge
of the Borrower, threatened, which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.
5.19.
Solvency . (a) As of the Closing Date,
after giving effect to the Transaction on such date, the Borrower
is together with its Subsidiaries on a consolidated basis,
Solvent.
(b)
The
Borrower does not intend to, and does not believe that it or any of
its Subsidiaries will, incur debts beyond its ability to pay such
debts as they mature, taking into account the timing and amounts of
cash to be received by it or any such Subsidiary and the timing and
amounts of cash to be payable on or in respect of its Indebtedness
or the Indebtedness of any such Subsidiary,
5.20.
Casualty, Etc . Neither the businesses nor the
properties of the Borrower or any of its Subsidiaries have been
affected by any fire, explosion, accident, strike, lockout or other
labor dispute, drought, storm, hail, earthquake, embargo, act of
God or of the public enemy or other casualty (whether or not
covered by insurance) that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.
5.21.
Labor Matters . Except as specifically disclosed
on Schedule 5.21, there are no collective bargaining agreements or
Multiemployer Plans covering the employees of the Borrower or any
of its Subsidiaries as of the Closing Date. (a) As of the Closing
Date, neither the Borrower nor any Subsidiary has suffered any
strikes, walkouts, work stoppages or other material labor
difficulty within the last five years, and (b) since the Closing
Date, neither the Borrower not any subsidiary has suffered any
strikes, walkouts, work stoppages or other material labor
difficulty that could reasonably be expected to result in a
Material Adverse Effect.
5.22.
Collateral Documents . The provisions of the
Collateral Documents are effective to create in favor of the
Administrative Agent for the benefit of the Secured Parties a
legal, valid and enforceable Lien on all right, title and interest
of the Collateral owned by the Loan Parties and described
therein. Except for filings contemplated hereby and by
the Collateral Documents, no filing or other action will be
necessary to perfect such Liens.
5.23.
Use of Proceeds . The Borrower will use the
proceeds of the Loans solely as provided for in Section
6.11.
5.24.
Coal Act; Black Lung Act .
(a)
The
Borrower, each of its Subsidiaries and its “related
persons” (as defined in the Coal Act) are in compliance in
all material respects with the Coal Act and any regulations
promulgated thereunder, and none of the Borrower, its Subsidiaries
or its related persons has any liability under the Coal Act, except
as disclosed in the Borrower’s financial statements or which
could reasonably be expected to have a Material Adverse Effect or
with respect to premiums or other material payments required
thereunder which have been paid when due.
(b)
The
Borrower and each of its Subsidiaries are in compliance in all
material respects with the Black Lung Act, and neither the Borrower
nor any of its Subsidiaries has either incurred any Black Lung
Liability or assumed any other Black Lung Liability, except as
disclosed in the Borrower’s financial statements or which
could reasonably be expected to have a Material Adverse Effect or
with respect to premiums, contributions or other material payments
required thereunder which have been paid when due.
Appendix 2
to the Term Sheet
Affirmative Covenants to be Incorporated
into the Bridge Facility 2
Below
are the affirmative covenants set forth in Article
VI of that certain Credit
Agreement, dated as of October 31, 2007, among the Company,
the lenders party thereto, and Bank of America, N.A., as
administrative agent thereunder, as amended as of the date
hereof (the “ Existing
Credit Agreement ”). Capitalized terms used and
not otherwise defined herein are used with the meanings
attributed thereto in (i) the Commitment Letter dated April 2,
2008 (the “ Commitment
Letter ”), from ArcLight to the Company, of which
this Appendix
2 forms an integral part, or (ii) the Existing Credit
Agreement, in each case as appropriate. All section
references set forth below, or any use of the phrases
“herein,” “hereunder,” or similar
phrases, shall refer to the relevant sections of the Existing
Credit Agreement. For the avoidance of doubt, it is
understood that the affirmative covenants contained in the
Bridge Facility Documentation shall (i) with respect to the
matters set forth below, be in the form set forth below, with
such modifications as shall be necessary to give effect to the
terms and conditions set forth in the Term Sheet, the
Commitment Letter, the Fee Letter and, where applicable, to
permit and give effect to the existence of the Existing Credit
Agreement, and (ii) in the case of all other matters, be on
Acceptable Bridge Terms.
So long as any Lender shall
have any Commitment hereunder, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied (other than in
respect of contingent obligations, indemnities and expenses
related thereto not then payable or in existence as of the
later of the Maturity Date or the Letter of Credit Expiration
Date), or any Letter of Credit shall remain outstanding, the
Borrower shall, and shall (except in the case of the
covenants set forth in Sections 6.01 and 6.02 (a) –
(g)) cause each Subsidiary to:
6.01.
Financial Statements . Deliver to the
Administrative Agent and each Lender, in form and detail reasonably
satisfactory to the Administrative Agent:
(a)
as
soon as available, but in any event within 90 days after the end of
each fiscal year of the Borrower (commencing with the fiscal year
ended December 31, 2007), a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year,
and the related consolidated statements of income or operations,
changes in shareholders’ equity and cash flows for such
fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and
prepared in accordance with GAAP, such consolidated statements to
be audited and accompanied by a report and opinion of an
independent certified public accountant of
nationally
recognized standing, which report and opinion shall be prepared in
accordance with generally accepted auditing standards and shall not
be subject to any “going concern” or like qualification
or exception or any qualification or exception as to the scope of
such audit; and
(b)
as
soon as available, but in any event within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of the
Borrower (commencing with the fiscal quarter ended March 31, 2008),
a consolidated balance sheet of the Borrower and its Subsidiaries
as at the end of such fiscal quarter, and the related consolidated
statements of income or operations, changes in shareholders’
equity and cash flows for such fiscal quarter and for the portion
of the Borrower’s fiscal year then ended, setting forth in
each case in comparative form the figures for the corresponding
fiscal quarter of the previous fiscal year and the corresponding
portion of the previous fiscal year, all in reasonable detail, such
consolidated statements to be certified by a Responsible Officer of
the Borrower as fairly presenting in all material respects the
financial condition, results of operations, changes in
shareholders’ equity and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of
footnotes.
As
to any information contained in materials furnished pursuant
to Section 6.02
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