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Exhibit
10.1
EXECUTION COPY
PATRIOT
COAL CORPORATION
U.S.$175,000,000
3.25% Convertible Senior Notes Due 2013 1
Purchase
Agreement
May
21, 2008
Citigroup
Global Markets Inc.
388
Greenwich Street
New
York, New York 10013
and
Lehman
Brothers Inc.
745
Seventh Avenue
New
York, New York 10019
As
Representatives of the Initial Purchasers
Ladies
and Gentlemen:
Patriot
Coal Corporation, a corporation organized under the laws of
Delaware (the “Company”), proposes to issue and
sell to the several parties named in Schedule I hereto (the
“Initial Purchasers”), for whom you (the
“Representatives”) are acting as representatives,
U.S.$175,000,000 principal amount of its 3.25% Convertible
Senior Notes due 2013 (the “Firm
Securities”). The Company also proposes to
grant to the Initial Purchasers an option to purchase up to
U.S.$25,000,000 additional principal amount of such Notes to
cover over-allotments, if any (the “Option
Securities” and, together with the Firm Securities, the
“Securities”). The Securities are
convertible into shares of Common Stock, par value U.S.$0.01
per share (the “Common Stock”), of the Company at
the conversion price set forth herein. The
Securities are to be issued under an indenture (the
“Indenture”), to be dated as of the Closing Date,
between the Company and U.S. Bank National Association, as
trustee (the “Trustee”). To
the extent there are no additional parties listed on Schedule
I other than you, the term Representatives as used herein
shall mean you as the Initial Purchasers, and the terms
Representatives and Initial Purchasers shall mean either the
singular or plural as the context requires. The use
of the neuter in this Agreement shall include the feminine and
masculine wherever appropriate. Certain terms used
herein are defined in Section 23 hereof.
Pursuant
to the Agreement and Plan of Merger (the “Merger
Agreement”) dated as of April 2, 2008 by and among
Magnum Coal Company, a Delaware corporation
(“Magnum”), the Company, Colt Merger Corporation,
a Delaware corporation and a wholly-
1 Plus an option to purchase up to an additional
U.S.$25,000,000 aggregate principal amount from the Company, solely
to cover over-allotments.
owned
subsidiary of the Company, ArcLight Energy Partners Fund I,
L.P., a Delaware limited partnership, and ArcLight Energy
Partners Fund II, L.P., a Delaware limited partnership,
subject to the conditions set forth therein, subsequent to the
Closing Date Colt Merger Corporation is to be merged with and
into Magnum, whereupon the separate existence of Colt Merger
Corporation will cease, and Magnum, as the surviving
corporation, will become the Company’s
subsidiary.
The
sale of the Securities to the Initial Purchasers will be made
without registration of the Securities or the Common Stock
issuable upon conversion thereof under the Act in reliance
upon exemptions from the registration requirements of the
Act.
In
connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum, dated May 20, 2008
(as amended or supplemented at the date thereof, including any
and all exhibits thereto and any information incorporated by
reference therein, the “Preliminary Memorandum”),
and a final offering memorandum, dated May 21, 2008 (as
amended or supplemented at the Execution Time, including any
and all exhibits thereto and any information incorporated by
reference therein, the “Final
Memorandum”). Each of the Preliminary
Memorandum and the Final Memorandum sets forth certain
information concerning the Company, the Securities and the
Common Stock issuable upon conversion thereof. The
Company hereby confirms that it has authorized the use of the
Disclosure Package, the Preliminary Memorandum and the Final
Memorandum, and any amendment or supplement thereto, in
connection with the offer and sale of the Securities by the
Initial Purchasers. Unless stated to the contrary,
any references herein to the terms “amend”,
“amendment” or “supplement” with
respect to the Final Memorandum shall be deemed to refer to
and include any information filed under the Exchange Act
subsequent to the Execution Time that is incorporated by
reference therein.
1.
Representations
and Warranties . The Company represents and
warrants to, and agrees with, each Initial Purchaser as set
forth below in this Section 1.
(a) The
Preliminary Memorandum, at the date thereof, did not contain
any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. At the Execution Time, on the Closing
Date and on any settlement date, the Final Memorandum did not
and will not (and any amendment or supplement thereto, at the
date thereof, at the Closing Date and on any settlement date,
will not) contain any untrue statement of a material fact or
omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; provided
, however ,
that the Company makes no representation or warranty as to the
information contained in or omitted from the Preliminary
Memorandum or the Final Memorandum, or any amendment or
supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Company by or on
behalf of the Initial Purchasers through the
Representatives specifically for inclusion therein, it being
understood and agreed that the only such information furnished
by or on behalf of any Initial Purchaser consists of the
information described as such in Section 8(b)
hereof.
(b) The
Disclosure Package, as of the Execution Time, does not contain
any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not
misleading. The
preceding sentence does not apply to statements in or
omissions from the Disclosure Package based upon and in
conformity with written information furnished to the Company
by any Initial Purchaser through the Representatives
specifically for use therein, it being understood and agreed
that the only such information furnished by or on behalf of
any Initial Purchaser consists of the information described as
such in Section 8(b) hereof.
(c) None
of the Company, its Affiliates, or any person acting on its or
their behalf has, directly or indirectly, made offers or sales
of any security, or solicited offers to buy any security,
under circumstances that would require the registration of the
Securities or the Common Stock issuable upon conversion
thereof under the Act.
(d) None
of the Company, its Affiliates, or any person acting on its or
their behalf has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the
Securities.
(e) The
Disclosure Package and the Final Memorandum have been prepared
by the Company for use by the Initial Purchasers in connection
with the purchase and resale of the Securities exempt from the
registration requirements of the Securities Act. No
order or decree preventing the use of the Disclosure Package
or the Final Memorandum, or any order asserting that the
transactions contemplated by this Agreement are subject to the
registration requirements of the Securities Act has been
issued, and no proceeding for that purpose has commenced or is
pending or, to the knowledge of the Company is
contemplated.
(f) The
Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Act.
(g) Assuming
the accuracy of the representations and warranties of the
Initial Purchasers contained in Section 4 and their compliance
with their agreements set forth herein, no registration under
the Act of the Securities or the Common Stock issuable upon
conversion thereof is required for the offer and sale of the
Securities to or by the Initial Purchasers in the manner
contemplated herein, in the Disclosure Package and the Final
Memorandum.
(h) The
Company is not, and after giving effect to the offering and
sale of the Securities and the application of the proceeds
thereof as described in the Disclosure Package and the Final
Memorandum will not be, an “investment company” as
defined in the Investment Company Act.
(i)
The Company is subject to and in compliance in all material
respects with the reporting requirements of Section 13 or
Section 15(d) of the Exchange Act.
(j)
The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any securities
of the Company (except as contemplated in this
Agreement).
(k) The
Company has not taken, directly or indirectly, any action
designed to or that has constituted or that might reasonably
be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale
of the Securities.
(l) Each
of the Company, its subsidiaries, and, to the Company’s
knowledge, Magnum and its subsidiaries, has been duly
incorporated or organized and is validly existing as a
corporation, limited liability company or other entity in good
standing under the laws of the jurisdiction in which it is
formed with full corporate power and authority to own or
lease, as the case may be, and to operate its properties and
conduct its business as described in the Disclosure Package
and the Final Memorandum, and is duly qualified to do business
as a foreign corporation and is in good standing under the
laws of each jurisdiction that requires such qualification,
except for such jurisdictions where the failure to so qualify
or to be in good standing would not result in a Material
Adverse Effect.
(m) All
the outstanding shares of capital stock or other equity or
ownership interests of each Significant Subsidiary have been
duly authorized and validly issued and are fully paid and
nonassessable, and, except as otherwise set forth in the
Disclosure Package and the Final Memorandum, all outstanding
shares of capital stock or other equity or ownership interests
of the Significant Subsidiaries are owned by the Company
either directly or through a subsidiary that is, except as
otherwise set forth in the Disclosure Package and the Final
Memorandum, wholly-owned by the Company, free and
clear of any security interest, claim, lien or encumbrance,
except in each case as set forth in the Disclosure Package and
the Final Memorandum.
(n) The
Company’s authorized equity capitalization is as set
forth in the Disclosure Package and the Final Memorandum; the
capital stock of the Company conforms to the description
thereof contained in the Disclosure Package and the Final
Memorandum; the outstanding shares of Common Stock have been
duly authorized and validly issued and are fully
paid and nonassessable; the shares of Common Stock initially
issuable upon conversion of the Securities have been duly
authorized and, when issued upon conversion of the Securities
against payment of the conversion price, will be validly
issued, fully paid and nonassessable; the Board of Directors
of the Company has duly and validly adopted resolutions
reserving such shares of Common Stock for issuance upon
conversion of the Securities; the holders of outstanding
shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Securities or
the shares of Common Stock issuable upon conversion thereof;
and, except as set forth in the Disclosure Package and the
Final Memorandum, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights
to convert any obligations into or exchange any securities
for, shares of capital stock of or ownership interests in the
Company are outstanding, other than (i) issuances pursuant to
employee benefit plans or upon exercise of outstanding options
and (ii) issuances pursuant to the Merger Agreement, in each
case as described in the Disclosure Package and the Final
Memorandum.
(o) The
statements in the Preliminary Memorandum and the Final
Memorandum under the headings “Certain U.S. Federal Tax
Consequences”, “Description of the Notes”,
“Description of Capital Stock”, “Business of
Patriot—Regulatory Matters”, “Business of
Patriot—Environmental Laws”, “Risk Factors
– Risks Relating to Patriot—Patriot could be
liable to Peabody for adverse tax consequences resulting from
certain change in control transactions and therefore could be
prevented from engaging in strategic or capital raising
transactions”, “Patriot’s mining operations
are extensively regulated, which imposes significant costs on
it, and future regulations and developments could increase
those costs or limit Patriot’s ability to produce and
sell coal”, “Patriot’s exposure to statutory
retiree healthcare costs could be
significantly
higher than Patriot has estimated”,
“—Concerns about the environmental impacts of coal
combustion, such as impacts on global climate change, are
resulting in increased regulation of coal combustion and could
significantly affect demand for Patriot’s
products”, “—Patriot may be unable to obtain
and renew permits necessary for its operations, which would
reduce its production, cash flows and profitability”,
and “—Patriot’s operations may impact the
environment or cause exposure to hazardous substances, and its
properties may have environmental contamination, which could
result in material liabilities to Patriot” fairly
summarize the matters therein described in all material
respects; and, to the knowledge of the Company, the statements
in the Preliminary Memorandum and the Final Memorandum under
the headings “Risk Factors—Risk Factors Relating
to Magnum—If Magnum’s assumptions regarding its
likely future expenses related to employee benefit plans are
incorrect, then expenditures for these benefits could be
materially higher than Magnum has assumed”,
“—Magnum
has stopped its participation in the production of
“synfuel” which has historically generated a
portion of Magnum’s revenue”,
“—Judicial rulings that restrict the issuance of
permits pursuant to the Clean Water Act could significantly
increase Magnum’s operating costs, discourage customers
from purchasing Magnum’s coal and materially harm
Magnum’s financial condition and operating
results”, “—Magnum has significant
reclamation and mine closure obligations. If the assumptions
underlying Magnum’s accruals are materially inaccurate,
Magnum could be required to expend greater amounts than
anticipated”, “—Magnum’s operations
may impact the environment or cause exposure to hazardous
materials, and its properties may have environmental
contamination, which could result in material
liabilities”, “—Environmental
litigation could result in delays in Magnum’s efforts to
obtain new permits, and in certain cases new permits may not
be issued”, “—Magnum is involved in legal
proceedings that if determined adversely to Magnum, could
significantly impact its profitability, financial position or
liquidity”, “Business of Magnum—Regulatory
Matters”, “Business of Magnum—Environmental
Laws” and “Business of Magnum—Legal
Proceedings” fairly summarize the matters therein
described in all material respects.
(p) This
Agreement has been duly authorized, executed and delivered by
the Company; the Indenture has been duly authorized and,
assuming due authorization, execution and delivery thereof by
the Trustee, when executed and delivered by the Company, will
constitute a legal, valid, binding instrument enforceable
against the Company in accordance with its terms (subject, as
to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting
creditors’ rights generally from time to time in effect
and to general principles of equity); and the Securities have
been duly authorized, and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered
to and paid for by the Initial Purchasers, will have been duly
executed and delivered by the Company and will constitute the
legal, valid and binding obligations of the Company entitled
to the benefits of the Indenture (subject, as to the
enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting
creditors’ rights generally from time to time in effect
and to general principles of equity) and will be convertible
into Common Stock in accordance with their terms.
(q) No
consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection
with the transactions contemplated herein or in the Indenture,
except such as may be required under the blue sky laws of any
jurisdiction in which the Securities are offered and
sold.
(r) None
of the execution and delivery of the Indenture, this Agreement
or the Merger Agreement, the issuance and sale of the
Securities or the issuance of the Common Stock upon conversion
thereof, or the consummation of any other of the transactions
herein or therein contemplated, or the fulfillment of the
terms hereof or thereof will conflict with, result in a breach
or violation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company, its subsidiaries,
or, to the knowledge of the Company, Magnum or any of its
subsidiaries pursuant to, (i) the charter or by-laws or
comparable constituting documents of the Company, its
subsidiaries, Magnum or any of its subsidiaries; (ii) the
terms of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the
Company, its subsidiaries, Magnum or any of its subsidiaries
is a party or bound or to which its or their property is
subject; or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company, its
subsidiaries, Magnum or any of its subsidiaries or any of its
or their properties, except in the case of clause (ii) and
(iii) for any such conflict, breach, violation or imposition
as would not result in a material adverse effect on the
condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in
the ordinary course of business (a “Material Adverse
Effect”).
(s) The
consolidated historical financial statements and schedules of
(x) the Company and its consolidated subsidiaries and (y)
Magnum and its consolidated subsidiaries included or
incorporated by reference in the Disclosure Package and the
Final Memorandum present fairly in all material respects the
financial condition, results of operations and cash flows of
the Company or Magnum, as the case may be, as of the dates and
for the periods indicated, comply as to form with the
applicable accounting requirements of Regulation S-X and have
been prepared in conformity with generally accepted accounting
principles in the United States applied on a consistent basis
throughout the periods involved (except as otherwise noted
therein); the selected financial data set forth under the
captions “Summary – Summary Financial and
Operating Data for Patriot,” “Summary –
Summary Financial and Operating Data for Magnum,”
“Selected Consolidated Financial Data of Patriot”
and “Selected Consolidated Financial Data of
Magnum” in the Preliminary Memorandum and the Final
Memorandum fairly present, on the basis stated in the
Preliminary Memorandum and the Final Memorandum, the
information included or incorporated by reference therein; the
pro forma financial statements included or incorporated by
reference in the Disclosure Package and the Final Memorandum
include assumptions that provide a reasonable basis for
presenting the significant effects directly attributable to
the transactions and events described therein, the related pro
forma adjustments give appropriate effect to those
assumptions; the pro forma adjustments reflect the proper
application of those adjustments to the historical financial
statement amounts in the pro forma financial statements
included in the Disclosure Package and the Final Memorandum;
the pro forma financial statements included in the Disclosure
Package and the Final Memorandum comply as to form with the
applicable accounting requirements of Regulation S-X; and the
pro forma adjustments have been properly applied to the
historical amounts in the compilation of those
statements.
(t) No
action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator
involving the Company, its subsidiaries, or, to the knowledge
of the Company, Magnum or any of its subsidiaries or its or
their property is pending or, to the
knowledge
of the Company, threatened that (i) could reasonably be
expected to have a material adverse effect on the performance
of this Agreement, the Indenture or the Merger Agreement or
the consummation of any of the transactions contemplated
hereby or thereby or (ii) could reasonably be expected to have
a Material Adverse Effect, except as set forth in or
contemplated in the Disclosure Package and the Final
Memorandum (exclusive of any amendment or supplement
thereto).
(u) Each
of the Company, its subsidiaries, and, to the knowledge of the
Company, Magnum and its subsidiaries owns or leases all such
properties as are necessary to the conduct of its operations
as presently conducted except where the failure to so own or
lease properties would not have a Material Adverse Effect and
except as set forth or contemplated in the Disclosure Package
and the Final Memorandum (exclusive of any amendment or
supplement thereto).
(v) None
of the Company, its subsidiaries, or, to the knowledge of the
Company, Magnum or any of its subsidiaries is in violation or
default of (i) any provision of its charter or bylaws or
comparable constituting documents; (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which it is a party or
bound or to which its property is subject; or (iii) any
statute, law, rule, regulation, judgment, order, decree or
requirement applicable to the Company, its subsidiaries,
Magnum or any of its subsidiaries of any court, regulatory
body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company, such
subsidiary, Magnum or such subsidiary or any of its
properties, as applicable, except, with respect to clauses
(ii) and (iii), as would not result in a Material Adverse
Effect.
(w) Ernst
& Young LLP, who have certified certain financial
statements of (x) the Company and its consolidated
subsidiaries and (y) Magnum and its consolidated subsidiaries
and delivered their reports with respect to the audited
consolidated financial statements and schedules included or
incorporated by reference in the Disclosure Package and the
Final Memorandum, are independent public accountants with
respect to each of the Company and Magnum within the meaning
of the Act.
(x) There
are no stamp or other issuance or transfer taxes or duties or
other similar fees or charges required to be paid in
connection with the execution and delivery of this Agreement
or the issuance or sale of the Securities or upon the issuance
of Common Stock upon the conversion thereof.
(y) Each
of the Company, and to the knowledge of the Company, Magnum,
(i) has timely filed all applicable tax returns that are
required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not
have a Material Adverse Effect and except as set forth in or
contemplated in the Disclosure Package and the Final
Memorandum (exclusive of any amendment or supplement thereto))
and all such tax returns are correct and complete in all
material respects, and (ii) has timely paid all taxes required
to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is
due and payable, except for any such tax or assessment, fine
or penalty that is currently being contested in good faith or
as would not have a Material Adverse
Effect
and except as set forth in or contemplated in the Disclosure
Package and the Final Memorandum (exclusive of any amendment
or supplement thereto).
(z) No
labor problem or dispute with the employees of the Company,
its subsidiaries, or to the Company’s knowledge, Magnum
or any of its subsidiaries exists or to the Company’s
knowledge is threatened or imminent, and the Company is not
aware of any existing or imminent labor disturbance by the
employees of any of its, its subsidiaries’ or to the
Company’s knowledge, Magnum’s or Magnum’s
subsidiaries’ principal suppliers, contractors or
customers, except as would not have a Material Adverse Effect,
and except as set forth in or contemplated in the Disclosure
Package and the Final Memorandum (exclusive of any amendment
or supplement thereto).
(aa) Each
of the Company, its subsidiaries and, to the Company’s
knowledge, Magnum and its subsidiaries is insured by insurers
of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; all policies of
insurance and fidelity or surety bonds insuring the Company,
its subsidiaries, and to the knowledge of the Company, Magnum
or any of its subsidiaries or their respective businesses,
assets, employees, officers and directors are in full force
and effect in all material respects; the Company, its
subsidiaries, and to the Company’s knowledge Magnum and
its subsidiaries are in compliance in all material respects
with the terms of such policies and instruments; there are no
material claims by the Company or its subsidiaries or, to the
Company’s knowledge, Magnum or its subsidiaries under
any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation
of rights clause; none of the Company or its subsidiaries or,
to the Company’s knowledge, Magnum and its subsidiaries
has been refused any insurance coverage sought or applied for;
and none of the Company or its subsidiaries or, to the
Company’s knowledge, Magnum or its subsidiaries has any
reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not
have a Material Adverse Effect except as set forth in or
contemplated in the Disclosure Package and the Final
Memorandum (exclusive of any amendment or supplement
thereto).
(bb) No
subsidiary of the Company or, to the Company’s
knowledge, Magnum is currently prohibited, and upon
consummation of the acquisition Magnum will not be prohibited,
directly or indirectly, from paying any dividends to the
Company (or, to the Company’s knowledge, in the case of
Magnum’s subsidiaries, to Magnum), from making any other
distribution on such subsidiary’s capital stock, from
repaying to the Company (or, to the Company’s knowledge,
in the case of Magnum’s subsidiaries, to Magnum) any
loans or advances to such subsidiary from the Company (or, to
the Company’s knowledge, in the case of Magnum’s
subsidiaries, to Magnum) or from transferring any of such
subsidiary’s property or assets to the Company or any
other subsidiary of the Company (or, to the Company’s
knowledge, in the case of Magnum’s subsidiaries, Magnum
or any of its other subsidiaries), except as described in or
contemplated in the Disclosure Package and the Final
Memorandum (exclusive of any amendment or supplement
thereto).
(cc) Except
as set forth in the Disclosure Package and the Final
Memorandum (exclusive of any amendment or supplement thereto),
the Company, its subsidiaries, and to the
knowledge
of the Company, Magnum and its subsidiaries, have such
permits, licenses, franchises, certificates, consents, orders
and other approvals or authorizations of any governmental or
regulatory authority (“Permits”), including,
without limitation, any permits or approvals required by the
United States Environmental Protection Agency, the United
States Office of Surface Mining Reclamation and Enforcement
and corresponding state agencies, as are necessary under
applicable law to own their properties and to conduct their
respective businesses in the manner described in the
Disclosure Package and the Final Memorandum, except to the
extent that the failure to have such Permits would not
reasonably be expected to have a Material Adverse Effect. The
Company, Magnum and their respective subsidiaries have
performed all their material obligations with respect to the
Permits except to the extent that such failure to perform
would not reasonably be expected to have a Material Adverse
Effect, and, to the best knowledge of the Company, no event
has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of
any such Permit except to the extent that such revocation or
termination would not reasonably be expected to have a
Material Adverse Effect, and none of the Company, Magnum or
any of their respective subsidiaries has received any notice
of proceedings or potential proceedings relating to any such
action, except as described in or contemplated in the
Disclosure Package and the Final Memorandum (exclusive of any
amendment or supplement thereto) and except to the extent that
any such revocation or termination would not have a Material
Adverse Effect.
(dd) The
Company and its consolidated subsidiaries, and to the
Company’s knowledge, Magnum and its consolidated
subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with
management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles in the United States and to maintain
asset accountability; (iii) access to assets is permitted only
in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences. The Company and its consolidated
subsidiaries’ internal controls over financial reporting
were effective as of December 31, 2007 and are effective as of
the date hereof. The Company is not aware of any
material weakness in its or its consolidated
subsidiaries’ internal control over financial
reporting. To the Company’s knowledge, Magnum
and its consolidated subsidiaries’ internal controls
over financial reporting were effective as of December 31,
2007 and are effective as of the date hereof. The
Company is not aware of any material weakness in the internal
control over financial reporting of Magnum and its
consolidated subsidiaries.
(ee) The
Company and its subsidiaries maintain “disclosure
controls and procedures” (as such term is defined in
Rule 13a-15(e) under the Exchange Act); such disclosure
controls and procedures are effective.
(ff) The
Company, its subsidiaries, and to the Company’s
knowledge, Magnum and its subsidiaries (i) are in compliance
with any and all applicable statutes, laws, rules,
regulations, judgments, orders, decrees or requirements
relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes,
pollutants or contaminants (“Environmental Laws”);
(ii) have received and are in compliance with all
Permits
required
of them under applicable Environmental Laws to conduct their
respective businesses; (iii) have not received notice of any
actual or potential liability under any Environmental Law and
have not been named as a “potentially responsible
party” under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended; and (iv)
are not aware of the presence, spill, discharge, disposal or
release of or exposure to hazardous or toxic substances,
materials or wastes relating to their properties or operations
that would require investigation or remediation pursuant to
Environmental Laws, except, for each of clause (i), (ii),
(iii) and (iv) above, as would not, individually or in the
aggregate, have a Material Adverse Effect, or as set forth in
or contemplated in the Disclosure Package and the Final
Memorandum (exclusive of any amendment or supplement
thereto).
(gg) The
subsidiaries listed on Annex A attached hereto are the only
“significant subsidiaries” of the Company as
defined in Rule 1-02 of Regulation S-X (the “Significant
Subsidiaries”).
(hh) None
of the following events has occurred or exists: (i)
a failure to fulfill the obligations, if any, under the
minimum funding standards of Section 302 of the United States
Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), and the regulations and published
interpretations thereunder with respect to a Plan, determined
without regard to any waiver of such obligations or extension
of any amortization period; (ii) an audit or investigation by
the Internal Revenue Service, the U.S. Department of Labor,
the Pension Benefit Guaranty Corporation or any other federal
or state governmental agency or any foreign regulatory agency
with respect to the employment or compensation of employees by
any of the Company, its subsidiaries, or, to the knowledge of
the Company, Magnum or its subsidiaries that could have a
Material Adverse Effect; (iii) any breach of any contractual
obligation, or any violation of law or applicable
qualification standards, with respect to the employment or
compensation of employees by the Company, its subsidiaries,
or, to the knowledge of the Company, Magnum or its
subsidiaries that could have a Material Adverse
Effect. None of the following events has occurred
or is reasonably likely to occur: (i) a material
increase in the aggregate amount of contributions required to
be made to all Plans in the current fiscal year of the Company
and its subsidiaries or, to the knowledge of the Company,
Magnum and its subsidiaries compared to the amount of such
contributions made in the most recently completed fiscal year
of the Company and its subsidiaries or Magnum and its
subsidiaries, respectively; (ii) a material increase in the
“accumulated post-retirement benefit obligations”
(within the meaning of Statement of Financial Accounting
Standards 106) for the current fiscal year of the Company and
its subsidiaries or, to the knowledge of the Company, Magnum
and its subsidiaries, compared to the amount of such
obligations in the most recently completed fiscal year of the
Company and its subsidiaries or Magnum and its subsidiaries,
respectively; (iii) any event or condition giving rise to a
liability under Title IV of ERISA that could have a Material
Adverse Effect; or (iv) the filing of a claim by one or more
employees or former employees of the Company, its
subsidiaries, or, to the knowledge of the Company, Magnum or
its subsidiaries related to their employment that could have a
Material Adverse Effect. For purposes of this
paragraph, the term “Plan” means a plan (within
the meaning of Section 3(3) of ERISA) subject to Title IV of
ERISA with respect to which the Company, its subsidiaries, or,
to the knowledge of the Company, Magnum or its subsidiaries
may have any liability.
(ii) None
of the Company, its subsidiaries, or to the knowledge of the
Company, (x) Magnum or any of its subsidiaries or (y) any
director, officer, agent, employee or Affiliate of the
Company, Magnum or any of their respective subsidiaries is
aware of or has taken any action, directly or indirectly, that
would result in a violation by such persons of the Foreign
Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder (the “FCPA”), including,
without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in
furtherance of an offer, payment, promise to pay or
authorization of the payment of any money, or other property,
gift, promise to give, or authorization of the giving of
anything of value to any “foreign official” (as
such term is defined in the FCPA) or any foreign political
party or official thereof or any candidate for foreign
political office, in contravention of the FCPA; and the
Company, its subsidiaries and, to the knowledge of the
Company, its Affiliates have conducted their businesses in
compliance with the FCPA and have instituted and maintain
policies and procedures designed to ensure, and which are
reasonably expected to continue to ensure, continued
compliance therewith.
(jj) The
operations of the Company, its subsidiaries, and to the
knowledge of the Company, Magnum and its subsidiaries are and
have been conducted at all times in compliance with applicable
financial recordkeeping and reporting requirements and money
laundering statutes and the rules and regulations thereunder
and any related or similar rules, regulations or guidelines,
issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator
involving the Company, its subsidiaries, or to the knowledge
of the Company, Magnum or any of its subsidiaries with respect
to the Money Laundering Laws is pending or, to the knowledge
of the Company, threatened.
(kk) None
of the Company, its subsidiaries, or, to the
knowledge of the Company, Magnum or its subsidiaries, any
director, officer, agent, employee or Affiliate of the
Company, Magnum or any of their respective subsidiaries is
currently subject to any sanctions administered by the Office
of Foreign Assets Control of the U.S. Department of the
Treasury (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering of the
Securities hereunder, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture
partner or other person or entity, for the purpose of
financing the activities of any person currently subject to
any U.S. sanctions administered by OFAC.
(ll) There
is and has been no failure on the part of the Company and any
of the Company’s directors or officers, in their
capacities as such, to comply with any provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith (the “Sarbanes-Oxley
Act”), including Section 402 related to loans and
Sections 302 and 906 related to certifications.
(mm) The
qualitative and quantitative data regarding proven and
probable coal reserves of the Company, and to the
Company’s knowledge, Magnum, included or incorporated by
reference in the Disclosure Package and the Final Memorandum
(x) were derived in accordance with the procedures described
in the Disclosure Package and the Final Memorandum and all
applicable industry standards, including Industry Guide 7
under the Exchange Act, and
(y)
for the Company, have been reviewed by John T. Boyd Company
and Alpha Engineering Services, Inc., and for Magnum, have
been reviewed by Weir International, Inc.
(nn) Prior
to the date hereof, the Company has furnished to the
Representatives letters, each substantially in the form of
Exhibit A hereto, duly executed by each officer and director
of the Company listed on Annex B attached hereto and addressed
to the Representatives.
Any
certificate signed by any officer of the Company and delivered
to the Representatives or counsel for the Initial Purchasers
in connection with the offering of the Securities shall be
deemed a representation and warranty by the Company, as to
matters covered thereby, to each Initial
Purchaser.
2.
Purchase and
Sale . (a) Subject to the terms
and conditions and in reliance upon the representations and
warranties herein set forth, the Company agrees to sell to
each Initial Purchaser, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, at a
purchase price of 97.25% of the principal amount thereof, plus
accrued interest, if any, from May 28, 2008 to the Closing
Date, the principal amount of Firm Securities set forth
opposite such Initial Purchaser’s name in Schedule I
hereto.
(b) Subject
to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company
hereby grants an option to the several Initial Purchasers to
purchase, seve
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