Exhibit 10.1

 

EXECUTION COPY

 

 

 

 

CREDIT AGREEMENT

 

dated as of

 

November 25, 2009

 

among

 

CLOUD PEAK ENERGY RESOURCES LLC

 

the LENDERS party hereto,

 

the ISSUING BANKS party hereto,

 

and

 

MORGAN STANLEY SENIOR FUNDING, INC.,
as Administrative Agent and Swingline Lender

--------------------------------------------------------------------------------

 

MORGAN STANLEY SENIOR FUNDING, INC., CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH and
RBC CAPITAL MARKETS,
as Joint Lead Arrangers and Joint Bookrunners

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH and RBC CAPITAL MARKETS,

as Joint Syndication Agents

 

CALYON NEW YORK BRANCH and JPMORGAN CHASE BANK, N.A.,
and
THE BANK OF NOVA SCOTIA, SOCIETE GENERALE and WELLS FARGO BANK, NATIONAL
ASSOCIATION,

as Joint Documentation Agents

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

 

 

PAGE

 

 

ARTICLE 1

DEFINITIONS

 

 

Section 1.01. Defined Terms

2

Section 1.02. Classification of Loans and Borrowings

36

Section 1.03. Terms Generally

36

Section 1.04. Accounting Terms

37

 

 

ARTICLE 2

THE CREDITS

 

 

Section 2.01. Commitments

37

Section 2.02. Loans and Borrowings

37

Section 2.03. Requests for Revolving Borrowings

38

Section 2.04. Swingline Loans

38

Section 2.05. Letters of Credit

40

Section 2.06. Funding of Borrowings

48

Section 2.07. Interest Elections

49

Section 2.08. Termination and Reduction of Commitments

50

Section 2.09. Repayment of Loans; Evidence of Debt

51

Section 2.10. Prepayment of Loans

51

Section 2.11. Fees

52

Section 2.12. Interest

53

Section 2.13. Alternate Rate of Interest

54

Section 2.14. Increased Costs

54

Section 2.15. Break Funding Payments

56

Section 2.16. Taxes

56

Section 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs

58

Section 2.18. Mitigation Obligations; Replacement of Lenders

60

Section 2.19. Optional Increase in Commitments

61

Section 2.20. Defaulting Lenders

62

 

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

 

Section 3.01. Organization; Powers

63

Section 3.02. Authorization; Enforceability

64

Section 3.03. Governmental Approvals; No Conflicts

64

Section 3.04. Financial Statements; No Material Adverse Change

64

Section 3.05. Properties

65

Section 3.06. Litigation and Environmental Matters

67

Section 3.07. Compliance with Laws and Agreements

67

Section 3.08. Investment Company Status; Regulatory Restrictions on Borrowing

68

Section 3.09. Taxes

68

 

--------------------------------------------------------------------------------

 

Section 3.10. ERISA

68

Section 3.11. Disclosure

69

Section 3.12. Subsidiaries

69

Section 3.13. Insurance

69

Section 3.14. Labor Matters

69

Section 3.15. Solvency

70

Section 3.16. Use of Proceeds

70

 

 

ARTICLE 4

CONDITIONS

 

 

Section 4.01. Effective Date

70

Section 4.02. Each Credit Event

72

 

 

ARTICLE 5

AFFIRMATIVE COVENANTS

 

 

Section 5.01. Financial Statements and Other Information

73

Section 5.02. Notice of Material Events

74

Section 5.03. Information Regarding Collateral

75

Section 5.04. Existence; Conduct of Business

75

Section 5.05. Payment of Obligations

75

Section 5.06. Maintenance of Real Property

75

Section 5.07. Maintenance of Personal Property

76

Section 5.08. Insurance

76

Section 5.09. Casualty and Condemnation

77

Section 5.10. Proper Records; Rights to Inspect and Appraise

77

Section 5.11. Compliance with Laws

78

Section 5.12. Use of Proceeds and Letters of Credit

78

Section 5.13. Additional Subsidiaries

78

Section 5.14. Further Assurances

78

Section 5.15. Preparation of Environmental Reports

79

Section 5.16. Maintenance of Ratings

79

Section 5.17. Operation of Mines

79

Section 5.18. Maintenance of Material Contracts

79

Section 5.19. Title Opinions

80

 

 

ARTICLE 6

NEGATIVE COVENANTS

 

 

Section 6.01. Debt; Certain Equity Securities

80

Section 6.02. Liens

82

Section 6.03. Fundamental Changes

83

Section 6.04. Investments

83

Section 6.05. Asset Sales

85

Section 6.06. Hedging Agreements

86

Section 6.07. Restricted Payments

86

Section 6.08. Transactions with Affiliates

87

Section 6.09. Restrictive Agreements

88

 

--------------------------------------------------------------------------------

 

Section 6.10. Amendment of Material Documents

89

Section 6.11. Net Cash Interest Expense Coverage Ratio

89

Section 6.12. Leverage Ratio

89

Section 6.13. First Lien Senior Secured Leverage Ratio

89

 

ARTICLE 7

EVENTS OF DEFAULT

 

ARTICLE 8

THE ADMINISTRATIVE AGENT

 

 

Section 8.01. Appointment and Authorization

92

Section 8.02. Rights and Powers as a Lender

92

Section 8.03. Limited Duties and Responsibilities

93

Section 8.04. Authority to Rely on Certain Writings, Statements and Advice

93

Section 8.05. Sub-Agents and Related Parties

93

Section 8.06. Resignation; Successor Administrative Agent

94

Section 8.07. Credit Decisions by Lenders

94

 

 

ARTICLE 9

MISCELLANEOUS

 

 

Section 9.01. Notices

95

Section 9.02. Waivers; Amendments

96

Section 9.03. Expenses; Indemnity; Damage Waiver

97

Section 9.04. Successors and Assigns

99

Section 9.05. Survival

102

Section 9.06. Counterparts; Integration; Effectiveness

102

Section 9.07. Severability

103

Section 9.08. Right of Set-off

103

Section 9.09. Governing Law; Jurisdiction; Consent to Service of Process

103

Section 9.10. WAIVER OF JURY TRIAL

104

Section 9.11. Headings

104

Section 9.12. Confidentiality

104

Section 9.13. PATRIOT Act

105

 

SCHEDULES:

 

 

 

Schedule 1.01(a)

List of Restricted Subsidiaries

Schedule 1.01(b)

List of Excluded Subsidiaries

Schedule 2.01

Commitments

Schedule 3.05(c)

Material Property Claims

Schedule 3.05(e)

Material Properties

Schedule 3.06

Disclosed Matters

Schedule 3.12

List of Subsidiaries

Schedule 3.13

Insurance

Schedule 5.19

Federal and State Mining Leases

 

--------------------------------------------------------------------------------

 

Schedule 6.01

Existing Debt

Schedule 6.02

Existing Liens

Schedule 6.04

Existing Investments

Schedule 6.09

Existing Restrictions

 

 

EXHIBITS:

 

 

 

Exhibit A

Form of Assignment

Exhibit B-1

Form of Opinion of Borrower’s Counsel

Exhibit B-2

Form of Opinion of Borrower’s Regulatory Counsel

Exhibit B-3

Form of Opinion of Borrower’s In-House Counsel

Exhibit B-4

Form of Opinion of Parent’s In-House Counsel

Exhibit B-5

Form of Opinion of Administrative Agent’s Regulatory Counsel

Exhibit C

Form of Guarantee and Security Agreement

Exhibit D

Form of Notice of LC Request

Exhibit E-1

Form of Borrowing Request

Exhibit E-2

Form of Swingline Borrowing Request

Exhibit F

Form of Note

Exhibit G

Form of Interest Election Request

Exhibit H

Certificate Regarding Non-Bank Status

 

--------------------------------------------------------------------------------

 

CREDIT AGREEMENT dated as of November 25, 2009 among CLOUD PEAK ENERGY RESOURCES
LLC, as Borrower, the LENDERS party hereto, the ISSUING BANKS party hereto,
MORGAN STANLEY SENIOR FUNDING, INC., as Administrative Agent and Swingline
Lender, MORGAN STANLEY SENIOR FUNDING, INC., CREDIT SUISSE AG, CAYMAN ISLANDS
BRANCH and RBC CAPITAL MARKETS, as Joint Lead Arrangers and Joint Bookrunners,
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH and RBC CAPITAL MARKETS as Joint
Syndication Agents, CALYON NEW YORK BRANCH and JPMORGAN CHASE BANK, N.A. and THE
BANK OF NOVA SCOTIA, SOCIETE GENERALE, and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Joint Documentation Agents.

 

RECITALS:

 

Through a series of transactions, (i) Rio Tinto Energy America Inc., a Delaware
corporation (“Parent”), contributed the Powder River Basin coal mining business
(the “Coal Business”) of Rio Tinto America Inc., a Delaware corporation (“RTA”)
to the Borrower and (ii) concurrently with the execution of this Agreement,
Parent will (x) transfer a portion of its Equity Interests in the Borrower to
Cloud Peak Energy Inc., a Delaware corporation (“Holdings”), and (y) consummate
a public offering, for Parent’s own account, of common stock of Holdings.

 

The Borrower wishes to borrow funds and obtain letters of credit under this
Agreement for the purposes set forth herein, and is willing to:

 

(i)  cause certain of its Subsidiaries to guarantee obligations of the Borrower
hereunder and under certain Permitted Hedging Agreements; and to secure its
guarantee thereof by granting Liens on its assets to the Administrative Agent as
provided in the Security Documents;

 

(ii)  secure its obligations hereunder and under such Permitted Hedging
Agreements, and cause such guarantor Subsidiaries to secure their obligations
under such guarantees, in each case through pledges and other security interests
on substantially all of their assets, all as further provided in the Security
Documents; and

 

The Lenders and the Issuing Banks are not willing to make loans or issue or
participate in letters of credit hereunder, and the counterparties to the
Permitted Hedging Agreements referred to above are not willing to enter into or
maintain them, unless the foregoing obligations of the Borrower are secured and
guaranteed as described above and each guarantee thereof is secured by Liens on
assets of the relevant Guarantor as provided in the Security Documents;

 

Therefore, the parties hereto agree as follows:

 

--------------------------------------------------------------------------------

 

ARTICLE 1
DEFINITIONS

 

Section 1.01.  Defined Terms.  As used in this Agreement, the following terms
have the meanings specified below:

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

 

“Acquired Debt” means, with respect to any specified Person, (a) Debt of any
other Person existing at the time such other Person is merged with or into or
became a Subsidiary of such specified Person, whether or not such Debt is
incurred in connection with, or in contemplation of, such other Person merging
with or into, or becoming a Restricted Subsidiary of, such specified Person, and
(b) Debt secured by a Lien encumbering an asset acquired by such specified
Person.

 

“Acquisition” means, with respect to any Person (the “acquiror”), any direct or
indirect acquisition by such acquiror of all or substantially all of the Equity
Interests in another Person, all or substantially all of the coal or other
mineral reserves of such other Person or any other assets or business of any
other Person constituting a business unit, line of business or division of such
other Person.

 

“Acquisition Agreement” means the Acquisition Agreement between Holdings and
Parent to be entered into on or prior to the Effective Date.

 

“Acquisition Documents” means the Acquisition Agreement, the LLC Agreement, the
Software License Agreement, the Cloud Peak Promissory Note, the Master
Separation Agreement, the Employee Matters Agreement, the Escrow Agreement, the
Management Services Agreement, the Transition Services Agreement, the
Registration Rights Agreement, the Trademark License Agreement, the Tax
Receivable Agreement, the Trademark Assignment Agreement, the RTEA Coal Supply
Agreement and the Agency Agreement (as such terms are defined in the Master
Separation Agreement).

 

“Adjustable Asset” means the RTEA Units and any asset other than cash owned by
the Borrower, either directly or indirectly through one or more entities that
are treated as partnerships or that are disregarded for U.S. federal income tax
purposes.

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Adjustment.

 

“Administrative Agent” means Morgan Stanley Senior Funding, Inc., in its
capacity as administrative agent under the Loan Documents.

 

2

--------------------------------------------------------------------------------

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

 

“Affiliate” means, 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, such specified Person.  “Control”
means 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
ability to exercise voting power, by contract or otherwise (provided that the
Parent and its Affiliates (other than the Borrower and its Subsidiaries) shall
not be deemed to Control the Borrower solely as a result of the rights and
obligations under the Acquisition Documents), and a Person shall be presumed to
“Control” another Person if (A) the first Person either (i) is the beneficial
owner, directly or indirectly, of 35% or more of the total voting power of the
Voting Stock of such specified Person or (ii) (x) is the beneficial owner,
directly or indirectly, of 10% or more of the total voting power of the Voting
Stock of such specified Person and (y) has the right to appoint or nominate, or
has an officer or director that is at least one member of the Board of Directors
of such specified Person, or (B) if the specified Person is a limited liability
company, the first Person is the managing member.  “Controlled” has a meaning
correlative thereto.

 

“Agent Parties” means, collectively, the Administrative Agent, the Joint Lead
Arrangers and the Joint Syndication Agents.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate in effect on such day plus ½ of 1% and (c) the Adjusted LIBO Rate for a one
month Interest Period determined on such day (or if such day is not a Business
Day, the immediately preceding Business Day) plus 1%.  Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Federal Funds
Effective Rate or the Adjusted LIBO Rate shall be effective from and including
the effective date of such change in the Prime Rate, the Federal Funds Effective
Rate or the Adjusted LIBO Rate, as applicable.

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the
total Commitments represented by such Lender’s Commitment.  If the Commitments
have terminated or expired, the Applicable Percentages shall be determined based
upon the Commitments most recently in effect, giving effect to any assignments.

 

“Applicable Rate” means, for any day, with respect to any ABR Loan or Eurodollar
Revolving Loan, or with respect to the Unused Commitment Fees payable hereunder,
as the case may be, the applicable rate per annum set forth below under the
caption “ABR Spread”, “Eurodollar Spread” or “Unused Commitment Fee Rate”, as
the case may be, based upon the Applicable Ratings (as defined below) ratings by
Moody’s and S&P, respectively, applicable on such date to the Level in effect on
such date:

 

Ratings Level

 

ABR
Spread

 

Eurodollar
Spread

 

Unused Commitment
Fee Rate

 

 

 

 

 

 

 

 

 

Level 1

 

2.25

%

3.25

%

0.75

%

 

 

 

 

 

 

 

 

Level 2

 

2.75

%

3.75

%

0.75

%

 

 

 

 

 

 

 

 

Level 3

 

3.00

%

4.00

%

0.75

%

 

 

 

 

 

 

 

 

Level 4

 

3.25

%

4.25

%

0.75

%

 

3

--------------------------------------------------------------------------------

 

For purposes of the foregoing:

 

“Level 1” applies on any day if on such day the Applicable Rating is BB+ or
higher by S&P and Ba1 or higher by Moody’s.

 

“Level 2” applies on any day if on such day (i) Level 1 does not apply and
(ii) the Applicable Rating is BB or higher by S&P and Ba2 or higher by Moody’s.

 

“Level 3” applies on any day if on such day (i) neither Level 1 nor Level 2
applies and (ii) the Applicable Rating is BB- or higher by S&P and Ba3 or higher
by Moody’s.

 

“Level 4” applies on any day if on such day none of Levels 1, 2 and 3 applies.

 

“Applicable Rating” means the corporate or corporate family rating for the
Borrower in effect at such time by Moody’s or S&P, as applicable (or, if the
designation “corporate” or “corporate family” have been modified, such successor
designations corresponding to such rating), provided that (i) if at any time
either Moody’s or S&P shall not have in effect a corporate or corporate family
rating, as applicable, for the Borrower (other than by reason of the
circumstances referred to in the last sentence of this definition), then such
rating agency shall be deemed to have established a rating in Level 4, and
(ii) if the corporate or corporate family ratings established or deemed to have
been established by Moody’s and S&P shall be changed (other than as a result of
a change in the rating system of Moody’s or S&P), such change shall be effective
as of the date on which it is first announced by the applicable rating agency,
irrespective of when notice of such change shall have been furnished by the
Borrower to the Agent and the Lenders pursuant to Section 5.01 or otherwise.

 

“Assignment” means an assignment and assumption agreement entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.

 

“Attributable Indebtedness” means, at any date, in respect of Capital Leases of
any Person, the capitalized amount thereof that would appear on a balance sheet
of such Person prepared in accordance with GAAP.

 

4

--------------------------------------------------------------------------------

 

“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
all the Commitments.

 

“Available Equity Basket Amount” means, at any date, an amount equal to (i) 100%
of the aggregate net cash proceeds received by the Borrower from issuances by
the Borrower of Equity Interests or from issuances by Holdings of Equity
Interests (other than Disqualified Equity Interests), the net cash proceeds of
which are contributed to the Borrower as additional common Equity Interests
(other than Disqualified Equity Interests), in each case, since the Effective
Date less (ii) the aggregate amount of such Available Equity Basket Amount
otherwise applied under the Agreement, provided that solely to the extent that
such payments are included in the calculation of EBITDA for a period by
operation of clause (xiv) of the definition thereof, payments by Parent or its
Affiliates (other than the Borrower and its Subsidiaries) on behalf of the
Borrower or its Subsidiaries in connection with the Acquisition Documents that
are contributions or deemed to be contributions, directly or indirectly, to the
equity capital of the Borrower shall not be considered an issuance of Equity
Interests for purposes of determining the Available Equity Basket Amount.

 

“Available Net Income Basket Amount” means, at any date, an amount equal to
(i) 25% of cumulative Consolidated Net Income from the period beginning with the
first full fiscal quarter of the Borrower beginning after the Effective Date and
ending with the fiscal quarter ending on or most recently prior to such date
(or, if such cumulative amount is negative, $0) less (ii) the aggregate amount
of such Available Net Income Basket Amount otherwise applied under the
Agreement.

 

“Basis Adjustment” means the adjustment to the tax basis of an Adjustable Asset
under any provision of the Code, including Section 732 of the Code (in
situations where, as a result of one or more Exchanges, Borrower becomes an
entity that is disregarded as separate from its owner for tax purposes),
Section 1012 of the Code, or Sections 743(b) and 754 of the Code (in situations
where, following an Exchange, Borrower remains in existence as an entity for tax
purposes) as a result, in each case, of an Exchange and the payments made
pursuant to the Tax Receivable Agreement. The amount of any Basis Adjustment
resulting from an Exchange of one or more RTEA Units shall be determined without
regard to any Pre-Exchange Transfer of such RTEA Units and as if any such
Pre-Exchange Transfer had not occurred.

 

“BLM” means the Bureau of Land Management.

 

“Borrower” means Cloud Peak Energy Resources LLC, a Delaware limited liability
company.

 

“Borrowing” means (a) Revolving Loans of the same Type made, converted or
continued on the same day and, in the case of Eurodollar Loans, as to which the
same Interest Period is in effect or (b) a Swingline Loan.

 

5

--------------------------------------------------------------------------------

 

“Borrowing Request” means a request by the Borrower, substantially in the form
of Exhibit E-1 or E-2 hereto, as applicable, for a Borrowing in accordance with
Section 2.03.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided 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 Lease” means, with respect to any Person, any lease of any property
which, in conformity with GAAP, is required to be capitalized on the balance
sheet of such Person.

 

“Capital Lease Obligations” of any Person means obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required under GAAP to be classified and accounted for as
capital leases on a balance sheet of such Person.  The amount of such
obligations will be the capitalized amount thereof determined in accordance with
GAAP.

 

“Capital Stock” means, with respect to any Person, any and all shares of stock
of a corporation, partnership interests or other equivalent interests (however
designated, whether voting or non-voting) in such Person’s equity, entitling the
holder to receive a share of the profits and losses, and a distribution of
assets, after liabilities, of such Person.

 

“Cash Equivalents” means:

 

(a)           U.S. Government Obligations or certificates representing an
ownership interest in U.S. Government Obligations with maturities not exceeding
one year from the date of acquisition,

 

(b)           (i) demand deposits, (ii) time deposits and certificates of
deposit with maturities of one year or less from the date of acquisition,
(iii) bankers’ acceptances with maturities not exceeding one year from the date
of acquisition, and (iv) overnight bank deposits, in each case with any bank or
trust company organized or licensed under the laws of the United States or any
state thereof (including any branch of a foreign bank licensed under any such
laws) having capital, surplus and undivided profits in excess of $250,000,000
(or the foreign currency equivalent thereof) whose short-term debt is rated
“A-2” or higher by S&P or “P-2” or higher by Moody’s,

 

(c)           commercial paper maturing within 364 days from the date of
acquisition thereof and having, at such date of acquisition, rated at least A-1
by S&P or P-1 by Moody’s;

 

(d)           readily marketable direct obligations issued by any state,
commonwealth or territory of the U.S. or any political subdivision thereof, in

 

6

--------------------------------------------------------------------------------

 

each case rated at least A-1 by S&P or P-1 by Moody’s with maturities not
exceeding one year from the date of acquisition;

 

(e)           investment funds at least 95% of the assets of which consist of
investments of the type described in clauses (a) through (d) above;

 

(f)            fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause
(b) above; and

 

(g)           in the case of a Foreign Subsidiary, substantially similar
investments, of comparable credit quality, denominated in the currency of any
jurisdiction in which such person conducts business.

 

“Change in Control” means:

 

(a)           any “person” or “group” (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, is
or becomes the “beneficial owner” (as such term is used in Rules 13d-3 under the
Exchange Act), directly or indirectly, of more than 49% of the total voting
power of the Voting Stock of Holdings or the Borrower;

 

(b)           the Permitted Holders (other than Holdings) are or become the
“beneficial owners” (as such term is used in Rules 13d-3 under the Exchange
Act), directly or indirectly, of more than 65% of the total voting power of the
Voting Stock of Holdings or the Borrower;

 

(c)           individuals who on the Effective Date constituted the board of
directors of Holdings (or, from and after the time, if any, at which the
Borrower shall have a board of directors, individuals who, on such date,
constituted the board of directors of the Borrower), together with any new
directors whose election by the board of directors or whose/ nomination for
election by the equity holders of Holdings or the Borrower, as applicable, was
approved by a majority of the directors then still in office who were either
directors or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the board of
directors of Holdings or the Borrower, as applicable, then in office;

 

(d)           Holdings ceases to be the managing member of the Borrower; or

 

(e)           the adoption of a plan relating to the liquidation or dissolution
of Holdings or the Borrower.

 

“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after such
date or (c) compliance by any Lender or Issuing Bank (or, for purposes of
Section 2.14(b), by any

 

7

--------------------------------------------------------------------------------

 

lending office of such Lender or by such Lender 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 such date.

 

“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.

 

“Cloud Peak Companies” means the Borrower, Holdings and the Restricted
Subsidiaries.

 

“Coal Business” has the meaning specified in the introductory paragraph hereto.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” means any and all “Collateral”, as defined in any Security
Document.

 

“Collateral and Guarantee Requirement” means the requirement that:

 

(a)           the Administrative Agent shall have received from each Credit
Party either (i) a counterpart of the Security Agreement duly executed and
delivered on behalf of such Credit Party or (ii) in the case of any Person that
becomes a Credit Party after the Effective Date, a supplement to the Security
Agreement, in the form specified therein, duly executed and delivered on behalf
of such Credit Party;

 

(b)           all outstanding Equity Interests owned by any Credit Party and
that are required to be pledged pursuant to the Security Agreement (except that
the Credit Parties shall not be required to pledge more than 66% of the
outstanding voting Equity Interests in any Foreign Subsidiary) shall have been
pledged pursuant to the Security Agreement and the Administrative Agent shall
have received all certificates or other instruments representing such Equity
Interests of Subsidiaries of such Credit Party, together with stock powers or
other instruments of transfer with respect thereto endorsed in blank;

 

(c)           all documents and instruments, including Uniform Commercial Code
financing statements and Mortgages, required by law or reasonably requested by
the Administrative Agent to be filed, registered or recorded to create the Liens
intended to be created by the Security Documents and perfect or record such
Liens to the extent, and with the priority, required by the Security Agreement,
shall have been filed, registered or recorded or delivered to the Administrative
Agent for filing, registration or recording;

 

(d)           the Administrative Agent shall have received (i) counterparts of a
Mortgage with respect to each Mortgaged Property duly executed, notarized and
delivered by the record owner of such Mortgaged Property; it being

 

8

--------------------------------------------------------------------------------

 

understood that with respect to the legal descriptions attached to the Mortgages
encumbering the Mortgaged Properties described by this clause (i), in the event
the Administrative Agent determines that any Mortgage does not include all of
the real property (including fixtures and improvements) which is owned or leased
by Borrower or a Restricted Subsidiary at that particular site, then upon
written notice of the Administrative Agent, Borrower or any Restricted
Subsidiary shall execute and deliver (at the sole cost and expense of Borrower)
all necessary documentation, including without limitation an amendment to the
applicable Mortgage, to cause the unencumbered portion of said real property to
be included in such Mortgage and (ii) such legal opinions and other documents as
the Administrative Agent or the Required Lenders may reasonably request with
respect to any such Mortgage or Mortgaged Property (including, without
limitation, a completed Federal Emergency Management Agency Standard Flood
Hazard Determination with respect to each portion of the Mortgaged Property
constituting improved residential or commercial real estate or a mobile home);
provided, that no Credit Party shall be required to take such actions under this
clause (d) with respect to any property acquired or leased after the date hereof
that it would not have been required to take with respect to properties owned or
leased on the Effective Date;

 

(e)           each Credit Party shall have obtained all consents and approvals
required to be obtained by it in connection with the execution and delivery of
all Security Documents to which it is a party, the performance of its
obligations thereunder and the granting of the Liens granted by it thereunder;
provided, that no Person that becomes a Credit Party after the Effective Date
shall be required to obtain any consents or approvals in connection with the
execution and delivery of Security Documents after the Effective Date that it
would not have been required to obtain under the Security Documents if it had
been a Credit Party on the Effective Date; and

 

(f)            each Credit Party shall have taken all other action required
under the Security Documents to perfect, register and/or record the Liens
granted by it thereunder, including, without limitation, any required filings
with the BLM or state land management agencies; provided, that no Credit Party
shall be required to take any actions to perfect, register and/or record Liens
granted after the Effective Date other than those required by the Security
Documents for Liens granted as of the Effective Date.

 

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Revolving Loans and to acquire participations in Letters of Credit and
Swingline Loans hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such
commitment may be (a) increased from time to time pursuant to Section 2.19,
(b) reduced from time to time pursuant to Section 2.08 or (c) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04 (it being understood that the total Commitments of all
the Lenders shall not be reduced or increased in the aggregate pursuant to
Section 9.04).  The initial amount of each Lender’s Commitment is (x) set forth
on Schedule 2.01, (y) in the case of any New Lender that

 

9

--------------------------------------------------------------------------------

 

becomes a Lender pursuant to Section 2.19, in the documents implementing any
such increase or addition or (z) in the Assignment and Assumption pursuant to
which such Lender shall have assumed its Commitment, as applicable.  The initial
aggregate amount of the Lenders’ Commitments is $400,000,000.

 

“Consolidated Current Liabilities” means, as of any date of determination, the
aggregate amount of liabilities of the Borrower and its consolidated Restricted
Subsidiaries which may properly be classified as current liabilities (including
taxes accrued as estimated, but excluding Specified Coal Agreement Obligations),
after eliminating (a) all intercompany items between the Borrower and any
Restricted Subsidiary or between Restricted Subsidiaries; and (b) all current
maturities of long-term Debt.

 

“Consolidated Interest Expense” means, for any period, the consolidated interest
expense of the Borrower and its Restricted Subsidiaries, plus, to the extent not
included in such consolidated interest expense, and to the extent incurred,
accrued or payable by the Borrower or its Restricted Subsidiaries, without
duplication, (i) interest expense in respect of Attributable Debt of Capital
Leases, (ii) imputed interest expense in respect of Specified Coal Agreement
Obligations, (iii) amortization of debt discount and debt issuance costs,
(iv) capitalized interest, (v) non-cash interest expense, and (vi) any interest,
premiums, fees or discounts paid or incurred on the sale of accounts receivable
(and any amortization thereof) payable by the Borrower or any Restricted
Subsidiary in connection with a Permitted Receivables Financing, and any yields
or other charges or other amounts comparable to, or in the nature of, interest
payable by the Borrower or any Restricted Subsidiary under any Permitted
Receivables Financing, as determined on a consolidated basis and in accordance
with GAAP.  Consolidated Interest Expense shall be determined for any period
after giving effect to any net payments made or received and costs incurred by
the Borrower and its Restricted Subsidiaries with respect to any related
interest rate Hedging Agreements.

 

“Consolidated Net Cash Interest Expense” means for any period Consolidated
Interest Expense, less (i) to the extent included in determining Consolidated
Interest Expense for such period, (w) any non-cash interest or other non-cash
charges otherwise included in Consolidated Interest Expense for such period,
(x) imputed interest expense in respect of Capital Leases, (y) imputed interest
expense in respect of Specified Coal Agreement Obligations and (z) any one-time
financing fees paid in connection with the Transaction or upon any amendment to
the Agreement and (ii) the consolidated cash interest income of the Borrower and
the Restricted Subsidiaries for such period received on cash or Cash
Equivalents, other than any such cash interest income received in respect of
cash or Cash Equivalents pledged or otherwise subject to a Lien in favor of any
obligations of the Borrower or any of its Affiliates.  Notwithstanding the
foregoing, Consolidated Interest Expense for the Borrower and its Restricted
Subsidiaries for the fiscal quarters ended on December 31, 2008, March 31, 2009,
June 30, 2009 and September 30, 2009 shall be deemed to be $14,506,000,
$14,340,700, $14,516,000 and $14,691,300, respectively.

 

“Consolidated Net Income” means, for any period (i) the aggregate net income (or
loss) of the Borrower and its Restricted Subsidiaries for such period determined
on a

 

10

--------------------------------------------------------------------------------

 

consolidated basis in conformity with GAAP, minus (but without duplication)
(ii) for any period in which the Borrower is a pass-through entity for purposes
of U.S. federal taxes, any Permitted Tax Distributions made with respect to such
period, provided that the following (without duplication) will be excluded in
computing Consolidated Net Income:

 

(a)           the net income (or loss) of any Person that is a non wholly-owned
Restricted Subsidiary (including any joint venture that is a Restricted
Subsidiary), except to the extent of the Borrower’s share, determined pro rata
with its percentage interest (direct or indirect) of common stock of such
Person, of such Person’s net income earned during such period;

 

(b)           the net income (or loss) of any Person other than a Restricted
Subsidiary (including any joint venture that is not a Restricted Subsidiary)
except to the extent of distributions of cash actually received by the Borrower
or a Guarantor with respect to such period;

 

(c)           the net income (or loss) of any Person (other than any Credit
Party) to the extent that the declaration or payment of dividends or similar
distributions by such Person of its net income is not at the date of
determination permitted without any prior governmental approval (which has not
been obtained) or, directly or indirectly, by the operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule, or
governmental regulation applicable to that Person or its stockholders, unless
such restriction with respect to the payment of dividends or in similar
distributions has been legally waived;

 

(d)           any net after-tax (provided that, for any period in which the
Borrower is a pass-through entity for purposes of U.S. federal taxes, net of the
amount included in a Permitted Tax Distribution made with respect thereto) gains
or losses (less all fees and expenses or charges relating thereto) attributable
to asset sales or other Dispositions, in each case other than in the ordinary
course of business;

 

(e)           any net after-tax (provided that, for any period in which the
Borrower is a pass-through entity for purposes of U.S. federal taxes, net of the
amount included in a Permitted Tax Distribution made with respect thereto)
extraordinary gains or losses; and

 

(f)            the cumulative effect of a change in accounting principles.

 

“Consolidated Net Tangible Assets” means, as of any date of determination,
(a) the sum of all amounts that would, in accordance with GAAP, be set forth
opposite the caption “total assets” (or any like caption) on a consolidated
balance sheet of Borrower and its Restricted Subsidiaries minus (b) the sum of
all amounts that would, in accordance with GAAP, be set forth opposite the
captions “goodwill” or other intangible categories (or any like caption) on a
consolidated balance sheet of Borrower and its Restricted Subsidiaries minus
(c) Consolidated Current Liabilities, all determined as of such date and after
giving pro forma effect to any transactions occurring on such date.

 

11

--------------------------------------------------------------------------------

 

“Control” means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ability to exercise voting power, by contract or otherwise.  “Controlling”
and “Controlled” have meanings correlative thereto.

 

“Credit Event” has the meaning set forth in Section 4.02.

 

“Credit Parties” means the Borrower and the Guarantors.

 

“Debt” means, with respect to any Person, without duplication,

 

(a)           all indebtedness of such Person for borrowed money;

 

(b)           all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments (other than any obligations in respect of
performance bonds, bid bonds, appeal bonds, surety bonds, reclamation bonds and
completion guarantees and similar obligations in respect of Specified Coal
Agreements or under any Mining Law or Environmental Law or with respect to
workers’ compensation benefits);

 

(c)           all obligations of such Person in respect of letters of credit,
bankers’ acceptances or other similar instruments (solely to the extent such
letters of credit, bankers’ acceptances or other similar instruments have been
drawn);

 

(d)           all obligations of such Person to pay the deferred and unpaid
purchase price of property or services provided by third-party service providers
which are recorded as liabilities under GAAP, excluding (i) trade payables
arising in the ordinary course of business, (ii) inter-company payables,
(iii) working capital-based and other customary post-closing adjustments in
acquisition transactions and (iv) salary and other employee compensation
obligations incurred in the ordinary course;

 

(e)           the Attributable Indebtedness of such Person in respect of Capital
Leases;

 

(f)            the amount of all Permitted Receivables Financings of such
Person;

 

(g)           Disqualified Equity Interests issued by the Borrower; and

 

(h)           all Debt of other Persons Guaranteed by such Person to the extent
so Guaranteed;

 

(i)            all Debt of other Persons secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person;

 

(j)            all obligations of such Person under Hedging Agreements;

 

12

--------------------------------------------------------------------------------

 

provided, that in no event shall Debt include (i) Specified Coal Agreement
Obligations, (ii) obligations (other than obligations with respect to Debt for
borrowed money or other Funded Debt) related to surface rights under an
agreement for the acquisition of surface rights for the production of coal
reserves in the ordinary course of business in a manner consistent with
historical practice of the Borrower (including the Parent, as its predecessor)
and its Subsidiaries, (iii) obligations under the TRA or (iv) obligations under
the Acquisition Documents (other than the TRA) that are not in respect of Debt
of the type referred to in clauses (a), (b) or (e).

 

The amount of Debt of any Person will be deemed to be:

 

(i)            with respect to Debt secured by a Lien on an asset of such Person
but not otherwise the obligation, contingent or otherwise, of such Person, the
lesser of (x) the fair market value of such asset on the date the Lien attached
and (y) the principal amount of such Debt;

 

(ii)           with respect to any Debt issued with original issue discount, the
face amount of such Debt less the remaining unamortized portion of the original
issue discount of such Debt;

 

(iii)          with respect to any Hedging Agreement, the amount payable
(determined after giving effect to all contractually permitted netting) if such
Hedging Agreement terminated at that time due to default by such Person; and

 

(iv)          otherwise, the outstanding principal amount thereof.

 

“Decker” means Decker Coal Company, an unincorporated joint venture under the
laws of Montana, of which the Borrower indirectly owns 50% of the Equity
Interests.

 

“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

 

“Defaulting Lender” means any Lender that (a) fails to make any Loan at a time
when the conditions precedent set forth in Article 4 to make a Loan hereunder
are satisfied unless such failure has been cured, or fails to fund
participations in Letters of Credit within three Business Days of the date
required to be funded unless such failure has been cured, (b) is or becomes (or
whose parent company is or becomes) the subject of a bankruptcy or insolvency
proceeding, (c) notifies the Borrower, the Administrative Agent, any Issuing
Bank or any Lender in writing that it does not intend to comply with any of its
funding obligations under this Agreement or has made a public statement to the
effect that it does not intend to comply with its funding obligations under this
Agreement or under other agreements generally in which it commits to extend
credit or (d) fails, within three Business Days after request by the
Administrative Agent, to confirm that it will comply with the terms of this
Agreement relating to its obligations to fund prospective Loans and
participations in then outstanding Letters of Credit, provided that

 

13

--------------------------------------------------------------------------------

 

such Lender shall cease to be a Defaulting Lender under this clause (c) upon
receipt of such information; provided, further, that a Lender shall not be a
Defaulting Lender solely by virtue of the ownership or acquisition of any
ownership interest in such Lender or parent company thereof or the exercise of
control over a Lender or parent company thereof by a Governmental Authority or
instrumentality thereof.

 

“Disclosed Matters” means the actions, suits, proceedings and environmental
matters disclosed in Schedule 3.06.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition of any property by any Person (including any sale and leaseback
transaction and any sale of Equity Interests, but excluding any issuance by such
Person of its own Equity Interests), including any sale, assignment, transfer or
other disposal, with or without recourse, of any notes or accounts receivable or
any rights and claims associated therewith.

 

“Disqualified Equity Interests” means any Equity Interest that, by its terms (or
by the terms of any security into which it is convertible, or for which it is
exchangeable, in each case, at the option of the holder of such Equity
Interest), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder of the Equity Interest, in whole or in part, on or
prior to the date that is 91 days after the Maturity Date.

 

“dollars” or “$” refers to lawful money of the United States.

 

“EBITDA” means, for any period, the sum of

 

(a)           Consolidated Net Income, plus

 

(b)           in each case to the extent deducted in calculating Consolidated
Net Income for such period and as determined on a consolidated basis (including
without limitation, any of the following items that have been paid under or in
respect of the Acquisition Documents):

 

(i)            Consolidated Interest Expense for such period;

 

(ii)           the provision for Taxes based on income, profits or capital,
including, without limitation, state franchise and similar Taxes (provided that,
but without duplication, and for any period in which the Borrower is a
pass-through entity for purposes of U.S. federal taxes, the amount of any
Permitted Tax Distributions with respect to such period);

 

(iii)          depreciation, depletion, amortization (including, without
limitation, amortization of intangibles, deferred financing fees and any
amortization included in pension, OPEB or other employee benefit expenses) and
all other non-cash items reducing Consolidated Net Income (including, without
limitation, write-downs and impairment of property, plant, equipment and
intangibles and other long-lived assets

 

14

--------------------------------------------------------------------------------

 

and the impact of purchase accounting) but excluding, in each case, non-cash
charges in a period which reflect cash expenses paid or to be paid in another
period, less all non-cash items increasing Consolidated Net Income;

 

(iv)          all non-recurring or unusual gains (and less all non-recurring or
unusual losses);

 

(v)           all non-cash start-up and transition costs, business optimization
expenses and other non-cash restructuring charges;

 

(vi)          the non-cash portion of “straight-line” rent expense;

 

(vii)         non-cash compensation expense or other non-cash expenses or
charges arising from the granting of stock options, the granting of stock
appreciation rights and similar arrangements (including any repricing,
amendment, modification, substitution or change of any such stock option, stock
appreciation rights or similar arrangements);

 

(viii)        any debt extinguishment costs;

 

(ix)           accretion of asset retirement obligations in accordance with SFAS
No. 143, Accounting for Asset Retirement Obligations, and any similar accounting
in prior periods;

 

(x)            net after-tax losses attributable to asset sales, and net
after-tax extraordinary losses (provided that, for any period in which the
Borrower is a pass-through entity for purposes of U.S. federal taxes, net of the
amount included in a Permitted Tax Distribution made with respect thereto);

 

(xi)           any transaction costs, fees and expenses incurred on or about the
Effective Date in respect of the Transactions;

 

(xii)          (A) mark-to-market gains (and less any mark-to-market losses)
relating to any Permitted Hedging Agreements and (B) any mark-to-market losses
attributed to short positions in any actual or synthetic forward sales contracts
relating to coal or any other similar device or instrument or other instrument
classified as a “derivative” pursuant to SFAS 133;

 

(xiii)         commissions, premiums, discounts, fees or other charges relating
to performance bonds, bid bonds, appeal bonds, surety bonds, reclamation and
completion guarantees and other similar obligations;

 

(xiv)        any expense that is required to be paid or has been paid that is
recognized on the income statement of the Borrower and its Subsidiaries as an
expense, to the extent that such expense has been

 

15

--------------------------------------------------------------------------------

 

reimbursed (including through any contribution or deemed contribution to the
equity capital of the Borrower) by the Parent and its Affiliates (other than the
Borrower and its Subsidiaries) to or on behalf of the Borrower and its
Subsidiaries pursuant to the Acquisition Documents (but in any event without
duplication of any such reimbursement payment that is added in arriving at
Consolidated Net Income for such period); and

 

(xv)         any indemnification payments made to the Parent and its Affiliates
(other than the Borrower and its Subsidiaries) pursuant to the Acquisition
Documents in respect of non-recurring items, provided, however, that the
aggregate amount of all such payments to be added back pursuant to this clause
(xv) shall not exceed $10 million in the aggregate;

 

minus

 

(c)           the sum of (in each case without duplication and to the extent the
respective amounts described in subclauses (i) and (ii) of this
clause (c) increased such Consolidated Net Income for the respective period for
which EBITDA is being determined):

 

(i)            non-cash items increasing Consolidated Net Income of Borrower and
the Restricted Subsidiaries for such period (but excluding any such items (A) in
respect of which cash was received in a prior period or will be received in a
future period or (B) which represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior period), and

 

(ii)           the cash portion of “straight-line” rent expense which exceeds
the amount expensed in respect of such rent expense.

 

Notwithstanding the foregoing, EBITDA for the Borrower and its Restricted
Subsidiaries for the fiscal quarters ended on December 31, 2008, March 31, 2009,
June 30, 2009 and September 30, 2009 shall be deemed to be $76,476,000,
$97,447,000, $103,080,000  and $109,519,000, respectively.

 

“Effective Date” means the date on which each of the conditions specified in
Section 4.01 is satisfied (or waived in accordance with Section 9.02).

 

“Environment” means soil, land surface or subsurface strata, water, surface
waters (including navigable waters, ocean waters within applicable territorial
limits, streams, ponds, drainage basins, and wetlands), ground waters, drinking
water supply, water related sediments, air, plant and animal life, and any other
environmental medium.

 

“Environmental Laws” means all laws (including common law), rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions or binding agreements
issued, promulgated or entered into by any Governmental Authority, relating in
any way to the Environment, the preservation, restoration or reclamation of
natural

 

16

--------------------------------------------------------------------------------

 

resources, or the presence, use, storage, discharge, management, release or
threatened release of any pollutants, contaminants or hazardous or toxic
substances, wastes or material or the effect of the environment on human health
and safety.

 

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of remediation, fines, penalties or
indemnities), directly or indirectly resulting from or based on (a) violation of
any Environmental Law or Environmental Permit, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Material, (c) exposure to any Hazardous Material, (d) the release or threatened
release of any Hazardous Material into the Environment, (e) the preservation,
restoration or reclamation of natural resources or (f) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.

 

“Environmental Permits” means any and all permits, licenses, registrations,
certifications, exemptions and any other authorization required under any
applicable Environmental Law.

 

“Equity Interests” means (i) shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person or (ii) any warrants,
options or other rights to acquire such shares or interests.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower or any Subsidiary, 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.

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (except an
event for which the 30-day notice period is waived); (b) the failure to satisfy
the minimum funding standard with respect to a Plan within the meaning of
Section 412 of the Code or Section 303 or 304 of ERISA), whether or not waived;
(c) a determination that any Plan is in “at risk” status (as defined in
Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code; (d) the filing
pursuant to Section 431 or Section 304 of ERISA of an application for the
extension of any amortization period; (e) the failure to timely make a
contribution required to be made with respect to any Plan or Multiemployer Plan
that would result in the imposition of an encumbrance under Section 412 of the
Code or Section 302 of ERISA; (f) the filing of a notice to terminate any Plan
if such termination would require material additional contributions in order to
be considered a standard termination within the meaning of Section 4041(b) of
ERISA; (g) the filing under Section 4041(c) of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan under Section 4041(c) of
ERISA; (h) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (i) the incurrence by the Borrower or any
ERISA Affiliate of any liability under

 

17

--------------------------------------------------------------------------------

 

Title IV of ERISA with respect to the termination of any Plan; (j) the receipt
by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of
any written notice relating to the commencement of proceedings to terminate any
Plan or Plans or to appoint a trustee to administer any Plan; (k) the incurrence
by the Borrower or any ERISA Affiliate of any liability with respect to
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (l) the
receipt by the Borrower or any ERISA Affiliate of any written notice, or the
receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of
any written notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, in
“endangered” or “critical” status within the meaning of Section 305 of ERISA; or
(m) any Foreign Benefit Event.

 

“Eurodollar”, when used with respect to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate.

 

“Events of Default” has the meaning specified in Article 7.

 

“Exchange” means a redemption of RTEA Units pursuant to an exercise by Parent of
its right to have its units in Borrower redeemed, or any acquisition of RTEA
Units by Holdings, whether acquired in connection with the IPO or otherwise.

 

“Excluded Subsidiary” means (i) those entities listed on Schedule 1.01(b) (an
“Initial Excluded Subsidiary”) and (ii) any other Subsidiary of the Borrower
that, after the Effective Date, the Borrower notifies the Administrative Agent
in writing is an “Excluded Subsidiary”, but only to the extent that such
Subsidiary (a) has no Debt other than Non-Recourse Debt (other than any Debt of
an Initial Excluded Subsidiary outstanding on the Effective Date), (b) is not a
party to any agreement or contract with the Borrower or any Restricted
Subsidiary of the Borrower except as permitted by Section 6.08, (c) is a Person
with respect to which neither the Borrower nor any of its Restricted
Subsidiaries has any direct or indirect obligation to subscribe for additional
Equity Interests in such Person, (d) has not guaranteed any Debt of the Borrower
or any of its Restricted Subsidiaries and (e) does not own any Equity Interests
of the Borrower or any Restricted Subsidiary.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
Issuing Bank or any other recipient of any payment to be made by or on account
of any obligation of the Borrower hereunder, (a) any Taxes imposed, deducted or
withheld by reason of any present or former connection between the recipient and
the jurisdiction imposing the Tax (other than on account of the execution,
delivery, performance, filing, recording, or enforcement of, this Agreement and
the other Loan Documents, and recipient’s participation in the transactions
contemplated by this Agreement and the other Loan Documents), (b) any branch
profits Taxes imposed by the United States of America or any similar Tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of an Issuing Bank, a Lender (other than an assignee pursuant to a request by
the Borrower under Section 2.18(b)) or an Agent Party, any withholding tax (and
any penalties and/or interest arising therefrom or with respect thereto) that is
(i) imposed, deducted or withheld with respect to amounts payable to such
Lender, Issuing

 

18

--------------------------------------------------------------------------------

 

Bank or Agent Party at the time such Lender, Issuing Bank or Agent Party becomes
a party to this Agreement (or designates a new lending office) or
(ii) attributable to such Lender’s, Issuing Bank’s or Agent Party’s failure to
comply with Section 2.16(e) (disregarding the last sentence of
Section 2.16(e) for such purpose unless such Lender, Issuing Bank or Agent Party
is not legally able to deliver any form or certificate pursuant to
Section 2.16(e) due to a Change in Law after the date such Lender, Issuing Bank
or Agent Party becomes a party hereto), except with respect to clause (i) above
to the extent that such Issuing Bank or Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax (and any penalties and/or interest arising therefrom or with respect
thereto) pursuant to Section 2.16(a).

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) 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 on
such Business Day, the average (rounded upwards, if necessary, to the next 1/100
of 1%) of the quotations for such day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.

 

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System of the United States.

 

“Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.

 

“First Lien Senior Secured Debt” means all Funded Debt that is secured by a Lien
(including, without limitation, Debt under this Agreement, secured purchase
money obligations and Permitted Receivables Financing) other than Second Lien
Senior Secured Debt.

 

“First Lien Senior Secured Leverage Ratio” means, on any day, the ratio of
(a) First Lien Senior Secured Debt as of such day to (b) EBITDA for the period
of four consecutive Fiscal Quarters ended on such day (or, if such day is not
the last day of a Fiscal Quarter, ended on the last day of the Fiscal Quarter
most recently ended before such day).

 

“Fiscal Quarter” means a fiscal quarter of the Borrower.

 

“Fiscal Year” means a fiscal year of the Borrower.

 

“Foreign Benefit Event” shall mean, with respect to any Foreign Pension Plan,
(a) the existence of unfunded liabilities in excess of the amount permitted
under any applicable law or in excess of the amount that would be permitted
absent a waiver from a Governmental Authority, (b) the failure to make the
required contributions or payments, under any applicable law, on or before the
due date for such contributions or payments, (c) the receipt of a notice by a
Governmental Authority relating to the intention to

 

19

--------------------------------------------------------------------------------

 

terminate any such Foreign Pension Plan or to appoint a trustee or similar
official to administer any such Foreign Pension Plan, or alleging the insolvency
of any such Foreign Pension Plan, (d) the incurrence of any liability by the
Borrower or any Subsidiary under applicable law on account of the complete or
partial termination of such Foreign Pension Plan or the complete or partial
withdrawal of any participating employer therein or (e) the occurrence of any
transaction that is prohibited under any applicable law and that could
reasonably be expected to result in the incurrence of any liability by the
Borrower or any Subsidiary, or the imposition on the Borrower or any Subsidiary
of any fine, excise tax or penalty resulting from any noncompliance with any
applicable law.

 

“Foreign Pension Plan” shall mean any benefit plan subject to the laws of a
jurisdiction outside the United States that under such applicable law is
required to be funded through a trust or other funding vehicle other than a
trust or funding vehicle maintained exclusively by a Governmental Authority and
with respect to which the Borrower or any of its Restricted Subsidiaries has any
liability.

 

“Foreign Subsidiary” means a Subsidiary (which may be a corporation, limited
liability company, partnership or other legal entity) organized under the laws
of a jurisdiction outside the United States, other than any such entity that is
treated as a partnership, disregarded entity or other “look-through” entity (for
purposes of federal taxation under the Code) of the Borrower or one of its
Subsidiaries organized under the laws of the United States or a state or other
subdivision thereof so long as treating such Subsidiary as other than a Foreign
Subsidiary would not cause at any time an inclusion by Parent, Holdings or any
Affiliate thereof under Section 951(a)(1)(B) of the Code.

 

“Funded Debt” means, at any time, and determined on a consolidated basis without
duplication, the consolidated Debt of the Borrower and its Restricted
Subsidiaries of the type referred to in clauses (a), (b), (c) (but only with
respect to reimbursement obligations related thereto), (e), (f), (g), (h) and
(i) in the definition of Debt (but in the case of clauses (h) and (i), only to
the extent that the Debt of other Persons so Guaranteed or secured is itself of
the type referred to in clauses (a), (b), (c) (but only with respect to
reimbursement obligations related thereto), (e) or (f) of such definition.

 

“GAAP” means generally accepted accounting principles as in effect in the United
States on the Effective Date, applied on a basis consistent (except for changes
concurred in by the Borrower’s independent public accountants) with the most
recent audited consolidated financial statements of the Borrower and its
consolidated Subsidiaries delivered to the Lenders.

 

“Governmental Authority” means the government of the United States, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Guarantee” by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing any Debt or other obligation of any
other

 

20

--------------------------------------------------------------------------------

 

Person (the “primary obligor”), whether directly or indirectly, and including
any written obligation of the guarantor, (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other obligation or to
purchase (or advance or supply funds for the purchase of) any security for the
payment thereof, (b) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Debt or other obligation or (c) as an
account party in respect of any letter of credit or letter of guaranty issued to
support such Debt or other obligation; provided that the term “Guarantee” shall
not include endorsements for collection or deposit in the ordinary course of
business.

 

“Guarantors” means each Wholly-Owned Restricted Subsidiary of the Borrower other
than any Foreign Subsidiary.

 

“Hazardous Material” means all explosive or radioactive substances or wastes and
all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes, and all
other substances or wastes of any nature, in each case subject to regulation
under or which could give rise to liability under any Environmental Law,
including, without limitation, coal ash, coal combustion by-products or waste,
boiler slag, scrubber residue or flue desulphurization residue.

 

“Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest rate, currency exchange rate or commodity price hedging arrangement or
any actual or synthetic forward sale contracts or any other similar device or
instrument.

 

“Holdings” has the meaning specified in the introductory paragraph hereto.

 

“Improvements” has the meaning assigned to such term in the Mortgages.

 

“Indemnified Taxes” means all Taxes except Excluded Taxes.

 

“Information Memorandum” means the Confidential Information Memorandum dated
September 30, 2009 relating to the Borrower and the Transactions.

 

“Interest Election Request” means a request by the Borrower, substantially in
the form of Exhibit G hereto or such other form reasonably acceptable to the
Administrative Agent, to convert or continue a Revolving Borrowing in accordance
with Section 2.07.

 

“Interest Payment Date” means (a) with respect to any ABR Loan (other than a
Swingline Loan), (x) the last day of each March, June, September and
December and (y) any day on which an ABR Loan is converted to a Eurodollar Loan,
(b) with respect to any Eurodollar 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 Borrowing 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

 

21

--------------------------------------------------------------------------------

 

Period, and (c) with respect to any Swingline Loan, the day that such Loan is
required to be repaid.

 

“Interest Period” means, with respect to any Eurodollar 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
(or, with the consent of each Lender, nine months) thereafter, as the Borrower
may elect; provided that (i) 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, in the case of a Eurodollar Borrowing only, 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
(ii) any Interest Period pertaining to a Eurodollar Borrowing 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, in the case of a Revolving
Borrowing, thereafter shall be the effective date of the most recent conversion
or continuation of such Borrowing.

 

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests or debt or other securities of another Person,
(b) a loan, advance or capital contribution to, Guarantee or assumption of debt
of, or purchase or other acquisition of any other debt or equity participation
or interest in, another Person, including any partnership or joint venture
interest in such other Person or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of all or substantially all of the
property and assets or business of another Person or assets constituting a
business unit, line of business or division of such Person.  For purposes of
covenant compliance, the amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in the value
of such Investment, less any amount paid, repaid, returned, distributed or
otherwise received in cash in respect of such Investment.

 

“Investment Grade Date” means the first date (after the Effective Date) on which
the Borrower has, simultaneously, (i) a corporate credit rating equal to or
higher than Baa3 (or the equivalent) by Moody’s and (ii) a corporate family
rating equal to or higher than BBB- (or the equivalent) by S&P; provided that
the Borrower has not been placed on “negative watch” by Moody’s or S&P at such
time.

 

“IPO” means an initial public offering of capital stock of Holdings on the date
hereof.

 

“IPO Registration Statement” means the registration statement on Form S-1,
including the prospectus related thereto, filed by Holdings with the Securities
and Exchange Commission in connection with the IPO, together with all amendments
and supplements thereto as of the Effective Date.

 

22

--------------------------------------------------------------------------------

 

“ISP” means the International Standby Practices 1998, International Chamber of
Commerce Publication No. 590.

 

“Issuing Bank” means Morgan Stanley Bank, N.A., Credit Suisse AG, Cayman Islands
branch, Royal Bank of Canada, JPMorgan Chase Bank, N.A., Wells Fargo Bank,
National Association, and any other Lender that, at the request of the Borrower
and with the consent of the Administrative Agent (not to be unreasonably
withheld or delayed), agrees to become an Issuing Bank in substitution for an
institution that is then acting as an Issuing Bank or as an additional Issuing
Bank; provided that there shall not be more than four (4) Issuing Banks at any
one time.  Each Issuing Bank may, in its discretion, arrange for one or more
Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case
the term “Issuing Bank” shall include any such Affiliate with respect to Letters
of Credit issued by such Affiliate.

 

“Joint Lead Arrangers” means Morgan Stanley Senior Funding, Inc., Credit Suisse
AG, Cayman Islands branch and RBC Capital Markets, in each case in its capacity
as joint lead arrangers under the Agreement.

 

“Joint Syndication Agents” means Credit Suisse AG, Cayman Islands branch and RBC
Capital Markets, in each case in its capacity as joint syndication agents under
the Agreement.

 

“LBA” means the acquisition of federal coal through an application for a federal
coal lease submitted in accordance with the BLM competitive leasing regulations.

 

“LBM” means the acquisition of federal coal through an application to modify an
existing coal lease submitted in accordance with the BLM non-competitive leasing
regulations.

 

“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter
of Credit.

 

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (b) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time.  The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.

 

“Lender Affiliate” means, (a) with respect to any Lender, (i) an Affiliate of
such Lender or (ii) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by such Lender or an Affiliate of such
Lender and (b) with respect to any Lender that is a fund which invests in bank
loans and similar extensions of credit, any other fund that invests in bank
loans and similar extensions of credit and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.

 

23

--------------------------------------------------------------------------------

 

“Lender Parties” means the Lenders, the Issuing Banks and the Administrative
Agent.

 

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that
shall have become a party hereto pursuant to an Assignment, other than any such
Person that ceases to be a party hereto pursuant to an Assignment.  Unless the
context requires otherwise, the term “Lenders” includes the Swingline Lender.

 

“Letter of Credit” has the meaning specified in Section 2.05(a).

 

“Leverage Ratio” means, on any day, the ratio of (a) Funded Debt as of such day
to (b) EBITDA for the period of four consecutive Fiscal Quarters ended on such
day (or, if such day is not the last day of a Fiscal Quarter, ended on the last
day of the Fiscal Quarter most recently ended before such day).

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the greater at any time of (a) (x) the rate per annum appearing on
Page BBAM 1 on the Bloomberg Service (or on any successor or substitute page of
such service, or any successor to or substitute for such service, providing rate
quotations comparable to those currently provided on such page of such service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two
Eurodollar Business Days prior to the commencement of such Interest Period, as
the rate for dollar deposits with a maturity comparable to such Interest Period
or (y) if the rate referred to in clause (x) is not available at such time for
any reason, then the rate at which dollar deposits of $5,000,000 and for a
maturity comparable to such Interest Period are offered by the principal London
office of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
before the beginning of such Interest Period and (b) 2.50% per annum.

 

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or Capital Lease).

 

“Loan Documents” means this Agreement, any Notes and the Security Documents.

 

“Loan Financing Transactions” means the execution, delivery and performance by
each Credit Party of the Loan Documents to which it is to be a party, the
borrowing of Loans, the use of the proceeds thereof and the issuance of Letters
of Credit hereunder.

 

“Loans” means loans made by the Lenders to the Borrower pursuant to this
Agreement.  Unless the context requires otherwise, the term “Loans” includes
Swingline Loans.

 

“Long-Term Debt” means any Debt that, in accordance with GAAP, constitutes (or,
when incurred, constituted) a long-term liability.

 

24

--------------------------------------------------------------------------------

 

“Master Separation Agreement” means the Master Separation Agreement by and among
RTA, Parent, Kennecott Management Services Company, Holdings, the Borrower and
the subsidiaries listed on the signature pages thereto to be entered into on or
prior to the Effective Date.

 

“Material Adverse Effect” means any event or circumstance, either individually
or in the aggregate, that has had or would reasonably be expected to have a
material (a) adverse effect on (i) the business, assets, operations or condition
(financial or otherwise) of the Borrower and its Restricted Subsidiaries taken
as a whole (which, for the avoidance of doubt shall not include any impact on
the Borrower and/or its Restricted Subsidiaries resulting from the expiration of
its existing contract with Houston Light & Power, the sale of the Jacobs Ranch
Mine or the winding-up of operations at the Decker Mine), or (ii) the ability of
the Credit Parties (taken as a whole) to perform any of their payment
obligations under any Loan Document or (b) impairment of the rights of or
benefits available to any Lender Party under any Loan Document.

 

“Material Debt” means Debt (other than obligations in respect of the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of the Borrower and its Restricted Subsidiaries in an aggregate principal amount
exceeding $50,000,000 (except for purposes of clause (g)(ii) of Article 7, in
which case the aggregate principal amount shall be $25,000,000).  For purposes
of determining Material Debt, the “principal amount” of the obligations of the
Borrower or any of its Restricted Subsidiaries in respect of any Hedging
Agreement at any time will be the maximum aggregate amount (after giving effect
to any netting agreements) that the Borrower or such Restricted Subsidiary would
be required to pay if such Hedging Agreement were terminated at such time;
provided, however, that Material Debt shall not include any guarantees or
Letters of Credit in respect of any performance, surety, reclamation or similar
bonds securing obligations of the Borrower or any of its Subsidiaries.

 

“Maturity Date” means December 16, 2013.

 

“Membership Interest Purchase Agreement” means the Membership Interest Purchase
Agreement, dated as of March 8, 2009, by and between Rio Tinto Sage LLC and Arch
Coal, Inc.

 

“Mine” means any excavation or opening into the earth now and hereafter made
from which coal is or can be extracted from any of the Real Properties.

 

“Mining Laws” means any and all applicable federal, state, local and foreign
statutes, laws, regulations, legally-binding guidance, ordinances, rules,
judgments, orders, decrees or common law causes of action relating to mining
operations and activities under the Mineral Leasing Act of 1920, the Federal
Coal Leasing Amendments Act or the Surface Mining Control and Reclamation Act,
each as amended or its replacement, and their state and local counterparts or
equivalents.

 

“Mining Lease” means a lease, license or other use agreement which provides the
Borrower or any Subsidiary the real property and water rights, other interests
in land, including coal, mining and surface rights, easements, rights of way and
options, and

 

25

--------------------------------------------------------------------------------

 

rights to timber and natural gas (including coalbed methane and gob gas)
necessary or desirable in order to recover coal from any Mine.  Leases which
provide Borrower or any other Subsidiary the right to construct and operate a
conveyor, crusher plant, silo, load out facility, rail spur, shops, offices and
related facilities on the surface of the Real Property containing such reserves
shall also be deemed a Mining Lease.

 

“Mining Permits” means any and all material permits, licenses, registrations,
certifications, exemptions and any other authorization required under any
applicable Mining Law or otherwise necessary to recover coal from any Mine being
operated by the Borrower or any other Subsidiary.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Mortgage” means a mortgage, deed of trust, assignment of leases and rents,
leasehold mortgage or other security document granting a Lien on any Mortgaged
Property, Fixture or As-Extracted Collateral (as such terms are defined in the
UCC) to secure the Secured Obligations.  Each Mortgage must be reasonably
satisfactory in form and substance to the Administrative Agent.

 

“Mortgaged Property” means any Real Property that is either (i) identified as a
Mortgaged Property on Schedule 3.05(e) or (ii) subject to a Transaction Lien
granted after the Effective Date pursuant to Section 5.13 or 5.14.

 

“Multiemployer Plan” means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

 

“Non-Recourse Debt” means Debt (i) as to which neither the Borrower nor any of
its Restricted Subsidiaries provides a Guarantee or other support in the form of
keep-well and (ii) as to which the holders of such Debt do not otherwise have
recourse to the stock or assets of the Borrower or any of its Restricted
Subsidiaries (other than the Equity Interests of an Excluded Subsidiary).

 

“Note” means a promissory note made by the Borrower in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibit F
hereto, as may be amended, supplemented or modified from time to time.

 

“Notice of LC Request” has the meaning specified in Section 2.05(b).

 

“Other Taxes” means any and all present or future recording, stamp, documentary,
excise, transfer, sales, property or similar taxes, charges or levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

 

“Parent” has the meaning specified in the introductory paragraph hereto.

 

“Participant Register” has the meaning specified in Section 9.04(h).

 

“Participants” has the meaning specified in Section 9.04(e).

 

26

--------------------------------------------------------------------------------

 

“PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56).

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

 

“Perfection Certificate” means a certificate in the form of Exhibit E to the
Security Agreement or any other form approved by the Administrative Agent.

 

“Permit Area” means, with respect to any Mine, all land covered by the Mining
Permits with respect to such Mine.

 

“Permitted Business” means the mining, production, marketing and sale of coal
and any business that is ancillary or complementary to the foregoing.

 

“Permitted Hedging Agreements” means Hedging Agreements entered into in the
ordinary course of business of the Borrower and its Restricted Subsidiaries to
hedge interest rate, foreign currency or commodity risk or otherwise for
non-speculative purposes (regardless of whether such agreement or instrument is
classified as a “derivative” pursuant to SFAS 133 and required to be
marked-to-market).

 

“Permitted Holders” means any or all of the following: (a) Rio Tinto plc,
(b) Parent, (c) Holdings and (d) any direct or indirect holding company both the
Capital Stock and the Voting Stock of which (or in the case of a trust, the
beneficial interests in which) are owned directly or indirectly, at least 80% by
Rio Tinto plc and/or Parent.

 

“Permitted Liens” means:

 

(a)           Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.05;

 

(b)           carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.05;

 

(c)           pledges or deposits made in the ordinary course of business (i) in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations or to secure liabilities to insurance carriers
under insurance arrangements in respect of such obligations, (ii) to secure
payment of reclamation liabilities or (iii) in support of obligations under
existing coal sales contracts (and extensions or renewals thereof on similar
terms);

 

(d)           existing or future grants of coal bed methane leases or oil and
gas or other hydrocarbon leases granted by any Governmental Authority or other
third party and associated pipelines, collection facilities, accessways and
easements pertaining to the same;

 

27

--------------------------------------------------------------------------------

 

(e)           surface use agreements, easements, zoning restrictions, rights of
way, encroachments, pipelines, leases (other than Capital Lease Obligations),
licenses, special assessments, trackage rights, transmission and transportation
lines related to Mining Leases or mineral right and/or other Real Property
including any reconveyance obligations to a surface owner following mining,
royalty payments, and other obligations under surface owner purchase or
leasehold arrangements necessary to obtain surface disturbance rights to access
the subsurface coal deposits and similar encumbrances on Real Property imposed
by law or arising in the ordinary course of business that do not secure any
monetary obligation and do not materially detract from the value of the affected
property or interfere with the ordinary conduct of business of the Borrower or
any Subsidiary;

 

(f)            pledges, deposits or non-exclusive licenses to use intellectual
property rights of the Borrower or its Subsidiaries to secure the performance of
bids, tenders, trade contracts, leases, public or statutory obligations, surety
and appeal bonds, reclamation bonds, performance bonds and other obligations of
a like nature, in each case in the ordinary course of business;

 

(g)           judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article 7;

 

(h)           Production Payments, royalties, dedication of reserves under
supply agreements, Liens in favor of the owner in connection with any Mining
Leases, or similar rights or interests granted, taken subject to, or otherwise
imposed on properties consistent with normal practices in the mining industry
and any precautionary UCC financing statement filing in respect of leases (and
not any Debt) entered into the ordinary course of business;

 

(i)            rights of owners of interests in overlying, underlying or
intervening strata and/or mineral interests not owned by Borrower or one of its
Subsidiaries, with respect to Real Property where the Borrower or applicable
Subsidiary’s ownership is only surface or severed mineral or is otherwise
subject to mineral severances in favor of one or more third parties;

 

(j)            layback arrangements, joint operation arrangements and similar
arrangements with adjoining coal operators;

 

(k)           Liens for Specified Coal Agreements arising as a result of
Specified Coal Agreement Obligations or obligations to grant surface or water
rights;

 

(l)            Liens on joint venture interests in favor of joint venture
partners to secure obligations arising under the respective joint venture
agreements;

 

(m)          with respect to water rights, Liens imposed by the doctrine of
prior appropriation (including seniority of water rights), the necessity to put
the water to a beneficial use, restrictions imposed by the applicable
Governmental

 

28

--------------------------------------------------------------------------------

 

Authority and the actual availability of water (including restrictions on the
use of ground water);

 

(n)           farm, grazing, hunting, recreational and residential leases with
respect to which the Borrower or any Subsidiary is a lessor encumbering portions
of the Real Properties to the extent such leases would be granted or permitted
by a prudent operator of mining properties similar in use and configuration to
Real Properties.

 

(o)           encumbrances typically found upon Real Property used for mining
purposes in the applicable jurisdiction in which the applicable Real Property is
located to the extent such encumbrances would be permitted or granted by a
prudent operator of mining property similar in use and configuration to such
Real Property (e.g., surface rights agreements, wheelage agreements and
reconveyance agreements);

 

(p)           rights and easements of owners (i) of undivided interests in any
of the Real Property where the Borrower or its Subsidiaries own less than 100%
of the fee interest, (ii) of interests in the surface of any Real Property where
the Borrower or its Subsidiaries do not own or lease such surface interest,
(iii) and lessees, if any, of coal or other minerals (including oil, gas and
coalbed methane) where the Borrower or its Subsidiaries do not own such coal or
other minerals, and (iv) and lessees of other coal seams and other minerals
(including oil, gas and coalbed methane) not owned or leased by the Borrower or
its Subsidiaries;

 

(q)           with respect to any Real Property in which Borrower or any
Subsidiary holds a leasehold interest, terms, agreements, provisions,
conditions, and limitations (other than royalty and other payment obligations
which are otherwise permitted hereunder) contained in the leases granting such
leasehold interest and the rights of lessors thereunder (and their heirs,
executors, administrators, successors, and assigns);

 

(r)            rights of others to subjacent or lateral support and absence of
subsidence rights or to the maintenance of barrier pillars or restrictions on
mining within certain areas as provided by any Mining Lease, unless in each case
waived by such other person;

 

(s)           Liens securing obligations in respect of trade-related letters of
credit permitted under Section 6.01(xii) covering only the goods (or the
documents of title in respect of such goods) financed by such letters of credit
and the proceeds and products thereof; and

 

(t)            Liens on the escrow account and Investments in such escrow
account, in each case to the extent permitted under Section 6.04(m).

 

provided, that the term “Permitted Liens” shall not include any Lien that
secures Debt for borrowed money or other Funded Debt and such Liens, in the
aggregate, do not have

 

29

--------------------------------------------------------------------------------

 

a Material Adverse Effect on the operation of the business in the ordinary
course of the Credit Parties as currently conducted.

 

“Permitted Receivables Financing” means any receivables financing facility or
arrangement pursuant to which a Securitization Subsidiary purchases or otherwise
acquires Receivables of the Borrower or any Restricted Subsidiary and enters
into a third party financing thereof on terms that the managing member of the
Borrower has concluded are customary and market terms fair to the Borrower and
its Restricted Subsidiaries.

 

“Permitted Tax Distributions” means distributions by the Borrower to Holdings
and other equity holders of the Borrower in an aggregate amount with respect to
any period not in excess of (i) the cumulative amount of Taxes that the Borrower
and its Subsidiaries would have been required to pay in respect of all periods
from the Effective Date through the end of such period (including required
payments with respect to estimated income taxes so as to avoid penalties)
calculated (x) as if the Borrower were taxable as a United States corporation on
a stand-alone basis with no carryforwards from periods prior ending on or prior
to the Effective Date, (y) as if Borrower had a carryover basis in the assets it
received from Parent and its affiliates (i.e. determined without regard to any
Basis Adjustments), and (z) as if the basis of any other assets of Borrower were
determined without regard to any Basis Adjustments, over (ii) the sum of (w) the
amount of any such Taxes actually paid by the Borrower and its Subsidiaries in
respect of such periods and (v) the amount of all prior Permitted Tax
Distributions.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Plan” means any employee pension benefit plan (except a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) a “contributing sponsor” as defined in
Section 4001(a)(13) of ERISA.

 

“Pre-Exchange Transfer” means any transfer of one or more RTEA Units that occurs
prior to an Exchange of such RTEA Units.

 

“Primary Syndication” means the period of time beginning on the Effective Date
and ending on the date which is forty-five (45) days after the Effective Date.

 

“Prime Rate” means the rate of interest per annum published by the Wall Street
Journal, U.S. edition, from time to time, as the prime rate.

 

“Private Coal Agreement” means an agreement between the Borrower and/or one or
more of its Subsidiaries, on the one hand, and a seller or lessee (in each case,
that is not a Governmental Authority) (the “Transferee”) under which the
Borrower and its Subsidiaries acquire coal through (i) a lease from such
Transferee, (ii) the purchase of one or more coal deposit or other assets from
such Transferee or (iii) the exchange of coal

 

30

--------------------------------------------------------------------------------

 

assets between the Borrower and its Subsidiaries, on the one hand, and such
Transferee, on the other.

 

“Production Payments” means with respect to any Person, all production payment
obligations and other similar obligations with respect to coal and other natural
resources of such Person that are recorded as a liability or deferred revenue on
the financial statements of such Person in accordance with GAAP.

 

“Productive Assets” means long-term or capital assets (or all of the capital
stock or other Equity Interests of a Person holding principally long-term or
capital assets and that becomes a Restricted Subsidiary) that are used or usable
by the Borrower or its Restricted Subsidiaries in a Permitted Business.

 

“Pro Forma Basis”, “Pro Forma Compliance” and “Pro Forma Effect” means, for
purposes of calculating compliance with each of the financial covenants set
forth in Section 6.11, Section 6.12 and Section 6.13 in respect of a Specified
Transaction, that the following transactions in connection therewith shall be
deemed to have occurred as of the first day of the applicable period of
measurement in such covenant:  (a) income statement items (whether positive or
negative) attributable to the property or Person subject to such Specified
Transaction, (i) in the case of a Disposition of all or substantially all of the
assets or Equity Interests of any Subsidiary or of any division or product line
or coal or other mine or mineral reserves, the Person or property so Disposed of
shall be excluded, and (ii) in the case of an Acquisition, the Person or
property so acquired shall be included, (b) any retirement of Debt and (c) any
incurrence or assumption of Debt by the Borrower or any Restricted Subsidiary in
connection therewith (and if such Debt has a floating or formula rate, such Debt
shall have an implied rate of interest for the applicable period for purposes of
this definition determined by utilizing the rate which is or would be in effect
with respect to such Debt as at the relevant date of determination).

 

“Real Property” shall mean, collectively, all right, title and interest of the
Borrower or any other Subsidiary (including any leasehold or mineral estate) in
and to any and all parcels of real property owned or operated by the Borrower or
any other Subsidiary, whether by lease, license or other use agreement,
including but not limited to, coal leases and surface use agreements, together
with, in each case, all Improvements and appurtenant fixtures (including all
conveyors, preparation plants or other coal processing facilities, silos, shops
and load out and other transportation facilities), easements and other property
and rights incidental to the ownership, lease or operation thereof, including
but not limited to, access rights, water rights and extraction rights for
minerals.

 

“Receivables” means accounts receivable (including all rights to payment)
created by or arising from the sale of goods, leases of goods or the rendition
of services, no matter how evidenced (including in the form of a chattel paper).

 

“Register” has the meaning specified in Section 9.04(c).

 

31

--------------------------------------------------------------------------------

 

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and its Affiliates.

 

“Required Lenders” means, at any time, Lenders having Revolving Credit Exposures
and unused Commitments representing more than 50% of the sum of the total
Revolving Credit Exposures and unused Commitments at such time; provided that
the unused Commitment of, and the portion of the total Revolving Credit
Exposures held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.

 

“Restricted Payment” means any (i) dividend or other distribution (whether in
cash, securities or other property) with respect to any Equity Interest in the
Borrower or any of its Subsidiaries, or any payment or other distribution
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any Equity Interest in the Borrower
or any of its Subsidiaries or (ii) any prepayment, purchase, repurchase
redemption of, or other payment in respect of, Subordinated Debt other than
payments of interest when due and principal when due in accordance with the
scheduled maturity thereof; provided that indemnity payments under the Master
Separation Agreement shall not be deemed to be Restricted Payments even if
calculated with reference to percentage equity ownership of the Borrower or
Holdings.

 

“Restricted Subsidiary” of a Person means any Subsidiary of the Borrower other
than an Excluded Subsidiary.  Schedule 1.01(a) sets forth all Restricted
Subsidiaries as of the Effective Date.

 

“Revolving Credit Exposure” means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender’s Revolving Loans and its
LC Exposure and Swingline Exposure at such time.

 

“RTA” has the meaning specified in the introductory paragraph hereto.

 

“RTEA Units” means any membership units in the Borrower that were owned by
Parent or its Affiliate prior to the IPO.

 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc.

 

“SEC” means the Securities and Exchange Commission.

 

“Second Lien Senior Secured Debt” means Debt of the Credit Parties secured by
Liens on the Collateral on a junior basis pursuant to intercreditor
arrangements, which shall contain customary market terms and conditions for
second lien financings and otherwise be in form and substance reasonably
satisfactory to the Administrative Agent.

 

“Secured Guarantee” has the meaning specified in Section 1 of the Security
Agreement.

 

32

--------------------------------------------------------------------------------

 

“Secured Obligations” has the meaning specified in Section 1 of the Security
Agreement.

 

“Secured Parties” has the meaning specified in Section 1 of the Security
Agreement.

 

“Securitization Subsidiary” means a Subsidiary of the Borrower (a) that is
designated a “Securitization Subsidiary” by the managing member of the Borrower,
(b) that does not engage in, and whose charter prohibits it from engaging in,
any activities other than Permitted Receivables Financings and any activity
necessary, incidental or related thereto, (c) no portion of the Debt or any
other obligation, contingent or otherwise, of which (x) is Guaranteed by the
Borrower or any Restricted Subsidiary of the Borrower, (y) is recourse to or
obligates the Borrower or any Restricted Subsidiary of the Borrower in any way,
or (z) subjects any property or asset of the Borrower or any Restricted
Subsidiary of the Borrower, directly or indirectly, contingently or otherwise,
to the satisfaction thereof, and (d) with respect to which neither the Borrower
nor any Restricted Subsidiary of the Borrower (other than an Excluded
Subsidiary) has any obligation to maintain or preserve its financial condition
or cause it to achieve certain levels of operating results, other than, in
respect of clauses (c) and (d), pursuant to customary representations,
warranties, covenants and indemnities entered into in connection with a
Permitted Receivables Financing.

 

“Security Agreement” means the Guarantee and Security Agreement among the Credit
Parties and the Administrative Agent, substantially in the form of Exhibit C.

 

“Security Documents” means the Security Agreement, the Mortgages and each other
security agreement, instrument or document executed and delivered pursuant to
Section 5.13 or 5.14 to secure any of the Secured Obligations.

 

“Senior Notes” means the senior unsecured notes to be issued by the Borrower on
or before the Effective Date in the aggregate principal amount of $600,000,000
and the Debt represented thereby.

 

“Senior Notes Documents” means the indenture under which the Senior Notes are
issued and all other instruments, agreements and other documents evidencing or
governing the Senior Notes or providing for any Guarantee or other right in
respect thereof.

 

“Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person’s ability to
pay such debts and liabilities as they mature and (d) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person’s property would constitute an unreasonably
small capital.  The amount of

 

33

--------------------------------------------------------------------------------

 

contingent liabilities at any time shall be computed as the amount that, in
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.

 

“Specified Coal Agreement Obligations” means installment or deferred payment
obligations or royalty payment obligations or obligations in connection with the
acquisition of related surface rights, in each case, in connection with a
Specified Coal Agreement owed solely to the seller or lessor thereunder (and not
to a bank or other third-party financer), but, (i) in the case of any such
obligations under a Private Coal Agreement, only to the extent that the proven
and probable coal reserves and other non-reserve coal deposits acquired under
all such Private Coal Agreements do not in the aggregate exceed 15% of the total
proven and probable coal reserves and other non-reserve coal deposits of the
Borrower and its Restricted Subsidiaries at such time, and (ii) excluding, in
any event, any Funded Debt.

 

“Specified Coal Agreements” means any LBA, LBM, State Coal Lease and Private
Coal Agreements.

 

“Specified Transaction” means any (a) Disposition of all or substantially all
the assets of or all the Equity Interests of any Restricted Subsidiary or of any
division or product line or coal or other mine or mineral reserves of any
Restricted Subsidiary, (b) Acquisition, or (c) the proposed incurrence of Debt
or making of a Restricted Payment in respect of which compliance with the
financial covenants set forth in Section 6.11, Section 6.12 and Section 6.13 is
by the terms of this Agreement required to be calculated on a Pro Forma Basis.

 

“State Coal Lease” means the acquisition of coal owned by a State in accordance
with the coal leasing regulations of such State.

 

“Statutory Reserve Adjustment” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Federal Reserve Board to which the Administrative Agent is
subject with respect to eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board).  Such
reserve percentages will include those imposed pursuant to such Regulation D. 
Eurodollar Loans will be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation.  The Statutory Reserve
Adjustment will be adjusted automatically on and as of the effective date of any
change in any applicable reserve percentage.

 

“Subordinated Debt” means Debt of any Credit Party that, by its terms, is
subordinated in right of payment to the obligations hereunder in respect of the
Loans (but not including Second Lien Senior Secured Debt that is subordinated
only in respect of the security interest on the Collateral).

 

34

--------------------------------------------------------------------------------

 

“subsidiary” means, with respect to any Person (the “parent”) at any date,
(a) any corporation, joint venture, limited liability company, partnership 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 and (b) any
other corporation, limited liability company, partnership or other entity of
which securities or other ownership interests representing more than 50% of the
equity or 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 by the parent and/or one or more of its
subsidiaries.

 

“Subsidiary” means any subsidiary of the Borrower.

 

“Swingline Exposure” means, at any time, the aggregate outstanding principal
amount of the Swingline Loans at such time.  The Swingline Exposure of any
Lender at any time will be its Applicable Percentage of the total Swingline
Exposure at such time.

 

“Swingline Lender” means Morgan Stanley Senior Funding, Inc., in its capacity as
the lender of Swingline Loans hereunder.

 

“Swingline Loan” means a Loan made pursuant to Section 2.04.

 

“Taxes” means any present or future tax, levy, import, duty, charge, deduction,
withholding, assessment or fee of any nature (including interest, penalties, and
additions thereto) that is imposed by any Governmental Authority or other taxing
authority.

 

“Tax Receivable Agreement” or “TRA” means the Tax Receivable Agreement to be
entered into between the Parent and Holdings.

 

“Transaction Documents” means, collectively, the Acquisition Documents, the IPO
Registration Statement, the Senior Notes Documents and the Loan Financing
Documents.

 

“Transaction Liens” means the Liens on Collateral granted by the Credit Parties
under the Security Documents.

 

“Transactions” means collectively, the transactions to occur on or prior to the
Effective Date pursuant to the Transaction Documents, including without
limitation the Loan Financing Transactions, the IPO and the issuance of the
Senior Notes.

 

“Type”, when used with respect 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 LIBO Rate or the Alternate Base Rate.

 

“UCP” means The Uniform Customs and Practice for Documentary Credits, 2007
Revision, ICC Publication No. 600.

 

“Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Plan’s
assets,

 

35

--------------------------------------------------------------------------------

 

determined in accordance with the assumptions used for funding the Plan pursuant
to Section 412 of the Code for the applicable plan year.

 

“United States” means the United States of America.

 

“Unused Commitment Fee” has the meaning set forth in Section 2.11.

 

“U.S. Government Obligations” means obligations issued or directly and fully
guaranteed or insured by the United States or by any agent or instrumentality
thereof, provided that the full faith and credit of the United States is pledged
in support thereof.

 

“Voting Stock” means with respect to any Person, Capital Stock of any class or
kind ordinarily having the power to vote for the election of directors, managers
or other voting members of the governing body of such Person.

 

“Withdrawal Liability” means 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.

 

“Wholly-Owned Restricted Subsidiary” means at any time a Restricted Subsidiary
all of the outstanding Equity Interests of which (other than directors’
qualifying shares) are at such time owned by the Borrower and/or one or more
Wholly-Owned Restricted Subsidiaries of the Borrower.

 

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 (including
those incorporated by reference to another document) apply equally to the
singular and plural forms of the terms defined.  Whenever the context may
require, any pronoun includes 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 agreement,
instrument or 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 (e) the word
“property”

 

36

--------------------------------------------------------------------------------

 

shall be construed to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.

 

Section 1.04.  Accounting Terms.  Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance
with GAAP.

 

ARTICLE 2
THE CREDITS

 

Section 2.01.  Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees to make Revolving Loans to the Borrower from time to
time during the Availability Period in an aggregate principal amount that will
not result in (a) such Lender’s Revolving Credit Exposure exceeding such
Lender’s Commitment or (b) the sum of the total Revolving Credit Exposures
exceeding the total Commitments.  Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Loans.

 

Section 2.02.  Loans and Borrowings.  (a)  Each Revolving Loan shall be made as
part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in
accordance with their respective Commitments.  The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several
and no Lender shall be responsible for any other Lender’s failure to make Loans
as required.

 

(b)           Subject to Section 2.13, each Revolving Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith.  Each Swingline Loan shall be an ABR Loan.  Each Lender
at its option may 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 Borrower to repay such
Loan in accordance with the terms of this Agreement.

 

(c)           At the commencement of each Interest Period for any Eurodollar
Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $5,000,000.  At the time that
each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $5,000,000;
provided that an ABR Revolving Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the total Commitments or that is required
to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.05(e).  Each Swingline Loan shall be in an amount that is an integral
multiple of $500,000 and not less than $500,000.  Borrowings of more than one
Type and Class may be outstanding at the same time; provided that there shall
not at any time be more than a total of ten (10) Eurodollar Revolving Borrowings
outstanding.

 

37

--------------------------------------------------------------------------------

 

(d)           Notwithstanding any other provision of this Agreement, the
Borrower 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 Maturity Date.

 

Section 2.03.  Requests for Revolving Borrowings.  To request a Revolving
Borrowing, the Borrower shall notify the Administrative Agent of such request by
telephone (a) 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 (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New
York City time, one Business Day before the date of the proposed Borrowing;
provided that any such notice of an ABR Revolving Borrowing to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.05(e) may be
given not later than 10:00 a.m., New York City time, on the date 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 Borrowing Request in a form approved by the Administrative Agent and
signed by the Borrower.  Each such telephonic and written Borrowing Request
shall specify the following information in compliance with Section 2.02:

 

(i)            the aggregate amount of the requested Borrowing;

 

(ii)           the date of such Borrowing, which shall be a Business Day;

 

(iii)          whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;

 

(iv)          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”; and

 

(v)           the location and number of the Borrower’s account to which funds
are to be disbursed, which shall comply with the requirements of Section 2.06.

 

If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing.  If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the Borrower shall be deemed to have selected an Interest Period of one month’s
duration, subject to the definition of Interest Period.  Promptly following
receipt of a Borrowing Request in accordance with this Section, 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.

 

Section 2.04.  Swingline Loans.  (a)  Subject to the terms and conditions set
forth herein, the Swingline Lender agrees to make Swingline Loans to the
Borrower from time to time during the 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 $10,000,000
or (ii) the sum of the total Revolving Credit Exposures exceeding the total
Commitments; provided that the Swingline Lender shall

 

38

--------------------------------------------------------------------------------

 

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 Borrower may borrow, prepay and reborrow Swingline Loans. 
Notwithstanding anything to the contrary contained in this Section 2.04 or
elsewhere in this Agreement, the Swingline Lender shall not be obligated to make
any Swingline Loan at a time when a Lender is a Defaulting Lender unless the
Swingline Lender has entered into arrangements satisfactory to it and the
Borrower to eliminate the Swingline Lender’s risk with respect to the Defaulting
Lender’s or Defaulting Lenders’ participation in such Swingline Loans, including
by cash collateralizing such Defaulting Lender’s or Defaulting Lenders’
Applicable Percentage of the outstanding Swingline Loans.

 

(b)           To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, 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 the Borrower.  The Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to the general
deposit account of the 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 2.05(e), by remittance to the relevant Issuing Bank) by
3:00 p.m., New York City time, on the requested date of such Swingline Loan.

 

(c)           The Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Lenders to acquire participations on such Business Day
in all or a portion of the Swingline Loans outstanding.  Such notice shall
specify the aggregate amount of Swingline Loans in which Lenders will
participate.  Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Lender, specifying in such notice such Lender’s
Applicable Percentage of such Swingline Loan or Loans.  Each 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 Applicable Percentage of such Swingline Loan or Loans.  Each
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, subject to Section 2.16.  Each Lender shall comply with
its obligation under this paragraph by wire transfer of immediately available
funds, in the same manner as provided in Section 2.06 with respect to Loans made
by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
the Swingline Lender the amounts so received by it from the Lenders.  The
Administrative Agent shall notify the 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 the
Borrower (or other party on behalf of the Borrower) in respect of a Swingline
Loan after receipt by the

 

39

--------------------------------------------------------------------------------

 

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 Lenders that shall have made their payments pursuant to this paragraph and
to the Swingline Lender, as their interests may appear; provided that any such
payment so remitted shall be repaid to the Swingline Lender or to the
Administrative Agent, as applicable, if and to the extent such payment is
required to be refunded to the Borrower for any reason.  The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in the payment thereof.

 

Section 2.05.  Letters of Credit.  (a) General.  Subject to the terms and
conditions set forth herein, each Issuing Bank agrees to issue and amend
(including, without limitation, to increase or decrease the stated amount of
each Letter of Credit) at the request and for the account of the Borrower, one
or more irrevocable standby letters of credit denominated in dollars in such
Issuing Bank’s then current standard form with such revisions as shall be
requested by the Borrower and approved by such Issuing Bank (each, a “Letter of
Credit”), at any time and from time to time during the Availability Period, in
an aggregate amount that will not result in (a) the sum of the total Revolving
Credit Exposures exceeding the total Commitments (disregarding, solely for
purposes of this clause (a), the Commitment and outstanding Loans of any
Defaulting Lender at such time) and (b) the aggregate face amount in respect of
all Letters of Credit issued and outstanding (together with any related and
unpaid reimbursement obligations) by such Issuing Bank (other than Morgan
Stanley Bank, N.A. and Credit Suisse AG, Cayman Islands branch) exceeding the
limit thereof (if any) separately agreed in writing between such Issuing Bank
and the Borrower and set forth for such Issuing Bank in the Register maintained
by the Administrative Agent pursuant to Section 9.04(c).  In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any Notice of LC Request submitted by the Borrower or any
Letter of Credit, the terms and conditions of this Agreement shall control.  The
relevant Issuing Bank shall not be under any obligation to issue a Letter of
Credit if any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank
from issuing any Letter of Credit, or any law, rule, regulation or orders of any
Governmental Authority applicable to such Issuing Bank or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over such Issuing Bank shall prohibit, or request
that such Issuing Bank refrain from, the issuance of letters of credit generally
or any Letter of Credit in particular or shall impose upon such Issuing Bank
with respect to any Letter of Credit any restriction, reserve or capital
requirement (for which such Issuing Bank is not otherwise compensated hereunder)
not in effect on the date hereof, or shall impose upon such Issuing Bank any
unreimbursed loss, cost or expense that was not applicable on the date hereof
and that such Issuing Bank in good faith deems material to it.

 

(b)           Notice of 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 Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the relevant Issuing Bank) to
the relevant Issuing Bank and the Administrative Agent (at least two
(2) Business Days in advance of the requested date of issuance, amendment,

 

40

--------------------------------------------------------------------------------

 

renewal or extension) a notice substantially in the form of Exhibit D hereto
(the “Notice of LC Request”) requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the requested date of issuance of such Letter of Credit (which shall
be a Business Day) and, as applicable, specifying the date of amendment, renewal
or extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Letter of Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit.  If requested by the Issuing Bank, the 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.  Such Issuing Bank
will issue, amend, renew or extend the requested Letter of Credit for the
account of the Borrower in such Issuing Bank’s then current standard form with
such revisions as shall be requested by the Borrower and approved by such
Issuing Bank within two (2) Business Days of the date of the receipt of the
Notice of LC Request and all related information required by such Issuing Bank
to permit it to comply (and to determine that it is in compliance) with
applicable laws and its own internal policies.  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 Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension the sum of the total Revolving Credit Exposures shall not
exceed the total Commitments.

 

(c)           Expiration Date.  Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five (5) Business Days prior to the Maturity Date; provided that any
Letter of Credit with a one-year tenor may (x) be issued on a date that is
within one year of the Maturity Date, or (y) provide for the automatic renewal
thereof for additional one-year periods, (which, in no event, shall extend
beyond the date referred to in clause (ii) of this paragraph (c) unless, in each
case, on the date of issuance of such Letters of Credit, such Letters of Credit
are cash collateralized in a manner reasonably acceptable to the relevant
Issuing Bank.

 

(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 relevant Issuing Bank or the Lenders, such
Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from
such Issuing Bank, a participation in such Letter of Credit equal to such
Lender’s Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit.  In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent, for the account of the relevant Issuing Bank, such
Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph
(e) of this Section, or of any reimbursement payment required to be refunded to
the Borrower 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

 

41

--------------------------------------------------------------------------------

 

Default or reduction or termination of the Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever, subject to Section 2.16.

 

(e)           Reimbursement.  If any Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the Borrower shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 5:00 p.m., New York City time, on the date that such
LC Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 3:00 p.m., New York City time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 5:00 p.m., New York City time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to
3:00 p.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that,
notwithstanding the amount requirements otherwise set forth in Section 2.02, the
Borrower may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.03 or 2.04 that such payment be financed with an
ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the
extent so financed, the Borrower’s obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Borrowing or Swingline
Loan.  If the Borrower fails to make such payment when due, the Administrative
Agent shall notify each Lender of the applicable LC Disbursement, the payment
then due from the Borrower in respect thereof and such Lender’s Applicable
Percentage thereof.  Promptly following receipt of such notice, each Lender
shall pay to the Administrative Agent its Applicable Percentage of the payment
then due from the Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and the Administrative
Agent shall promptly pay to the relevant Issuing Bank the amounts so received by
it from the Lenders.  Promptly following receipt by the Administrative Agent of
any payment from the Borrower pursuant to this paragraph, the Administrative
Agent shall distribute such payment to the relevant Issuing Bank or, to the
extent that Lenders have made payments pursuant to this paragraph to reimburse
such Issuing Bank, then to such Lenders and such Issuing Bank as their interests
may appear.  Any payment made by a Lender pursuant to this paragraph to
reimburse an 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 Borrower of its obligation to reimburse such LC
Disbursement.

 

(f)            Obligations Absolute; Claims Against Issuing Banks; Waivers;
Exculpations; Limitations of Liability; Ratification.  The Borrower’s
obligations hereunder to reimburse LC Disbursements as provided in paragraph
(e) of this Section shall be absolute, unconditional and irrevocable and shall
be performed strictly in accordance with the terms of this Agreement,
irrespective of:

 

(i)            any lack of validity or enforceability relating to or against the
Borrower or any Credit Party for any reason of this Agreement or the Loan
Documents.

 

42

--------------------------------------------------------------------------------

 

(ii)           if any other person shall at any time have Guaranteed any of the
Borrower’s obligations hereunder or granted any security therefore, any change
in the time, manner or place of payment of or any other term of the obligations
of such other person,

 

(iii)          any exchange, change or release of any Collateral, or any release
or waiver of any Guarantee, for any of the Borrower’s obligations hereunder,

 

(iv)          the existence of any claim, setoff, defense or other right that
the Borrower or any other person may have at any time against any beneficiary of
the Letter of Credit (including any second or substitute beneficiary or
transferee under a transferable letter of credit and any successor of a
beneficiary by operation of law), any assignee of proceeds of the Letter of
Credit, any Issuing Bank or any other person, whether in connection with any
transaction contemplated by this Agreement, a Letter of Credit or any unrelated
transaction, or

 

(v)           any presentation under a Letter of Credit being forged,
fraudulent, invalid, insufficient or abusive or any statement therein being
untrue or inaccurate,

 

(vi)          any payment under a Letter of Credit against a presentation that
does not comply with the terms and conditions of the Letter of Credit, or

 

(vii)         any other circumstance that might, but for the provisions of this
Section, constitute a legal or equitable discharge of or defense to any or all
of the Borrower’s obligations hereunder.

 

(g)           Without limiting the foregoing, it is expressly agreed that the
absolute, unconditional and irrevocable obligation of the Borrower to reimburse
or pay the relevant Issuing Bank pursuant to this Agreement will not be excused
by ordinary negligence, gross negligence, wrongful conduct or willful misconduct
(as finally determined by a court of competent jurisdiction) of such Issuing
Bank.  However, the foregoing shall not excuse the relevant Issuing Bank from
liability to the Borrower in any independent action or proceeding brought by the
Borrower against such Issuing Bank following such reimbursement or payment by
the Borrower to the extent of any unavoidable direct damages suffered by the
Borrower that are caused directly by such Issuing Bank’s gross negligence or
willful misconduct; provided that (i) such Issuing Bank shall be deemed to have
acted with due diligence and reasonable care if it acts in accordance with
standard letter of credit practice of commercial banks located in New York City;
and (ii) the Borrower’s aggregate remedies against such Issuing Bank for
wrongfully honoring a presentation or wrongfully retaining honored documents
shall in no event exceed the aggregate amount paid by the Borrower to such
Issuing Bank with respect to the honored presentation, plus interest.

 

(h)           Without limiting any other provision of this Agreement, the
relevant Issuing Bank and, as applicable, its correspondents (if any):

 

43

--------------------------------------------------------------------------------

 

(i)            may rely upon any oral, telephonic, facsimile, electronic,
written or other communication believed in good faith (i.e., honesty in fact) to
have been authorized by the Borrower, whether or not given or signed by an
authorized person,

 

(ii)           shall not be responsible for errors, omissions, interruptions or
delays in transmission or delivery of any message, advice or document in
connection with a Letter of Credit, whether transmitted by courier, mail, telex,
any other telecommunication, or otherwise (whether or not encrypted), or for
errors in interpretation of technical terms or in translation (and such Issuing
Bank and its correspondents may transmit Letter of Credit terms without
translating them),

 

(iii)          shall not be responsible for the identity or authority of any
signer or the form, accuracy, genuineness, falsification or legal effect of any
presentation or payment instruction under a Letter of Credit if such
presentation or instruction appears on its face to be in compliance with a
Letter of Credit, even if the purported signer is a customer of such Issuing
Bank or its signature is otherwise known to such Issuing Bank,

 

(iv)          shall not be responsible for any acts or omissions by, or the
solvency of, the beneficiary, any nominated person or any other person,

 

(v)           may honor any presentation under a Letter of Credit (A) which
appears on its face to substantially or reasonably comply with the terms and
conditions of a Letter of Credit, whether or not it appears on its face to
strictly, exactly or literally comply, (B) which is or appears on its face to
have been signed or presented by any purported successor of the beneficiary or
any other party in whose name a Letter of Credit requires or authorizes that any
draft or other document be signed, presented or issued, including any
administrator, executor, trustee in bankruptcy, liquidator, receiver, or
successor by merger or consolidation, or (C) which is or appears on its face to
have been signed or presented by the beneficiary after a change of name of the
beneficiary,

 

(vi)          may replace an original Letter of Credit, waive a requirement for
its presentation, or provide a replacement or copy to the beneficiary,

 

(vii)         may assert or waive application of any provision of the UCP or the
ISP and other customs and practice primarily benefiting letter of credit
issuers,

 

(viii)        may disregard any requirement of a Letter of Credit that
presentation be made to it at a particular place or by a particular time of day
(but not any requirement for presentation by a particular day),

 

(ix)           may honor a previously dishonored presentation under a Letter of
Credit, whether pursuant to court order, to settle or compromise any claim that
it wrongfully dishonored, or otherwise, and shall be entitled to reimbursement
to

 

44

--------------------------------------------------------------------------------

 

the same extent (if any) as if it had initially honored plus reimbursement of
any interest paid by it,

 

(x)            may pay any paying or negotiating bank (designated or permitted
by the terms of a Letter of Credit) claiming that it rightfully honored or is
entitled to reimbursement or indemnity under the laws or practice of the place
where it is located,

 

(xi)           may make any payment under or in connection with a Letter of
Credit by any means it chooses, including by wire transfer or by check,

 

(xii)          may dishonor any presentation (A) with the Borrower’s
authorization or (B) for which the Borrower is unable or unwilling to reimburse
or indemnify such Issuing Bank; provided that the Borrower recognizes and agrees
that the circumstances described in this paragraph may not relieve such Issuing
Bank or its correspondents from any obligations to the beneficiary, any
confirmer or other nominated person, or any other person,

 

(xiii)         may select any branch or Affiliate of such Issuing Bank or any
other bank to act as advising, transferring, confirming and/or nominated bank
under the law and practice of the place where it is located (if the application
submitted by the Borrower for a Letter of Credit does not prohibit advice,
transfer, confirmation and/or nomination or such selection),

 

(xiv)        shall not be responsible for any other action or inaction taken or
suffered by such Issuing Bank or its correspondents under or in connection with
a Letter of Credit or any presentation or demand, if required or permitted under
any applicable domestic or foreign law or the ISP and/or UCP,

 

(xv)         shall have no obligation to issue any Letter of Credit or take any
action which would violate any provision of law applicable to such Issuing Bank
or a Letter of Credit or which such Issuing Bank determines could subject it to
an unreasonable legal risk or liability, and

 

(xvi)        none of the circumstances described in this Section 2.05(h) shall
impair or waive such Issuing Bank’s rights and remedies against the Borrower or
place such Issuing Bank or any of its correspondents under any liability to the
Borrower.

 

(i)            Neither the relevant Issuing Bank nor any of its correspondents
shall be liable in contract, tort, or otherwise for any punitive, exemplary,
consequential or special damages.  Examples of damages which are indirect and
may not be shifted to or recovered from such Issuing Bank include damages to the
extent attributable to:

 

(i)            any change in the value of any foreign currency or any services,
goods or other property for which payment is supported by a Letter of Credit,

 

45

--------------------------------------------------------------------------------

 

(ii)           forged documents or fraud by the beneficiary or any other person
(except to the extent that such Issuing Bank had knowledge of the foregoing) or

 

(iii)          breach by the beneficiary of any obligation underlying a Letter
of Credit.

 

(j)            Independence; Borrower Responsibility.

 

(i)            The Borrower acknowledges that the rights and obligations of the
relevant Issuing Bank under each Letter of Credit are independent of the
existence, performance or nonperformance of any contract or arrangement
underlying the Letter of Credit, including contracts or arrangements between
such Issuing Bank and the Borrower and contracts or arrangements between the
Borrower and the beneficiary.  The relevant Issuing Bank may, without incurring
any liability to the Borrower or impairing its entitlement to reimbursement or
indemnity under this Agreement, (i) honor a Letter of Credit despite notice from
the Borrower of, and without any duty to inquire into, any defense to honor or
any adverse claim or other right against the beneficiary or any other person, or
(ii) dishonor a Letter of Credit for fraud or forgery.  The relevant Issuing
Bank shall have no duty to request or require the presentation of any document,
including any default certificate, not required to be presented under the terms
and conditions of a Letter of Credit.  The relevant Issuing Bank shall have no
duty to seek any waiver of discrepancies from the Borrower, nor any duty to
grant any waiver of discrepancies which the Borrower approves or requests.

 

(ii)           The Borrower is responsible for preparing or approving the text
of each Letter of Credit.  The Borrower shall use the relevant Issuing Bank’s
then-current standard form together with such amendments thereto as are
acceptable to such Issuing Bank in its sole discretion. The Borrower’s ultimate
responsibility for the final text shall not be affected by any assistance the
relevant Issuing Bank may provide such as drafting or recommending text or by
such Issuing Bank’s use or refusal to use text submitted by the Borrower.  The
Borrower acknowledges that the Borrower has been represented by legal counsel of
its choice in connection with the execution and delivery of this Agreement and
with respect to the issuance and form of each Letter of Credit, that the
relevant Issuing Bank does not represent or warrant that the Letter of Credit
will satisfy the Borrower’s requirements or intentions, and that the Borrower is
responsible for the suitability of the Letter of Credit for the Borrower’s
purposes.

 

(k)           Non-Documentary Conditions.  The Issuing Banks are authorized (but
shall not hereby be required) to honor any presentation without regard to any
non documentary term or condition stated in the Letter of Credit.

 

(l)            Transfers.  If a Letter of Credit is in transferable form, no
Issuing Bank shall have a duty to determine the proper identity of anyone
appearing in any transfer request, draft or other document as transferee, nor
shall any Issuing Bank be responsible for the validity or correctness of any
transfer made pursuant to documents that appear on

 

46

--------------------------------------------------------------------------------

 

their face to be substantially in accordance with the terms and conditions of
the Letter of Credit.

 

(m)          Extensions and Modifications; Waivers of Discrepancies.  This
Agreement shall be binding upon the Borrower with respect to any replacement,
extension, transfer or modification of a Letter of Credit or waiver of
discrepancies authorized by the Borrower.  The Borrower’s obligations to the
relevant Issuing Bank under this Agreement or in respect of each Letter of
Credit shall not be reduced or impaired by any agreement by such Issuing Bank
and the beneficiary extending or shortening such Issuing Bank’s time after
presentation to examine documents or to honor or give notice of discrepancies. 
Except as provided elsewhere in this Agreement or as may be provided in a Letter
of Credit or otherwise specifically agreed to in writing by the relevant Issuing
Bank in its sole discretion, such Issuing Bank shall have no duty to (i) extend
the expiration date or term of any Letter of Credit or (ii) otherwise amend or
modify any Letter of Credit.

 

(n)           Disbursement Procedures.  The relevant Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit.  The relevant Issuing
Bank shall promptly notify the Administrative Agent by telephone (confirmed by
telecopy) or electronic mail of such demand for payment and whether such Issuing
Bank has made or will make an LC Disbursement thereunder; provided that any
failure to give or delay in giving such notice shall not relieve the Borrower of
its obligation to reimburse such Issuing Bank and the Lenders with respect to
any such LC Disbursement.

 

(o)           Interim Interest.  If any Issuing Bank shall make any LC
Disbursement, then, unless the Borrower 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 Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.12(d) shall apply. 
Interest accrued pursuant to this paragraph shall be for the account of the
relevant Issuing Bank, except that interest accrued on and after the date of
payment by any Lender pursuant to paragraph (e) of this Section to reimburse
such Issuing Bank shall be for the account of such Lender to the extent of such
payment.

 

(p)           Replacement of Issuing Bank.  Any Issuing Bank may be replaced at
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank.  The Administrative Agent
shall notify the Lenders of any such replacement of an Issuing Bank.  At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.11(b).  From and after the effective date of any such replacement,
(i) the successor Issuing Bank shall have all the rights and obligations of an
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 to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require.  After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue

 

47

--------------------------------------------------------------------------------

 

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 replacement, but
shall not be required to issue additional Letters of Credit.

 

(q)           Cash Collateralization.  If any Event of Default shall occur and
be continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with LC Exposure representing greater than 50% of
the total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Lenders, 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 Borrower
described in clause (h) or (i) of Article 7.  Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
obligations of the Borrower under this Agreement.  The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account.  Cash in such account shall earn interest and at
the option and sole discretion of the Administrative Agent and at the Borrower’s
risk and expense, amounts in such account may be invested in Cash Equivalents. 
Interest or profits, if any, on such investments shall accumulate in such
account.  Moneys in such account shall be applied by the Administrative Agent to
reimburse the relevant 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 Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated (but
subject to the consent of Lenders with LC Exposure representing greater than 50%
of the total LC Exposure), be applied to satisfy other obligations of the
Borrower under this Agreement.  If the Borrower is required to provide an amount
of cash collateral hereunder as a result of the occurrence of an Event of
Default, such amount (to the extent not applied as aforesaid) shall be returned
to the Borrower within three Business Days after all Events of Default have been
cured or waived.

 

Section 2.06.  Funding of Borrowings.  (a) Each Lender shall make each Loan to
be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as provided
in Section 2.04.  The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the relevant Issuing Bank.

 

(b)           Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to

 

48

--------------------------------------------------------------------------------

 

the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount.  In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, 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 or (ii) in the case of the Borrower, the
interest rate applicable to ABR Loans.  If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing.

 

Section 2.07.  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 Revolving Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request.  Thereafter, the Borrower may elect to
convert such Borrowing to a different Type or to continue such Borrowing and, in
the case of a Eurodollar Revolving Borrowing, may elect Interest Periods
therefor, all as provided in this Section.  The 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.  This Section shall not apply to
Swingline Borrowings, which may not be converted or continued.

 

(b)           To make an election pursuant to this Section, the 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 Borrower were
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  in a form approved by the Administrative Agent and signed by the
Borrower.

 

(c)           Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.03:

 

(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;

 

49

--------------------------------------------------------------------------------

 

(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”.

 

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration, subject to the definition
of the term “Interest Period”.

 

(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 the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Revolving Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein or an Event of Default is continuing, at the end of such
Interest Period such Borrowing shall be converted to an Interest Period of one
month’s duration, subject to the definition of the term “Interest Period”. 
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 the Borrower, then, so long as an Event of Default
is continuing (i) no outstanding Revolving Borrowing may be converted to or
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Revolving Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.

 

Section 2.08.  Termination and Reduction of Commitments.  (a) Unless previously
terminated, the Commitments shall terminate on the Maturity Date.

 

(b)           The Borrower may at any time terminate, or from time to time
reduce, the Commitments; provided that (i) each reduction of the Commitments
shall be in an amount that is an integral multiple of $5,000,000 and not less
than $10,000,000 and (ii) the Borrower shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of the Loans in
accordance with Section 2.10, the sum of the Revolving Credit Exposures would
exceed the total Commitments.

 

(c)           The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under paragraph (b) of this Section at
least three (3) 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 the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or

 

50

--------------------------------------------------------------------------------

 

prior to the specified effective date) if such condition is not satisfied.  Any
termination or reduction of the Commitments shall be permanent.  Each reduction
of the Commitments shall be made ratably among the Lenders in accordance with
their respective Commitments.

 

Section 2.09.  Repayment of Loans; Evidence of Debt.  (a) The Borrower hereby
unconditionally promises to pay (i) to the Administrative Agent for the account
of each Lender the then unpaid principal amount of each Revolving Loan on the
Maturity Date and (ii) to the Swingline Lender the then unpaid principal amount
of each Swingline Loan on the earlier of the 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 four (4) Business Days after such Swingline Loan is made;
provided that on each date that a Revolving Borrowing is made, the Borrower
shall repay all Swingline Loans then outstanding.

 

(b)           Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.

 

(c)           The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type 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 Borrower 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.

 

(d)           The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be conclusive evidence of the existence and
amounts of the obligations recorded therein absent manifest error; 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 obligation of the
Borrower to repay the Loans in accordance with the terms of this Agreement.

 

(e)           Any Lender may request that Loans made by it be evidenced by a
promissory note.  In such event, the Borrower 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) and in a
form approved by the Administrative Agent.  Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) 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).

 

Section 2.10.  Prepayment of Loans.  (a) The Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part,
subject to the provisions of this Section.

 

51

--------------------------------------------------------------------------------

 

(b)           The 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 Revolving Borrowing, not later than 11:00 a.m., New
York City time, three (3) Business Days before the date of prepayment, (ii) in
the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m.,
New York City time, one (1) Business Day before the date of prepayment or
(iii) in the case of prepayment of a Swingline Loan, not later than 12:00 noon,
New York City time, on the date of prepayment.  Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid, which prepayment amount shall
be $1,000,000 or an integral multiple of $500,000 in excess thereof; provided
that, if a notice of prepayment is given in connection with a conditional notice
of termination of the Commitments as contemplated by Section 2.08, then such
notice of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.08.  Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof.   Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section 2.02. 
Each prepayment of a Revolving 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 2.12.

 

(c)           Excess Revolving Credit Exposures.  If, immediately after any
reduction of the Commitments pursuant to Section 2.08(b), the total Revolving
Credit Exposures would exceed the total Commitments, the Borrower shall,
concurrently with such reduction, prepay Revolving Borrowings or Swingline Loans
in an amount equal to such excess.

 

Section 2.11.  Fees.  (a) The Borrower agrees to pay to the Administrative Agent
for the account of each Lender an unused commitment fee (an “Unused Commitment
Fee”), which shall accrue at the Applicable Rate noted under the caption “Unused
Commitment Fee Rate” on the average daily unused amount of the Commitment of
such Lender (determined, solely for purposes of determining the Unused
Commitment Fee, without regard to any outstanding Swingline Loans) during the
period from the Effective Date to but excluding the date on which such
Commitment terminates; provided that no Unused Commitment Fee shall accrue on
the Commitment of a Defaulting Lender so long as such Lender shall be a
Defaulting Lender.  Accrued Unused 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 Commitments terminate, commencing on the first such date to
occur after the date hereof.  All Unused 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).

 

(b)           The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
Letters of Credit, which shall accrue at the same Applicable Rate used to
determine the interest rate applicable to Eurodollar Revolving Loans on the
average daily amount of such Lender’s LC Exposure (excluding any portion thereof
attributable to unreimbursed LC

 

52

--------------------------------------------------------------------------------

 

Disbursements) during the period from and including the Effective Date to but
excluding the later of the date on which such Lender’s Commitment terminates and
the date on which such Lender ceases to have any LC Exposure, and (ii) to the
relevant Issuing Bank a 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 Effective Date to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any LC
Exposure, as well as such Issuing Bank’s standard and customary fees with
respect to the issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder.  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 Effective Date;
provided that all such fees shall be payable on the date on which the
Commitments terminate and any such fees accruing after the date on which the
Commitments terminate shall be payable on demand.  Any other fees payable to the
Issuing Banks pursuant to this paragraph shall be payable within 10 days after
demand.  All 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).

 

(c)           The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
in writing between the Borrower and the Administrative Agent.

 

(d)           All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the relevant
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of the Unused Commitment Fees and participation fees, to the Lenders.  Fees paid
shall not be refundable under any circumstances.

 

Section 2.12.  Interest.  (a) The Loans comprising each ABR Borrowing (including
each Swingline Loan) shall bear interest at the Alternate Base Rate plus the
Applicable Rate under the caption “ABR Spread.”

 

(b)           The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate under the caption “Eurodollar Spread.”

 

(c)           Notwithstanding the foregoing, if at any time an Event of Default
is continuing (including, without limitation, as a result of any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder not being paid when due, whether at stated maturity, upon acceleration
or otherwise) each Loan or other amount shall bear interest, after as well as
before judgment, at a rate per annum equal to (i) in the case of principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 2%
plus the rate applicable to ABR Loans as provided in paragraph (a) of this
Section.

 

53

--------------------------------------------------------------------------------

 

(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 Commitments; provided that (i) interest accrued pursuant to
paragraph (c) of this Section shall be payable on demand, (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 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 Revolving 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
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap 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,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent
in good faith, and such determination shall be conclusive absent manifest error.

 

Section 2.13.  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 LIBO Rate or the LIBO Rate, as applicable,
for such Interest Period; or

 

(b)           the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;

 

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the 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 Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be
ineffective and (ii) if any Borrowing Request requests a Eurodollar Revolving
Borrowing, such Borrowing shall be made as an ABR Borrowing; provided that if
the circumstances giving rise to such notice affect only one Type of Borrowings,
then the other Type of Borrowings shall be permitted.

 

Section 2.14.  Increased Costs.  (a) 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

 

54

--------------------------------------------------------------------------------

 

credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate) or Issuing Bank; or

 

(ii)           impose on any Lender or 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 such Loan) or to increase the cost to such Lender or 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 Issuing
Bank hereunder (whether of principal, interest or otherwise), then the Borrower
will pay to such Lender or Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or Issuing Bank, as the case
may be, for such additional costs incurred or reduction suffered.

 

(b)           If any Lender or Issuing Bank determines in good faith that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender or Issuing Bank’s capital or on the
capital of such Lender or 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 such Issuing
Bank, to a level materially below that which such Lender or Issuing Bank or such
Lender or Issuing Bank’s holding company could have achieved but for such Change
in Law (taking into consideration such Lender or Issuing Bank’s standard
policies and the standard policies of such Lender or Issuing Bank’s holding
company with respect to capital adequacy), then from time to time the Borrower
will pay to such Lender or Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or Issuing Bank or such Lender
or Issuing Bank’s holding company for any such reduction suffered.

 

(c)           A certificate of a Lender or 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
Section 2.14(a) or Section 2.14(b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error.  The Borrower shall pay
such Lender or Issuing Bank, as the case may be, the amount shown as due on any
such certificate within 10 days after receipt thereof.  Notwithstanding the
foregoing, any increased costs due to Taxes shall be governed solely by
Section 2.16.

 

(d)           Failure or delay on the part of any Lender or Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender or Issuing Bank’s right to demand such compensation; provided that
the Borrower shall not be required to compensate a Lender or Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Lender or Issuing Bank, as the case
may be, notifies the Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender or Issuing Bank’s intention to claim
compensation therefor; provided further that, if the Change in Law

 

55

--------------------------------------------------------------------------------

 

giving rise to such increased costs or reductions is retroactive, then the
270-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

Section 2.15.  Break Funding Payments.  In the event of (a) the payment 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 (regardless of whether such notice may be revoked under
Section 2.10(b) and is revoked in accordance therewith) 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 the Borrower pursuant to Section 2.18, then,
in any such event, the Borrower 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 LIBO 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 shall be delivered to the
Borrower and shall be conclusive absent manifest error.  The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

 

Section 2.16.  Taxes.  (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Taxes, subject to the following sentence.  If the Borrower
shall be required to deduct any Taxes from any and all payments by or on account
of any obligation of the Borrower hereunder, then (i) with respect to
Indemnified Taxes or Other Taxes, the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) 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 for Indemnified Taxes or
Other Taxes been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

 

(b)           Without duplication, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

 

(c)           Without duplication, the Borrower shall indemnify the
Administrative Agent, each Issuing Bank and each Lender, within 15 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative

 

56

--------------------------------------------------------------------------------

 

Agent, such Issuing Bank or such Lender, as the case may be, on or with respect
to any payment by or on account of any obligation of the Borrower hereunder
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and reasonable out-of-pocket
expenses arising therefrom or with respect thereto, 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 any
Indemnified Taxes or Other Taxes paid by the Lender, Issuing Bank or the
Administrative Agent on its own behalf or on behalf of a Lender or an Issuing
Bank, as the case may be, delivered to the Borrower shall be conclusive absent
manifest error.

 

(d)           As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(e)           Any Lender, Issuing Bank or Agent Party that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement shall deliver to the
Borrower and/or to any applicable Governmental Authority (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 Borrower as will permit such payments to be made
without withholding or at a reduced rate of withholding.  Without limiting the
generality of the foregoing, each Lender, Issuing Bank and Agent Party shall
deliver to the Borrower and the Administrative Agent on or prior to the date on
which such Lender, Issuing Bank or Agent Party, as applicable, becomes a party
to this Agreement (and from time to time thereafter upon the expiration or
invalidity of any of the certificates or IRS forms described below or upon the
request of the Borrower or the Administrative Agent), two (2) original copies of
whichever of the following is applicable:

 

(i)            duly completed and executed IRS Form W-8BEN (or successor forms)
establishing eligibility for benefits of an income tax treaty to which the
United States is a party or that such party is not subject to deduction or
withholding of United States federal income tax,

 

(ii)           duly completed and executed IRS Form W-8ECI (or successor forms),
establishing that such party is not subject to deduction or withholding of
United States federal income tax,

 

(iii)          in the case of a party claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) duly executed
Certificate Regarding Non-Bank Status, substantially in the form of Exhibit H,
and (y) duly completed and executed IRS Form W-8BEN (or successor forms), or

 

57

--------------------------------------------------------------------------------

 

(iv)          IRS Form W-9 (or successor forms), establishing that such party is
not subject to backup withholding or information reporting requirements.

 

Notwithstanding any other provisions of this paragraph, any Lender, Issuing Bank
or Agent Party shall not be required to deliver any form or certificate pursuant
to this paragraph that such Lender, Issuing Bank or Agent Party, as applicable,
is not legally able to deliver.

 

(f)            If the Administrative Agent, an Issuing Bank or a Lender
determines, in its reasonable discretion, that it has received a refund of any
Taxes or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this
Section 2.16, it shall pay over such refund to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section 2.16 with respect to the Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of the Administrative Agent,
such Issuing Bank or such Lender, as applicable, and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided that the Borrower, upon the request of the Administrative
Agent, such Issuing Bank or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent, such Issuing Bank
or such Lender in the event the Administrative Agent, such Issuing Bank or such
Lender is required to repay such refund to such Governmental Authority. This
Section shall not be construed to require the Administrative Agent, any Issuing
Bank or any Lender to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to the Borrower or any other
Person.

 

(g)           At the Borrower’s request and at the Borrower’s cost, each Lender,
Issuing Bank and Agent Party shall take reasonable steps (i) to contest such
Lender’s, such Issuing Bank’s or Agent Party’s, as applicable, liability for
Taxes that have not been paid or (ii) to seek a refund of Taxes, if such steps
would not subject such Lender, Issuing Bank or Agent Party, as applicable, to
any unreimbursed cost or expense and would not otherwise be disadvantageous to
such Lender, Issuing Bank or Agent Party, as applicable.

 

Section 2.17.  Payments Generally; Pro Rata Treatment; Sharing of Set-offs. 
(a) The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.14, 2.15 or 2.16, or otherwise) prior to
3:00 pm, New York City time, on the date when due, in immediately available
funds, without set off 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 One Pierrepoint Plaza, 7th Floor, 300 Cadman Plaza West,
Brooklyn, New York 11201, except payments to be made directly to an Issuing Bank
or Swingline Lender as expressly provided herein and except that payments
pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the
Persons entitled thereto.  The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the appropriate
recipient promptly following

 

58

--------------------------------------------------------------------------------

 

receipt thereof.  If any payment hereunder 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
hereunder 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; provided that if such payment is (x) a
prepayment of the principal amount of any Loans or unreimbursed LC Disbursements
for which a Defaulting Lender has funded its participation obligations and
(y) made at a time when the conditions set forth in Section 4.02 are satisfied,
such payment shall be applied solely to prepay the Loans and reimbursement
obligations owed to, all non-Defaulting Lenders pro rata prior to being applied
to the prepayment of any Loans or reimbursement obligations owed to, any
Defaulting Lender.

 

(c)           If any Lender shall, by exercising any right of set off 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 the 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
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply).  The 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 the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.

 

59

--------------------------------------------------------------------------------

 

(d)           Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or an Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or Issuing Banks, as
the case may be, the amount due.  In such event, if the Borrower has not in fact
made such payment, then each of the Lenders or Issuing Banks, 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 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 2.04(c), 2.05(d) or (e), 2.06(b), 2.17(d) or 9.03(c),
then the Administrative Agent may, in its good faith 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 2.18.  Mitigation Obligations; Replacement of Lenders.  (a) If any
Lender requests compensation under Section 2.14, or if the Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.16, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.

 

(b)           If any Lender requests compensation under Section 2.14, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
or if any Lender becomes a Defaulting Lender, or any Lender becomes a
“Nonconsenting Lender” (hereinafter defined), then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance with
and subject to the restrictions contained in Section 9.04), all its interests,
rights and obligations under this Agreement to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent (and if a Commitment is being
assigned, the relevant Issuing Bank), which consent, in each case, shall not
unreasonably be withheld or delayed, (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

 

60

--------------------------------------------------------------------------------

 

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 Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.14 or payments required to be made pursuant to
Section 2.16, such assignment will result in a 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 Borrower to require such assignment
and delegation cease to apply. In the event that (x) the Borrower or the
Administrative Agent has requested the Lenders to consent to a departure or
waiver of any provisions of the Loan Documents or to agree to any amendment
thereto and (y) the Required Lenders have agreed to such consent, waiver or
amendment, then any Lender who does not agree to such consent, waiver or
amendment shall be deemed a “Nonconsenting Lender”. Any such replacement shall
not be deemed a waiver of any rights that the Borrower shall have against the
replaced Lender.

 

Section 2.19.  Optional Increase in Commitments.  At any time the Borrower, may,
if it so elects, increase the aggregate amount of the Commitments, either by
designating one or more financial institutions not theretofore a Lender (each, a
“New Lender”) to become a Lender (such designation to be effective only with the
prior written consent of the Administrative Agent, which consent will not be
unreasonably withheld or delayed), and/or by agreeing with one or more existing
Lenders (each, an “Increasing Lender”) that each such Lender’s Commitment shall
be increased.  Upon execution and delivery by the Borrower and such Lender or
other financial institution of an instrument in form reasonably satisfactory to
the Administrative Agent, each such New Lender and Increasing Lender shall have
a Commitment as set forth in such instrument with all the rights and obligations
of a Lender with such a Commitment hereunder; provided that:

 

(i)            no Event of Default shall have occurred and be continuing
immediately before or after giving effect to such increase;

 

(ii)           the Borrower shall provide prompt notice of such increase to the
Administrative Agent, who shall promptly notify the Lenders;

 

(iii)          any such increase shall be in an amount greater than or equal to
$10,000,000;

 

(iv)          immediately after such increase is made, the aggregate amount of
increases in the Commitments pursuant to this Section 2.19 shall not exceed
$50,000,000;

 

(v)           any such increase in the Commitments shall not constitute a
separate tranche of Commitments but an increase thereof, and shall have the same
terms as the outstanding Loans including, without limitation, the Applicable
Rate with respect to such New Lender or Increasing Lender’s portion of the
outstanding Loans which shall not exceed the Applicable Rate in effect as of the
Effective Date;

 

61

--------------------------------------------------------------------------------

 

(vi)          no New Lender or Increasing Lender shall receive any additional
fees or compensation directly or indirectly from Holdings, the Borrower or any
Restricted Subsidiary for such Lender’s new Commitment or the increased portion
thereof, as applicable, other than upfront fees no greater than those paid to
the initial Lenders on a comparable basis; and

 

(vii)         the Borrower may elect to increase the aggregate amount of the
Commitments pursuant to this Section 2.19 no more than twice.

 

On the effective date of any increase in the aggregate amount of the Commitments
pursuant to this Section 2.19, (i) each New Lender shall pay to the Agent an
amount equal to its pro rata share of the aggregate outstanding Loans and
(ii) any Increasing Lender shall pay to the Administrative Agent an amount equal
to the increase in its pro rata share of the aggregate outstanding Loans, in
each case such payments shall be for the account of each other Lender.  Upon
receipt of such amount by the Administrative Agent, (i) each other Lender shall
be deemed to have ratably assigned that portion of its outstanding Loans that is
being reduced to the New Lenders and the Increasing Lenders in accordance with
such Lender’s new Commitment or the increased portion thereof as applicable, and
(ii) the Administrative Agent shall promptly distribute to each other Lender its
ratable share of the amounts received by the Administrative Agent pursuant to
this paragraph.

 

Section 2.20.  Defaulting Lenders.  (a) If any Letters of Credit are outstanding
at the time a Lender becomes a Defaulting Lender, and the Commitments have not
been terminated in accordance with Article 7, then:

 

(i)            so long as no Default has occurred and is continuing, all or any
part of the aggregate amount available to be drawn under all outstanding Letters
of Credit shall be reallocated among the Lenders that are not Defaulting Lenders
(“non-Defaulting Lenders”) in accordance with their Applicable Percentage
(disregarding any Defaulting Lender’s Commitment) but only to the extent that
the sum of (A) the aggregate principal amount of all Loans made by such
non-Defaulting Lenders (in their capacity as Lenders) and outstanding at such
time, plus (B) such non-Defaulting Lenders’ Applicable Percentage (before giving
effect to the reallocation contemplated herein) of the aggregate amount
available to be drawn under all outstanding Letters of Credit, plus (C) the
aggregate principal amount of all Loans made by each Issuing Bank pursuant to
Section 2.02 that have not been ratably funded by such non-Defaulting Lenders
and outstanding at such time, plus (D) such Defaulting Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letters of
Credit, does not exceed the total of all non-Defaulting Lenders’ Commitments.

 

(ii)           if the reallocation described in clause (i) above cannot, or can
only partially, be effected, the Borrower shall within one Business Day
following notice by the Administrative Agent, cash collateralize such Defaulting
Lender’s Applicable Percentage of the aggregate amount available to be drawn
under such Letters of Credit (after giving effect to any partial reallocation
pursuant to

 

62

--------------------------------------------------------------------------------

 

clause (i) above) by paying cash collateral to the applicable Issuing Bank for
so long as such Letters of Credit are outstanding;

 

(iii)          if the Applicable Percentage of Letters of Credit of the
non-Defaulting Lenders are reallocated pursuant to this Section 2.20, then the
fees payable to the Lenders pursuant to Section 2.11(b) shall be adjusted in
accordance with such non-Defaulting Lenders’ Applicable Percentage of Letters of
Credit; or

 

(iv)          if any Defaulting Lender’s Applicable Percentage of Letters of
Credit is neither cash collateralized nor reallocated pursuant to this
Section 2.20, then, without prejudice to any rights or remedies of any Issuing
Bank or any Lender or the Borrower hereunder, all letter of credit fees payable
under Section 2.11(b) with respect to such Defaulting Lender’s Applicable
Percentage of Letters of Credit shall be payable to the applicable Issuing Bank
until such Lender’s Applicable Percentage of Letters of Credit is cash
collateralized and/or reallocated.

 

(b)           So long as any Lender is a Defaulting Lender, no Issuing Bank
shall be required to issue, amend or increase any Letter of Credit, unless it is
satisfied that the related exposure will be 100% covered by the Commitments of
the non-Defaulting Lenders and/or cash collateral will be provided by the
applicable Borrower in accordance with Section 2.20, and participating interests
in any such newly issued or increased Letter of Credit shall be allocated among
non-Defaulting Lenders in a manner consistent with Section 2.20(a)(i) (and
Defaulting Lenders shall not participate therein).

 

(c)           No Commitment of any Lender shall be increased or otherwise
affected, and, except as otherwise expressly provided in this Section 2.20,
performance by the Borrower of its obligations shall not be excused or otherwise
modified as a result of the operation of this Section 2.20.  The rights and
remedies against a Defaulting Lender under this Section 2.20 are in addition to
any other rights and remedies which the Borrower, the Administrative Agent, any
Issuing Bank, or any Lender may have against such Defaulting Lender.

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Lender Parties that:

 

Section 3.01.  Organization; Powers.  Each Cloud Peak Company is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted and, except where failures to do so, in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required.

 

63

--------------------------------------------------------------------------------

 

Section 3.02.  Authorization; Enforceability.  The Loan Documents that have been
or are to be entered into by the applicable Credit Party are within its
corporate or limited liability company powers and have been duly authorized by
all necessary corporate or limited liability company action and, if required,
stockholder or member action.  Each Loan Document to which the applicable Credit
Party is a party constitutes (or, in the case of any Loan Document entered into
after the date hereof, when executed and delivered by such Person, will
constitute) a legal, valid and binding obligation of such Credit Party, in each
case enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and 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.  (a) The entry into the
Loan Documents and the performance of the Loan Financing Transactions
contemplated thereunder (a) do not require any consent or approval of,
registration or filing with, or other action by, any Governmental Authority,
except (i) such as have been obtained or made and are in full force and effect
in all material respects, (ii) filings, consents and notices necessary to
perfect or acknowledge, to the fullest extent possible, the Transaction Liens
and (iii) notices of the Transactions required under the Mining Permits
(including to the Bureau of Alcohol, Tobacco and Firearms) and Environmental
Permits regarding a change in control that will be given to the applicable
Governmental Authority on or prior to the date by which such notices are due,
(b) will not violate any charter, by-laws or organizational documents of the
Borrower or any of its Restricted Subsidiaries, (c) will not violate any
applicable law or regulation (including any Environmental Law or Mining Law) or
any order of any Governmental Authority (including any Environmental Permit or
Mining Permit), (d) will not violate or result in a default under any indenture,
lease (including any Mining Lease), agreement or other instrument binding upon
the Borrower or any of its Restricted Subsidiaries or any of their respective
properties, or give rise to a right thereunder to require the Borrower or any of
its Restricted Subsidiaries to make any payment, except in each case referred to
in clause (c) or (d) to the extent that failure to do so would not reasonably be
expected to have a Material Adverse Effect and (e) will not result in the
creation or imposition of any Lien (other than the Transaction Liens) on any
property of the Borrower or any of its Restricted Subsidiaries.

 

Section 3.04.  Financial Statements; No Material Adverse Change.  (a) The
Borrower has heretofore furnished to the Lenders (i) its consolidated balance
sheet as of December 31, 2008 and the related consolidated statements of income,
stockholders’ equity and cash flows for the Fiscal Year then ended, reported on
by Pricewaterhouse Coopers LLP, Independent Registered Public Accounting Firm,
and (ii) its consolidated balance sheet as of September 30, 2009 and the related
consolidated statements of income, stockholders’ equity and cash flows for the
Fiscal Quarter then ended and for the portion of the Fiscal Year then ended, all
certified by its chief financial officer.  Such financial statements present
fairly, in all material respects, the financial position of the Borrower and its
consolidated Subsidiaries as of such dates and their results of operations and
cash flows for such periods in accordance with GAAP, subject to normal year-end
adjustments and the absence of footnotes in the case of the statements referred
to in clause (ii) above.

 

64

--------------------------------------------------------------------------------

 

(b)           The Borrower has heretofore furnished to the Lenders its pro forma
consolidated balance sheet as of September 30, 2009, prepared giving effect to
the Transactions as if the Transactions had occurred on such date.  Such pro
forma consolidated balance sheet (i) has been prepared in good faith based on
the same assumptions used to prepare the pro forma financial statements included
in the Information Memorandum (which assumptions are believed by the Borrower to
be reasonable), (ii) is based on the best information available to the Borrower
after due inquiry, (iii) accurately reflects all adjustments necessary to give
effect to the Transactions and (iv) presents fairly, in all material respects,
the pro forma financial position of the Borrower and its consolidated
Subsidiaries as of September 30, 2009 as if the Transactions had occurred on
such date.

 

(c)           After giving effect to the Transactions, neither the Borrower nor
any of its Subsidiaries has, as of the Effective Date, any material contingent
liabilities, unusual material long-term commitments or unrealized losses, except
as disclosed in the financial statements referred to above or the notes thereto
or in the Information Memorandum and except for the Disclosed Matters.

 

(d)           Since September 30, 2009, there has been no Material Adverse
Effect.

 

Section 3.05.  Properties. (a) Subject to the Liens expressly permitted by
Section 6.02, the Borrower and each Restricted Subsidiary is the sole owner of,
and has good record title to, the Real Property described in Schedule
3.05(e) and is the sole owner of and has good and valid title to, all other real
and personal property material to its business, including the real and personal
property described in Schedule 3.05(e), in each case except where the failure to
have such title or interest does not or would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.  The Borrower
and each Restricted Subsidiary owns and has maintained, in all material respects
and in accordance with normal coal mining industry practice, all of the
machinery, equipment, vehicles, preparation plants or other coal processing
facilities, loadouts and other transportation facilities and other tangible
personal property now owned or leased by the Borrower and the Restricted
Subsidiaries that is necessary to conduct their business as it is now conducted,
except where the failure to do so in the aggregate does not or would not
reasonably be expected to have a Material Adverse Effect.  All Real Property
described in Schedule 3.05(e) and all other properties and assets comprising the
Collateral are free and clear of Liens, other than Liens expressly permitted by
Section 6.02.

 

(b)           The Borrower and each Restricted Subsidiary has complied with all
obligations under all leases (including Mining Leases) to which it is a party,
except where the failure to comply does not or would not have a Material Adverse
Effect, and all such leases are in full force and effect, except leases in
respect of which the failure to be in full force and effect does not or would
not reasonably be expected to have a Material Adverse Effect.  Subject to the
Liens expressly permitted by Section 6.02, the Borrower and each Restricted
Subsidiary enjoys peaceful and undisturbed possession under all such Mining
Leases, other than leases in respect of which the failure to enjoy peaceful and
undisturbed possession would not reasonably be expected to have, in the
aggregate, a Material Adverse Effect.

 

65

--------------------------------------------------------------------------------

 

(c)           Except as set forth on Schedule 3.05(c), and except for such
claims that do not and would not reasonably be expected to cause a Material
Adverse Effect, neither the Borrower nor any of the Restricted Subsidiaries has
received written or, to the knowledge of the Borrower and the Restricted
Subsidiaries, other notice of material claims, which are still outstanding or
unresolved, that the Borrower or any Restricted Subsidiary has mined any coal
that it did not have the right to mine or mined any coal in such a manner as to
give rise to any material claims for loss, waste or trespass, and, to the
knowledge of the Borrower and each Restricted Subsidiary, no facts exist upon
which such a claim could be based.

 

(d)           The Borrower and each of its Restricted Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property necessary for use in its business, except as set forth in
the Acquisition Agreements relating to the discontinuance of the use of certain
predecessor trademarks and tradenames, and to the knowledge of the Borrower, the
use thereof by the Borrower and its Restricted Subsidiaries does not infringe
upon the rights of any other Person, except for infringements that, in the
aggregate, do not and would not reasonably be expected to result in a Material
Adverse Effect.

 

(e)           Schedule 3.05(e) sets forth a brief description of each material
Mining Lease (including coal leases and surface rights), each material
Improvement, each material Mining Permit and each other material item of
Collateral owned or controlled by the Borrower or any Restricted Subsidiary as
of the Effective Date and the nature of the Borrower’s or each of its Restricted
Subsidiaries’ interest therein, after giving effect to the Transactions in each
case that is material to the Coal Business.

 

(f)            Except as disclosed in Schedule 3.06 or by Holdings in its
Registration Statement on Form S-1, there are no developments affecting any of
the Mortgaged Property pending or, to the knowledge of any Credit Party
threatened, which might materially detract from the value, materially interfere
with any present or intended use or materially adversely affect the
marketability of such Mortgaged Property, other than any such developments that
do not and would not, in the aggregate, reasonably be expected to result in a
Material Adverse Effect.

 

(g)           None of the Borrower and their Restricted Subsidiaries is
obligated under any right of first refusal, option or other contractual right to
sell, assign or otherwise dispose of any Mortgaged Property or any interest
therein, except for Liens permitted under Section 6.02 or Section 6.05.

 

(h)           With respect to each Mortgaged Property on which significant
surface Improvements are located, subject to the Liens expressly permitted by
Section 6.02, there are no rights or claims of parties in possession,
encroachments, overlaps, boundary line disputes or other matters which would be
disclosed by an accurate survey or inspection of the premises except as do not
and would not reasonably be expected to have, in the aggregate, a Material
Adverse Effect.

 

(i)            As of the Effective Date, each of the Borrower and its Restricted
Subsidiaries has proven or probable reserves of coal in place on Mining Leases
for which

 

66

--------------------------------------------------------------------------------

 

the Borrower and its Restricted Subsidiaries have all Mining Permits, surface
use agreements and other ancillary rights, in each case, necessary for the
operation of such leases as a Mine at levels consistent with the most recent
mining plan provided to the Lenders prior to the Effective Date.

 

Section 3.06.  Litigation and Environmental Matters.  (a) Except as set forth in
the Disclosed Matters or, with respect to Section 3.06(i) only, as disclosed by
Holdings in its Registration Statement on Form S-1:

 

(i)            There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Restricted
Subsidiary as to which there is a reasonable likelihood of adverse
determinations that, in the aggregate, would reasonably be expected to result in
a Material Adverse Effect.

 

(ii)           Neither the Borrower nor any Restricted Subsidiary has been
notified in writing, or, to the knowledge of the Borrower and each Restricted
Subsidiary, otherwise notified, by the Federal Office of Surface Mining or the
agency of any state administering the Surface Mining Control and Reclamation Act
of 1977, as amended, or any comparable state statute that it is: (i) ineligible
to receive additional surface mining permits; or (ii) under investigation to
determine whether their eligibility to receive any Mining Permit should be
revoked, i.e., “permit blocked”; in each case, except as would not reasonably be
expected to have a Material Adverse Effect.  To the knowledge of the Borrower,
no facts exist that presently or upon the giving of notice or the lapse of time
or otherwise would render the Borrower or any Restricted Subsidiary ineligible
to receive surface mining permits.

 

(b)           Except for noncompliance, Environmental Liability or claims that
do not and would not reasonably be expected to result in a Material Adverse
Effect, neither the Borrower nor any Restricted Subsidiary nor any Guarantor and
no Real Property now or previously owned, leased or operated by any such entity
(i) has failed to comply with any Environmental Law or to obtain, maintain or
comply with any Environmental Permit, (ii) is subject to any Environmental
Liability (other than Environmental Liabilities for reclamation obligations for
which adequate reserves have been made on the financial statements of the
Borrower and its Subsidiaries in accordance with GAAP or for which no reserves
are so required), or (iii) has received written notice of any claim with respect
to any Environmental Liability.

 

(c)           Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in a Material Adverse Effect.

 

Section 3.07.  Compliance with Laws and Agreements.  The Borrower and each
Restricted Subsidiary is in compliance with all applicable laws, regulations and
orders (including any zoning, ordinance, code or approval, Mining Law, or Mining
Permit), excluding any Environmental Law (it being understood that Environmental
Law is

 

67

--------------------------------------------------------------------------------

 

covered in Section 3.06), of any Governmental Authority, in each case applicable
to it or its property, and all indentures, agreements and other instruments
binding on it or its property, except where failures to do so, in the aggregate,
do not and would not reasonably be expected to result in a Material Adverse
Effect.

 

Section 3.08.  Investment Company Status; Regulatory Restrictions on Borrowing. 
Neither the Borrower nor any Restricted Subsidiary is an “investment company” as
defined in, or subject to regulation under, the Investment Company Act of 1940. 
Neither the Borrower nor any Restricted Subsidiary is subject to regulation
under any law, treaty, rule or regulation or determination of an arbitrator or
court or other Governmental Authority (other than Regulations G, U and X of the
Federal Reserve Board) which limits its ability to incur any Debt under this
Agreement or any promissory note.

 

Section 3.09.  Taxes.  The Borrower and each Subsidiary has timely filed or
caused to be filed all Tax returns and reports required to have been filed by it
on or prior to the time when the same have become due and has paid or caused to
be paid on or prior to the time when the same have become due, all Taxes
required to have been paid by it, except (a) any Taxes that are being contested
in good faith by appropriate proceedings and for which the Borrower or relevant
Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP, or (b) to the extent that failures to do so, in the
aggregate, do not and would not reasonably be expected to result in a Material
Adverse Effect.

 

Section 3.10.  ERISA.  (a) No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other ERISA Events for which
liability is reasonably expected to occur, would reasonably be expected to
result in a Material Adverse Effect.  There exists no Unfunded Pension Liability
with respect to any Plan that would reasonably be expected to result in a
Material Adverse Effect.

 

(b) From and after the date on which the Borrower and its Restricted
Subsidiaries have or are liable with respect to any Foreign Pension Plan (in
each case in this clause (b)):  Each such Foreign Pension Plan is in compliance
in all respects with all requirements of law applicable thereto and the
respective requirements of the governing documents for such plan except where
the failure to comply would not reasonably be expected to have a Material
Adverse Effect.  With respect to each Foreign Pension Plan, none of the
Borrower, its Restricted Subsidiaries or to the knowledge of the Borrower, any
of its respective directors, officers, employees or agents has engaged in a
transaction that would subject the Borrower or any Subsidiary, directly or
indirectly, to a tax or civil penalty that would reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.  With
respect to each Foreign Pension Plan, reserves have been established in the
financial statements furnished to the Lender in respect of any material unfunded
liabilities in accordance with applicable law or, where required, in accordance
with ordinary accounting practices in the jurisdiction in which such Foreign
Pension Plan is maintained.  The aggregate unfunded liabilities with respect to
such Foreign Pension Plans would not reasonably be expected to result in a
Material Adverse Effect.

 

68

--------------------------------------------------------------------------------

 

Section 3.11.  Disclosure.  Except as disclosed by Holdings in its Registration
Statement on Form S-1 or otherwise pursuant to the Loan Documents, as of the
Effective Date the Borrower has disclosed to the Lenders all agreements,
instruments and corporate or other restrictions to which the Borrower or any
Subsidiary is subject that are known to Borrower, and all other matters known to
any of them, that, in the aggregate, would reasonably be expected to result in a
Material Adverse Effect.  Neither the Information Memorandum nor any of the
other written reports, financial statements, certificates or other information
furnished by or on behalf of any Credit Party to the Administrative Agent or any
Lender in connection with the negotiation of this Agreement or any other Loan
Document or delivered hereunder or thereunder (as modified or supplemented by
other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, when
made and in the light of the circumstances under which they were made, not
materially misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based on assumptions believed to be reasonable at the time.

 

Section 3.12.  Subsidiaries.  Schedule 3.12 sets forth the name of, and the
ownership interest of the Borrower in, each of its Subsidiaries and identifies
each Subsidiary that is a Guarantor, in each case as of the Effective Date.  All
of the Borrower’s Restricted Subsidiaries are, and will at all times be, fully
consolidated in its consolidated financial statements.

 

Section 3.13.  Insurance.  Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of Holdings, the Borrower and its
Subsidiaries as of the Effective Date.  As of the Effective Date, all premiums
in respect of such insurance required to be paid have been paid.  The Borrower
believes that the insurance maintained by or on behalf of the Borrower and its
Subsidiaries is adequate.  No Mortgage encumbers improved Real Property that is
located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards within the meaning of
the National Flood Insurance Act of 1968 unless flood insurance available under
such Act has been obtained in accordance with Section 5.08(c).

 

Section 3.14.  Labor Matters.  As of the Effective Date, except as otherwise
disclosed by Holdings in its Registration Statement on Form S-1, there are no
strikes, lockouts or slowdowns against the Borrower or any Restricted Subsidiary
pending or, to the knowledge of the Borrower, threatened.  The hours worked by
and payments made to employees of the Borrower and each Restricted Subsidiary
have not violated the Fair Labor Standards Act or any other applicable Federal,
state, local or foreign law dealing with such matters.  All payments due from
the Borrower or any Restricted Subsidiary, or for which any claim may be made
against the Borrower or any Restricted Subsidiary, 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 the Borrower or such Restricted
Subsidiary, except where the failure to make such payment would not reasonably
be expected to cause 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
by which the Borrower or any Restricted Subsidiary is bound.

 

69

--------------------------------------------------------------------------------

 

Section 3.15.  Solvency.  Immediately after the Transactions to occur on the
Effective Date are consummated and after giving effect to the application of the
proceeds of the Loan made on the Effective Date and the reimbursement of the CPE
Promissory Note issued to Parent in connection with the Acquisition Agreement,
the Credit Parties, on a consolidated basis, will be Solvent.

 

Section 3.16.  Use of Proceeds.  The Borrower shall use the proceeds of the
Loans solely in accordance with Section 5.12.

 

ARTICLE 4
CONDITIONS

 

Section 4.01.  Effective Date.  The obligations of the Lenders to make Loans and
of the Issuing Banks to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):

 

(a)           The Administrative Agent shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such party
or (ii) written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page) that such party has
signed a counterpart of this Agreement.

 

(b)           The Administrative Agent shall have received a Note for the
account of each Lender requesting a Note to be delivered in connection with the
Effective Date.

 

(c)           The Administrative Agent shall have received a reasonably
satisfactory written opinion (addressed to the Administrative Agent and the
Lenders and dated the Effective Date) of each of (i) Fried, Frank, Harris,
Shriver & Jacobsen LLP, special counsel for the Borrower, substantially in the
form of Exhibit B-1, (ii) Holland & Hart LLP, special regulatory counsel to the
Borrower, substantially in the form of Exhibit B-2, (iii) Amy Stefonick,
internal counsel to the Borrower, and Kevin Baker, internal counsel to Parent,
substantially in the form of Exhibits B-3 and B-4, respectively, (iv) Parsons
Behle & Latimer, special regulatory counsel to the Administrative Agent,
substantially in the form of Exhibit B-5 and (v) local counsel in each
jurisdiction where a Mortgaged Property is located, and, in the case of each
opinion required by this subsection, covering such other matters relating to the
Credit Parties or the Loan Documents as the Required Lenders shall reasonably
request.

 

(d)           The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of each Credit Party,
the authorization of the Loan Documents and any other legal matters relating to
the Credit Parties, the Loan Documents, all in form and substance reasonably
satisfactory to the Administrative Agent and its counsel.

 

70

--------------------------------------------------------------------------------

 

(e)           The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
clauses (b) and (c) of Section 4.02.

 

(f)            The Credit Parties shall have paid, or have caused to be paid,
all invoiced fees and other amounts due and payable to the Lender Parties on or
before the Effective Date, including, to the extent invoiced, all out-of-pocket
expenses (including fees, charges and disbursements of counsel) required to be
reimbursed or paid by any Credit Party under the Loan Documents.

 

(g)           Evidence that the Collateral and Guarantee Requirement shall have
been satisfied and the Administrative Agent shall have received a completed
Perfection Certificate dated the Effective Date and signed by a Financial
Officer or other executive officer of the Borrower, together with all
attachments contemplated thereby, including the results of a search of the
Uniform Commercial Code (or equivalent) filings made with respect to the Credit
Parties in the jurisdictions contemplated by the Perfection Certificate and
copies of the financing statements (or similar documents) disclosed by such
search and evidence reasonably satisfactory to the Administrative Agent that the
Liens indicated by such financing statements (or similar documents) are
permitted by Section 6.02 or have been released.

 

(h)           The Administrative Agent shall have received evidence that all
insurance required by Section 5.08 is in effect.

 

(i)            Prior to or substantially simultaneously with the initial Credit
Event, the acquisition of Equity Interests in the Borrower by Holdings shall be
consummated in accordance with the terms of the Acquisition Agreement and no
provision thereof shall have been amended or waived in any material respect that
is adverse to the interests of the Lenders without the prior written consent of
the Administrative Agent.

 

(j)            Each of the IPO and the offering of the Senior Notes shall be
consummated simultaneously with the occurrence of the Effective Date, resulting
in combined aggregate gross cash proceeds of at least $900,000,000.

 

(k)           The Administrative Agent shall have received copies of the
Transaction Documents and all certificates, opinions and other documents
delivered thereunder (without material amendment, modification or waiver thereof
which is adverse to the Lenders (as reasonably determined by the Administrative
Agent)).

 

(l)            The Lenders shall have received a pro forma consolidated balance
sheet of the Borrower as of September 30, 2009, reflecting all pro forma
adjustments as if the Transactions had been consummated on such date, and such
pro forma consolidated balance sheet shall be consistent in all material
respects with the forecasts and other information previously provided to the
Lenders.

 

(m)          The Administrative Agent shall have received an opinion from Duff &
Phelps LLC, in form and substance and with detailed support for the conclusions

 

71

--------------------------------------------------------------------------------

 

expressed therein, in each case reasonably satisfactory to the Administrative
Agent, that the Credit Parties are and, immediately after giving effect to the
Transactions on the Effective Date will be, Solvent.

 

(n)           The Administrative Agent shall have received, not later than three
Business Days prior to the Effective Date, all documentation and other
information with respect to the Borrower required by regulatory authorities
under applicable “know-your-customer” and anti-money laundering rules and
regulations, including without limitation the PATRIOT Act.

 

(o)           On and as of the Effective Date (and immediately after giving
effect to any Credit Event and other Transaction to occur on the Effective Date
and the application of all proceeds thereof as contemplated by the Transaction
Documents), (i) the representations and warranties of each Credit Party set
forth in the Loan Documents shall be true and correct and (ii) no Default shall
have occurred and be continuing.

 

Promptly after the Effective Date occurs, the Administrative Agent shall notify
the Borrower and the Lenders thereof, and such notice shall be conclusive and
binding.

 

Section 4.02.  Each Credit Event.  The obligation of each Lender to make a Loan
on the occasion of any Borrowing, the obligation of the Swingline Lender to make
any Swingline Loan and the obligation of each Issuing Bank to issue, amend,
renew or extend any Letter of Credit (each such event, a “Credit Event”), are
each subject to the following conditions:

 

(a)           The Administrative Agent (or, if applicable, the relevant Issuing
Bank or the Swingline Lender) shall have received a request with respect to such
Credit Event in accordance with the terms of this Agreement.

 

(b)           The representations and warranties of each Credit Party set forth
in the Loan Documents shall be true (or, in the case of any representation and
warranty that is not by its express terms limited by a materiality or “Material
Adverse Effect” exception or qualifier, true in all material respects) on and as
of the date of such Credit Event, provided that, to the extent that such
representations and warranties specifically refer to an earlier date, they shall
be true and correct in all material respects as of such date.

 

(c)           At the time of such Credit Event, no Default shall exist, or would
exist after giving effect to such Credit Event and the application of the
proceeds therefrom.

 

Each Borrowing, each Swingline Loan and each issuance, amendment, renewal or
extension of a Letter of Credit shall be deemed to constitute a representation
and warranty by the Borrower on the date thereof as to the matters specified in
clauses (b) and (c) of this Section.

 

72

--------------------------------------------------------------------------------

 

ARTICLE 5
AFFIRMATIVE COVENANTS

 

Until all the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or been cancelled and all LC Disbursements
have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

Section 5.01.  Financial Statements and Other Information.  The Borrower will
furnish to the Administrative Agent and each Lender:

 

(a)           within 90 days after the end of each Fiscal Year, its audited
consolidated balance sheet as of the end of such Fiscal Year and the related
statements of operations, stockholders’ equity and cash flows for such Fiscal
Year, setting forth in each case in comparative form the figures for the
previous Fiscal Year, all reported on by Pricewaterhouse Coopers LLP or other
independent registered public accounting firm of recognized national standing
(without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) as presenting fairly
in all material respects the financial position, results of operations and cash
flows of the Borrower and its consolidated Subsidiaries on a consolidated basis
in accordance with GAAP;

 

(b)           within 45 days after the end of each of the first three Fiscal
Quarters of each Fiscal Year, its consolidated balance sheet as of the end of
such Fiscal Quarter and the related statements of operations, stockholders’
equity and cash flows for such Fiscal Quarter and for the then elapsed portion
of such Fiscal Year, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous Fiscal Year, all certified by a Financial
Officer as presenting fairly in all material respects the financial position,
results of operations and cash flows of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal
year-end adjustments and the absence of footnotes;

 

(c)           concurrently with each delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer (i) certifying as
to whether a Default has occurred and is continuing and, if a Default has
occurred and is continuing, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Sections 6.11, 6.12 and 6.13
and (iii) stating whether any change in GAAP or in the application thereof has
occurred since the date of the Borrower’s audited financial statements referred
to in Section 3.04 and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such certificate;

 

(d)           within 75 days after the beginning of each Fiscal Year, a detailed
consolidated budget for such Fiscal Year (including a projected consolidated
balance sheet and related statements of projected operations and cash flows as
of the end of and for such Fiscal Year and setting forth the assumptions used in
preparing such budget and

 

73

--------------------------------------------------------------------------------

 

an updated life of mine statistics for such Fiscal Year) and, promptly when
available, any significant revisions of such budget;

 

(e)           promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings or the Borrower with the SEC, or any Governmental Authority succeeding
to any or all of the functions of the SEC, or with any national securities
exchange, or distributed by Holdings to its shareholders generally, as the case
may be; and

 

(f)            as soon as practicable following any request therefor, such other
information regarding the operations (including as to coal reserves), business
affairs and financial condition of the Borrower and its Subsidiaries in such
detail as is commercially reasonably available to the Borrower and its
Subsidiaries, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender through the Administrative Agent may
reasonably request, in each case, solely with respect to the Administrative
Agent’s or Lender’s credit review of the Borrower and its Restricted
Subsidiaries in connection with the Loan Financing Transactions contemplated by
the Loan Documents.

 

Section 5.02.  Notice of Material Events.  The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:

 

(a)           the occurrence of any Default;

 

(b)           the occurrence of a “default” or “event of default” (however
denominated) or any event requiring a mandatory offer to purchase or right of
redemption, under the Senior Notes;

 

(c)           the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Subsidiary or any Affiliate thereof that, if adversely
determined, would reasonably be expected to result in a Material Adverse Effect;

 

(d)           the loss, delay, denial, termination or material and adverse
modification of the terms of any material lease from any Governmental Authority
or any material coal contract, with or without the consent of the Borrower or
any of its Affiliates that would reasonably be expected to result in a Material
Adverse Effect;

 

(e)           the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, would reasonably be expected to result in
liabilities of the Borrower and its Subsidiaries in an aggregate amount
exceeding $10,000,000; and

 

(f)            any other development that results in, or would reasonably be
expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the

 

74

--------------------------------------------------------------------------------

 

event or development requiring such notice and any action taken or proposed to
be taken with respect thereto.

 

Section 5.03.  Information Regarding Collateral.  (a) The Borrower will furnish
to the Administrative Agent (for distribution to each Lender by the
Administrative Agent) prompt written notice of any change in (i) any Credit
Party’s corporate name or any trade name used to identify it in the conduct of
its business or any Credit Party’s chief executive office, its principal place
of business, or any office or facility at which Collateral owned by it is
located (including the establishment of any such new office or facility),
(ii) any Credit Party’s identity or corporate structure or (iii) any Credit
Party’s Federal Taxpayer Identification Number.  The Borrower will not effect or
permit any change referred to in the preceding sentence unless all filings have
been made under the Uniform Commercial Code and all other actions have been
taken that are required so that such change will not at any time adversely
affect the validity, perfection or priority of any Transaction Lien on any of
the Collateral.

 

(b)           Each year, at the time annual financial statements with respect to
the preceding Fiscal Year are delivered pursuant to Section 5.01(a), the
Borrower will deliver to the Administrative Agent (for distribution to each
Lender by the Administrative Agent) a certificate of a Financial Officer and its
chief legal officer setting forth the information required pursuant to Section 1
of the Perfection Certificate or confirming that there has been no material
change in such information since the date of the Perfection Certificate
delivered on the Effective Date or the date of the most recent certificate
delivered pursuant to this subsection.

 

Section 5.04.  Existence; Conduct of Business.  The Borrower and its Restricted
Subsidiaries will do or cause to be done all things reasonably necessary to
preserve, renew and keep in full force and effect its (i) legal existence and
(ii) the rights, licenses, qualifications, permits, privileges, franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
business, except where the failure to do so would not reasonably be expected to
result in a Material Adverse Effect; provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 6.03.

 

Section 5.05.  Payment of Obligations.  The Borrower and each Restricted
Subsidiary will pay its Debt and other obligations, including Tax liabilities,
before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or relevant Restricted Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP,
(c) such contest effectively suspends collection of the contested obligation and
the enforcement of any Lien securing such obligation and (d) the failure to make
payment pending such contest would not reasonably be expected to result in a
Material Adverse Effect.

 

Section 5.06.  Maintenance of Real Property.  The Borrower and each Restricted
Subsidiary will maintain in good standing all of the Mining Leases and other
agreements related to Real Property and will promptly perform all material
obligations thereunder, except where the failure to do so would not reasonably
be expected to result in a Material

 

75

--------------------------------------------------------------------------------

 

Adverse Effect, provided that nothing in the foregoing shall be deemed to
preclude termination of the Mining Lease upon expiration or termination of its
term after completion of mining.

 

Section 5.07.  Maintenance of Personal Property.  The Borrower and each
Restricted Subsidiary will maintain all material personal property necessary to
the conduct of its business in good working order and condition in accordance
with the standards of a good operator in the open pit coal mining business,
ordinary wear and tear excepted 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, if any, may be properly conducted at all times, except
where the failure to do so would not reasonably be expected to result in a
Material Adverse Effect.

 

Section 5.08.  Insurance.  (a) The Borrower and its Subsidiaries will maintain
with financially sound and reputable insurance companies selected by the
Borrower (which, for the avoidance of doubt, may include Three Crowns Insurance,
for so long as Parent owns Equity Interests of Borrower and for so long as Three
Crowns Insurance conducts its business through entities duly licensed by the
appropriate Government Authority in any state in which it is required to do so 
to conduct business as an insurer or otherwise provides insurance coverage in a
manner that is acceptable in any jurisdiction in which such insurance is
provided to the Borrower and its Subsidiaries) that customarily write insurance
for the risks covered thereby in the amounts contemplated thereby in such
amounts, including deductibles and levels of self-insurance, and on material
terms, in each case at least as favorable on an aggregate basis to the Lenders
as those in effect on the Effective Date:

 

(i)            fire and extended coverage insurance, on a replacement cost basis
(except for drag lines which are insured on the basis of 120% of declared
value), with respect to all personal property and Improvements, in such amounts
as are customarily maintained by companies in the same or similar business
operating in the same or similar locations;

 

(ii)           commercial general liability insurance against claims for bodily
injury, death or property damage occurring upon, about or in connection with the
use of any properties owned, occupied or controlled by it, providing coverage on
an occurrence basis in accordance with good practice as compared to companies in
the same or similar business and including the broad form CGL endorsement;

 

(iii)          business interruption insurance, insuring against loss of gross
earnings for a period of at least 12 months arising from any risks or
occurrences required to be covered by insurance pursuant to clause (i) above;
and

 

(iv)          such other insurance as may be required by law.

 

Deductibles or self-insured retention shall not exceed $2,500,000 for fire and
extended coverage policies, $2,000,000 for commercial general liability
policies, provided,

 

76

--------------------------------------------------------------------------------

 

however, that so long as Borrower is insured under Three Crowns Insurance, the
deductibles shall be the deductibles that are in place prior to the Effective
Date.

 

(b)           Fire and extended coverage policies (and any policies required to
be maintained pursuant to subsection (a) of this Section) maintained with
respect to any Collateral shall be endorsed or otherwise amended to include
(i) a non-contributing mortgagee clause (regarding Improvements) and lenders’
loss payable clause (regarding personal property), in each case in favor of the
Administrative Agent and providing for losses thereunder to be payable to the
Administrative Agent or its designee as sole loss payee, and (ii) such other
provisions as the Administrative Agent may reasonably require from time to time
to protect the interests of the Secured Parties.  Commercial general liability
policies shall be endorsed to name the Administrative Agent as an additional
insured.  Each such policy referred to in this subsection also shall provide
that it shall not be canceled, modified or not renewed (i) by reason of
nonpayment of premium except upon at least 10 days’ prior written notice thereof
by the insurer to the Administrative Agent (giving the Administrative Agent the
right to cure defaults in the payment of premiums) or (ii) for any other reason
except upon at least 30 days’ prior written notice thereof by the insurer to the
Administrative Agent.  The Borrower shall deliver to the Administrative Agent,
prior to the cancellation, modification or nonrenewal of any such policy of
insurance, a copy of a renewal or replacement policy (or other evidence of
renewal of a policy previously delivered to the Administrative Agent) together
with evidence satisfactory to the Administrative Agent of payment of the premium
therefor.

 

(c)           With respect to each Mortgaged Property, the Borrower shall obtain
flood insurance in such total amount as the Administrative Agent may from time
to time require, if at any time the area in which any improvements located on
any Mortgaged Property is designated a “flood hazard area” in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), and otherwise comply with the National Flood Insurance
Program as set forth in the Flood Disaster Protection Act of 1973, as amended
from time to time.

 

Section 5.09.  Casualty and Condemnation.  The Borrower will furnish to the
Administrative Agent and the Lenders prompt written notice of any loss or other
insured damage to any material portion of the Collateral (which, for the
avoidance of doubt, shall not include the conduct of mining operations in the
ordinary course) or the commencement of any action or proceeding for the taking
of any Collateral or any part thereof or interest therein under power of eminent
domain or by condemnation or similar proceeding, in each case to the extent that
such action would reasonably be expected to result in a Material Adverse Effect.

 

Section 5.10.  Proper Records; Rights to Inspect and Appraise.  The Borrower and
each Restricted Subsidiary will keep proper books of record and account in which
complete and correct entries are made of all transactions relating to its
business and activities in accordance with GAAP.  The Borrower and each
Restricted Subsidiary will permit any representatives designated by the
Administrative Agent or the Required Lenders, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and

 

77

--------------------------------------------------------------------------------

 

as often as reasonably requested; provided, however, so long as no Event of
Default has occurred and is continuing, such inspections shall be limited to two
(2) per year.

 

Section 5.11.  Compliance with Laws.  The Borrower and each Restricted
Subsidiary will comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property (owned or leased) and
all Environmental Laws, Mining Laws and all Environmental Permits and Mining
Permits, except where failures to do so, in the aggregate, do not and would not
reasonably be expected to result in a Material Adverse Effect.

 

Section 5.12.  Use of Proceeds and Letters of Credit.  The proceeds of the Loans
will be used only for general corporate purposes.  No part of the proceeds of
any Loan will be used, directly or indirectly, for any purpose that entails a
violation of any of the Regulations of the Federal Reserve Board, including
Regulations T, U and X.  Letters of Credit will be requested and used only
(i) to support payment obligations of the Borrower and its Restricted
Subsidiaries, including to collateralize reclamation bonds, performance bonds,
bid bonds, surety bonds and other similar instruments, (ii) to make payments or
to collateralize obligations to Parent and its Affiliates pursuant to
reimbursement obligations relating to certain already existing letters of credit
issued by Parent and/or its Affiliates for the benefit of the Borrower, (iii) in
support of certain obligations under the Transaction Documents and (iv) for
other general corporate purposes.

 

Section 5.13.  Additional Subsidiaries.  If any additional Subsidiary (other
than an Excluded Subsidiary) is formed or acquired after the Effective Date, the
Borrower will, within three Business Days after such Subsidiary is formed or
acquired, notify the Administrative Agent and the Lenders thereof and, cause any
Equity Interest in or Debt of such Subsidiary owned by or on behalf of any
Credit Party to be added to the Collateral to the extent required by the
Security Agreement.  If such Subsidiary is or subsequently becomes a
Wholly-Owned Restricted Subsidiary and is not prohibited by applicable law or
regulation from guaranteeing the Borrower’s obligations hereunder, the Borrower
shall promptly cause the Collateral and Guarantee Requirement to be satisfied
with respect to such Subsidiary, whereupon such Subsidiary will become a
“Guarantor” and “Grantor” for purposes of the Loan Documents.

 

Section 5.14.  Further Assurances.  (a) The Credit Parties will execute and
deliver any and all further documents, financing statements, agreements and
instruments, and take all such further actions (including the filing and
recording of financing statements, fixture filings, mortgages, deeds of trust
and other documents), that may be required under any applicable law, or that the
Administrative Agent or the Required Lenders may reasonably request, to cause
the Collateral and Guarantee Requirement to be and remain satisfied, all at the
Borrower’s expense.  The Borrower will provide to the Administrative Agent, from
time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Transaction Liens
created or intended to be created by the Security Documents.

 

(b)           If any material assets (including any Real Property) are acquired
by the Borrower or any Guarantor after the Effective Date (other than assets
constituting Collateral that become subject to Transaction Liens upon
acquisition thereof), the

 

78

--------------------------------------------------------------------------------

 

Borrower will notify the Administrative Agent and the Lenders thereof, and, if
requested by the Administrative Agent or the Required Lenders, will cause such
assets to be subjected to a Transaction Lien securing the Secured Obligations
and will take, or cause the relevant Guarantor to take, such actions as shall be
necessary or reasonably requested by the Administrative Agent to grant and
perfect (to the extent possible) or record such Transaction Lien, including
actions described in Section 5.14(a), all at the Borrower’s expense, provided
that no Credit Party shall be required to take such actions under this clause
(b) with respect to any newly acquired assets that it would not have been
required to take under the Security Documents with respect to assets owned or
held by Credit Parties as of the Effective Date.

 

(c)           If at any time Holdings proposes to Guarantee the Senior Notes of
the Borrower or any of its Subsidiaries, the Borrower shall ensure that Holdings
shall, prior to or simultaneously with providing such Guarantee, provide to the
Administrative Agent a Guarantee of the Loans and all other Secured Obligations
all substantially on the terms of the Guarantee contained in the Security
Agreement, and take such other actions in connection therewith, including
actions described in Section 5.14(a), as the Administrative Agent shall
reasonably request, all at the Borrower’s expense.

 

Section 5.15. Preparation of Environmental Reports.  In addition to any other
rights hereunder, not more often than once per Permit Area established after the
Effective Date during the term of this Agreement (or more frequently during the
continuance of an Event of Default), at the reasonable request of the
Administrative Agent, the Borrower will provide to the Lenders within 90 days
after such request, at the expense of the Borrower, an environmental or mining
site assessment or audit report summarizing any material Environmental
Liabilities for any of its Real Properties described in such request, prepared
by an environmental or mining consulting firm reasonably acceptable to the
Administrative Agent (or for so long as no Event of Default has occurred and is
continuing, an internally prepared environmental report consistent with the
Borrower’s policies and procedures on environmental reports), in each case
showing compliance with, or the Borrower’s or applicable Subsidiary’s plan to
achieve compliance with, Environmental Laws subject to ordinary course normal
practices and procedures of the coal mining industry with respect to such
Environmental Liabilities or matters.

 

Section 5.16.  Maintenance of Ratings.  The Borrower will use commercially
reasonable efforts to maintain at all times a corporate credit rating from S&P
and a corporate family rating from Moody’s, in each case with respect to the
Borrower.

 

Section 5.17.  Operation of Mines.  The Borrower will, and shall cause each of
its Restricted Subsidiaries to, operate their mines in all material respects in
accordance with sound coal mining practices and Mining Laws and Mining Permits,
except where the failure to do so would not reasonably be expected to result in
a Material Adverse Effect.

 

Section 5.18.  Maintenance of Material Contracts.  The Borrower will, and will
cause each of its Restricted Subsidiaries to, comply with the provisions of and
to maintain in full force and effect all material licenses, material permits,
and material coal purchase and supply contracts to which any such Person is a
party, except where the

 

79

--------------------------------------------------------------------------------

 

failure to so maintain in full force and effect a material license, material
permit or a material contract would not be reasonably expected to result in a
Material Adverse Effect.

 

Section 5.19.  Title Opinions. The Credit Parties shall deliver to the
Administrative Agent (for distribution to each Lender by the Administrative
Agent), within 120 days after the Effective Date, with respect to any Mining
Lease identified as being a “Federal or State Mining Lease” in Schedule 5.19, a
title opinion in a form reasonably satisfactory to the Administrative Agent or
the Required Lenders.

 

ARTICLE 6
NEGATIVE COVENANTS

 

Until all the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or been cancelled and all LC Disbursements
have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

Section 6.01.  Debt; Certain Equity Securities.  Neither the Borrower nor any
Restricted Subsidiary will create, incur, assume or permit to exist any Debt
(including Acquired Debt), and no Restricted Subsidiary shall issue any
preferred stock, except:

 

(i)            Debt created under the Loan Documents;

 

(ii)           the Senior Notes;

 

(iii)          Second Lien Senior Secured Debt in an aggregate principal amount
not to exceed, at the time incurred, the greater of (x) $140,000,000 and (y) 12%
of Consolidated Net Tangible Assets determined at the date of the incurrence of
such Second Lien Senior Secured Debt, provided, that no Default shall have
occurred and be continuing or result therefrom, and provided further that after
giving effect thereto, the Borrower is in Pro Forma Compliance with the
covenants contained in Section 6.11, Section 6.12 and Section 6.13, calculated
based on the relevant financial statements delivered pursuant to Section 5.01,
as though such incurrence occurred at the beginning of the period covered
thereby;

 

(iv)          Debt existing on the date hereof and listed in Schedule 6.01 and
extensions, renewals and replacements of any such Debt that do not increase the
outstanding principal amount thereof or result in an earlier maturity date or
decreased weighted average life thereof;

 

(v)           Debt of the Borrower or any Restricted Subsidiary to the Borrower
or any Restricted Subsidiary and Debt of any Subsidiary to the Borrower or any
Restricted Subsidiary; provided that (x) Debt owed by any Restricted Subsidiary
that is not a Credit Party to the Borrower or any Guarantor shall be subject to
Section 6.04 and (y) Debt owed by a Credit Party to any Restricted Subsidiary
that is not a Credit Party shall be subordinated to the

 

80

--------------------------------------------------------------------------------

 

Secured Obligations on customary terms and conditions reasonably satisfactory to
the Administrative Agent;

 

(vi)          Guarantees by the Borrower or any Restricted Subsidiary of Debt of
the Borrower or any Restricted Subsidiary and Guarantees by any Subsidiary of
Debt of the Borrower or any Restricted Subsidiary; provided that Guarantees by
the Borrower or any Guarantor of Debt of any Subsidiary that is not a Credit
Party shall be subject to Section 6.04;

 

(vii)         Guarantees by the Borrower or any Restricted Subsidiary of
borrowings by current or former officers, managers, directors, employees or
consultants in connection with the purchase of Equity Interests of Holdings by
any such person in an aggregate principal amount not to exceed $2,500,000 at any
one time outstanding;

 

(viii)        Debt of the Borrower or any Restricted Subsidiary (A) in existence
on the date any Person becomes a Restricted Subsidiary as a result of an
Acquisition or other acquisition by the Borrower and its other Restricted
Subsidiaries or (B) incurred to finance the acquisition, construction or
improvement of any assets, including Capital Lease Obligations and any Debt
assumed in connection with the acquisition of any such assets or secured by a
Lien on any such assets before the acquisition thereof; and extensions, renewals
and replacements of any such Debt under this clause (viii) that do not increase
the outstanding principal amount thereof or result in an earlier maturity date
or decreased weighted average life thereof; provided that the aggregate
principal amount of Debt outstanding at any time and permitted by this clause
(viii) shall not exceed the greater of $100,000,000 and 8% of Consolidated Net
Tangible Assets determined at such date;

 

(ix)           Debt in connection with Permitted Receivables Financings,
provided that the aggregate principal amount of all Receivables issued pursuant
to such Permitted Receivables Financings shall not exceed $100,000,000 at any
time outstanding;

 

(x)            Debt of Foreign Subsidiaries engaged in Permitted Businesses for
general corporate purposes in an aggregate amount not to exceed $10,000,000 at
any time outstanding;

 

(xi)           Debt related to the financing of insurance policy premiums;
provided that (A) such insurance is for the benefit of the Borrower or its
Restricted Subsidiaries and (B) the aggregate principal amount of Debt permitted
by this clause shall not exceed $7,500,000 at any time outstanding;

 

(xii)          Debt under trade-related letters of credit obtained in the
ordinary course;

 

(xiii)         for so long as Holdings is paying certain obligations on behalf
of the Borrower and its Subsidiaries, Guarantees by the Borrower or any
Restricted

 

81

--------------------------------------------------------------------------------

 

Subsidiary of obligations relating to the establishment of one or more
commercial bank accounts of Holdings used to pay obligations solely under the
Acquisition Documents or otherwise of, or on behalf of, the Borrower and its
Subsidiaries or in connection with Holdings’ role as the managing member of the
Borrower, in an aggregate amount not to exceed $5,000,000 at any time
outstanding;

 

(xiv)        Debt under any Permitted Hedge Agreement; and

 

(xv)         other unsecured Debt of any Credit Party (including unsecured Debt
of any Person that becomes a Credit Party after the date hereof); provided that
if the aggregate principal amount of such Debt (considered with any other
related Debt issued in connection with a particular transaction) shall exceed
$5,000,000, the Borrower shall be in Pro Forma Compliance with the covenants
contained in Sections 6.11, 6.12 and 6.13.

 

Section 6.02.  Liens.  Neither the Borrower nor any Restricted Subsidiary will
create or permit to exist any Lien on any property now owned or hereafter
acquired by it, or assign or sell accounts receivable or rights in respect
thereof, except:

 

(i)            Transaction Liens;

 

(ii)           Permitted Liens;

 

(iii)          Liens securing Second Lien Senior Secured Debt permitted by
Section 6.01(iii);

 

(iv)          any Lien on any property of the Borrower or any Restricted
Subsidiary existing on the date hereof and listed in Schedule 6.02 and any
modifications, replacements, renewals or extensions thereof; provided that the
Lien does not (x) extend to any additional property or (y) secure any additional
obligations, in each case other than the initial property so subject to such
Lien and the Debt and other obligations originally so secured, and any
modifications, replacements, renewals, extensions or refinancings thereof
permitted hereunder;

 

(v)           Liens on assets acquired, constructed or improved by the Borrower
or any Restricted Subsidiary; provided that (A) the Debt secured by such Liens
is permitted by Section 6.01(viii), and (B) such Liens will not apply to any
other property of the Borrower or any Restricted Subsidiary, and any extension,
renewal or replacements thereof;

 

(vi)          Liens on accounts receivable and related property pursuant to any
Permitted Receivables Financing;

 

(vii)         any Lien granted in favor of the Swingline Lender or any Issuing
Bank pursuant to arrangements designed to eliminate such Swingline Lender’s or
Issuing Bank’s risk with respect to any Defaulting Lender’s or Defaulting

 

82

--------------------------------------------------------------------------------

 

Lenders’ participation in Swingline Loans or Letters of Credit, respectively, as
contemplated by Section 2.20;

 

(viii)        Liens in favor of a banking institution arising by operation of
law or any contract, including in support of guarantees permitted under
Section 6.01(xiii), encumbering deposits (including the right of set-off) held
by such banking institutions incurred in the ordinary course of business and
which are within the general parameters customary in the banking industry; or

 

(ix)           Liens not permitted by the foregoing clauses of this Section 6.02
securing other obligations in an aggregate amount outstanding or, if less in
each case, on assets with an aggregate fair market value (determined immediately
prior to the incurrence of such Lien), that together do not exceed the greater
of $35,000,000 and 3.0% of Consolidated Net Tangible Assets determined at such
date.

 

Section 6.03.  Fundamental Changes.  Neither the Borrower nor any Restricted
Subsidiary will merge into or consolidate with any other Person, or liquidate or
dissolve, or permit any other Person to merge into or consolidate with it,
except that, if at the time thereof and immediately after giving effect thereto
no Default shall have occurred and be continuing, (i) any Subsidiary may merge
into the Borrower in a transaction in which the Borrower is the surviving
corporation, (ii) any Restricted Subsidiary may merge into any Subsidiary in a
transaction in which the surviving entity is a Restricted Subsidiary and (if any
party to such merger is a Guarantor) is a Guarantor and (iii) any Subsidiary
(except a Guarantor) may liquidate or dissolve if the Borrower determines in
good faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Lenders; provided that, if
any such merger involves a Person that is not a wholly owned Subsidiary
immediately before such merger, such merger shall not be permitted unless also
permitted by Section 6.04.  The Borrower shall not, and shall not permit any of
its Restricted Subsidiaries to, engage in any business other than Permitted
Businesses, and at all times the Borrower and its Restricted Subsidiaries,
determined as a whole, shall be principally engaged in Permitted Businesses.

 

Section 6.04.  Investments.  Neither the Borrower nor any Restricted Subsidiary
will purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly-owned Restricted Subsidiary before such merger) any
Investment except:

 

(a)           Cash Equivalents;

 

(b)           Investments existing on the date hereof and listed on Schedule
6.04;

 

(c)           Investments in Credit Parties (including immediately after giving
effect to and as a result of such Investment);

 

(d)           Investments by the Borrower and its Restricted Subsidiaries in
Persons other than Credit Parties; provided that:

 

83

--------------------------------------------------------------------------------

 

(i)            unless the Investment Grade Date has occurred, the aggregate
amount of Investments by the Borrower and its Restricted Subsidiaries under this
clause (d) shall not at any time exceed the sum of (x) the greater of
(A) $100,000,000 and (B) 8% of Consolidated Net Tangible Assets determined at
such date plus (y) if positive, the Available Net Income Basket Amount plus
(z) if positive, the Available Equity Basket Amount; and

 

(ii)           if such Investment comprises an Acquisition:

 

(A)  immediately before and immediately after giving Pro Forma Effect to any
such Acquisition, no Event of Default shall have occurred and be continuing;

 

(B)  any Person or other property acquired in such Acquisition is in a Permitted
Business; and

 

(C)  unless the aggregate principal amount of Debt incurred by the Borrower and
its Restricted Subsidiaries in connection with such Acquisition (including
without limitation Acquired Debt) is less than $5,000,000, immediately after
giving effect to such Acquisition, the Borrower shall be in Pro Forma Compliance
with Section 6.11, Section 6.12 and Section 6.13, determined on the basis of the
financial information most recently delivered to the Administrative Agent and
the Lenders pursuant to Section 5.01(a) or Section 5.01(b) as though such
Acquisition had been consummated as of the first day of the fiscal period
covered thereby (and such compliance shall be evidenced by a certificate from a
Financial Officer of the Borrower demonstrating such compliance calculation in
reasonable detail).

 

(e)           Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;

 

(f)            Investments made pursuant to surety bonds, reclamation bonds,
performance bonds, bid bonds, appeal bonds and similar obligations, in each
case, to the extent such surety bonds, reclamation bonds, performance bonds, bid
bonds, appeal bonds and similar obligations are permitted under this Agreement;

 

(g)           Investments in the Equity Interests of Holdings in connection with
certain purchases or redemptions of Equity Interests held by officers, directors
and employees or any Plan in an aggregate amount not to exceed to $5,000,000 per
annum when combined with any purchases or redemptions of Equity Interests of the
Borrower permitted by Section 6.07(b);

 

(h)           loans and advances to current or former officers, managers,
directors, employees or consultants of Holdings, the Borrower or any Restricted
Subsidiary in an aggregate amount not to exceed $2,000,000 at any time
outstanding;

 

84

--------------------------------------------------------------------------------

 

(i)            Investments arising as a result of Permitted Receivables
Financings;

 

(j)            Hedging Agreements permitted by Section 6.06;

 

(k)           Production Payments, royalties, dedication of reserves under
supply agreements or similar rights or interests granted, taken subject to, or
otherwise imposed on properties with normal practices in the mining industry;

 

(l)            Investments resulting from pledges and deposits permitted under
the definition of “Permitted Liens”;

 

(m)          Investments in an escrow account required by the Master Separation
Agreement provided to support indemnity and other payment obligations with
respect to surety bonds, letters of credit and reclamation obligations existing
prior to the Effective Date, by Holdings, the Borrower and its Subsidiaries to
RTA and its Affiliates under the Acquisition Documents;

 

(n)           additional Investments necessary for the conduct of the Borrower’s
business in the ordinary course for each of Decker, Wyoming Quality Healthcare
Coalition and Montana Royalty Company, Ltd., in an aggregate amount not to
exceed $10,000,000;

 

(o)           Investments consisting of indemnification obligations in respect
of performance bonds, bid bonds, appeal bonds, surety bonds, reclamation bonds
and completion guarantees and similar obligations in respect of Specified Coal
Agreements or under any Mining Law or Environmental Law or with respect to
workers’ compensation benefits, in each case entered into in the ordinary course
of business, and pledges or deposits made in the ordinary course of business in
support of obligations under existing coal sales contracts (and extensions or
renewals thereof on similar terms); and

 

(p)           other Investments not permitted by the foregoing clauses of this
Section 6.04 in an aggregate amount not to exceed at the time made the sum of
(x) the greater of (i) $75,000,000 and (ii) 6% of Consolidated Net Tangible
Assets determined at such date, plus (y) if positive, the Available Net Income
Basket Amount plus (z) if positive, the Available Equity Basket Amount.

 

Section 6.05.  Asset Sales.  Neither the Borrower nor any Restricted Subsidiary
will sell, transfer, lease or otherwise dispose of any property, including any
Equity Interest owned by it, nor will any Restricted Subsidiary issue any
additional Equity Interest in such Restricted Subsidiary, except:

 

(a)           sales of inventory, used, obsolete or surplus equipment or
reserves, dispositions related to the burn-off of mines and Cash Equivalents in
the ordinary course of business and dispositions of surface rights and
termination of Mining Leases after the completion of mining and reclamation, and
termination or abandonment of water rights no longer needed for mining;

 

85

--------------------------------------------------------------------------------

 

(b)           sales, transfers and other dispositions to the Borrower or a
Restricted Subsidiary; provided that any such sales, transfers or dispositions
involving a Subsidiary that is not a Credit Party shall comply with
Section 6.08;

 

(c)           licensing and cross-licensing arrangements involving any
technology or other intellectual property of the Borrower or any Restricted
Subsidiary in the ordinary course of business consistent with past practice;
provided, however, that any such license or cross-license of technology or other
intellectual property shall be on a non-exclusive basis;

 

(d)           Dispositions of assets by virtue of an asset exchange or swap with
a third party in any transaction (x) with an aggregate fair market value less
than or equal to $12,500,000, (y) involving a coal-for-coal swap or
(z) consisting of a coal swap involving any Real Property;

 

(e)           exchanges and relocation of easements for pipelines, oil and gas
infrastructure and similar arrangements in the ordinary course of business;

 

(f)            Disposition of assets related to Jacobs Ranch or the sale thereof
required pursuant to the Master Separation Agreement and the Membership Interest
Purchase Agreement; and

 

(g)           Dispositions not permitted by the foregoing clauses of this
Section 6.05 with an aggregate fair market value not exceeding 5% of
Consolidated Net Tangible Assets (determined as of the date of the balance sheet
of the Borrower and its Restricted Subsidiaries most recently delivered pursuant
to Section 3.04(b) or Section 5.01, as applicable) in any fiscal year, provided
that any Disposition or series of related Dispositions made pursuant to this
clause (g) of assets or property with an aggregate fair market value in excess
of $7,500,000 shall be made for fair value and for consideration comprising at
least 80% cash and Cash Equivalents, and provided further that solely for
purposes of the determination under the foregoing proviso, Cash Equivalents
shall be deemed to include Productive Assets.

 

Section 6.06.  Hedging Agreements.  Neither the Borrower nor any Subsidiary will
enter into or be an obligor with respect to any Hedging Agreement except
Permitted Hedging Agreements.

 

Section 6.07.  Restricted Payments.  Neither the Borrower nor any Subsidiary
will declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment except:

 

(a)           the Borrower may make Permitted Tax Distributions to Holdings and
other holders of Equity Interests in the Borrower;

 

(b)           the Borrower may make payments to Holdings (and other holders of
Equity Interests of the Borrower on a pro-rata basis) to fund dividends on
Holdings’ common stock in an annual amount per share (adjusted appropriately to
reflect subsequent stock splits, subdivisions and reclassifications) equal to
1.5% of the per-share

 

86

--------------------------------------------------------------------------------

 

price to the public in the IPO, provided that no Default shall have occurred and
be continuing as a result therefrom;

 

(c)           the Borrower may redeem, repurchase or otherwise acquire or retire
its Equity Interests from current or former officers, managers, directors,
employees or consultants (or their respective estates or immediate family
members) of Holdings or any Subsidiary in an aggregate amount not to exceed
$5,000,000 per annum when combined with any investments in the Equity Interests
of Holdings permitted by Section 6.04(g); provided that no Default shall have
occurred and be continuing as a result therefrom;

 

(d)           the Borrower may make Restricted Payments on or prior to the
Effective Date to consummate the Transactions;

 

(e)           the Borrower and each Restricted Subsidiary may declare and make
Restricted Payments payable solely in the Equity Interests (other than
Disqualified Equity Interests) of such Person;

 

(f)            the Borrower may make a one-time payment to Holdings or Parent in
the amount of a required working capital-based adjustment made in the time
period provided for in the Acquisition Documents;

 

(g)           each Restricted Subsidiary may make Restricted Payments payable,
on a pro rata basis or on a basis more favorable to the Borrower, to all holders
of any class of Equity Interests of such Restricted Subsidiary at least 50% of
which is held, directly or indirectly through other Restricted Subsidiaries, by
the Borrower;

 

(h)           the Borrower may make payments to Holdings and other holders of
Equity Interests in the Borrower (but only to the extent necessary) to permit
Holdings to make any required payments under the Tax Receivable Agreement in an
aggregate amount, for all such Restricted Payments made pursuant to this clause
(h) after the Effective Date, not to exceed the sum of (x) $30,000,000 plus
(y) 50% of the sum of (A) if positive, the Available Net Income Basket Amount
plus (B) if positive, the Available Equity Basket Amount; and

 

(i)            so long as no Event of Default shall have occurred and be
continuing immediately before or after giving effect thereto, the Borrower may
make other payments or distributions not otherwise permitted under this
Section 6.07 in an aggregate amount, for all such Restricted Payments made
pursuant to this clause (i) after the Effective Date, not to exceed the sum of
(x) $30,000,000 plus (y) 50% of the sum of (A) if positive, the Available Net
Income Basket Amount plus (B) if positive, the Available Equity Basket Amount.

 

Section 6.08.  Transactions with Affiliates.  Neither the Borrower nor any
Restricted Subsidiary will sell, lease or otherwise transfer any property to, or
purchase, lease or otherwise acquire any property from, or otherwise engage in
any other transaction with, any of its Affiliates (other than transactions in
the ordinary course of business that are on terms and conditions, taken as a
whole, not less favorable to the Borrower or any Restricted Subsidiary than
could be obtained on an arm’s length basis

 

87

--------------------------------------------------------------------------------

 

from unrelated third parties) if the aggregate value of such transaction or
series of related transactions with such Affiliate exceeds $10,000,000, except:

 

(a)           transactions between or among the Borrower and the Guarantors not
involving any other Affiliate;

 

(b)           any Restricted Payment permitted by Section 6.07;

 

(c)           transactions arising under the Transaction Documents (as such
documents are in effect on the Effective Date, and as amended or modified
thereafter on terms that are not materially less favorable to the Borrower and
its Restricted Subsidiaries, taken as a whole, considered in the aggregate
taking into account all such substantially contemporaneous amendments and
modifications of the Transaction Documents);

 

(d)           arrangements with respect to the procurement of services of
directors, officers, independent contractors, consultants or employees in the
ordinary course of business and the payment of customary compensation (including
bonuses) and other benefits (including retirement, health, stock option and
other benefit plans) and reasonable reimbursement arrangements in connection
therewith;

 

(e)           the payment of fees and indemnities to directors, officers,
consultants and employees of Holdings and the Restricted Subsidiaries in the
ordinary course of business;

 

(f)            transactions with any joint venture or similar arrangements
(including, without limitation, any cash management activities relating
thereto); provided, however that such arrangements are on terms no less
favorable to the Borrower and its Restricted Subsidiaries, on the one hand, and
the relevant joint venture partner and its Affiliates, on the other hand, taking
into account all related arrangements and transactions entered into by the
Borrower and its Restricted Subsidiaries, on the one hand, and the relevant
joint venture partner and its Affiliates, on the other hand;

 

(g)           the payment of fees and expenses relating to the Transactions on
the Effective Date; and

 

(h)           letter of credit reimbursement obligations in connection with
letter of credit arrangements historically provided by Parent and its Affiliates
on behalf of the Borrower in the ordinary course of business.

 

Section 6.09.  Restrictive Agreements.  Neither the Borrower nor any Restricted
Subsidiary will, directly or indirectly, enter into or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any
condition on (a) the ability of any Credit Party to create or permit to exist
any Lien on any of its property or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital stock
or to make or repay loans or advances to the Borrower or any Restricted
Subsidiary or to Guarantee Debt of the Borrower or any Restricted Subsidiary;
provided that (i) the foregoing shall not apply to restrictions and conditions
imposed by law or by any Loan Document or the Transaction Document (as such
documents are in effect on the Effective Date, and as amended or modified
thereafter on terms that are not materially

 

88

--------------------------------------------------------------------------------

 

less favorable to the Borrower and its Restricted Subsidiaries, taken as a
whole, considered in the aggregate taking into account all such substantially
contemporaneous amendments and modifications of the Transaction Documents),
(ii) the foregoing shall not apply to restrictions and conditions existing on
the date hereof and identified on Schedule 6.09 (but shall apply to any
amendment or modification expanding the scope of, or any extension or renewal
of, any such restriction or condition), (iii) the foregoing shall not apply to
customary restrictions and conditions contained in agreements relating to the
sale of a Restricted Subsidiary or an asset pending such sale, provided that
such restrictions and conditions apply only to the Restricted Subsidiary or such
asset that is to be sold and such sale is permitted hereunder, (iv) clause
(a) of this Section shall not apply to restrictions or conditions imposed by any
agreement relating to secured Debt permitted by this Agreement on property
securing such Debt; and (v) clause (a) of this Section shall not apply to
customary provisions in leases restricting the assignment thereof or any
restrictions imposed pursuant to Specified Coal Agreements or Mining Leases.

 

Section 6.10.  Amendment of Material Documents.  Neither the Borrower nor any
Restricted Subsidiary will amend, modify or waive any of its rights under
(a) any document evidencing or governing, or under which was issued, any
Subordinated Debt or any Second Lien Senior Secured Debt, in each case in a
manner adverse to the interests of the Lenders hereunder or (b) if such
amendment, modification or waiver would reasonably be expected to have a
Material Adverse Effect, its certificate of incorporation, by-laws or other
organizational documents.

 

Section 6.11.  Net Cash Interest Expense Coverage Ratio.  The Borrower will not
permit the ratio of (a) EBITDA to (b) Consolidated Net Cash Interest Expense, in
each case for any period of four consecutive Fiscal Quarters ending on any date
during any period set forth below and determined on a Pro Forma Basis, to be
less than the ratio set forth below opposite such period:

 

Period

 

Ratio

 

Effective Date through December 31, 2010

 

2.50 to 1.0

 

January 1, 2011 through Maturity Date

 

2.75 to 1.0

 

 

Section 6.12.  Leverage Ratio.  The Borrower will not permit the Leverage Ratio
at any time during any period set forth below (in each case determined on a Pro
Forma Basis) to exceed the ratio set forth opposite such period:

 

Period

 

Ratio

 

Effective Date through December 31, 2010

 

3.75 to 1.0

 

January 1, 2011 through Maturity Date

 

3.50 to 1.0

 

 

Section 6.13.  First Lien Senior Secured Leverage Ratio.  The Borrower will not
permit the First Lien Senior Secured Leverage Ratio, in each case determined on
a Pro Forma Basis  to exceed 1.50 to 1.0.

 

89

--------------------------------------------------------------------------------

 

ARTICLE 7
EVENTS OF DEFAULT

 

If any of the following events (“Events of Default”) shall occur:

 

(a)                                  the Borrower shall fail to pay any
principal of any Loan or any LC Disbursement reimbursement obligation when the
same shall become due, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;

 

(b)                                 the Borrower shall fail to pay when due any
interest on any Loan or any fee or other amount (except an amount referred to in
clause (a) above) payable to any Lender Party under any Loan Document, and such
failure shall continue unremedied for a period of three (3) Business Days;

 

(c)                                  any representation, warranty or
certification made or deemed made by or on behalf of any Credit Party in or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder or in any report, certificate, financial statement or other
document furnished pursuant to any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been incorrect in
any material respect when made or deemed made;

 

(d)                                 the Borrower shall fail to observe or
perform any covenant or agreement contained in Section 5.02, 5.04 (with respect
to the existence of the Borrower) or 5.12 or in Article 6;

 

(e)                                  any Credit Party shall fail to observe or
perform any covenant or agreement contained in any Loan Document (other than
those specified in clause (a), (b) or (d) above), and such failure shall
continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);

 

(f)                                    the Borrower or any Restricted Subsidiary
shall fail to make a payment or payments (whether of principal or interest) in
respect of Material Debt when the same shall become due (beyond the period of
grace, if any, provided in the instrument or agreement under which such Material
Debt was created), whether at the due date thereof, at a date fixed for
prepayment or upon acceleration;

 

(g)                                 any event or condition occurs that results
in (i) Material Debt becoming due before its final scheduled maturity or
(ii) that enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of Material Debt or any trustee or agent on
its or their behalf to cause Material Debt to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, before its scheduled
maturity; provided that this clause shall not apply to secured Debt that becomes
due as a result of a voluntary sale or transfer of the property securing such
Debt;

 

(h)                                 an involuntary proceeding shall be commenced
or an involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any of its
Restricted Subsidiaries or its debts, or of a substantial part of its

 

90

--------------------------------------------------------------------------------

 

assets, under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect or (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Borrower or any of its Restricted Subsidiaries or for a substantial part of its
assets, 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;

 

(i)                                     the Borrower or any of its Restricted
Subsidiaries shall (i) voluntarily commence any proceeding or file any petition
seeking liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) above,
(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any of its
Restricted Subsidiaries or for a substantial part of its assets, (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 or
(vi) take any action for the purpose of effecting any of the foregoing;

 

(j)                                     the Borrower or any of its Restricted
Subsidiaries shall become unable, admit in writing its inability or fail
generally to pay its debts as they become due;

 

(k)                                  one or more judgments for the payment of
money in an aggregate amount exceeding $50,000,000 shall be rendered against the
Borrower or any of its Restricted Subsidiaries and 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 attach or
levy upon any asset of the Borrower or any of its Restricted Subsidiaries to
enforce any such judgment;

 

(l)                                     an ERISA Event shall have occurred that,
in the opinion of the Required Lenders, when taken either alone or together with
all other ERISA Events that have occurred, would reasonably be expected to
result in a Material Adverse Effect;

 

(m)                               any Lien purported to be created under any
Security Document shall cease to be, or shall be asserted by any Credit Party
not to be, a valid and perfected Lien on any material portion of the Collateral
to the extent provided, and with the priority required by (but, (x) in the case
of priority, only to the extent that any prior Lien not contemplated or
permitted under the Loan Documents is material and (y) in any event, subject to
Liens permitted by Section 6.02), the applicable Security Document, except
(i) as a result of a sale or other disposition of the applicable Collateral in a
transaction permitted under the Loan Documents or (ii) as a result of the
Administrative Agent’s failure to maintain possession of any stock certificates,
promissory notes or other documents delivered to it under the Security
Agreement;

 

(n)                                 a Change in Control shall occur;

 

(o)                                 any Guarantor’s Secured Guarantee shall at
any time fail to constitute a valid and binding agreement of such Guarantor or
any party shall so assert in writing; or

 

91

--------------------------------------------------------------------------------

 

(p)                                 one or more surety, reclamation or similar
bonds securing obligations of the Borrower or any Restricted Subsidiary of the
Borrower (or any required guaranties thereof or required letters of credit with
respect thereto) with an aggregate face amount of $50,000,000 or more shall be
actually terminated, suspended or revoked and not replaced within 30 days of
such termination, suspension or revocation; or

 

(q)                                 there shall occur any material uninsured
damage to or loss, theft or destruction of any of the Collateral that has a
Material Adverse Effect on the Lenders or any other of the Borrower’s or any of
its Restricted Subsidiaries’ assets are attached, seized, levied upon or
subjected to a writ or distress warrant; or such come within the possession of
any receiver, trustee, custodian or assignee for the benefit of creditors and
the same is not cured within thirty (30) days thereafter.

 

then, and in every such event (except an event with respect to the Borrower or
any Restricted Subsidiary described in clause (h) or (i) 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 the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are waived by the
Borrower; and in the case of any event with respect to the Borrower described in
clause (h) or (i) above, the Commitments shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon
and all fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are waived by the Borrower.

 

ARTICLE 8
THE ADMINISTRATIVE AGENT

 

Section 8.01.  Appointment and Authorization.  Each Lender Party irrevocably
appoints the Administrative Agent as its agent and authorizes the Administrative
Agent (i) to sign and deliver the Security Documents and (ii) to take such
actions on its behalf and to exercise such powers as are delegated to the
Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.

 

Section 8.02.  Rights and Powers as a Lender.  A bank serving as the
Administrative Agent shall, in its capacity as a Lender, have the same rights
and powers as any other Lender and may exercise the same as though it were not
the Administrative Agent.  Such bank and its Affiliates may accept deposits
from, lend money to and

 

92

--------------------------------------------------------------------------------

 

generally engage in any kind of business with the Borrower or any of its
Subsidiaries or Affiliates thereof as if it were not the Administrative Agent.

 

Section 8.03.  Limited Duties and Responsibilities.  The Administrative Agent
shall not 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 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 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 is
required in writing to exercise by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) and (c) except as expressly set forth in the Loan
Documents, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for any failure to disclose, any information relating to the
Borrower or any of its Restricted Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates in
any capacity.  The Administrative 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 9.02) or in the absence of its own
gross negligence or willful misconduct.  The Administrative Agent shall be
deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Administrative Agent the Borrower or a Lender, and the
Administrative 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 4 or elsewhere in any Loan Document, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent.

 

Section 8.04.  Authority to Rely on Certain Writings, Statements and Advice. 
The Administrative Agent shall be entitled to rely on, and shall not incur any
liability for relying on, 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.  The Administrative Agent also may
rely on 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.  The Administrative Agent may consult with legal counsel (who may be
counsel for the Borrower or its Restricted Subsidiaries), 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 8.05.  Sub-Agents and Related Parties.  The Administrative Agent may
perform any and all its duties and exercise its rights and powers by or through
one or more sub-agents appointed by it.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective

 

93

--------------------------------------------------------------------------------

 

Related Parties.  The exculpatory provisions of the preceding Sections of this
Article shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

 

Section 8.06.  Resignation; Successor Administrative Agent.  Subject to the
appointment and acceptance of a successor Administrative Agent as provided in
this Section, the Administrative Agent may resign at any time by notifying the
Lenders, the Issuing Banks and the Borrower.  Upon any such resignation, the
Required Lenders shall have the right to appoint a successor that is a bank or
trust company organized under the laws of the United States or any State or
district thereof with an office in New York, New York, which has a combined
capital surplus of at least $200,000,000 (an “Eligible Successor Agent”), with
the consent of the Borrower (which consent shall not be unreasonably withheld or
delayed).  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 gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders and the Issuing Banks, and
after consultation with the Borrower, appoint a successor Administrative Agent,
which shall be an Eligible Successor Agent.  Upon acceptance of its appointment
as Administrative Agent 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 the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder.  The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed by the Borrower and such successor. 
After the Administrative Agent’s resignation hereunder, the provisions of this
Article and Section 9.03 shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring Administrative Agent was acting as Administrative Agent. 
Notwithstanding anything to the contrary herein, the Required Lenders shall be
entitled to replace the Administrative Agent with an Eligible Successor Agent
with the consent of the Borrower (which consent shall not be unreasonably
withheld or delayed), and from and after such replacement, all references herein
to the Administrative Agent shall be references to such financial institution.

 

Section 8.07.  Credit Decisions by Lenders.  Each Lender acknowledges that it
has, independently and without reliance on the Administrative Agent 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 on the
Administrative Agent 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 on this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.

 

94

--------------------------------------------------------------------------------

 

ARTICLE 9
MISCELLANEOUS

 

Section 9.01.  Notices.  (a)  Except in the case of notices and other
communications expressly permitted to be given by telephone, all 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:

 

(i)                                    if to the Borrower, to:

 

Cloud Peak Energy Resources LLC

8051 E. Maplewood Ave.

Building 4

Greenwood Village, CO 80111

Attention: Oscar Martinez, Treasury,

with a copy to:

Legal Department

505 S. Gillette Ave. (82716)

P.O. Box 3009

Gillette, WY 82717-3009

 

Telecopy No. 212.507.6680

 

with a copy (which shall not constitute notice for any purpose under the Loan
Documents) to:

 

Fried, Frank, Harris, Shriver & Jacobson LLP

1001 Pennsylvania Avenue, NW

Washington, D.C. 20004-2505

Attention: Gus M. Atiyah

Tel:  202-639-7000

Fax:  202-639-7003

email:  gus.atiyah@friedfrank.com

 

(ii)                                 if to the Administrative Agent, to:

 

Morgan Stanley Senior Funding, Inc.

One Pierrepoint Plaza, 7th Floor

300 Cadman Plaza West

Brooklyn, New York 11201

Attention:  MS Agency / Beejal Sakaria

Telecopy No. 212.507.6680

 

95

--------------------------------------------------------------------------------

 

(iii)                              if to the Swingline Lender, to:

 

Morgan Stanley Senior Funding, Inc.

One Pierrepoint Plaza, 7th Floor

300 Cadman Plaza West

Brooklyn, New York 11201

Attention:  MS Agency / Beejal Sakaria

Telecopy No. 212.507.6680

 

(iv)                              if to any Issuing Bank, to it at its address
(or telecopy number) set forth in its Administrative Questionnaire;

 

(v)                                 if to any other Lender, to it at its address
(or telecopy number) set forth in its Administrative Questionnaire.

 

(b)                                 Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communications
pursuant to procedures approved by the Administrative Agent; provided that the
foregoing shall not apply to notices pursuant to Article 2 unless otherwise
agreed by the Administrative Agent and the applicable Lender.  The
Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.

 

(c)                                  Any party hereto may change its address or
telecopy number for notices and other communications hereunder by notice to the
Administrative Agent and the Borrower.  All notices and other communications
given to any party hereto in accordance with the provisions of this Agreement
will be deemed to have been given on the date of receipt.

 

Section 9.02.  Waivers; Amendments.  (a) No failure or delay by any Lender Party
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 Lender
Parties under the 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 Credit Party therefrom
shall in any event be effective unless the same shall be permitted by subsection
(b) of this Section, 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, neither the making of a Loan nor the issuance,
amendment, renewal or extension of a Letter of Credit shall be construed as a
waiver of any Default, regardless of whether any Lender Party had notice or
knowledge of such Default at the time.

 

(b)                                 No Loan Document or provision thereof may be
waived, amended or modified except, in the case of this Agreement, by an
agreement or agreements in writing entered into by the Borrower and the Required
Lenders or, in the case of any other Loan Document, by an agreement or
agreements in writing entered into by the parties thereto with the consent of
the Required Lenders; provided that no such agreement shall:

 

96

--------------------------------------------------------------------------------

 

(i)                                     increase the Commitment of any Lender
(or reinstate any Commitment terminated pursuant to Article 7) without its
written consent;

 

(ii)                                  reduce the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce any fee
payable hereunder, without the written consent of each Lender Party 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 fee payable hereunder, or reduce the amount of, waive
or excuse any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender Party affected thereby;

 

(iv)                              change 2.17(b) or 2.17(c) in a manner that
would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender;

 

(v)                                 change any provision of this Section or the
percentage set forth in the definition of “Required Lenders” or any other
provision of any Loan Document specifying the number or percentage of Lenders
(or Lenders of any Class) required to take any action thereunder, without the
written consent of each Lender;

 

(vi)                              release any material Guarantor from its
Secured Guarantee (except as expressly provided in the Security Agreement), or
limit its liability in respect of its Secured Guarantee, without the written
consent of each Lender;

 

(vii)                           release all or substantially all of the
Collateral from the Transaction Liens, without the written consent of each
Lender; or

 

provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent, the Issuing Banks or the
Swingline Lender without its prior written consent.

 

(c)                                  Notwithstanding the foregoing, if the
Required Lenders enter into or consent to any waiver, amendment or modification
pursuant to subsection (b) of this Section, no consent of any other Lender will
be required if, when such waiver, amendment or modification becomes effective,
(i) the Commitment of each Lender not consenting thereto terminates and (ii) all
amounts owing to it or accrued for its account hereunder are paid in full.

 

Section 9.03.  Expenses; Indemnity; Damage Waiver.  (a) The Borrower shall pay
(i) all reasonable out-of-pocket expenses incurred by the Administrative Agent
and its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent, in connection with the syndication of the
credit facilities provided for herein, the preparation and administration of the
Loan Documents and any amendments, modifications or waivers of the provisions
thereof (whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable

 

97

--------------------------------------------------------------------------------

 

out-of-pocket expenses incurred by any Issuing Bank in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder and (iii) all out-of-pocket expenses incurred by any
Lender Party and any Agent Party including the fees, charges and disbursements
of any counsel for any Lender Party and any Agent Party, in connection with the
enforcement or protection of its rights in connection with the Loan Documents
(including its rights under this Section), the Letters of Credit or the Loans,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of the Letters of Credit or the Loans.

 

(b)                                 The Borrower shall indemnify each of the
Lender Parties and each Agent Party and their respective Related Parties (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of any Loan
Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective obligations
thereunder or the consummation of the Transactions, (ii) any Loan or Letter of
Credit or the use of the proceeds therefrom (including any refusal by any
Issuing Bank to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (iii) any actual or alleged presence or
release of Hazardous Material on or from any Mortgaged Property or any other
property currently or formerly owned or operated by the Borrower or any
Subsidiary, or any other Environmental Liability resulting from the ownership or
operation of the Mines or any other Real Property by, or relating in any way to
the Borrower or any Subsidiary or any Guarantor or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not be available to any Indemnitee 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 such Indemnitee’s gross negligence or willful misconduct.

 

(c)                                  To the extent that the Borrower fails to
pay any amount required to be paid by it to the Administrative Agent, any
Issuing Bank or the Swingline Lender under subsection (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, the
relevant 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 the
Administrative Agent, such Issuing Bank or the Swingline Lender in its capacity
as such.  For purposes hereof, a Lender’s “pro rata share” shall be determined
based on its share of the sum of the total Revolving Credit Exposures and unused
Commitments at the time (in each case, determined as if no Lender were a
Defaulting Lender).

 

(d)                                 To the extent permitted by applicable law,
the Borrower shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for

 

98

--------------------------------------------------------------------------------

 

special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.

 

(e)                                  All amounts due under this Section shall be
payable within ten (10) days after written demand therefor.

 

Section 9.04.  Successors and Assigns.  (a) The provisions of this Agreement
shall be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
an Issuing Bank that issues any Letter of Credit), except that (i) the Borrower
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 Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section.  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (except the
parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of an Issuing Bank that issues any Letter of Credit)
and, to the extent expressly provided herein, the Related Parties of the Lender
Parties) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)                                 Any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of any Commitment it has at the time and any Loans
at the time owing to it); provided that:

 

(i)                                     the Administrative Agent must give prior
written consent to any such assignment, other than an assignment of any
Commitment to an assignee that is a Lender with a Commitment immediately prior
to giving effect to such assignment (which consent shall not be unreasonably
withheld or delayed);

 

(ii)                                  the Borrower must give prior written
consent to any such assignment, other than any assignment made during the
Primary Syndication, or any assignment to a Lender, a Lender affiliate, an
Approved Fund or, if an Event of Default has occurred and is continuing, any
other assignee (which consent shall not be unreasonably withheld or delayed);

 

(iii)                               the Issuing Banks must give prior written
consent to any such assignment (which consent shall not be unreasonably withheld
or delayed);

 

(iv)                              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;

 

(v)                                 unless each of the Borrower and the
Administrative Agent otherwise consent, the amount of the Commitment or Loans of
the assigning Lender subject to each such assignment (determined as of the date
on which the relevant Assignment is delivered to the Administrative Agent) shall
not be less

 

99

--------------------------------------------------------------------------------

 

than $1,000,000; provided that this (v) shall not apply to an assignment to a
Lender or a Lender Affiliate or an assignment of the entire remaining amount of
the assigning Lender’s Commitment or Loans;

 

(vi)                              the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment; and

 

the assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent a completed Administrative Questionnaire in which the assignee designates
one or more credit contacts to whom all syndicate-level information will be made
available and who may receive such information in accordance with the assignee’s
compliance procedures and applicable laws, including Federal and state
securities laws.

 

For the purposes of this Section 9.04(b), the term “Approved Fund” has the
following meaning:

 

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) Lender Affiliate or (c) an entity or an Affiliate
of an entity that administers or manages a Lender.

 

Subject to acceptance and recording thereof pursuant to subsection (d) of this
Section, from and after the effective date specified in each Assignment the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment, be released from its obligations and not
entitled to its rights under this Agreement.  Notwithstanding the foregoing, in
the case of an Assignment 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 and subject to the obligations
of Sections 2.14, 2.15, 2.16 and 9.03 with respect to facts and circumstances
occurring prior to the effective date of such Assignment.  Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this subsection 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 subsection (e) of this Section.

 

(c)                    The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in New York City a
copy of each Assignment delivered to it and a register for the recordation of
the names and addresses of the Lenders, their respective Commitments and the
principal amounts 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 absent manifest error, and the parties hereto
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender for all purposes of this Agreement, notwithstanding
notice to the contrary.  The Register shall be available for inspection by

 

100

--------------------------------------------------------------------------------

 

any party hereto at any reasonable time and from time to time upon reasonable
prior notice.

 

(d)                   Upon its receipt of a duly completed Assignment 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 subsection (b) of this Section and
any written consent to such assignment required by subsection (b) of this
Section, the Administrative Agent shall promptly accept such Assignment 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 subsection.

 

(e)                    Any Lender may, without the consent of the Borrower or
any other Lender Party, sell participations to one or more banks or other
entities (“Participants”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitments
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 Borrower and the other Lender Parties 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 clauses (i), (ii), (iii), (vi) or (vii) of the first proviso to
Section 9.02(b) that affects such Participant.  Subject to subsection (f) of
this Section, each Participant shall be subject to the obligations and entitled
to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were
a Lender and had acquired its interest by assignment pursuant to subsection
(b) of this Section.  To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 9.08 as though it were a Lender,
provided that such Participant agrees to be subject to Section 2.17(c) as though
it were a Lender.

 

(f)                      A Participant shall not be entitled to receive any
greater payment under Section 2.14 or 2.16 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 Borrower’s prior written consent.  For the avoidance of doubt, a
Participant shall not be entitled to the benefits of Section 2.16 unless the
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with
Section 2.16(e) 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 or any central bank, and this
Section 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

 

101

--------------------------------------------------------------------------------

 

release a Lender from any of its obligations hereunder or substitute any such
pledgee or assignee for such Lender as a party hereto.

 

(h)                                 In the case of a participation, the
applicable Lender, acting solely for this purpose as a non-fiduciary agent of
the Borrower, shall maintain a register on which it enters the name and address
of each Participant and the amount of each Participant’s interest in the
Commitments and the principal amounts of the Loans and LC Disbursements owing to
such Lender (the “Participant Register”). The entries in the Participant
Register shall be conclusive, and such Lender shall treat each Person whose name
is recorded in the Participant Register as the owner of such Loan or other
obligation hereunder for all purposes of this Agreement notwithstanding any
notice to the contrary. Any such Participant Register shall be available for
inspection by the Administrative Agent at any reasonable time and from time to
time upon reasonable prior notice); provided that the applicable Lender shall
have no obligation to show such Participant Register to the Borrower.

 

Section 9.05.  Survival.  All covenants, agreements, representations and
warranties made by the Credit Parties in the Loan Documents and in certificates
or other instruments delivered in connection with or pursuant to the Loan
Documents 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 any Lender Party 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 any principal
of or accrued interest on any Loan or any fee or other amount payable hereunder
is outstanding and unpaid or any Letter of Credit is outstanding or any
Commitment has not expired or terminated.  The provisions of Sections 2.14,
2.15, 2.16 and 9.03 and Article 8 shall survive and remain in full force and
effect regardless of the consummation of the Transactions, 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 9.06.  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 any separate letter agreements with respect to fees payable
to the Administrative Agent 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 (i) will become
effective when the Administrative Agent shall have signed this Agreement and
received counterparts hereof that, when taken together, bear the signatures of
each of the other parties hereto and (ii) thereafter will 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 or pdf by email will be effective as delivery of a
manually executed counterpart of this Agreement.

 

102

--------------------------------------------------------------------------------

 

Section 9.07.  Severability.  If any provision of any Loan Document is invalid,
illegal or unenforceable in any jurisdiction then, to the fullest extent
permitted by law, (i) such provision shall, as to such jurisdiction, be
ineffective to the extent (but only to the extent) of such invalidity,
illegality or unenforceability, (ii) the other provisions of the Loan Documents
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in favor of the Lender Parties in order to carry out the
intentions of the parties thereto as nearly as may be possible and (iii) the
invalidity, illegality or unenforceability of any such provision in any
jurisdiction shall not affect the validity, legality or enforceability of such
provision in any other jurisdiction.

 

Section 9.08.  Right of Set-off.  If an Event of Default shall have occurred and
be continuing, each Lender and each of its Affiliates is 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 in no event any escrow 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 the Borrower against any obligations of the Borrower now or
hereafter existing hereunder and held by such Lender, irrespective of whether or
not such Lender shall have made any demand hereunder and although such
obligations may be unmatured.  The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff) that
such Lender may have.

 

Section 9.09.  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.

 

(b)                                 The Borrower 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
relevant appellate court, in any action or proceeding arising out of or relating
to any Loan Document, or for recognition or enforcement of any judgment, and
each party hereto irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State court or, to the extent permitted by law, in such Federal court. 
Each party 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 any Loan Document
shall affect any right that any Lender Party may otherwise have to bring any
action or proceeding relating to any Loan Document against any Credit Party or
its properties in the courts of any jurisdiction.

 

(c)                                  The Borrower irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to any Loan Document
in any court referred to in subsection (b) of this Section.  Each party hereto
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of any such suit, action or proceeding in
any such court.

 

103

--------------------------------------------------------------------------------

 

(d)                                 Each party hereto irrevocably consents to
service of process in the manner provided for notices in Section 9.01.  Nothing
in any Loan Document will affect the right of any party hereto to serve process
in any other manner permitted by law.

 

Section 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO 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 ANY
LOAN DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREBY (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.

 

Section 9.11.  Headings.  Article and Section headings and the Table of Contents
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 9.12.  Confidentiality.  (a) Each Lender Party agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (b) to its and its 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), (c) to the extent requested by any regulatory
authority, (d) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (e) to any other party to this Agreement,
(f) in connection with the exercise of any remedy hereunder or any suit, action
or proceeding relating to any Loan Document or the enforcement of any right
thereunder, (g) in connection with pledges and assignments made pursuant to
Section 9.04(g), (h) subject to an agreement containing provisions substantially
the same as those of this Section, to (i) any actual or prospective assignee of
or Participant in any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrower and its obligations, (i) with
the consent of the Borrower or (j) to the extent such Information either
(i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to any Lender Party on a nonconfidential basis
from a source other than the Borrower.  For the purposes of this Section,
“Information” means all information received from the Borrower relating to the
Borrower or its business, other than any such information that is available to
any Lender Party on a nonconfidential basis before disclosure by the Borrower;
provided that, in the case of information received from the Borrower 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 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

 

104

--------------------------------------------------------------------------------

 

confidentiality of such Information as such Person would accord to its own
confidential information.

 

EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN
SECTION 9.12(a) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL
NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR
RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES
REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE
SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND
APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE
BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH
MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER, THE CREDIT
PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.  ACCORDINGLY,
EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS
IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE
INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH
ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

 

Section 9.13.  PATRIOT Act.  Each Lender hereby notifies the Borrower that
pursuant to the requirements of the PATRIOT Act, it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with the PATRIOT Act.

 

105

--------------------------------------------------------------------------------

 

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.

 

 

CLOUD PEAK ENERGY RESOURCES LLC, as Borrower

 

 

 

 

 

 

 

By:

/s/ Colin Marshall

 

 

Name:

Colin Marshall

 

 

Title:

President & CEO

 

[Signature Page to Credit Agreement]

 

--------------------------------------------------------------------------------

 

 

MORGAN STANLEY SENIOR FUNDING, INC., as a Lender and as Administrative Agent and
Swingline Lender

 

 

 

 

 

 

 

By:

/s/ Peter Zippelius

 

 

Name:

Peter Zippelius

 

 

Title:

Vice President

 

[Signature Page to Credit Agreement]

 

--------------------------------------------------------------------------------

 

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Lender

 

 

 

 

 

 

 

By:

/s/ Rianka Mohan

 

 

Name:

Rianka Mohan

 

 

Title:

Vice President

 

 

 

 

 

 

 

 

 

By:

/s/ Christopher Reo Day

 

 

Name:

Christopher Reo Day

 

 

Title:

Assocaiate

 

[Signature Page to Credit Agreement]

 

--------------------------------------------------------------------------------

 

 

ROYAL BANK OF CANADA,
as Lender

 

 

 

 

 

 

 

By:

/s/ Jason S. York

 

 

Name:

Jason S. York

 

 

Title:

Authorized Signatory

 

[Signature Page to Credit Agreement]

 

--------------------------------------------------------------------------------

 

 

CALYON NEW YORK BRANCH
as Lender

 

 

 

 

 

 

 

By:

/s/ Ghislain Descamps

 

 

Name:

Ghislain descamps

 

 

Title:

Director

 

 

 

 

 

 

 

CALYON NEW YORK BRANCH
as Lender

 

 

 

 

 

 

By:

/s/ Elvis Grgurovic

 

 

Name:

Elvis Grgurovic

 

 

Title:

Director

 

[SIGNATURE PAGE to CREDIT AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

JPMorgan Chase Bank, N.A.
as Lender

 

 

 

 

 

 

 

By:

/s/ Peter S. Predun

 

 

Name:

Peter S. Predun

 

 

Title:

Executive Director

 

[SIGNATURE PAGE to CREDIT AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

The Bank of Nova Scotia

 

 

 

as Lender

 

 

 

 

 

 

 

By:

/s/ Ray Clarke

 

 

Name:

Ray Clarke

 

 

Title:

Managing Director

 

 

 

 

 

 

 

By:

/s/ Elizabeth Daponte

 

 

Name:

Elizabeth Daponte

 

 

Title:

Associate Director

 

--------------------------------------------------------------------------------

 

 

Société Générale

 

as Lender

 

 

 

 

 

 

 

By:

/s/ Emmanuel Chesneau

 

 

Name:

Emmanuel Chesneau

 

 

Title:

Managing Director

 

[SIGNATURE PAGE to CREDIT AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Lender

 

 

 

 

 

 

 

By:

/s/ Troy S. Akagi

 

 

Name:

Troy S. Akagi

 

 

Title:

Vice President

 

[Signature Page to Credit Agreement]

 

--------------------------------------------------------------------------------

 

 

Bank of Montreal, Chicago Branch
as Lender

 

 

 

 

 

 

 

By:

/s/ Joseph W. Linder

 

 

Name:

Joseph W. Linder

 

 

Title:

Vice-President

 

[SIGNATURE PAGE to CREDIT AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

Citibank N.A.
as Lender

 

 

 

 

 

 

 

By:

/s/ Raymond Dunning

 

 

Name:

Raymond Dunning

 

 

Title:

Vice President

 

--------------------------------------------------------------------------------

 

 

RAYMOND JAMES BANK, FSB
as Lender

 

 

 

 

 

 

 

By:

/s/ Garrett McKinnon

 

 

Name:

Garrett McKinnon

 

 

Title:

Senior Vice President

 

[SIGNATURE PAGE to CREDIT AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

STATE BANK OF INDIA
as Lender

 

 

 

 

 

 

 

By:

/s/ Prabodh Parikh

 

 

Name:

Prabodh Parikh

 

 

Title:

Vice President & Head (Credit) New York Branch

 

[SIGNATURE PAGE to CREDIT AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

Natixis, New York Branch

 

as Lender

 

 

 

By:

/s/ Vincent Lauras

 

 

Name:

Vincent Lauras

 

 

Title:

Senior Managing Director

 

 

 

 

 

 

 

By:

/s/ Amaury Courtial

 

 

Name:

Amaury Courtial

 

 

Title:

Director

 

--------------------------------------------------------------------------------

 

 

PNC Bank, National Association

 

as Lender

 

 

 

 

 

By:

/s/ Richard C. Munsick

 

Richard C. Munsick

 

Senior Vice President

 

[SIGNATURE PAGE to CREDIT AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

SunTrust Bank

 

as Lender

 

 

 

 

 

By:

/s/ Baerbel Freudenthaler

 

 

Name:

Baerbel Freudenthaler

 

 

Title:

Vice President

 

[SIGNATURE PAGE to CREDIT AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

ING Capital LLC

 

as Lender

 

 

 

 

 

By:

/s/ Remko van de Water

 

 

Name:

Remko van de Water

 

 

Title:

Director

 

[SIGNATURE PAGE to CREDIT AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

Capital One Leverage Finance Corp.

 

as Lender

 

 

 

 

 

By:

/s/ Ron Walker

 

 

Name:

Ron Walker

 

 

Title:

Senior Vice President

 

[SIGNATURE PAGE to CREDIT AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

MORGAN STANLEY BANK, N.A.,

 

as Issuing Bank

 

 

 

 

 

By:

/s/ Peter Zippelius

 

 

Name:

Peter Zippelius

 

 

Title:

Vice President

 

[Signature Page to Credit Agreement]

 

--------------------------------------------------------------------------------

 

 

JPMORGAN CHASE BANK, N.A.

 

as Issuing Bank

 

 

 

 

 

By:

/s/ Peter S. Predun

 

 

Name:

Peter S. Predun

 

 

Title:

Executive Director

 

[Signature Page to Credit Agreement]

 

--------------------------------------------------------------------------------

 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Issuing Bank

 

 

 

 

 

By:

/s/ Troy S. Akagi

 

 

Name:

TROY S. AKAGI

 

 

Title:

VICE PRESIDENT

 

[Signature Page to Credit Agreement]

 

--------------------------------------------------------------------------------

 

 

CREDIT SUISSE AG, CAYMAN ISLANDS
BRANCH, as Issuing Bank

 

 

 

 

 

By:

/s/ Robert Hetu

 

 

Name:

ROBERT HETU

 

 

Title:

MANAGING DIRECTOR

 

 

 

 

 

 

 

By:

/s/ Christopher Reo Day

 

 

Name:

CHRISTOPHER REO DAY

 

 

Title:

ASSOCIATE

 

[Signature Page to Credit Agreement]

 

--------------------------------------------------------------------------------

 

 

ROYAL BANK OF CANADA,

 

as Issuing Bank

 

 

 

 

 

By:

/s/ Jason S.York

 

 

Name:

Jason S.York

 

 

Title:

Authorized Signatory

 

[Signature Page to Credit Agreement]

 

--------------------------------------------------------------------------------