exv10w1



 





Exhibit 10.1


EXECUTION COPY




 

 










CREDIT AGREEMENT




Dated as of October 31, 2007




among




PATRIOT COAL CORPORATION,




as the Borrower,




BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender and

L/C Issuer




and




The Other Lenders Party Hereto




BANC OF AMERICA SECURITIES LLC,
 as Sole Lead Arranger and Sole Book Manager




 

 






BANK OF AMERICA, N.A.,

as Syndication Agent




and




FIFTH THIRD BANK, SOVEREIGN BANK and

U.S. BANK NATIONAL ASSOCIATION,

as Co-Documentation Agents




 

 










 









 












TABLE OF CONTENTS




	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE I	 	 	 	 
	 
	 	DEFINITIONS AND ACCOUNTING TERMS	 	 	 	 
	 
	 	 	 	 	 	 
	1.01
	 	Defined Terms	 	 	1	 
	1.02
	 	Other Interpretive Provisions	 	 	28	 
	1.03
	 	Accounting Terms	 	 	29	 
	1.04
	 	Times of Day	 	 	30	 
	1.05
	 	Letter of Credit Amounts	 	 	30	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE II
	 	 	 	 
	 
	 	THE COMMITMENTS AND CREDIT EXTENSIONS	 	 	 	 
	 
	 	 	 	 	 	 
	2.01
	 	The Revolving Credit Loans.	 	 	30	 
	2.02
	 	Borrowings, Conversions and Continuations of Loans	 	 	30	 
	2.03
	 	Letters of Credit	 	 	32	 
	2.04
	 	Swing Line Loans	 	 	41	 
	2.05
	 	Prepayments	 	 	44	 
	2.06
	 	Termination or Reduction of Commitments	 	 	46	 
	2.07
	 	Repayment of Loans	 	 	47	 
	2.08
	 	Interest	 	 	47	 
	2.09
	 	Fees	 	 	48	 
	2.10
	 	Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate	 	 	48	 
	2.11
	 	Evidence of Debt	 	 	49	 
	2.12
	 	Payments Generally; Administrative Agent’s Clawback	 	 	49	 
	2.13
	 	Sharing of Payments by Lenders	 	 	51	 
	2.14
	 	Increase in Facility	 	 	52	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE III
	 	 	 	 
	 
	 	TAXES, YIELD PROTECTION AND ILLEGALITY	 	 	 	 
	 
	 	 	 	 	 	 
	3.01
	 	Taxes	 	 	53	 
	3.02
	 	Illegality	 	 	56	 
	3.03
	 	Inability to Determine Rates	 	 	56	 
	3.04
	 	Increased Costs; Reserves on Eurocurrency Rate Loans	 	 	56	 
	3.05
	 	Compensation for Losses	 	 	58	 
	3.06
	 	Mitigation Obligations; Replacement of Lenders	 	 	59	 
	3.07
	 	Survival	 	 	59	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE IV
	 	 	 	 
	 
	 	CONDITIONS PRECEDENT TO CREDIT EXTENSIONS	 	 	 	 
	 
	 	 	 	 	 	 
	4.01
	 	Conditions of Initial Credit Extension	 	 	59	 
	4.02
	 	Conditions to all Credit Extensions	 	 	64	 






i 









 






	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE V
	 	 	 	 
	 
	 	REPRESENTATIONS AND WARRANTIES	 	 	 	 
	 
	 	 	 	 	 	 
	5.01
	 	Existence, Qualification and Power	 	 	64	 
	5.02
	 	Authorization; No Contravention	 	 	65	 
	5.03
	 	Governmental Authorization; Other Consents	 	 	65	 
	5.04
	 	Binding Effect	 	 	65	 
	5.05
	 	Financial Statements; No Material Adverse Effect	 	 	65	 
	5.06
	 	Litigation	 	 	66	 
	5.07
	 	No Default	 	 	66	 
	5.08
	 	Ownership of Property; Liens; Investments	 	 	67	 
	5.09
	 	Environmental Compliance	 	 	67	 
	5.10
	 	Mining	 	 	68	 
	5.11
	 	Insurance	 	 	68	 
	5.12
	 	Taxes	 	 	68	 
	5.13
	 	ERISA Compliance	 	 	69	 
	5.14
	 	Subsidiaries; Equity Interests; Loan Parties	 	 	69	 
	5.15
	 	Margin Regulations; Investment Company Act	 	 	70	 
	5.16
	 	Disclosure	 	 	70	 
	5.17
	 	Compliance with Laws	 	 	70	 
	5.18
	 	Intellectual Property; Licenses, Etc.	 	 	71	 
	5.19
	 	Solvency	 	 	71	 
	5.20
	 	Casualty, Etc.	 	 	71	 
	5.21
	 	Labor Matters	 	 	71	 
	5.22
	 	Collateral Documents	 	 	71	 
	5.23
	 	Use of Proceeds	 	 	71	 
	5.24
	 	Coal Act; Black Lung Act	 	 	72	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE VI
	 	 	 	 
	 
	 	AFFIRMATIVE COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	6.01
	 	Financial Statements	 	 	72	 
	6.02
	 	Certificates; Other Information	 	 	73	 
	6.03
	 	Notices	 	 	75	 
	6.04
	 	Payment of Obligations	 	 	76	 
	6.05
	 	Preservation of Existence, Etc.	 	 	76	 
	6.06
	 	Maintenance of Properties	 	 	77	 
	6.07
	 	Maintenance of Insurance	 	 	77	 
	6.08
	 	Compliance with Laws	 	 	77	 
	6.09
	 	Books and Records	 	 	77	 
	6.10
	 	Inspection Rights	 	 	78	 
	6.11
	 	Use of Proceeds	 	 	78	 
	6.12
	 	Covenant to Guarantee Obligations and Give Security	 	 	78	 
	6.13
	 	Compliance with Environmental Laws	 	 	82	 
	6.14
	 	Preparation of Environmental Reports	 	 	82	 
	6.15
	 	Further Assurances	 	 	82	 
	6.16
	 	Compliance with Terms of Leaseholds and Related Documents	 	 	83	 






ii 









 






	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	 
	 	 	 	 	 	 
	6.17
	 	[Reserved]	 	 	83	 
	6.18
	 	[Reserved]	 	 	83	 
	6.19
	 	Certain Long Term Liabilities and Environmental Reserves	 	 	83	 
	6.20
	 	Mining Financial Assurances	 	 	83	 
	6.21
	 	Post-Closing Obligations	 	 	83	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE VII
	 	 	 	 
	 
	 	NEGATIVE COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	7.01
	 	Liens	 	 	84	 
	7.02
	 	Indebtedness	 	 	86	 
	7.03
	 	Investments	 	 	87	 
	7.04
	 	Fundamental Changes	 	 	89	 
	7.05
	 	Dispositions	 	 	89	 
	7.06
	 	Restricted Payments	 	 	90	 
	7.07
	 	Change in Nature of Business	 	 	91	 
	7.08
	 	Transactions with Affiliates	 	 	91	 
	7.09
	 	Burdensome Agreements	 	 	92	 
	7.10
	 	Use of Proceeds	 	 	92	 
	7.11
	 	Financial Covenants	 	 	92	 
	7.12
	 	Capital Expenditures	 	 	92	 
	7.13
	 	Amendments of Organization Documents	 	 	93	 
	7.14
	 	Accounting Changes	 	 	93	 
	7.15
	 	Prepayments, Etc. of Indebtedness	 	 	93	 
	7.16
	 	Amendment, Etc. of Related Documents and Indebtedness	 	 	93	 
	7.17
	 	Limitation on Negative Pledge Clauses	 	 	93	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE VIII
	 	 	 	 
	 
	 	EVENTS OF DEFAULT AND REMEDIES	 	 	 	 
	 
	 	 	 	 	 	 
	8.01
	 	Events of Default	 	 	95	 
	8.02
	 	Remedies Upon Event of Default	 	 	97	 
	8.03
	 	Application of Funds	 	 	98	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE IX
	 	 	 	 
	 
	 	ADMINISTRATIVE AGENT	 	 	 	 
	 
	 	 	 	 	 	 
	9.01
	 	Appointment and Authority	 	 	99	 
	9.02
	 	Rights as a Lender	 	 	99	 
	9.03
	 	Exculpatory Provisions	 	 	100	 
	9.04
	 	Reliance by Administrative Agent	 	 	101	 
	9.05
	 	Delegation of Duties	 	 	101	 
	9.06
	 	Resignation of Administrative Agent	 	 	101	 
	9.07
	 	Non-Reliance on Administrative Agent and Other Lenders	 	 	102	 
	9.08
	 	No Other Duties, Etc.	 	 	102	 
	9.09
	 	Administrative Agent May File Proofs of Claim	 	 	102	 
	9.10
	 	Collateral and Guaranty Matters	 	 	103	 






iii 









 






	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	 
	 	 	 	 	 	 
	9.11
	 	Indemnification	 	 	104	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE X
	 	 	 	 
	 
	 	MISCELLANENOUS	 	 	 	 
	 
	 	 	 	 	 	 
	10.01
	 	Amendments, Etc.	 	 	104	 
	10.02
	 	Notices; Effectiveness; Electronic Communications	 	 	106	 
	10.03
	 	No Waiver; Cumulative Remedies	 	 	108	 
	10.04
	 	Expenses; Indemnity; Damage Waiver	 	 	108	 
	10.05
	 	Payments Set Aside	 	 	110	 
	10.06
	 	Successors and Assigns	 	 	110	 
	10.07
	 	Treatment of Certain Information; Confidentiality	 	 	114	 
	10.08
	 	Right of Setoff	 	 	114	 
	10.09
	 	Interest Rate Limitation	 	 	115	 
	10.10
	 	Counterparts; Integration; Effectiveness	 	 	115	 
	10.11
	 	Survival of Representations and Warranties	 	 	115	 
	10.12
	 	Severability	 	 	116	 
	10.13
	 	Replacement of Lenders	 	 	116	 
	10.14
	 	Governing Law; Jurisdiction; Etc.	 	 	117	 
	10.15
	 	Waiver of Jury Trial	 	 	117	 
	10.16
	 	Delivery of Lender Addenda	 	 	118	 
	10.17
	 	No Advisory or Fiduciary Responsibility	 	 	118	 
	10.18
	 	USA PATRIOT Act Notice	 	 	118	 
	10.19
	 	Time of the Essence	 	 	119	 






iv 









 






SCHEDULES




	 	 	 	 	 
	 	1.01	(a)	 	Subsidiary Guarantors

	 	1.01	(b)	 	Existing Letters of Credit

	 	4.01
	(a)(iv)
	 	Mortgaged Property

	 	5.08	(c)	 	Real Property

	 	5.09	 	 	Environmental Matters

	 	5.14	 	 	Subsidiaries and Other Equity Investments; Loan Parties

	 	5.18	 	 	Intellectual Property Matters

	 	5.21	 	 	Labor Matters

	 	6.21	 	 	Post-Closing Obligations

	 	7.01	 	 	Existing Liens

	 	7.02	 	 	Existing Indebtedness

	 	7.03	 	 	Existing Investments

	 	7.17	 	 	Negative Pledges

	 	10.02	 	 	Administrative Agent’s Office, Certain Addresses for Notices







EXHIBITS




     Form of



	 	 	 
	A
	 	Borrowing Notice

	B
	 	Swing Line Loan Notice

	C
	 	Note

	D
	 	Compliance Certificate

	E
	 	Assignment and Assumption

	F
	 	Subsidiary Guaranty

	G
	 	Security Agreement

	H
	 	Mortgage

	I-1
	 	Opinion of Simpson, Thacher & Bartlett LLP

	I-2
	 	Opinion of Bowles Rice McDavid Graff & Love LLP (West Virginia local counsel)

	I-3
	 	Opinion of Gordon & Gordon, PSC (Kentucky local counsel)

	I-4
	 	Opinion of Ziemer, Stayman, Weitzel & Shoulders, LLP (Illinois local counsel)

	I-5
	 	Opinion of Joe Bean, Esq.

	J
	 	Consent Agreement

	K
	 	Lender Addendum








v 











 





CREDIT AGREEMENT




          This CREDIT AGREEMENT (“Agreement”) is entered into as of October 31, 2007, among PATRIOT
COAL CORPORATION, a Delaware corporation (the “Borrower”), each lender from time to time
party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK
OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.




PRELIMINARY STATEMENTS:




          WHEREAS, the Borrower, a subsidiary of Peabody Energy Corporation, a Delaware corporation
(“Peabody”), intends to become a separate legal entity by way of a distribution of the
Borrower’s common shares to stockholders of Peabody (the “Spin-Off”);




          WHEREAS, the Board of Directors of Peabody has approved the Spin-Off;




          WHEREAS, in furtherance of the foregoing, the Borrower has requested that the Lenders provide a
revolving credit facility to be used by the Borrower for working capital (including the issuance of
letters of credit), capital expenditures and other lawful purposes; and




          WHEREAS, the Lenders have indicated their willingness to lend and the L/C Issuer has indicated its
willingness to issue letters of credit, in each case, on the terms and subject to the conditions
set forth herein.




          In consideration of the mutual covenants and agreements herein contained, the parties hereto
covenant and agree as follows:




ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS




          1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings
set forth below:




          “Accounting Change” means changes in accounting principles required by the promulgation of
any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants or, if applicable, the Securities and Exchange
Commission.




          “Acquired Assets” has the meaning specified in the definition of “Permitted Acquisition”.




          “Acquired Entity” has the meaning specified in the definition of “Permitted Acquisition”.




          “Additional Extensions of Credit” has the meaning specified in Section 10.01.




          “Adjustment Date” means the date of receipt by the Administrative Agent of the financial
statements for the most recently completed fiscal period furnished pursuant to Section





 









 







6.01, and the compliance certificate with respect to such financial statements furnished
pursuant to Section 6.02. For purposes of determining the Applicable Rate, the first
Adjustment Date shall be the third day following the date on which the financial statements for the
fiscal quarter ending March 31, 2008 furnished pursuant to Section 6.01 and the related
compliance certificate furnished pursuant to Section 6.02 are delivered to the
Administrative Agent.




          “Administrative Agent” means Bank of America in its capacity as administrative agent under
any of the Loan Documents, or any successor administrative agent.




          “Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or account as
the Administrative Agent may from time to time notify to the Borrower and the Lenders.




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




          “Affiliate” means, with respect to any Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under common Control with
the Person specified.




          “Aggregate Commitments” means the Commitments of all the Lenders. “Agreement” means
this Credit Agreement.




          “Applicable Percentage” means, with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Facility represented by such Lender’s Commitment at
such time. If the commitment of each Lender to make Loans and the obligation of the L/C Issuer to
make L/C Credit Extensions have been terminated pursuant to Section 8.02, or if the
Commitments have expired, then the Applicable Percentage of each Lender in respect of the Facility
shall be determined based on the Applicable Percentage of such Lender in respect of the Facility
most recently in effect, giving effect to any subsequent assignments. The initial Applicable
Percentage of each Lender in respect of the Facility is set forth on Schedule 1 to the Lender
Addendum delivered by such Lender or in the Assignment and Assumption pursuant to which such Lender
becomes a party hereto, as applicable.




          “Applicable Rate” means, from time to time, the following percentages per annum, based upon
the Consolidated Leverage Ratio as set forth below:






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Applicable Rate	 	 
	 	 	 	 	 	 	Eurocurrency Rate	 	 	 	 
	 	 	Consolidated	 	Loans and Letters	 	 	 	 
	Level	 	Leverage Ratio	 	of Credit	 	Base Rate Loans	 	Commitment Fee
	I
	 	 	> 2.50x	 	 	 	2.750	%	 	 	1.750	%	 	 	0.500	%
	II
	 	 	> 2.00x	 	 	 	2.375	%	 	 	1.375	%	 	 	0.375	%
	III
	 	 	> 1.50x	 	 	 	2.125	%	 	 	1.125	%	 	 	0.375	%
	IV
	 	 	> 1.00x	 	 	 	1.875	%	 	 	0.875	%	 	 	0.250	%
	V
	 	 	> 1.00x	 	 	 	1.750	%	 	 	0.750	%	 	 	0.250	%






2









 





 provided, that (a) the Applicable Rate will be determined as of the last day of the
immediately preceding fiscal quarter, provided, that from the Closing Date to the date on
which the Administrative Agent receives the Borrower’s compliance certificate for the fiscal
quarter ending March 31, 2008, the pricing will be at Level V, (b) the Applicable Rate determined
for any Adjustment Date (including the first Adjustment Date) shall remain in effect until a
subsequent Adjustment Date for which the Consolidated Leverage Ratio falls within a different
level, and (c) if the financial statements and related compliance certificate for any fiscal period
are not delivered by the date due pursuant to Sections 6.01 and 6.02, the
Applicable Rate shall be those set forth in Level I until the date of delivery of such financial
statements and compliance certificate, after which the Applicable Rate shall be based on the
Consolidated Leverage Ratio set forth in such compliance certificate.




          “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.




          “Arranger” means Banc of America Securities LLC, in its capacity as sole lead arranger and
sole book manager.




          “Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or
two or more Approved Funds managed by the same investment advisor.




          “Assignment and Assumption” means an assignment and assumption entered into by a Lender and
an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b)),
and accepted by the Administrative Agent, in substantially the form of Exhibit E or any other form
approved by the Administrative Agent.




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




          “Audited Financial Statements” means the audited consolidated balance sheet of the Borrower
and its Subsidiaries for the fiscal year ended December 31, 2006, and the related consolidated
statements of income or operations, changes in shareholders’ equity and cash flows for such fiscal
year of the Borrower and its Subsidiaries, including the notes thereto.




          “Availability Period” means the period from and including the Closing Date to the earliest
of (i) the Maturity Date, (ii) the date of termination of the Commitments pursuant to Section 2.06,
and (iii) the date of termination of the commitment of each Lender to make Revolving Credit Loans
and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.




          “Bank of America” means Bank of America, N.A. and its successors.





3









 








          “Base Rate” means for any day a fluctuating rate per annum equal to the higher of (a) the
Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly
announced from time to time by Bank of America as its “prime rate.” The “prime rate” is a rate set
by Bank of America based upon various factors including Bank of America’s costs and desired return,
general economic conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate. Any change in such rate
announced by Bank of America shall take effect at the opening of business on the day specified in
the public announcement of such change.




          “Base Rate Loan” means a Revolving Credit Loan that bears interest based on the Base Rate.




          “BBA LIBOR Daily Floating Rate” means a daily fluctuating rate of interest equal to the
rate per annum (rounded upwards to the nearest 1/100 of one percent) equal to BBA LIBOR, as
published by Reuters (or other commercially available source providing quotations of BBA LIBOR as
selected by the Swing Line Lender from time to time) as determined for each banking day at
approximately 11:00 a.m. London time two (2) London Banking Days prior to the date in question, for
U.S. Dollar deposits (for delivery on the first day of such interest period) with a one month term,
as adjusted from time to time, in the Swing Line Lender’s sole discretion for reserve requirements,
deposit insurance assessment rates and other regulatory costs. If such rate is not available at
such time for any reason, then the rate for that interest period will be determined by such
alternate method as reasonably selected by the Administrative Agent. A “London Banking Day” is a
day on which banks in London are open for business and dealing in offshore dollars.




          “Black Lung Act” means the Black Lung Benefits Act of 1972, 30 U.S.C. §§ 901, et seq., the
Federal Mine Safety and Health Act of 1977, 30 U.S.C. §§ 801, et seq., the Black Lung Benefits
Reform Act of 1977, Pub. L. No. 95-239, 92 Stat. 95 (1978), and the Black Lung Benefits Amendments
of 1981, Pub. L. No. 97-119, Title 11, 95 Stat. 1643, in each case as amended.




          “Black Lung Liability” means any liability or benefit obligations related to black lung
claims and benefits under the Black Lung Act, and liabilities and benefits related to
pneumoconiosis, silicosis, exposure to isocyanates or other lung disease arising under any federal
or state law, including any Mining Law.




          “Borrower” has the meaning specified in the introductory paragraph hereto. “Borrower
Materials” has the meaning specified in Section 6.02.




          “Borrowing” means a Revolving Credit Borrowing or a Swing Line Borrowing, as the context
may require.




          “Borrowing Notice” means a notice of (a) a Revolving Credit Borrowing, (b) a conversion of
Revolving Credit Loans from one Type to the other, or (c) a continuation of Eurocurrency Rate
Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the
form of Exhibit A.





4









 








          “Business” has the meaning specified in Section 5.09(b).




          “Business Day” means any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the state where the
Administrative Agent’s Office is located and, if such day relates to any Eurocurrency Rate Loan,
means any such day on which dealings in deposits in Dollars are conducted by and between banks in
the London interbank eurodollar market.




          “Capital Expenditures” means, with respect to any Person for any period, any expenditure in
respect of the purchase or other acquisition of any fixed or capital asset (excluding normal
replacements and maintenance which are properly charged to current
operations); provided, that
Capital Expenditures for the Borrower and its Subsidiaries shall not include Permitted Acquisitions
during such period. For purposes of this definition, the purchase price of equipment that is
purchased substantially concurrently with the trade-in of existing equipment with the proceeds of
any non-ordinary course asset sales (provided, that the purchase is made within 180 days after the
sale) or with insurance proceeds shall be included in Capital Expenditures only to the extent of
the gross amount by which such purchase price exceeds the credit granted by the seller of such
equipment for the equipment being traded in at such time, the proceeds of such asset sale or the
amount of such insurance proceeds, as the case may be.




          “Capital Lease Obligations” means of any Person as of the date of determination, the
aggregate liability of such Person under Financing Leases reflected on a balance sheet of such
Person under GAAP.




          “Capital Stock” means any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent ownership interests
in a Person (other than a corporation) and any and all warrants or options to purchase any of the
foregoing, but excluding any securities convertible into or exchangeable for shares of Capital
Stock.




          “Cash Collateral Account” means a blocked, interest bearing deposit account of one or more
of the Loan Parties at Bank of America in the name of the Administrative Agent and under the sole
dominion and control of the Administrative Agent, and otherwise established in a manner reasonably
satisfactory to the Administrative Agent.




          “Cash
Collateralize” has the meaning specified in
Section 2.03(g).




          “Cash Equivalents” means any of the following types of Investments:





     (a) readily marketable obligations issued or directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof having maturities of not more than 24
months from the date of acquisition thereof; provided, that the full faith and credit of the United
States of America is pledged in support thereof;




     (b) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any
commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States of
America, any state thereof or the District of Columbia or is the principal banking subsidiary of a
bank holding company organized under the laws



5









 






of the United States of America, any state thereof or the District of Columbia, and is a member of
the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as
described in clause (c) of this definition and (iii) has combined capital and surplus of at least
$500,000,000, in each case with maturities of not more than twelve months from the date of
acquisition thereof;




     (c) repurchase obligations with a term of not more than 30 days for underlying securities of the
types described in clause (a), (b), and (f) entered into with any financial institution meeting the
qualifications specified in clause (b) above;




     (d) commercial paper issued by any Person organized under the laws of any state of the United
States of America and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at
least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than
270 days from the date of acquisition thereof;




     (e) marketable short-term money market and similar securities having a rating of at least P-2 or
A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be
rating such obligations, an equivalent rating from another nationally recognized statistical rating
agency selected by the Borrower;




     (f) readily marketable direct obligations issued by any state or commonwealth of the United States
or any political subdivision or taxing authority thereof having an Investment Grade Rating from
either Moody’s or S&P with maturities of 12 months or less from the date of acquisition;




     (g) Investments with average maturities of 12 months or less from the date of acquisition in money
market funds rated within the top three categories by S&P or Moody’s; and




     (h) shares of investments companies registered under the Investment Company Act of 1940,
substantially all of the investments of which are one or more of the types of securities described
in clauses (a) through (g) of this definition.



          “Cash Management Agreement” means any agreement to provide cash management services,
including treasury, depository, overdraft, credit or debit card, electronic funds transfer and
other cash management arrangements.




          “Cash Management Bank” means any Person that, at the time it enters into a Cash Management
Agreement, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Cash
Management Agreement.




          “CFC” means a Person that is a controlled foreign corporation under Section 957
of the Code.




          “Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any request or directive





6









 







(whether or not having the force of law) by any Governmental Authority required to be complied with
by any Lender.




          “Change of Control” means:





     (a) an event or series of events by which any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in its capacity as
trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner”
(as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, directly or
indirectly, of 35% or more of the equity securities of the Borrower entitled to vote for members of
the board of directors or equivalent governing body of the Borrower on a fully-diluted basis; or




     (b) during any period of 12 consecutive months, a majority of the members of the board of directors
or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were
members of that board or equivalent governing body on the first day of such period, (ii) whose
election or nomination to that board or equivalent governing body was approved by individuals
referred to in clause (i) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body or (iii) whose election or nomination to that
board or other equivalent governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at least a majority of that
board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii),
any individual whose initial nomination for, or assumption of office as, a member of that board or
equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or group other than a
solicitation for the election of one or more directors by or on behalf of the board of directors).



          “Closing
Date” means the first date all the conditions precedent in
Section 4.01 are
satisfied or waived in accordance with Section 10.01.




          “Coal Act” means the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C. §§ 9701, et seq., as amended.




          “Coal Supply Agreements” means each agreement entered into by Patriot Coal Sales LLC and
certain affiliates of Peabody in the form of the Master Coal Supply Agreement, attached as Exhibit
J-3 to the Separation Agreement.




          “Coal Supply Agreement I” means the Coal Supply Agreement I, dated as of October 22, 2007,
between COALSALES II, LLC and Patriot Coal Sales LLC.




          “Coal Supply Agreement II” means the Coal Supply Agreement II, dated as of October 22,
2007, between COALSALES II, LLC and Patriot Coal Sales LLC.




          “Code” means the Internal Revenue Code of 1986.





7









 








          “Collateral”
means all of the “Collateral” and “Mortgaged
Property” referred to in the
Collateral Documents and all of the other property that is under the terms of the Collateral
Documents subject to Liens in favor of the Administrative Agent for the benefit of the Secured
Parties as security for the Obligations.




          “Collateral Documents” means, collectively, the Security Agreement, the Intellectual
Property Security Agreements, the Mortgages, each of the mortgages, collateral assignments,
security agreements, pledge agreements or other similar agreements delivered to the Administrative
Agent pursuant to Section 6.12, and each of the other agreements, instruments or documents that
creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the
Secured Parties as security for the Obligations.




          “Commitment” means, as to each Lender, its obligation to (a) make Revolving Credit Loans to
the Borrower pursuant to Section 2.01, (b) purchase participations in L/C Obligations, and (c)
purchase participations in Swing Line Loans, in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth under the caption “Commitment” opposite such
Lender’s name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may
be, opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a
party hereto, as applicable, as such amount may be adjusted from time to time in accordance with
this Agreement. The aggregate amount of the Commitments as of the Closing Date is $500,000,000.




          “Compliance Certificate” means a certificate substantially in the form of Exhibit D.




          “Consent
Agreement” means the Consent Agreement in the form of
Exhibit J.




          “Consolidated Cash Interest Charges” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the sum of (a) all interest expense and letter of
credit fees and commissions of the Borrower and its Subsidiaries in connection with borrowed money
or other extensions of credit, in each case to the extent treated as interest in accordance with
GAAP and payable in cash.




          “Consolidated EBITDA” means, as of the last day of any period, Consolidated Net Income for
such period (excluding, without duplication, (a) Federal, state, local and foreign income tax
expense or benefit for such period, (b) noncash compensation expenses related to common stock and
other equity securities issued to employees, (c) extraordinary or non- recurring gains and losses
in accordance with GAAP, (d) gains or losses on discontinued operations and (e) any FAS 144
writedowns, in each case for such period), plus (i) consolidated interest expense, determined in
accordance with GAAP, plus (ii) any minority interests share of income and losses for such period,
plus (iii) to the extent deducted in computing such Consolidated Net Income, the sum of all income
taxes, depreciation, depletion and amortization of property, plant, equipment and intangibles, plus
(iv) any debt extinguishment costs, plus (v) non-cash charges including non-cash charges due to
cumulative effects of changes in accounting principles (but excluding any such charge which
requires an accrual of, or a cash reserve for, anticipated cash charges for any future period),
plus (vi) asset retirement obligation expenses less asset retirement obligations cash payments (it
being understood that asset retirement obligation





8









 







expenses may not be added back under any other clause in this definition), plus (vii) cash proceeds
of asset sales so long as such cash proceeds do not exceed 20% of Consolidated EBITDA in any
reporting period, plus (viii) cash received from any non-wholly owned subsidiary or joint venture,
plus (ix) transaction costs, fees and expenses incurred during such period in connection with any
acquisition not prohibited hereunder or any issuance of debt or equity securities by the Borrower
or any of its Subsidiaries, in each case for such period, minus (x) gains and losses on asset
sales, minus (xi) Consolidated EBITDA of any non-wholly owned subsidiary, and equity earnings and
losses from joint ventures (other than Consolidated EBITDA from the Borrower’s interest in KE
Ventures, LLC equal to the product of (A) the Consolidated EBITDA of KE Ventures, LLC times (B) the
Borrower’s percentage ownership in KE Ventures, LLC, so long as the Borrower owns, directly or
indirectly, no less than 81.5% of the Capital Stock of KE Ventures, LLC); provided, that for
purposes of calculating the Consolidated Leverage Ratio (and not for any other purpose), (A)
Consolidated EBITDA for the four quarter period ending March 31, 2008 shall equal Consolidated
EBITDA for the fiscal quarter ending March 31, 2008 multiplied by 4, (B) Consolidated EBITDA for
the four quarter period ending June 30, 2008 shall equal the sum of Consolidated EBITDA for the
fiscal quarters ending March 31, 2008 and June 30, 2008 multiplied by 2, and (C) Consolidated
EBITDA for the four quarter period ending September 30, 2008 shall equal the sum of Consolidated
EBITDA for the fiscal quarters ending March 31, 2008, June 30, 2008 and September 30, 2008
multiplied by 4/3.




          “Consolidated Funded Indebtedness” means, as of any date of determination, for the Borrower
and its Subsidiaries on a consolidated basis, the sum of (a) the outstanding principal amount of
all obligations, whether current or long-term, for borrowed money (including Obligations hereunder)
and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar
instruments, (b) all direct obligations arising under standby letters of credit (other than with
respect to Designated Letters of Credit) and similar instruments, (c) all obligations in respect of
the deferred purchase price of property or services (other than (i) trade accounts payable in the
ordinary course of business and (ii) obligations under coal leases which may be terminated at the
discretion of the lessee), (d) Attributable Indebtedness in respect of Capital Lease Obligations,
(e) without duplication, all Guarantees with respect to outstanding Indebtedness of the types
specified in clauses (a) through (d) above of Persons other than the Borrower or any Subsidiary and
(f) amounts due under Permitted Securitization Programs (whether or not on the balance sheet of the
Borrower or its Subsidiaries).




          “Consolidated Interest Coverage Ratio” means, as of any date of determination, the ratio of
(a) Consolidated EBITDA for the period of the four prior consecutive fiscal quarters ending as of
the date of the financial statements most recently delivered by the Borrower pursuant to Section
6.01(a) or (b), as applicable, to (b) Consolidated Cash Interest Charges for such period.




          “Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (a)
Consolidated Funded Indebtedness as of the date of the financial statements most recently delivered
by the Borrower pursuant to Section 6.01(a) or (b), as applicable, to (b) Consolidated EBITDA for
the period of the four consecutive fiscal quarters ending as of the date of such financial
statements.





9









 








          “Consolidated Net Income” means, for any period, for the Borrower and its Subsidiaries on a
consolidated basis, the net income of the Borrower and its Subsidiaries for that period, determined
in accordance with GAAP.




          “Contractual Obligation” means, as to any Person, any provision of any security issued by
such Person or of any agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.




          “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. “Controlling” and “Controlled” have meanings
correlative thereto.




          “Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit
Extension.




          “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the
United States or other applicable jurisdictions from time to time in effect and affecting the
rights of creditors generally.




          “Default” means any event or condition that constitutes an Event of Default or that, with
the giving of any notice, the passage of time, or both, would be an Event of Default.




          “Default Rate” means (a) when used with respect to Obligations other than Letter of Credit
Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any,
applicable to Base Rate Loans plus (iii) 2% per annum; provided, however, that with
respect to a Eurocurrency Rate Loan, the Default Rate shall be an interest rate equal to the
interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per
annum and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate
plus 2% per annum.




          “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the
Revolving Credit Loans, participations in L/C Obligations or participations in Swing Line Loans
required to be funded by it hereunder within one Business Day of the date required to be funded by
it hereunder, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender
any other amount required to be paid by it hereunder within one Business Day of the date when due,
unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject
of a bankruptcy or insolvency proceeding.




          “Designated Letters of Credit” means letters of credit issued with respect to mine
reclamation, workers’ compensation and other employee benefit liabilities.




          “Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by any Person, 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.





10









 








          “Dollar” and “$” mean lawful money of the United States.




          “Domestic Subsidiary” means any Subsidiary of the Borrower that is organized under the laws
of any political subdivision of the United States or the District of Columbia.




          “Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund;
and (d) any other Person (other than a natural person) approved by (i) except in the case of an
assignee of any Loan held by either Arranger or any of its Affiliates, the Administrative Agent,
(ii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval
not to be unreasonably withheld or delayed), (iii) the L/C Issuer and (iv) the Swing Line Lender;
provided, that notwithstanding the foregoing, “Eligible Assignee” shall not include the
Borrower or any of the Borrower’s Affiliates or Subsidiaries or any natural person.




          “Environment” means ambient and indoor air, surface water and groundwater (including
potable water, navigable water and wetlands), the land surface or subsurface strata or sediment,
natural resources such as flora or fauna or as otherwise defined in any Environmental Law.




          “Environmental Laws” means any and all applicable current and future federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental restrictions or common
law causes of action relating to (a) protection of the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous materials, substances or wastes into the environment including ambient air, surface,
water, ground water, or land, (b) SMCRA, (c) MSHA, (d) human health as affected by Hazardous
Substances, (e) acid mine drainage and (f) mining operations and activities to the extent relating
to environmental protection or reclamation; provided, that “Environmental Laws” do not
include any laws relating to worker or retiree benefits, including benefits arising out of
occupational diseases.




          “Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure
to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into
the Environment, (e) Reclamation 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,
notifications, exemptions and any other authorization required under any applicable Environmental
Law (including, without limitation, those necessary under any applicable Environmental Laws for the
construction, maintenance and operation of any coal mine or related processing facilities or
Reclamation).





11









 








          “Equity Interests” means, with respect to any Person, all of the shares of capital stock of
(or other ownership or profit interests in) such Person, all of the warrants, options or other
rights for the purchase or acquisition from such Person of shares of capital stock of (or other
ownership or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person
or warrants, rights or options for the purchase or acquisition from such Person of such shares (or
such other interests), and all of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting, and whether or not
such shares, warrants, options, rights or other interests are outstanding on any date of
determination.




          “ERISA” means the Employee Retirement Income Security Act of 1974.




          “ERISA Affiliate” means any trade or business (whether or not incorporated) under common
control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections
414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).




          “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal
by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during
a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a
complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer
Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.




          “Eurocurrency Rate” means, for any Interest Period with respect to a Eurocurrency Rate
Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as
published by Reuters (or other commercially available source providing quotations of BBA LIBOR as
designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period, for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.
If such rate is not available at such time for any reason, then the “Eurocurrency Rate” for such
Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate
at which deposits in Dollars for delivery on the first day of such Interest Period in same day
funds in the approximate amount of the Eurocurrency Rate Loan being made, continued or converted by
Bank of America and with a term equivalent to such Interest Period would be offered by Bank of
America’s London Branch (or other Bank of America branch or Affiliate) to major banks in the London
interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business
Days prior to the commencement of such Interest Period.





12









 








          “Eurocurrency Rate Loan” means a Revolving Credit Loan that bears interest at a rate based
on the Eurocurrency Rate.




          “Event of Default” has the meaning specified in Section 8.01.




          “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the L/C
Issuer or any other recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) branch profits taxes or taxes imposed on or measured by its overall net
income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), as a
result of a present or former connection between the Administrative Agent, such Lender or such L/C
Issuer (or such other recipient) and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent, such Lender, or such L/C Issuer (or such
other recipient) having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any Loan Document) and (b) in the case of a Foreign Lender
(other than an assignee pursuant to a request by the Borrower under Section 10.13), any
United States withholding tax that is imposed on amounts payable to such Foreign Lender at the time
such Foreign Lender becomes a party hereto (or designates a new Lending Office) or any tax that is
attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in
Law after the date such Foreign Lender becomes a party hereto) to comply with Section
3.01(e); except to the extent that such Foreign Lender (or its assignor, if any) was entitled,
at the time of the designation of a new Lending Office (or assignment) to receive additional
amounts from Borrower with respect to such withholding tax pursuant to Section 3.01(a).




          “Existing Letters of Credit” means the letters of credit outstanding on the Closing Date
and set forth on Schedule 1.01(b).




          “Extraordinary Receipt” means any cash received by the Borrower or any of its Subsidiaries
as proceeds of insurance (other than proceeds of business interruption insurance to the extent such
proceeds constitute compensation for lost earnings) or condemnation awards (and payments in lieu
thereof).




          “Facility” means, at any time, the aggregate amount of the Lenders’ Commitments at such
time.




          “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided, that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such
rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%)
charged to Bank of America on such day on such transactions as determined by the Administrative
Agent.





13









 








          “Fee Letter” means the letter agreement, dated September 24, 2007, among the Borrower, the
Administrative Agent and the Arranger.




          “Financing Lease” means any lease of property, real or personal, the obligations of the
lessee in respect of which are required in accordance with GAAP to be capitalized on a balance
sheet of the lessee.




          “Foreign Lender” means, with respect to the Borrower, any Lender that is organized under
the laws of a jurisdiction other than the United States, any state thereof or the District of
Columbia.




          “Foreign Subsidiary” means a Subsidiary that is organized under the laws of a jurisdiction
other than the United States or any state thereof or the District of Columbia and any Subsidiary
thereof.




          “Form 10” means the Borrower’s draft Form 10, dated August 20, 2007, as amended through the
Closing Date.




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





          “Fund” means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business.




          “GAAP” means generally accepted accounting principles in the United States set forth in the
opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board, that are applicable to the circumstances as of the date of determination.




          “Governmental Authority” means the government of the United States or 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 (including any supra-national bodies such as the European Union or the European Central
Bank).




          “Guarantee” means, as to any Person (the “guaranteeing person”), any obligation of (a) the
guaranteeing person or (b) another Person (including, without limitation, any bank under any letter
of credit) to the extent the guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation in order to induce the creation of such obligation, in either case guaranteeing
or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the “primary
obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or
indirectly, including, without limitation, reimbursement obligations under letters of credit and
any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary





14









 







obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary obligation against loss in
respect thereof; provided, however, that the term Guarantee shall not include (i) indemnification
or reimbursement obligations under or in respect of Surety Bonds or Designated Letters of Credit,
(ii) ordinary course performance guarantees by any Loan Party of the obligations (other than for
the payment of borrowed money) of any other Loan Party and (iii) endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any Guarantee obligation of
any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee obligation is made
and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms
of the instrument embodying such Guarantee obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated or determinable, in
which case the amount of such Guarantee obligation shall be such guaranteeing person’s maximum
reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.
The term “Guarantee” as a verb has a corresponding meaning.




          “Guarantor Subsidiary” means any Subsidiary of the Borrower that is (a) a Domestic
Subsidiary and (b) a Foreign Subsidiary, in the case of clause (b) to the extent the Borrower
determines in good faith and in its reasonable discretion that no material adverse tax consequences
would result; provided, that such term shall not include any Subsidiary not wholly- owned, directly
or indirectly, by the Borrower to the extent (but only so long as) it is prohibited by the terms of
any Contractual Obligation (including pursuant to any Organization Documents of such Subsidiary)
from guaranteeing the Obligations or any other obligations or liabilities guaranteed pursuant to
the terms of the Subsidiary Guaranty (it being understood that, for purposes of this definition,
the terms of any Contractual Obligation shall be deemed to prohibit such Guarantee if it would
constitute a breach or default under or result in the termination of or require the consent of any
Person (other than the Borrower or any of its Subsidiaries, or the Administrative Agent or the
Lenders in their respective capacities as such) under the security, agreement, instrument or other
undertaking giving rise to such Contractual Obligation); provided further, that such Contractual
Obligation is or was not created in contemplation of this definition.




          “Hazardous Materials” means (i) any explosive or radioactive substances or wastes and (ii)
any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under,
or that could reasonably be expected to give rise to liability under, any applicable Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls, urea-formaldehyde
insulation, gasoline or petroleum (including crude oil or any fraction thereof) or petroleum
products or any coal ash, coal combustion by-products or waste, boiler slag, scrubber residue or
flue desulphurization residue.




          “Hedge Bank” means any Person that, at the time it enters into a Secured Hedge Agreement,
is a Lender or an Affiliate of a Lender, in its capacity as a party to such Secured Hedge
Agreement.





15











 





          “Honor Date” shall have the meaning specified in Section 2.03(c)(i).




          “Indebtedness” means, as to any Person at a particular time, without duplication, all of
the following, whether or not included as indebtedness or liabilities in accordance with GAAP:




          (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced
by bonds, debentures, notes, loan agreements or other similar instruments;




          (b) all obligations of such Person arising under letters of credit (including
standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and
similar instruments issued for the account of such Person;




          (c) net obligations of such Person under any Swap Contract;




          (d) all obligations of such Person to pay the deferred purchase price of
property or services (other than current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices and accrued expenses
incurred in the ordinary course of business);




          (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not such indebtedness
shall have been assumed by such Person or is limited in recourse;




          (f) Capital Lease Obligations; and




          (g) all Guarantees of such Person in respect of any of the foregoing
Indebtedness of any other Person.




          For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a corporation or limited
liability company) in which such Person is a general partner or a joint venturer, to the extent
such person is liable therefor as a result of such Person’s ownership interest in such entity or
otherwise, except (other than in the case of general partner liability) to the extent that the
terms of such Indebtedness expressly provide that such person is not liable therefor. The amount of
any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination
Value thereof as of such date. The amount of any Capital Lease Obligation as of any date shall be
deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.




          “Indemnified Taxes” means Taxes other than Excluded Taxes.




          “Indemnitees” has the meaning specified in Section 10.04(b).




          “Information” has the meaning specified in Section 10.07.





16









 








          “Information Memorandum” means the information memorandum dated September 2007 used by
the Arranger in connection with the syndication of the Commitments.




          “Intellectual Property Security Agreements” means the Copyright Security Agreement, the
Patent Security Agreement and the Trademark Security Agreement, each as defined under the Security
Agreement.




          “Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan or a BBA
LIBOR Daily Floating Rate Loan, the last day of each Interest Period applicable to such Loan and
the Maturity Date (or, if sooner, the date on which the Obligations become due and payable pursuant
to Section 8.02); provided, however, that if any Interest Period for a
Eurocurrency Rate Loan exceeds three months, the respective dates that fall every three months
after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any
Base Rate Loan and any BBA LIBOR Daily Floating Rate Loan, the last Business Day of each March,
June, September and December and the Maturity Date.




          “Interest Period” means, as to each Eurocurrency Rate Loan, the period commencing on the
date such Eurocurrency Rate Loan is disbursed or converted to or continued as a Eurocurrency Rate
Loan and ending on the date one, two, three or six months or, to the extent available to all
Lenders making such Eurocurrency Rate Loans, nine or twelve months thereafter, as selected by the
Borrower in its Borrowing Notice; provided, that:




          (a) any Interest Period that would otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding Business Day;




          (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of such Interest
Period; and




          (c) no Interest Period shall extend beyond the Maturity Date.




          “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 Capital Stock or other
securities of another Person, (b) a loan, advance (excluding intercompany liabilities incurred in
the ordinary course of business in connection with the cash management operations of the Borrower
and its Subsidiaries) 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 assets of another Person that
constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall
be (i) the amount actually invested, as determined immediately prior to the time of each such
Investment, without adjustment for subsequent increases or decreases in the value of such
Investment minus (ii) the amount of dividends or distributions received in connection with such
Investment and any return of capital and any





17









 







payment of principal received in respect of such Investment that in each case is received in cash,
Cash Equivalents or short-term marketable debt securities.




          “Investment Grade Rating” shall mean a rating equal to or higher than Baa3 (or equivalent)
by Moody’s and BBB- (or equivalent) by S&P, or an equivalent rating by any other nationally
recognized statistical rating agency selected by the Borrower and reasonably acceptable to the
Administrative Agent.




          “IP Rights” has the meaning specified in Section 5.18.




          “IRS” means the United States Internal Revenue Service.




          “ISP” means, with respect to any Letter of Credit, the “International Standby Practices
1998” published by the Institute of International Banking Law & Practice, Inc. (or such later
version thereof as may be in effect at the time of issuance).




          “Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit
Application, and any other document, agreement and instrument entered into by the L/C Issuer and
the Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to any such Letter of
Credit.




          “Joint Venture” means any Person (other than a Subsidiary) in which the Borrower and its
Subsidiaries collectively hold an ownership interest.




          “Laws” means, as to any Person, collectively, all international, foreign, Federal, state
and local statutes, treaties, rules, regulations, ordinances, codes, and determinations of
arbitrators or courts or other Governmental Authorities, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its property is subject.




          “L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Applicable Percentage.




          “L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of
Credit which has not been reimbursed on the date when made or refinanced as a Revolving Credit
Borrowing.




          “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or
extension of the expiry date thereof, or the increase of the amount thereof.




          “L/C Issuer” means Bank of America in its capacity as issuer of Letters of Credit
hereunder, and such other Lender or Lenders that agree to act as L/C Issuer at the request of the
Borrower, and any successor issuer of Letters of Credit hereunder.




          “L/C Obligations” means, as at any date of determination, the aggregate amount available to
be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts,
including all L/C Borrowings. For purposes of computing the amount available to be drawn under any
Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with
Section 1.06. For all purposes of this Agreement, if on any date





18









 







of determination a Letter of Credit has expired by its terms but any amount may still be drawn
thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be
deemed to be “outstanding” in the amount so remaining available to be drawn.




          “Lender” has the meaning specified in the introductory paragraph hereto and, as the context
requires, includes the Swing Line Lender.




          “Lender Addendum” means, with respect to any initial Lender, a Lender Addendum, substantially in the form of Exhibit K, to be executed and delivered by such Lender on
the Closing Date as provided in Section 10.16.




          “Lending Office” means, as to any Lender, the office or offices of such Lender described as
such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may
from time to time notify the Borrower and the Administrative Agent.




          “Letter of Credit” means any letter of credit issued hereunder and shall include the
Existing Letters of Credit.




          “Letter of Credit Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by any L/C Issuer.




          “Letter of Credit Expiration Date” means the day that is seven days prior to the Maturity
Date (or, if such day is not a Business Day, the next preceding Business Day).




          “Letter of Credit Fee” has the meaning specified in Section 2.03(i).




          “Liability Assumption Agreements” means (a) the Coal Act Liability Assumption Agreement,
dated as of October 22, 2007, among the Borrower, Peabody Holding Company, LLC and Peabody, (b) the
NBCWA Liability Assumption Agreement, dated as of October 22, 2007, among the Borrower, Peabody
Holding Company, LLC, Peabody Coal Company, LLC and Peabody, and (c) the Salaried Employee
Liability Assumption Agreement, dated as of October 22, 2007, among the Borrower, Peabody Holding
Company, LLC, Peabody Coal Company, LLC and Peabody.




          “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other security interest
or preferential arrangement in the nature of a security interest of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, any easement, right of way or
other encumbrance on title to real property, and any Financing Lease having substantially the same
economic effect as any of the foregoing).




          “Loan” means an extension of credit by a Lender to the Borrower under Article II in
the form of a Revolving Credit Loan or a Swing Line Loan.




          “Loan Documents” means, collectively, (a) this Agreement, (b) the Notes, (c) the Subsidiary
Guaranty, (d) the Collateral Documents, (e) each Issuer Document, (f) each Secured Hedge Agreement,
and (g) each Secured Cash Management Agreement.





19









 








          “Loan Parties” means, collectively, the Borrower and each Subsidiary Guarantor.




          “Material Adverse Effect” means a material adverse effect upon (a) the business, assets,
operations, property or condition (financial or otherwise) of the Borrower and its Subsidiaries
taken as a whole or (b) the validity or enforceability of this or any of the other Loan Documents
or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.




          “Material Leased Real Property” means real property leased by any Loan Party having a fair
market value reasonably estimated by the Borrower to be in excess of $2,000,000.




          “Material Owned Real Property” means real property owned by any Loan Party having a fair
market value reasonably estimated by the Borrower to be in excess of $1,000,000.




          “Maturity Date” means October 31, 2011; provided, however, that, in each
case, if such date is not a Business Day, the Maturity Date shall be the immediately preceding
Business Day.




          “Mining Financial Assurances” has the meaning specified in Section 5.10(a).




          “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.




          “Mortgage” has the meaning specified in Section 4.01(a)(iv).




          “Mortgage Policy” has the meaning specified in Section 4.01(a)(iv)(B).




          “MSHA” means the Mining Safety and Health Act of 1977, 30 U.S.C. §§ 801 et seq., as
amended.




          “Multiemployer Plan” means any employee benefit plan of the type described in Section
4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make
contributions, or during the preceding five plan years, has made or been obligated to make
contributions.




          “Net Cash Proceeds” means:




          (a) with respect to any Disposition by the Borrower or any of its Subsidiaries, or any
Extraordinary Receipt received or paid to the account of the Borrower or any of its Subsidiaries,
the excess, if any, of (i) the sum of cash and Cash Equivalents received in connection with such
transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant
to, or by monetization of, a note receivable or otherwise, but only as and when so received) over
(ii) the sum of (A) the principal amount of any Indebtedness that is secured by the applicable
asset and that is required to be repaid in connection with such transaction (other than
Indebtedness under the Loan Documents), (B) the reasonable and customary out-of-pocket expenses
incurred by the Borrower or such Subsidiary in connection with such transaction and (C) income
taxes reasonably estimated to be actually payable within two years of the date of the relevant
transaction as a result of any gain recognized in connection therewith; provided, that if





20









 







the amount of any estimated taxes pursuant to subclause (C) exceeds the amount of taxes actually
required to be paid in cash in respect of such Disposition, the aggregate amount of such excess
shall constitute Net Cash Proceeds; and




          (b) with respect to the incurrence or issuance of any Indebtedness by the Borrower or any of its
Subsidiaries, the excess of (i) the sum of the cash and Cash Equivalents received in connection
with such transaction over (ii) the underwriting discounts and commissions, and other reasonable
and customary out-of-pocket expenses, incurred by the Borrower or such Subsidiary in connection
therewith.




          “Note” means a promissory note made by the Borrower in favor of a Lender evidencing
Revolving Credit Loans or Swing Line Loans, as the case may be, made by such Lender, substantially
in the form of Exhibit C.




          “Obligations” means all advances to, and debts, liabilities and obligations of, any Loan
Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit,
whether direct or indirect (including those acquired by assumption), absolute or contingent, due or
to become due, now existing or hereafter arising and including interest and fees that accrue after
the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any
Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such
interest and fees are allowed claims in such proceeding.




          “Organization Documents” means, (a) with respect to any corporation, the certificate or
articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with
respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; and (c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity.




          “Other Taxes” means all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies (and interest, fines, penalties and additions related
thereto) arising from any payment made hereunder or under any other Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.




          “Outstanding Amount” means (i) with respect to Revolving Credit Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Revolving Credit Loans and Swing Line Loans, as the case may be,
occurring on such date; (ii) with respect to Swing Line Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and prepayments of such
Swing Line Loans occurring on such date; and (iii) with respect to any L/C Obligations on any date,
the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C





21









 







Obligations as of such date, including as a result of any reimbursements by the Borrower of
Unreimbursed Amounts.




          “Overnight Rate” means, for any day, the greater of (a) the Federal Funds Rate and (b) an
overnight rate determined by the Administrative Agent, the L/C Issuer, or the Swing Line Lender, as
the case may be, in accordance with banking industry rules on interbank compensation.




          “Participant” has the meaning specified in Section 10.06(d).




          “PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of
Title IV of ERISA, or any successor thereto.




          “Peabody” has the meaning specified in the Preliminary Statements.




          “Peabody Credit Agreement” means that certain Third Amended and Restated Credit Agreement
dated as of September 15, 2006 and conformed through Amendment No. 1 dated as of September 27,
2006, among Peabody, Bank of America, N.A., as agent, and a syndicate of lenders.




          “Peabody Loan Documents” means the “Loan Documents” as defined in the Peabody Credit
Agreement.




          “Pension Plan” means any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and
is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any
ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time
during the immediately preceding five plan years.




          “Permitted Acquisition” shall mean the acquisition by the Borrower or any Subsidiary of all
or substantially all the assets of a Person or line of business of such person (referred to herein
as the “Acquired Assets”), or all of the Equity Interests of a Person (referred to herein as the
“Acquired Entity”); provided, that (i) such acquisition was not preceded by an unsolicited tender
offer for such Equity Interests by, or proxy contest initiated by the Borrower or any Subsidiary;
(ii) the Acquired Entity or the Acquired Assets, as applicable, shall be engaged in a Similar
Business as conducted during the current and most recently concluded calendar year; (iii) at the
time of such transaction (A) both before and after giving effect thereto, no Event of Default or
Default shall have occurred and be continuing; (B) the Borrower would be in compliance with the
covenants set forth in Section 7.11 as of the most recently completed period ending prior to such
transaction for which the financial statements and certificates required by Sections 6.01(a) or (b)
were required to be delivered, after giving pro forma effect to such transaction and to any other
event occurring after such period as to which pro forma recalculation is appropriate (including any
other transaction described in this definition occurring after such period) as if such transaction
(and the occurrence or assumption of any Indebtedness in connection therewith) had occurred as of
the first day of such period; (C) after giving effect to such acquisition, the aggregate of unused
and available Commitments plus the amount of other free and unencumbered cash and Cash Equivalents
available to the Borrower shall be at least





22









 







equal to $50,000,000; and (D) the aggregate of the cash consideration paid (excluding cash
consideration paid with the proceeds of equity issuances after the Closing Date) in connection with
such acquisition and any related acquisitions pursuant to this definition (including any
Indebtedness of the Acquired Entity that is assumed by the Borrower or any Subsidiary in connection
with such acquisition) shall not exceed $100,000,000 in any fiscal year; (iv) the Borrower and the
Subsidiaries shall not incur or assume any Indebtedness in connection with such acquisition, except
as permitted by Section 7.02; (v) the Borrower shall comply, and shall cause the Acquired
Entity, if any, to comply, with the applicable provisions of Section 6.12 and Section
7.3 of the Security Agreement; and (vi) at least 5 Business Days prior to the proposed date of
consummation of the transaction, the Borrower shall deliver to the Administrative Agent (A) an
officer’s certificate certifying that such transaction complies with this definition (which shall
have attached thereto reasonably detailed backup data and calculations showing such compliance) and
(B) all such other information and data relating to the transaction or the Person or business to be
acquired as may be reasonably requested by the Administrative Agent.




          “Permitted Securitization Programs” means any receivables securitization program pursuant
to which the Borrower or any of its Subsidiaries sells accounts receivable and related receivables,
so long as any related Indebtedness incurred to finance the purchase of such accounts receivable is
not includible on the balance sheet of the Borrower or any Subsidiary in accordance with GAAP and
applicable regulations of the SEC; provided, that the aggregate principle amount of all
asset-backed securities issued pursuant to such receivables securitization programs shall not
exceed $50,000,000 at any time outstanding; provided, that any such receivables securitization
program in excess of $25,000,000 shall result in a corresponding permanent reduction of the
Commitments.




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




          “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA)
established by the Borrower or, with respect to any such plan that is subject to Section 412 of the
Code or Title IV of ERISA, by any ERISA Affiliate.




          “Platform” has the meaning specified in Section 6.02.




          “Pledged Debt” has the meaning specified in Section 1.1 of the Security
Agreement.




          “Pledged Equity Interests” has the meaning specified in Section 1.1 of the
Security Agreement.




          “Pro Forma Basis” means, for purposes of calculating the financial covenants set forth in
Section 7.11, that with respect to any acquisition or disposition described in Section
1.03(c), such acquisition or disposition shall be deemed to have occurred as of the first day of
the most recent four fiscal quarter period preceding the date of such acquisition or disposition
for which the Borrower has delivered financial statements pursuant to Section 6.01. In
connection with the foregoing, (a) with respect to any acquisition, income statement items
attributable to the Person or property or assets acquired of shall be included to the extent
relating to any period





23









 







applicable in such calculations to the extent (i) such items are not otherwise included in such
income statement items for the Borrower and its Subsidiaries in accordance with GAAP or in
accordance with any defined terms set forth in Section 1.01, (ii) such items are supported
by financial statements or other information reasonably satisfactory to the Administrative Agent
and (iii) any Indebtedness incurred or assumed by the Borrower or any Subsidiary (including the
Person, property or assets acquired) in connection with such acquisition and any Indebtedness of
the Person, property or assets acquired which is not retired in connection with such acquisition
(A) shall be deemed to have been incurred as of the first day of the most recent four fiscal
quarter period preceding the date for such acquisition and (B) if such Indebtedness has a floating
or formula rate, shall have an implied rate of interest for the most recent four fiscal quarter
period preceding the date of such acquisition for purposes of this definition determined by
utilizing the rate which is or would be in effect with respect to such Indebtedness as at the
relevant date of determination; and (b) with respect to any disposition, income statement items
attributable to the Person or property or assets being disposed of shall be excluded to the extent
relating to any period applicable in such calculations in accordance with the foregoing principles
applicable to acquisitions, mutatis mutandis.




          “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.




          “Properties” has the meaning specified in Section 5.09(a).




          “Public Lender”
has the meaning specified in Section 6.02.




          “Reclamation” means the reclamation and restoration of land, water and any future, current,
abandoned or former mines, and of any other Environment affected by such mines, as required
pursuant to SMCRA, any other Environmental Law or any Environmental Permit.




          “Refinancing Indebtedness” has the meaning specified in Section 7.02(c).




          “Register”
has the meaning specified in Section 10.06(c).






          “Related Documents” means the Separation Agreement, the Tax Separation Agreement, the Coal
Supply Agreement I, the Coal Supply Agreement II, the Coal Supply Agreements and the Liability
Assumption Agreements.




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




          “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other
than events for which the 30 day notice period has been waived.




          “Request for Credit Extension” means (a) with respect to a Borrowing, conversion or
continuation of Revolving Credit Loans, a Borrowing Notice, (b) with respect to an L/C





24









 







Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a
Swing Line Loan Notice.




          “Required Lenders” means, as of any date of determination, Lenders holding more than 50% of
the sum of the (a) Total Outstandings (with the aggregate amount of each Lender’s risk
participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held”
by such Lender for purposes of this definition) and (b) aggregate unused Commitments; provided,
that the unused Commitment of, and the portion of the Total Outstandings held or deemed held by,
any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.




          “Requirement of Law” means as to any Person, the Organizational Documents of such Person,
and any law, treaty, rule or regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.




          “Responsible Officer” means the chief executive officer, president, or any vice president
of the Borrower or, with respect to financial matters, the chief financial officer or treasurer of
the Borrower.




          “Restricted Payment” means any dividend or other distribution (whether in cash, securities
or other property) with respect to any Capital Stock of the Borrower or any Subsidiary, or any
payment (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 such Capital Stock, or on account of any return of capital to the Borrower’s
stockholders, partners or members (or the equivalent Person thereof).




          “Revolving Credit Borrowing” means a borrowing consisting of simultaneous Revolving Credit
Loans of the same Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period
made by each of the Lenders pursuant to Section 2.01.




          “Revolving Credit Loan” has the meaning specified in Section 2.01.




          “S&P” means Standard & Poor’s Ratings Services, a division of The McGrawHill Companies,
Inc., and any successor thereto.




          “SEC” means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.




          “Secured Cash Management Agreement” means any Cash Management Agreement that is entered
into by and between the Borrower and any Cash Management Bank.




          “Secured Hedge Agreement” means any interest rate Swap Contract permitted under Article VII
that is entered into by and between the Borrower and any Hedge Bank.




          “Secured Parties” means, collectively, the Administrative Agent, the Lenders, the L/C
Issuer, the Hedge Banks, the Cash Management Banks, and each co-agent or sub-agent appointed by the
Administrative Agent from time to time pursuant to Section 9.05.





25









 








          “Security Agreement” has the meaning specified in Section 4.01(a)(iii).




          “Separation Agreement” means the Separation Agreement, Plan of Reorganization and
Distribution, dated as of October 22, 2007, between Peabody and the Borrower.




          “Similar Business” means coal production, coal mining, coal gasification, coal
liqui-faction, other BTU conversions, coal brokering, coal transportation, mine development, coal
supply contract restructurings, ash disposal, environmental remediation, Reclamation, coal and coal
bed methane exploration, production, marketing, transportation and distribution and other related
businesses, and activities of the Borrower and its Subsidiaries as of the date hereof and any
business or activity that is reasonably similar thereto or a reasonable extension, development or
expansion thereof or ancillary thereto.




          “SMCRA” means the Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. §§1201 et
seq., as amended.




          “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 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, (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, and (e) such
Person is able to pay its debts and liabilities, contingent obligations and other commitments as
they mature in the ordinary course of business. The amount of contingent liabilities at any time
shall be computed as the amount that, in the 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.




          “Spin-Off” has the meaning specified in the Preliminary Statements.




          “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of securities or other interests
having ordinary voting power for the election of directors or other governing body (other than
securities or interests having such power only by reason of the happening of a contingency) are at
the time beneficially owned, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to
“Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.




          “Subsidiary Guarantors” means, collectively, the subsidiaries of the Borrower listed on
Schedule 1.01(a).




          “Subsidiary Guaranty” means the certain Guarantee made by the Subsidiary Guarantors in
favor of the Secured Parties, substantially in the form of Exhibit F, together with each
other guaranty and guaranty supplement delivered pursuant to Section 6.12.





26









 








          “Surety Bonds” means surety bonds obtained by the Borrower or any Subsidiary in the
ordinary course of business consistent with past practice and the indemnification or reimbursement
obligations of the Borrower or such Subsidiary in connection therewith.




          “Swap Contract” means any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options, forward commodity
contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions, currency options,
spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement.




          “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking
into account the effect of any valid netting agreement relating to such Swap Contracts, (a) for any
date on or after the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any date prior to the
date referenced in clause (a), the amount(s) determined as the mark-tomarket value(s) for such Swap
Contracts, as determined based upon one or more mid-market or other readily available quotations
provided by any recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).




          “Swing Line” means the revolving credit facility made available by the Swing Line Lender
pursuant to Section 2.04.




          “Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section
2.04.




          “Swing Line Lender” means Bank of America in its capacity as provider of Swing Line Loans,
or any successor swing line lender hereunder.




          “Swing Line Loan” has the meaning specified in Section 2.04(a).




          “Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section
2.04(b), which, if in writing, shall be substantially in the form of Exhibit B.




          “Swing Line Sublimit” means an amount equal to the lesser of (a) $50,000,000 and (b) the
unused Aggregate Commitments. The Swing Line Sublimit is part of, and not in addition to, the
Aggregate Commitments.




          “Tangible Assets” means at any date, with respect to any Person, (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 such Person at such date 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 such Person on such
date.





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          “Tax Separation Agreement” means that Tax Separation Agreement, dated as of October 22,
2007, between Peabody and the Borrower.




          “Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental Authority, including
any interest, additions to tax or penalties applicable thereto.




          “Threshold Amount” means $15,000,000.




          “Total Outstandings” means the aggregate Outstanding Amount of all Revolving Credit Loans,
Swing Line Loans and L/C Obligations.




          “Transaction” means, collectively, (a) the consummation of the Spin-Off, (b) the
entering into by the Loan Parties of the Loan Documents and the Related Documents to which they are
a party, (c) the refinancing of certain outstanding Indebtedness of the Borrower and its
Subsidiaries and the termination of all commitments with respect thereto, and (d) the payment of
the fees and expenses incurred in connection with the consummation of the foregoing.




          “Type” means, with respect to a Revolving Credit Loan, its character as a Base Rate Loan or
a Eurocurrency Rate Loan.




          “UCC” means the Uniform Commercial Code as in effect in the State of New York;
provided, that if perfection or the effect of perfection or non-perfection or the priority
of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code
as in effect from time to time in such other jurisdiction for purposes of the provisions hereof
relating to such perfection, effect of perfection or non-perfection or priority.




          “UCP” means the Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, as the same may be amended from time to
time.




          “Unfunded Pension Liability” means the excess of a Pension Plan’s accrued benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s
assets, determined in accordance with the actuarial assumptions used for funding the Pension Plan
pursuant to Section 412 of the Code for the applicable plan year.




          “United States” and “U.S.” mean the United States of America.




          “Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).




          “U.S. Loan Party” means any Loan Party that is organized under the laws of one of the
states of the United States of America and that is not a CFC.




          1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan
Document, unless otherwise specified herein or in such other Loan Document:





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          (a) The definitions of terms herein shall apply equally to the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation.” The word
“will” shall be construed to have the same meaning and effect as the word “shall.”
Unless the context requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document (including any Organization Document) 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 or in any other Loan Document), (ii) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (iii) the words “herein,”
“hereof” and “hereunder,” and words of similar import when used in any Loan
Document, shall be construed to refer to such Loan Document in its entirety and not to any
particular provision thereof, (iv) all references in a Loan Document to Articles, Sections,
Preliminary Statements, Exhibits and Schedules shall be construed to refer to Articles and Sections
of, and Preliminary Statements, Exhibits and Schedules to, the Loan Document in which such
references appear, (v) any reference to any law shall include all statutory and regulatory
provisions consolidating, amending, replacing or interpreting such law and any reference to any law
or regulation shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time, and (vi) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities, accounts and
contract rights.




          (b) In the computation of periods of time from a specified date to a later specified date, the word
“from” means “from and including;” the words “to” and “until” each
mean “to but excluding;” and the word “through” means “to and including.”




          (c) Section headings herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any other Loan
Document.




          1.03 Accounting Terms. (a) Generally. All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect
from time to time, applied in a manner consistent with that used in preparing the Audited Financial
Statements, except as otherwise specifically prescribed herein.




          (b) Changes in GAAP. If at any time any Accounting Change or any other change as permitted
by Section 7.14 would affect the computation of any financial ratio or requirement set
forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such
ratio or requirement to preserve the original intent thereof in light of such Accounting Change as
if such Accounting Change has not been made (subject to the approval of the Required Lenders);
provided, that until so amended, all financial covenants, standards, and





29









 







terms in this Agreement shall continue to be calculated or construed as if such Accounting Change
had not occurred.




          (c) Pro Forma Basis Calculation. Notwithstanding the foregoing, the parties hereto
acknowledge and agree that all calculations of the Consolidated Interest Coverage Ratio and the
Consolidated Leverage Ratio for purposes of determining compliance with Section 7.11(a) and
(b) shall be made on a Pro Forma Basis (i) with respect to any acquisition by the Borrower
or its Subsidiaries of any Person, property or assets, if the Consolidated EBITDA for the acquired
Person or business for the most recent four fiscal quarter period for which financial statements
are available is equal to or greater than 5% of the Consolidated EBITDA of the Borrower and its
Subsidiaries for such period and (ii) with respect to any disposition by the Borrower or its
Subsidiaries of any Person, property or assets, if the Consolidated EBITDA for the Person or
business being disposed of for the most recent four fiscal quarter period for which financial
statements are available was equal to or exceeded 5% of the Consolidated EBITDA of the Borrower and
its Subsidiaries for such period.




          1.04 Times of Day. Unless otherwise specified, all references herein to times of day shall
be references to Eastern time (daylight or standard, as applicable).




          1.05 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of
Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at
such time; provided, however, that with respect to any Letter of Credit that, by
its terms or the terms of any Issuer Document related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all such increases,
whether or not such maximum stated amount is in effect at such time.




ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS




          2.01 The Revolving Credit Loans. Subject to the terms and conditions set forth herein, each
Lender severally agrees to make loans (each such loan, a “Revolving Credit Loan”) to the
Borrower from time to time, on any Business Day during the Availability Period, in an aggregate
principal amount not to exceed at any time outstanding the amount of such Lender’s Commitment;
provided, however, that after giving effect to any Revolving Credit Borrowing, (i)
the Total Outstandings shall not exceed the Facility, and (ii) the aggregate Outstanding Amount of
the Revolving Credit Loans of any Lender, plus such Lender’s Applicable Percentage of the
Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the
Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment. Within the
limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the
Borrower may borrow under this Section 2.01, prepay under Section 2.05, and
reborrow under this Section 2.01. Revolving Credit Loans may be Base Rate Loans or
Eurocurrency Rate Loans, as further provided herein.




          2.02 Borrowings, Conversions and Continuations of Loans. (a) Each Revolving Credit
Borrowing, each conversion of Revolving Credit Loans from one Type to the other, and each
continuation of Eurocurrency Rate Loans shall be made upon the Borrower’s





30









 







irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice
must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days
prior to the requested date of any Borrowing of, conversion to or continuation of Eurocurrency Rate
Loans or of any conversion of Eurocurrency Rate Loans, and (ii) on the requested date of any
Borrowing of Base Rate Loans; provided, however, that if the Borrower wishes to
request Eurocurrency Rate Loans having an Interest Period other than one, two, three, or six months
or, to the extent available to all Lenders making such Eurocurrency Rate Loans, nine or twelve
months in duration as provided in the definition of “Interest Period”, the applicable notice must
be received by the Administrative Agent not later than 11:00 a.m. four Business Days prior to the
requested date of such Borrowing, conversion or continuation of Eurocurrency Rate Loans, whereupon
the Administrative Agent shall give prompt notice to the Lenders of such request and determine
whether the requested Interest Period is acceptable to all of them. Not later than 11:00 a.m.,
three Business Days before the requested date of such Borrowing, conversion or continuation of
Eurocurrency Rate Loans, the Administrative Agent shall notify the Borrower (which notice may be by
telephone) whether or not the requested Interest Period has been consented to by all the Lenders.
Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed
promptly by delivery to the Administrative Agent of a written Borrowing Notice, appropriately
completed and signed by a Responsible Officer of the Borrower. Each Borrowing of, conversion to or
continuation of Eurocurrency Rate Loans shall be in a principal amount of $1,000,000 or a whole
multiple of $500,000 in excess thereof. Except as provided in Sections 2.03(c) and
2.04(c), each Borrowing of or conversion to Base Rate Loans shall be in a principal amount
of $500,000 or a whole multiple of $100,000 in excess thereof. Each Borrowing Notice (whether
telephonic or written) shall specify (i) whether the Borrower is requesting a Revolving Credit
Borrowing, a conversion of Revolving Credit Loans from one Type to the other, or a continuation of
Eurocurrency Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as
the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be
borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing
Revolving Credit Loans are to be converted, and (v) if applicable, the duration of the Interest
Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Borrowing Notice
or if the Borrower fails to give a timely notice requesting a conversion or continuation of
Eurocurrency Rate Loans, then the applicable Revolving Credit Loans shall be made as, or converted
to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the
last day of the Interest Period then in effect with respect to the applicable Eurocurrency Rate
Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurocurrency Rate
Loans in any such Borrowing Notice, but fails to specify an Interest Period, it will be deemed to
have specified an Interest Period of one month. Notwithstanding anything to the contrary herein, a
Swing Line Loan may not be converted to a Eurocurrency Rate Loan.




          (b) Following receipt of a Borrowing Notice, the Administrative Agent shall promptly notify each
Lender of the amount of its Applicable Percentage under the Facility of the Revolving Credit Loans,
and if no timely notice of a conversion or continuation is provided by the Borrower, the
Administrative Agent shall notify each Lender of the details of any automatic conversion to Base
Rate Loans described in the preceding subsection. In the case of a Revolving Credit
Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in
immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the
Business Day specified in the applicable Borrowing Notice. Upon satisfaction of the





31









 







applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial
Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received
available to the Borrower in like funds as received by the Administrative Agent either by (i)
crediting the account of the Borrower on the books of Bank of America with the amount of such funds
or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) the Administrative Agent by the Borrower; provided,
however, that if, on the date a Borrowing Notice with respect to a Revolving Credit
Borrowing is given by the Borrower, there are L/C Advances outstanding, then the proceeds of such
Revolving Credit Borrowing, first, shall be applied to the payment in full of any
Unreimbursed Amounts in respect thereof, and second, shall be made available to the
Borrower as provided above.




          (c) Unless the Lenders are compensated for any losses under Section 3.05, a Eurocurrency
Rate Loan may be continued or converted only on the last day of an Interest Period for such
Eurocurrency Rate Loan. During the existence of a Default, no Loans may be requested as, converted
to or continued as Eurocurrency Rate Loans if the Required Lenders or the Administrative Agent so
notify the Borrower.




          (d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest
rate applicable to any Interest Period for Eurocurrency Rate Loans upon determination of such
interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent shall
notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in
determining the Base Rate promptly following the public announcement of such change.




          (e) After giving effect to all Revolving Credit Borrowings, all conversions of Revolving Credit
Loans from one Type to the other, and all continuations of Revolving Credit Loans as the same Type,
there shall not be more than fifteen (15) Interest Periods in effect hereunder.




          2.03 Letters of Credit. (a) The Letter of Credit Commitment. (i) Subject to the
terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements
of the Lenders set forth in this Section 2.03, (1) from time to time on any Business Day
during the period from the Closing Date until the Letter of Credit Expiration Date, to issue
Letters of Credit for the account of the Borrower or any Subsidiary, and to amend or extend Letters
of Credit previously issued by it, in accordance with Section 2.03(b), and (2) to honor
drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters
of Credit issued for the account of the Borrower or any Subsidiary and any drawings thereunder;
provided, that after giving effect to any L/C Credit Extension with respect to any Letter
of Credit, (x) the Total Outstandings shall not exceed the Facility, and (y) the aggregate
Outstanding Amount of the Revolving Credit Loans of any Lender, plus such Lender’s
Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s
Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such
Lender’s Commitment. Each request by the Borrower or any Subsidiary for the issuance or amendment
of a Letter of Credit shall be deemed to be a representation by the Borrower that the L/C Credit
Extension so requested complies with the conditions set forth in the proviso to the preceding
sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the
Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the





32









 







Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit
that have expired or that have been drawn upon and reimbursed. All Existing Letters of Credit shall
be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject
to and governed by the terms and conditions hereof.





     (ii) No L/C Issuer shall issue any Letter of Credit if:




     (A) subject to Section 2.03(b)(iii), the expiry date of such requested Letter of Credit
would occur more than twelve months after the date of issuance or last extension, unless the
Required Lenders have approved such expiry date; or




     (B) the expiry date of such requested Letter of Credit would occur after the Letter of Credit
Expiration Date, unless all the Lenders have approved such expiry date.




     (iii) No L/C Issuer shall be under any obligation to issue any Letter of Credit if:




     (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms
purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law
applicable to the L/C Issuer or any request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request
that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated
hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed
loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good
faith deems material to it;




     (B) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer;




     (C) except as otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of
Credit is in an initial stated amount less than $100,000, in the case of a commercial Letter of
Credit, or $250,000, in the case of a standby Letter of Credit;




     (D) such Letter of Credit is to be denominated in a currency other than Dollars;




     (E) subject to Section 2.03(b)(iv), such Letter of Credit contains any provisions for
automatic reinstatement of the stated amount after any drawing thereunder; or




     (F) a default of any Lender’s obligations to fund under Section 2.03(c) exists or any
Lender is at such time a Defaulting Lender hereunder, unless the L/C Issuer has entered into
satisfactory arrangements with the Borrower or such Lender to eliminate the L/C Issuer’s risk with
respect to such Lender.



33









 






     (iv) No L/C Issuer shall be under any obligation to amend any Letter of Credit if (A) such L/C
Issuer would not have any obligation at such time to issue such Letter of Credit in its amended
form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the
proposed amendment to such Letter of Credit.




     (v) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued
by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and
immunities (A) provided to the Administrative Agent in Article IX with respect to any acts
taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or
proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as
if the term “Administrative Agent” as used in Article IX included the L/C Issuer with
respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C
Issuer.



          (b) Procedures for Issuance and Amendment of Letters of Credit; Auto- Extension Letters of
Credit. (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower delivered to an L/C Issuer (with a copy to the Administrative Agent) in the
form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer
of the Borrower. Such Letter of Credit Application must be received by such L/C Issuer and the
Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and
time as the Administrative Agent and such L/C Issuer may agree in a particular instance in their
sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In
the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail reasonably satisfactory to the L/C Issuer: (A) the
proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the
amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof;
(E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the
full text of any certificate to be presented by such beneficiary in case of any drawing thereunder;
and (G) such other matters as the L/C Issuer may reasonably require. In the case of a request for
an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify
in form and detail reasonably satisfactory to the L/C Issuer (1) the Letter of Credit to be
amended; (2) the proposed date of amendment thereof (which shall be a Business Day); (3) the nature
of the proposed amendment; and (4) such other matters as the L/C Issuer may reasonably require.
Additionally, the Borrower shall furnish to the L/C Issuer and the Administrative Agent such other
documents and information pertaining to such requested Letter of Credit issuance or amendment,
including any Issuer Documents, as the L/C Issuer or the Administrative Agent may reasonably
require.





     (ii) Promptly after receipt of any Letter of Credit Application, the applicable L/C Issuer will
confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent
has received a copy of such Letter of Credit Application from the Borrower and, if not, such L/C
Issuer will provide the Administrative Agent with a copy thereof. Unless such L/C Issuer has
received written notice from any Lender, the Administrative Agent or any Loan Party, at least one
Business Day prior to the requested date of issuance or amendment of the applicable Letter of
Credit, that one or more applicable conditions contained in Article IV shall not then be
satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested
date, issue a Letter



34









 




of Credit for the account of the Borrower or enter into the applicable amendment, as the case may
be, in each case in accordance with the L/C Issuer’s usual and customary business practices.
Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in
such Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage
times the amount of such Letter of Credit.





     (iii) If the Borrower so requests in any applicable Letter of Credit Application, an L/C Issuer
may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic
extension provisions (each, an “Auto-Extension Letter of Credit”); provided, that
any such Auto-Extension Letter of Credit must permit the applicable L/C Issuer to prevent any such
extension at least once in each twelve-month period (commencing with the date of issuance of such
Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the
“Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time
such Letter of Credit is issued. Unless otherwise directed by the applicable L/C Issuer, the
Borrower shall not be required to make a specific request to the applicable L/C Issuer for any such
extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to
have authorized (but may not require) the applicable L/C Issuer to permit the extension of such
Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date;
provided, however, that the applicable L/C Issuer shall not permit any such
extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no
obligation at such time to issue such Letter of Credit in its revised form (as extended) under the
terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a)), or
(B) it has received notice (which may be by telephone or in writing) on or before the day that is
five Business Days before the Non-Extension Notice Date from the Administrative Agent or the
Borrower that one or more of the applicable conditions specified in Section 4.02 is not
then satisfied, and in each such case directing the applicable L/C Issuer not to permit such
extension.




     (iv) If the Borrower so requests in any applicable Letter of Credit Application, an L/C Issuer may,
in its sole and absolute discretion, agree to issue a Letter of Credit that permits the automatic
reinstatement of all or a portion of the stated amount thereof after any drawing thereunder (each,
an “Auto-Reinstatement Letter of Credit”). Unless otherwise directed by the applicable L/C
Issuer, the Borrower shall not be required to make a specific request to the applicable L/C Issuer
to permit such reinstatement. Once an Auto-Reinstatement Letter of Credit has been issued, except
as provided in the following sentence, the Lenders shall be deemed to have authorized (but may not
require) the applicable L/C Issuer to reinstate all or a portion of the stated amount thereof in
accordance with the provisions of such Letter of Credit. Notwithstanding the foregoing, if such
Auto-Reinstatement Letter of Credit permits the applicable L/C Issuer to decline to reinstate all
or any portion of the stated amount thereof after a drawing thereunder by giving notice of such
non-reinstatement within a specified number of days after such drawing (the “Non-Reinstatement
Deadline”), the applicable L/C Issuer shall not permit such reinstatement if it has received a
notice (which may be by telephone or in writing) on or before the day that is seven Business Days
before the Non-Reinstatement Deadline




35












 






from the Administrative Agent or the Borrower that one or more of the applicable conditions
specified in Section 4.02 is not then satisfied (treating such reinstatement as an L/C
Credit Extension for purposes of this clause) and, in each case, directing the applicable L/C
Issuer not to permit such reinstatement.




     (v) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to
an advising bank with respect thereto or to the beneficiary thereof, the applicable L/C Issuer will
also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter
of Credit or amendment.



          (c) Drawings and Reimbursements; Funding of Participations. (i) Upon receipt from the
beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the
applicable L/C Issuer shall notify the Borrower and the Administrative Agent thereof. The Borrower
shall reimburse such L/C Issuer through the Administrative Agent in an amount equal to the amount
of such drawing on the date on which the Borrower receives notice of any payment by the L/C Issuer
under a Letter of Credit, provided that the Borrower receives notice by 1:00 p.m., New York
City time on such date, or on the next Business Day if notice is not received by such time (each
such date, an “Honor Date”). If the Borrower fails to so reimburse such L/C Issuer by the
time set forth in the preceding sentence, the applicable L/C Issuer shall promptly notify the
Administrative Agent of the Honor Date and the amount of the unreimbursed drawing (the
“Unreimbursed Amount”). The Administrative Agent shall promptly notify each Lender thereof
and of the amount of such Lender’s Applicable Percentage thereof. Any notice given by such L/C
Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by
telephone if immediately confirmed in writing; provided, that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such notice.





     (ii) Each Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available
to the Administrative Agent for the account of the L/C Issuer at the Administrative Agent’s Office
in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m.
on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the
provisions of Section 2.03(c)(iii), each Lender that so makes funds available shall be
deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall
remit the funds so received to the L/C Issuer.




     (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Revolving Credit
Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be
satisfied or for any other reason, the Borrower shall be deemed to have incurred from the L/C
Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which
L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest
at (A) the rate applicable to Base Rate Loans from the Honor Date to the date reimbursement is
required pursuant to Section 2.03(c)(i) and (B) thereafter, the Default Rate. Each Lender’s
payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section
2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and
shall



36









 







constitute an L/C Advance from such Lender in satisfaction of its participation obligation under
this Section 2.03.




     (iv) Until each Lender funds its Revolving Credit Loan or L/C Advance pursuant to this Section
2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest
in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account of
the L/C Issuer.




     (v) Each Lender’s obligation to make Revolving Credit Loans or L/C Advances to reimburse the L/C
Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c),
shall be absolute and unconditional and shall not be affected by any circumstance, including (A)
any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the
L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar
to any of the foregoing; provided, however, that each Lender’s obligation to make
Revolving Credit Loans pursuant to this Section 2.03(c) is subject to the conditions set
forth in Section 4.02 (other than delivery by the Borrower of a Borrowing Notice). No such
making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to
reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of
Credit, together with interest as provided herein.




     (vi) If any Lender fails to make available to the Administrative Agent for the account of the L/C
Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this
Section 2.03(c) by the time specified in Section 2.03(c)(ii), the L/C Issuer shall
be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such
amount with interest thereon for the period from the date such payment is required to the date on
which such payment is immediately available to the L/C Issuer at a rate per annum equal to the
Overnight Rate, plus any administrative, processing or similar fees customarily charged by the L/C
Issuer in connection with the foregoing. If such Lender pays such amount (with interest and fees as
aforesaid), the amount so paid shall constitute such Lender’s Loan included in the relevant L/C
Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the L/C
Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing
under this Section 2.03(c)(vi) shall be conclusive absent manifest error.



          (d) Repayment of Participations. (i) At any time after the L/C Issuer has made a payment
under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of
such payment in accordance with Section 2.03(c), if the Administrative Agent receives for
the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest
thereon (whether directly from the Borrower or otherwise, including proceeds of cash collateral
applied thereto by the Administrative Agent), the Administrative Agent will distribute to such
Lender its Applicable Percentage thereof (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Lender’s L/C Advance was outstanding) in the same
funds as those received by the Administrative Agent.





37









 









     (ii) If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant
to Section 2.03(c)(i) is required to be returned under any of the circumstances described
in Section 10.05 (including pursuant to any settlement entered into by the L/C Issuer in
its discretion), each Lender shall pay to the Administrative Agent for the account of the L/C
Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest
thereon from the date of such demand to the date such amount is returned by such Lender, at a rate
per annum equal to the applicable Overnight Rate from time to time in effect. The obligations of
the Lenders under this clause shall survive the payment in full of the Obligations and the
termination of this Agreement.



          (e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C Issuer for
each drawing under each Letter of Credit and to repay each Unreimbursed Amount shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:





     (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other
Loan Document;




     (ii) the existence of any claim, counterclaim, setoff, defense or other right that the Borrower or
any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of
Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C
Issuer or any Lender, whether in connection with this Agreement, the transactions contemplated
hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;




     (iii) any draft, demand, certificate or other document presented under such Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under such Letter of Credit, except to the extent
caused by the L/C Issuer’s gross negligence or willful misconduct;




     (iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or
certificate that does not strictly comply with the terms of such Letter of Credit, so long as the
L/C Issuer shall have determined in the absence of gross negligence or willful misconduct, in good
faith and in accordance with the standard of care specified in the Uniform Commercial Code of the
State of New York, that the documents (including each draft) delivered under such Letter of Credit
in connection with such presentment appear on their face to be in conformity with such Letter of
Credit;




     (v) any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any transferee of such
Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief
Law; or



38









 






     (vi) any other action taken or omitted to be taken by the L/C Issuer under or in connection with
any Letter of Credit or the related drafts or documents, whether or not similar to any of the
foregoing, if done in the absence of gross negligence or willful misconduct, in good faith and in
accordance with the standards of care specified in the Uniform Commercial Code of the State of New
York .



          The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that
is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions
or other irregularity, the Borrower will promptly notify the L/C Issuer. The Borrower shall be
conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents
unless such notice is given as aforesaid.




          (f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any drawing
under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document
(other than any sight draft, certificates and documents expressly required by the Letter of Credit)
or to ascertain or inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the L/C Issuer, the Administrative
Agent, any of their respective Related Parties nor any correspondent, participant or assignee of
the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection
herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable;
(ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii)
the due execution, effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not, preclude
the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. Notwithstanding anything to the contrary herein the
Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrower,
to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary,
damages suffered by the Borrower which the Borrower proves were caused by the L/C Issuer’s willful
misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary or transferee of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear
on their face to be in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity
or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.




          (g) Cash Collateral. (i) Upon the request of the Administrative Agent, if, as of the Letter
of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, the Borrower
shall, in each case, immediately Cash Collateralize the then Outstanding Amount of such L/C
Obligation.





     (ii) Sections 2.05 and 8.02(c) set forth certain additional requirements to deliver
cash collateral hereunder. For purposes of this Section 2.03, Section 2.05 and
Section



39









 







8.02 (c), “Cash Collateralize” means to pledge to the Administrative Agent and
deposit in the Cash Collateral Account, for the benefit of the L/C Issuer and the Lenders, as
collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in
form and substance reasonably satisfactory to the Administrative Agent and the L/C Issuer (which
documents are hereby consented to by the Lenders). Derivatives of such term have corresponding
meanings. The Borrower hereby grants to the Administrative Agent, for the benefit of the L/C Issuer
and the Lenders, a security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing. Cash collateral shall be maintained in the Cash Collateral
Account. If at any time the Administrative Agent determines that any funds held in the Cash
Collateral Account are subject to any right or claim of any Person other than the Administrative
Agent or that the total amount of such funds is less than the aggregate Outstanding Amount of all
L/C Obligations, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited in the Cash Collateral Account, an amount
equal to the excess of (x) such aggregate Outstanding Amount over (y) the total amount of funds, if
any, then held in the Cash Collateral Account that the Administrative Agent determines to be free
and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are
on deposit in the Cash Collateral Account, such funds shall be applied, to the extent permitted
under applicable Laws, to reimburse the L/C Issuer for the amount of such drawing.



          (h) Applicability of ISP and UCP. Unless otherwise expressly agreed by the L/C Issuer and
the Borrower when a Letter of Credit is issued (including any such agreement applicable to an
Existing Letter of Credit), (i) the rules of the ISP shall apply to each standby Letter of Credit,
and (ii) the rules of the UCP at the time of issuance shall apply to each commercial Letter of
Credit.




          (i) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Applicable Percentage a Letter of Credit fee (the
“Letter of Credit Fee”) for each Letter of Credit equal to the Applicable Rate for Eurocurrency
Rate Loans times the daily amount available to be drawn under such Letter of Credit. For purposes
of computing the daily amount available to be drawn under any Letter of Credit, the amount of such
Letter of Credit shall be determined in accordance with Section 1.05. Letter of Credit Fees shall
be (i) computed on a quarterly basis in arrears and (ii) due and payable on the first Business Day
after the end of each March, June, September and December, commencing with the first such date to
occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and
thereafter on demand. If there is any change in the Applicable Rate during any quarter, the daily
amount available to be drawn under each Letter of Credit shall be computed and multiplied by the
Applicable Rate separately for each period during such quarter that such Applicable Rate was in
effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required
Lenders, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default
Rate.




          (j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The Borrower
shall pay directly to the L/C Issuer for its own account a fronting fee with respect to each Letter
of Credit, at the rate of 0.125% per annum on the face amount drawn under





40









 







each Letter of Credit, computed on the daily amount available to be drawn under such Letter of
Credit on a quarterly basis in arrears. Such fronting fee shall be due and payable on the first
Business Day after the end of each March, June, September and December in respect of the most
recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing
with the first such date to occur after the issuance of such Letter of Credit, on the Letter of
Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be
determined in accordance with Section 1.05. In addition, the Borrower shall pay directly to
the L/C Issuer for its own account the customary issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of
credit as from time to time in effect. Such customary fees and standard costs and charges are due
and payable on demand and are nonrefundable.




          (k) Conflict with Issuer Documents. In the event of any conflict between the terms hereof
and the terms of any Issuer Document, the terms hereof shall control.




          (l) Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit
issued or outstanding hereunder is in support of any obligations of, or is for the account of, a
Subsidiary, the Borrower shall be obligated to reimburse the L/C Issuer hereunder for any and all
drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters
of Credit for the account of Subsidiaries inures to the benefit of the Borrower, and that the
Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.




          2.04 Swing Line Loans. (a) The Swing Line. Subject to the terms and conditions set
forth herein, the Swing Line Lender agrees, in reliance upon the agreements of the other Lenders
set forth in this Section 2.04, to make loans (each such loan, a “Swing Line Loan”) to the
Borrower from time to time on any Business Day during the Availability Period in an aggregate
principal amount not to exceed at any time outstanding the amount of the Swing Line Sublimit,
notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage
of the Outstanding Amount of Revolving Credit Loans and L/C Obligations of the Lender acting as
Swing Line Lender, may exceed the amount of such Lender’s Commitment; provided,
however, that after giving effect to any Swing Line Loan, (i) the Total Outstandings shall
not exceed the Facility at such time, and (ii) the aggregate Outstanding Amount of the Revolving
Credit Loans of any Lender at such time, plus such Lender’s Applicable Percentage of the
Outstanding Amount of all L/C Obligations at such time, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all Swing Line Loans at such time shall not exceed such
Lender’s Commitment, and provided further that the Borrower shall not use the
proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan. Within the foregoing
limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this
Section 2.04, prepay under Section 2.05, and reborrow under this Section
2.04. Each Swing Line Loan shall be a BBA LIBOR Daily Floating Rate Loan. Immediately upon the
making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing
Line Loan in an amount equal to the product of such Lender’s Applicable Percentage times the amount
of such Swing Line Loan.





41









 








          (b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the Borrower’s
irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by
telephone. Each such notice must be received by the Swing Line Lender and the Administrative Agent
not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be
borrowed, which shall be a minimum of $100,000, and (ii) the requested borrowing date, which shall
be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the Swing
Line Lender and the Administrative Agent of a written Swing Line Loan Notice, appropriately
completed and signed by a Responsible Officer of the Borrower. Promptly after receipt by the Swing
Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the
Administrative Agent (by telephone or in writing) that the Administrative Agent has also received
such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent
(by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received
notice (by telephone or in writing) from the Administrative Agent (including at the request of any
Lender) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing
Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first
proviso to the first sentence of Section 2.04(a), or (B) that one or more of the applicable
conditions specified in Article IV is not then satisfied, then, subject to the terms and
conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on the borrowing date
specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the
Borrower at its office by crediting the account of the Borrower on the books of the Swing Line
Lender in immediately available funds.





42









 








          (c) Refinancing of Swing Line Loans. (i) The Swing Line Lender at any time in its sole and
absolute discretion may, and in any event on the 10th Business Day after such Swing Line
Loan is made, shall request, on behalf of the Borrower (which hereby irrevocably authorizes the
Swing Line Lender to so request on its behalf), that each Lender make a Base Rate Loan in an amount
equal to such Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding or,
in the case of any request given with respect to Swing Line Loans which have been outstanding for
10 Business Days, the amount of such outstanding Swing Line Loans; provided, that such Loans may,
and upon the Borrower’s request shall, be made as Eurocurrency Rate Loans if a Eurocurrency Rate
Loan could otherwise be made pursuant to Section 2.02. Such request shall be made in writing (which
written request shall be deemed to be a Borrowing Notice for purposes hereof) and in accordance
with the requirements of Section 2.02, without regard to the minimum and multiples
specified therein for the principal amount of Base Rate Loans or Eurocurrency Loans, but subject to
the unutilized portion of the Aggregate Commitments and the conditions set forth in Section
4.02. The Swing Line Lender shall furnish the Borrower with a copy of the applicable Borrowing
Notice promptly after delivering such notice to the Administrative Agent. Each Lender shall make an
amount equal to its Applicable Percentage of the amount specified in such Borrowing Notice
available to the Administrative Agent in immediately available funds for the account of the Swing
Line Lender at the Administrative Agent’s Office not later than 1:00 p.m. on the day specified in
such Borrowing Notice, whereupon, subject to Section 2.04(c)(ii), each Swing Line Lender
that so makes funds available shall be deemed to have made a Base Rate Loan (or Eurocurrency Rate
Loan, if applicable) to the Borrower in such amount. The Administrative Agent shall remit the funds
so received to the Swing Line Lender.





     (ii) If for any reason any Swing Line Loan cannot be refinanced by such a Revolving Credit
Borrowing in accordance with Section 2.04(c)(i), the request for Base Rate Loans submitted
by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line
Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and
each Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant
to Section 2.04(c)(i) shall be deemed payment in respect of such participation.




     (iii) If any Lender fails to make available to the Administrative Agent for the account of the
Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the
Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative
Agent), on demand, such amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the Swing Line Lender at a
rate per annum equal to the Overnight Rate from time to time in effect, plus any administrative,
processing or similar fees customarily charged by the Swing Line Lender in connection with the
foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so
paid shall constitute such Lender’s Loan included in the relevant Borrowing or funded participation
in the relevant Swing Line Loan, as the case may be. A certificate of the Swing Line Lender
submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under
this clause (iii) shall be conclusive absent manifest error.



43









 






     (iv) Each Lender’s obligation to make Revolving Credit Loans or to purchase and fund risk
participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line
Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar
to any of the foregoing; provided, however, that each Lender’s obligation to make
Revolving Credit Loans pursuant to this Section 2.04(c) is subject to the conditions set
forth in Section 4.02. No such funding of risk participations shall relieve or otherwise
impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided
herein.



          (d) Repayment of Participations. (i) At any time after any Lender has purchased and funded
a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account
of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Applicable
Percentage of such payment (appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Lender’s risk participation was funded) in the same funds as
those received by the Swing Line Lender.





     (ii) If any payment received by the Swing Line Lender in respect of principal or interest on any
Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances
described in Section 10.05 (including pursuant to any settlement entered into by the Swing
Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Applicable
Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of
such demand to the date such amount is returned, at a rate per annum equal to the applicable
Overnight Rate. The Administrative Agent will make such demand upon the request of the Swing Line
Lender. The obligations of the Lenders under this clause shall survive the payment in full of the
Obligations and the termination of this Agreement.



          (e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be responsible
for invoicing the Borrower for interest on the Swing Line Loans. Until each Lender funds its Base
Rate Loan or risk participation pursuant to this Section 2.04 to refinance such Lender’s
Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage
shall be solely for the account of the Swing Line Lender.




          (f) Payments Directly to Swing Line Lender. The Borrower shall make all payments of
principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.




          2.05 Prepayments. (a) Optional. (i) The Borrower may, upon notice to the
Administrative Agent, at any time or from time to time voluntarily prepay Revolving Credit Loans in
whole or in part without premium or penalty; provided, that (A) such notice must be
received by the Administrative Agent not later than 11:00 a.m. (1) three Business Days prior to any
date of prepayment of Eurocurrency Rate Loans and (2) on the date of prepayment of Base Rate Loans;
(B) any prepayment of Eurocurrency Rate Loans shall be in a principal amount of $1,000,000 or a
whole multiple of $500,000 in excess thereof; and (C) any prepayment of Base





44









 







Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such
notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid
and, if Eurocurrency Rate Loans are to be prepaid, the Interest Period(s) of such Loans. The
Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of
the amount of such Lender’s ratable portion of such prepayment (based on such Lender’s Applicable
Percentage in respect of the Facility). If such notice is given by the Borrower, the Borrower shall
make such prepayment and the payment amount specified in such notice shall be due and payable on
the date specified therein. Any prepayment of a Eurocurrency Rate Loan shall be accompanied by all
accrued interest on the amount prepaid, together with any additional amounts required pursuant to
Section 3.05.





     (ii) The Borrower may, upon notice to the Swing Line Lender (with a copy to the Administrative
Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part
without premium or penalty; provided, that (A) such notice must be received by the Swing
Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment,
and (B) any such prepayment shall be in a minimum principal amount of $100,000. Each such notice
shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such notice shall be due
and payable on the date specified therein.



          (b) Mandatory. (i) If the Borrower or any of its Subsidiaries Disposes of any property
(other than any Disposition of any property permitted by Section 7.05 (a), (b), (c), (d), (e)
or (h)) which results in the realization by such Person of Net Cash Proceeds, the Borrower
shall prepay an aggregate principal amount of Loans equal to 100% of such Net Cash Proceeds
immediately upon receipt thereof by such Person (such prepayments to be applied as set forth in
clauses (v) below), without a corresponding permanent reduction in Commitments; provided,
however, that, with respect to any Net Cash Proceeds realized under a Disposition described
in this Section 2.05(b)(i), at the election of the Borrower (as notified by the Borrower to
the Administrative Agent on or prior to the date of such Disposition), and so long as no Default
shall have occurred and be continuing, the Borrower or such Subsidiary may reinvest all or any
portion of such Net Cash Proceeds in operating assets or to make any Permitted Acquisition so long
as within 270 days after the receipt of such Net Cash Proceeds, such purchase shall have been
consummated (as certified by the Borrower in writing to the Administrative Agent); and
provided further, however, that any Net Cash Proceeds not reinvested shall
be applied to the prepayment of the Loans as set forth in this Section 2.05(b)(i) at the
end of such 270 day period.





     (ii) Upon the incurrence or issuance by the Borrower or any of its Subsidiaries of any senior
secured Indebtedness (other than senior secured Indebtedness expressly permitted to be incurred or
issued pursuant to Section 7.02 or the creation of any Permitted Securitization Program
with a principal balance in excess of $25,000,000), the Borrower shall prepay an aggregate
principal amount of Loans equal to 100% of all Net Cash Proceeds received therefrom (in the case of
a Permitted Securitization Program, only to the amount in excess of $25,000,000) immediately upon
receipt thereof by the Borrower or such Subsidiary (such prepayments to be applied as set forth in
clause (v) below), with a corresponding permanent reduction in Commitments.



45









 






     (iii) Upon any Extraordinary Receipt received by or paid to or for the account of the Borrower or
any of its Subsidiaries, and not otherwise included in clause (i) or (ii) of this Section
2.05(b), the Borrower shall prepay an aggregate principal amount of Loans equal to 100% of all
Net Cash Proceeds received therefrom immediately upon receipt thereof by the Borrower or such
Subsidiary (such prepayments to be applied as set forth in clause (v) below), without a
corresponding permanent reduction in Commitments; provided, however, that at the
election of the Borrower (as notified by the Borrower to the Administrative Agent on or prior to
the date of receipt of such cash proceeds), and so long as no Default shall have occurred and be
continuing, the Borrower or such Subsidiary may apply within 270 days after the receipt of such
cash proceeds to replace or repair the equipment, fixed assets or real property in respect of which
such cash proceeds were received, reinvest in other operating assets or make any Permitted
Acquisition; and provided, further, however, that any cash proceeds not so applied shall be applied
to the prepayment of the Loans as set forth in this Section 2.05(b)(iii) at the end of such
270 day period.




     (iv) If the Administrative Agent notifies the Borrower at any time that the Total Outstandings at
such time exceed the Aggregate Commitments then in effect, then, within two Business Days after
receipt of such notice, the Borrower shall prepay Loans and/or the Borrower shall Cash
Collateralize the L/C Obligations in an aggregate amount sufficient to reduce such Outstanding
Amount as of such date of payment to an amount not to exceed 100% of the Aggregate Commitments then
in effect; provided, however, that, subject to the provisions of Section 2.03(g)(ii), the
Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this
Section 2.05(b)(v) unless after the prepayment in full of the Loans the Total Outstandings
exceed the Aggregate Commitments then in effect.




     (v) Prepayments of the Facility made pursuant to this Section 2.05(b), first, shall be
applied ratably to the L/C Borrowings and the Swing Line Loans, second, shall be applied
ratably to the outstanding Revolving Credit Loans, and, third, but only in the case of prepayments
under clause (ii) above, shall be used to Cash Collateralize the remaining L/C Obligations; and, in
the case of prepayments of the Facility required pursuant to clause (i), (ii) or (iii) of this
Section 2.05(b), the amount remaining, if any, after the prepayment in full of all L/C
Borrowings, Swing Line Loans and Revolving Credit Loans outstanding at such time and, in the case
of clause (ii) above, the Cash Collateralization of the remaining L/C Obligations in full may be
retained by the Borrower for use in the ordinary course of its business. Upon the drawing of any
Letter of Credit that has been Cash Collateralized, the funds held in the Cash Collateral Account
shall be applied (without any further action by or notice to or from the Borrower or any other Loan
Party) to reimburse the L/C Issuer or the Lenders, as applicable.



          2.06 Termination or Reduction of Commitments. (a) Optional. The Borrower may, upon
notice to the Administrative Agent, terminate the Commitments or the Swing Line Sublimit, or from
time to time permanently reduce the Commitments or the Swing Line Sublimit; provided, that (i) any
such notice shall be received by the Administrative Agent not later than 11:00 a.m. three Business
Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an
aggregate amount of $1,000,000 or any whole multiple of





46









 







$500,000 in excess thereof, (iii) the Borrower shall not terminate or reduce the Aggregate
Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total
Outstandings would exceed the Aggregate Commitments, and (iv) if, after giving effect to any
reduction of the Aggregate Commitments, the Swing Line Sublimit exceeds the amount of the Aggregate
Commitments, such Swing Line Sublimit shall be automatically reduced by the amount of such excess.
The Administrative Agent will promptly notify the Lenders of any such notice of termination or
reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be applied
to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the
effective date of any termination of the Aggregate Commitments shall be paid on the effective date
of such termination.




          (b) Mandatory. The Commitments shall be automatically and permanently reduced on each date
on which the prepayment of Revolving Credit Loans is required to be made under Section
2.05(b)(ii) by an amount equal to the amount of such prepayment.




          (c) Application of Commitment Reductions; Payment of Fees. The Administrative Agent will
promptly notify the Lenders of any termination or reduction of the Swing Line Sublimit or the
Commitment under this Section 2.06. Upon any reduction of the Commitments, the Commitment of each
Lender shall be reduced by such Lender’s Applicable Percentage of such reduction amount. All fees
in respect of the Facility accrued until the effective date of any termination of the Facility
shall be paid on the effective date of such termination.




          2.07 Repayment of Loans.




          (a) Revolving Credit Loans. The Borrower shall repay to the Lenders on the Maturity Date
(or, if sooner, the date on which such principal becomes due and payable pursuant to Section 8.02)
the aggregate principal amount of all Revolving Credit Loans outstanding on such date.




          (b) Swing Line Loans. The Borrower shall repay each Swing Line Loan on the earlier to occur
of (i) the date ten Business Days after such Loan is made and (ii) the Maturity Date.




          2.08 Interest. (a) Subject to the provisions of Section 2.08(b), (i) each
Eurocurrency Rate Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurocurrency Rate for such Interest Period plus
the Applicable Rate; (ii) each Base Rate Loan shall bear interest on the outstanding principal
amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the outstanding
principal amount thereof from the applicable borrowing date at a rate per annum equal to the BBA
LIBOR Daily Floating Rate plus the Applicable Rate.




          (b) (i) If any amount of principal or interest of any Loan (or any other Obligations) is not paid
when due (without regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a





47









 







fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws.





     (ii) Upon the request of the Required Lenders, while any Event of Default exists, the Borrower
shall pay interest on the principal amount of all outstanding Obligations hereunder at a
fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws.




     (iii) Accrued and unpaid interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand.



          (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date
applicable thereto and at such other times as may be specified herein. Interest hereunder shall be
due and payable in accordance with the terms hereof before and after judgment, and before and after
the commencement of any proceeding under any Debtor Relief Law.




          2.09 Fees. In addition to certain fees described in Sections 2.03(i) and (j):




          (a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the account of
each Lender in accordance with its Applicable Percentage, a commitment fee equal to the Applicable
Rate times the actual daily amount by which the Aggregate Commitments of all Lenders exceed
the sum of (i) the Outstanding Amount of Revolving Credit Loans (excluding any Outstanding Amount
of Swing Line Loans) and (ii) the Outstanding Amount of L/C Obligations, determined as of the last
day of the immediately preceding fiscal quarter. The commitment fee shall accrue at all times
during the Availability Period, including at any time during which one or more of the conditions in
Article IV is not met, and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with the first such date to
occur after the Closing Date, and on the Maturity Date (or, if sooner, the date on which the
Obligations become due and payable pursuant to Section 8.02).




          (b) Other Fees. The Borrower shall pay to the Arranger and the Administrative Agent for
their own respective accounts fees in the amounts and at the times specified in the Fee Letter.
Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.




          2.10 Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate. (a) All
computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America’s
“prime rate” shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made on the basis of a
360-day year and actual days elapsed. Interest shall accrue on each Loan for the day on which the
Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan
or such portion is paid, provided, that any Loan that is repaid on the same day on which it
is made shall, subject to Section 2.12(a), bear interest for one day. Each determination by
the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for
all purposes, absent manifest error.





48









 








          (b) If, as a result of any restatement of or other adjustment to the financial statements of the
Borrower or for any other reason, the Borrower or the Lenders determine that (i) the Consolidated
Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a
proper calculation of the Consolidated Leverage Ratio would have resulted in higher pricing for
such period, the Borrower shall immediately and retroactively be obligated to pay to the
Administrative Agent for the account of the applicable Lenders, promptly on demand by the
Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief
with respect to the Borrower under the Bankruptcy Code of the United States, automatically and
without further action by the Administrative Agent, any Lender or the L/C Issuer), an amount equal
to the excess of the amount of interest and fees that should have been paid for such period over
the amount of interest and fees actually paid for such period. This paragraph shall not limit the
rights of the Administrative Agent, any Lender or the L/C Issuer, as the case may be, under
Section 2.03(c)(iii), 2.03(i) or 2.08(b) or under Article VIII. The
Borrower’s obligations under this paragraph shall survive the termination of the Aggregate
Commitments and the repayment of all other Obligations hereunder.




          2.11 Evidence of Debt. (a) The Credit Extensions made by each Lender shall be evidenced by
one or more accounts or records maintained by such Lender and by the Administrative Agent in the
ordinary course of business. The accounts or records maintained by the Administrative Agent and
each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made
by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or
any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict
between the accounts and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the Administrative
Agent shall control in the absence of manifest error. Upon the request of any Lender to the
Borrower made through the Administrative Agent, the Borrower shall execute and deliver to such
Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans to the
Borrower in addition to such accounts or records. Each Lender may attach schedules to a Note and
endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.




          (b) In addition to the accounts and records referred to in Section 2.11(a), each Lender and
the Administrative Agent shall maintain in accordance with its usual practice accounts or records
evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing
Line Loans. In the event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence of manifest error.




          2.12 Payments Generally; Administrative Agent’s Clawback. (a) General. All payments
to be made by the Borrower shall be made without condition or deduction for any counterclaim,
defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the
Borrower hereunder shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in
immediately available funds not later than 2:00 p.m. on the date specified herein. The
Administrative Agent will promptly distribute to each Lender its Applicable





49









 







Percentage in respect of the Facility (or other applicable share as provided herein) of such
payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments
received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment
to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made
on the next following Business Day, and such extension of time shall be reflected in computing
interest or fees, as the case may be.




          (b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of
Eurocurrency Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon
on the date of such Borrowing) that such Lender will not make available to 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 Section 2.02 (or, in the case of
a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with
and at the time required by Section 2.02) 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 in immediately available funds 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 (A) in the case of a payment to be made by such Lender, the
Overnight Rate, plus any administrative, processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made
by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender
shall pay such interest to the Administrative Agent for the same or an overlapping period, the
Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the
Borrower for such period. If such Lender pays its share of the applicable Borrowing to the
Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such
Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may
have against a Lender that shall have failed to make such payment to the Administrative Agent.





     (ii) Payments by Borrower; Presumptions by Administrative Agent. 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 the L/C Issuer 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 the L/C Issuer, 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 the L/C Issuer, as the
case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount
so distributed to such Lender or the L/C Issuer, in immediately available funds 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 Overnight Rate.



50









 





          A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing
under this Section 2.12(b) shall be conclusive, absent manifest error.




          (c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the
Administrative Agent funds for any Loan to be made by such Lender to the Borrower as provided in
the foregoing provisions of this Article II, and such funds are not made available to the
Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set
forth in Article IV are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall promptly return such funds (in like funds as received from such Lender)
to such Lender, without interest.




          (d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make
Revolving Credit Loans, to fund participations in Letters of Credit and Swing Line Loans and to
make payments pursuant to Section 10.04(c) are several and not joint. The failure of any
Lender to make any Revolving Credit Loan, to fund any such participation or to make any payment
under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of
its corresponding obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Revolving Credit Loan, to purchase its participation or
to make its payment under Section 10.04(c).




          (e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the
funds for any Loan in any particular place or manner or to constitute a representation by any
Lender that it has obtained or will obtain the funds for any Loan in any particular place or
manner.




          2.13 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff
or counterclaim or otherwise, obtain payment in respect of (a) Obligations due and payable to such
Lender hereunder and under the other Loan Documents at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations due and payable to such Lender
at such time to (ii) the aggregate amount of the Obligations due and payable to all Lenders
hereunder and under the other Loan Documents at such time) of payments on account of the
Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such
time obtained by all the Lenders at such time or (b) Obligations owing (but not due and payable) to
such Lender hereunder and under the other Loan Documents at such time in excess of its ratable
share (according to the proportion of (i) the amount of such Obligations owing (but not due and
payable) to such Lender at such time to (ii) the aggregate amount of the Obligations owing (but not
due and payable) to all Lenders hereunder and under the other Loan Parties at such time) of payment
on account of the Obligations owing (but not due and payable) to all Lenders hereunder and under
the other Loan Documents at such time obtained by all of the Lenders at such time then the Lender
receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b)
purchase (for cash at face value) participations in the Revolving Credit Loans and
subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of Obligations then due and payable to the
Lenders or owing (but not due and payable) to the Lenders, as the case may be, provided,
that:





51









 








     (i) if any such participations or subparticipations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations or subparticipations
shall be rescinded and the purchase price restored to the extent of such recovery, without
interest; and





     (ii) the provisions of this Section shall not be construed to apply to (A) any payment made by the
Borrower pursuant to and in accordance with the express terms of this Agreement, (B) any payment
obtained by a Lender as consideration for the assignment of or sale of a participation in any of
its Revolving Credit Loans or subparticipations in L/C Obligations or Swing Line Loans to any
assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the
provisions of this Section shall apply), or (C) any payments pursuant to the Fee Letter.



          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 setoff 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.




          2.14 Increase in Facility. (a) Request for Increase. Provided there exists
no Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the
Borrower may from time to time request an increase in the Facility by an amount (for all such
requests) not to exceed $200,000,000 more than the aggregate principal amount of the Facility on
the Closing Date, subject to approval by the Administrative Agent; provided, that any such
request for an increase shall be in a minimum amount of $25,000,000. At the time of sending such
notice, the Borrower (in consultation with the Administrative Agent) shall specify the time period
within which each Lender is requested to respond (which shall in no event be less than ten Business
Days from the date of delivery of such notice to the Lenders).




          (b) Lender Elections to Increase. Each Lender shall notify the Administrative Agent within
such time period whether or not it agrees to increase its Commitment and, if so, whether by an
amount equal to, greater than, or less than its Applicable Percentage of such requested increase.
Any Lender not responding within such time period shall be deemed to have declined to increase its
Commitment.




          (c) Notification by Administrative Agent; Additional Lenders. The Administrative Agent
shall notify the Borrower and each Lender of the Lenders’ responses to each request made hereunder.
To achieve the full amount of a requested increase, and subject to the approval of the
Administrative Agent, the L/C Issuer and the Swing Line Lender (which approvals shall not be
unreasonably withheld), the Borrower may also invite additional Eligible Assignees to become
Lenders pursuant to a joinder agreement in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.




          (d) Effective Date and Allocations. If the Facility is increased in accordance with this
Section, the Administrative Agent and the Borrower shall determine the effective date (the
“Increase Effective Date”) and the final allocation of such increase. The Administrative





52









 








          Agent shall promptly notify the Borrower and the Lenders of the final allocation of such increase
and the Increase Effective Date.




          (e) Conditions to Effectiveness of Increase. As a condition precedent to such increase, the
Borrower shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the
Increase Effective Date signed by a Responsible Officer of such Loan Party (i) certifying and
attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and
(ii) in the case of the Borrower, certifying that, before and after giving effect to such increase,
(A) the representations and warranties contained in Article V and the other Loan Documents
are true and correct in all material respects on and as of the Increase Effective Date, except to
the extent that such representations and warranties specifically refer to an earlier date, in which
case they are true and correct as of such earlier date, and except that for purposes of this
Section 2.15, the representations and warranties contained in Sections 5.05(a) and
(b) shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and
(b), respectively, of Section 6.01, and (B) no Default exists. The Borrower shall prepay
any Revolving Credit Loans outstanding on the Increase Effective Date (and pay any additional
amounts required pursuant to Section 3.05) to the extent necessary to keep the outstanding
Revolving Credit Loans ratable with any revised Applicable Percentages arising from any nonratable
increase in the Commitments under this Section.




          (f) Conflicting Provisions. This Section shall supersede any conflicting
provisions in Sections 2.13 or 10.01.




ARTICLE III




TAXES, YIELD PROTECTION AND ILLEGALITY




          3.01 Taxes. (a) Payments Free of Taxes. Any and all payments by or on
behalf of the Borrower hereunder or under any other Loan Document shall be made free and clear of
and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided, that if
the Borrower or other Person making payments on behalf of the Borrower shall be required by
applicable law to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) 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 3.01(a) (after payment
of all Indemnified Taxes and Other Taxes) the Administrative Agent, any Lender or the L/C Issuer,
as the case may be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
timely pay the full amount deducted to the relevant Governmental Authority in accordance with
applicable law.




          (b) Payment of Other Taxes by the Borrower. Without limiting the provisions of
Section 3.01(a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.




          (c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent,
each Lender and the L/C Issuer, within 30 days after demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) paid by the





53









 








Administrative Agent, such Lender or the L/C Issuer or any of their respective Affiliates, as the
case may be, and any penalties, interest and reasonable 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 such payment or
liability delivered to the Borrower by a Lender or the L/C Issuer (with a copy to the
Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or
the L/C Issuer, shall be conclusive absent manifest error.




          (d) Evidence of Payments. 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, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent




          (e) Status of Lenders. Each Lender that is a “U.S. Person” as defined in section
7701(a)(30) of the Code that has not otherwise established to the reasonable satisfaction of the
Borrower and Administrative Agent (or, in the case of a Participant purchasing its participation
from a Foreign Lender, to the Lender from which the related participation shall have been
purchased) that it is an exempt recipient (as defined in section 6049(b)(4) of the Code and the
regulations thereunder) shall deliver to the Borrower and Administrative Agent on or prior to the
date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter
as prescribed by applicable law or upon the reasonable request of the Borrower or Administrative
Agent), two duly completed and executed copies of Internal Revenue Service Form W-9.



Any Foreign Lender shall deliver to the Borrower and the Administrative Agent on or prior to the
date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Administrative Agent, but only if such Foreign
Lender is legally entitled to do so), two copies of whichever of the following is applicable or any
subsequent version thereof or successor thereto:





     (i) duly completed and executed copies of Internal Revenue Service Form W-
8BEN claiming eligibility for benefits of an income tax treaty to which the United States
is a party,




     (ii) duly completed and executed copies of Internal Revenue Service Form W8ECI relating to all
payments to be received by such Foreign Lender hereunder or under any other Loan Document,




     (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest
under section 881(c) of the Code, (A) a certificate to the effect that such Foreign Lender is not
(1) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder”
of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (3) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code and (B) duly completed copies of
Internal Revenue Service Form W-8BEN, or



54









 






     (iv) any other form prescribed by applicable law as a basis for claiming exemption from or a
reduction in United States Federal withholding tax duly completed and executed together with such
supplementary documentation as may be prescribed by applicable law to permit the Borrower to
determine the withholding or deduction required to be made.


In the event that, pursuant to Section 10.06(d), a Participant is claiming the benefits of
this Section 3.01, such Participant shall provide the forms required above to the Lender
from which the related participation was purchased, and if such Lender is a Foreign Lender, such
Lender shall, promptly upon receipt thereof (but in no event later than the next scheduled payment
under this Agreement) forward such documentation to the Borrower and the Administrative Agent,
together with such additional forms as are required by law.



Without limiting the obligations of the Lenders set forth above regarding delivery of certain forms
and documents to establish each Lender’s status for U.S. withholding tax purposes, each Lender
agrees promptly to deliver to the Administrative Agent or the Borrower, as the Administrative Agent
or the Borrower shall reasonably request, on or prior to the Effective Date, and in a timely
fashion thereafter (including upon the expiration or obsolescence of any such forms or documents
and promptly after the occurrence of any event requiring a change from the most recent forms
previously delivered), such other documents and forms as would reduce or avoid any Indemnified
Taxes in respect of all payments to be made to such Lender outside of the U.S. by the Borrower
pursuant to this Agreement or otherwise to establish such Lender’s status for withholding tax
purposes in such other jurisdiction; provided, that in such Lender’s reasonable judgment
such documentation or forms would not materially prejudice such Lender. Each Lender shall promptly
notify the Administrative Agent of any change in circumstances which would modify or render invalid
any such claimed exemption or reduction. Notwithstanding any other provision of this Section
3.01(e), a Lender shall not be required to deliver any form, document or other information
pursuant to this Section 3.01(e) that such Lender is not legally able to deliver.




          (f) Treatment of Certain Refunds. If the Administrative Agent, any Lender or the L/C Issuer
receives a refund with respect to Indemnified Taxes or Other Taxes paid by the Borrower, which in
the sole discretion and good faith judgment of such Administrative Agent, Lender or L/C Issuer is
allocable to such payment, it shall promptly pay such refund (but only to the extent of the
Indemnified Taxes or Other Taxes paid by the Borrower giving rise to such refund) to the Borrower,
net of all out-of-pocket expenses of such Administrative Agent, the Lender or the L/C Issuer
incurred in obtaining such refund (including any Taxes imposed with respect to such refund) as is
determined by such Administrative Agent, Lender or L/C Issuer in good faith and in its sole
discretion, and as will leave such Administrative Agent, Lender or L/C Issuer in no worse position
than it would be in if no such Indemnified Taxes or Other Taxes had been imposed and without
interest (other than any interest paid by the relevant Governmental Authority with respect to such
refund); provided, however, that the Borrower agrees to promptly return such amount
(plus any penalties, interest or other charges imposed by the relevant Governmental Authority), net
of any reasonable incremental additional costs, to the applicable Administrative Agent, the Lender
or the L/C Issuer, as the case may be, if it receives notice from the applicable Administrative
Agent, Lender or L/C Issuer that such Administrative Agent, the Lender or the L/C Issuer is
required to repay such refund. This subsection shall not be construed





55











 




to require the Administrative Agent, any Lender or the L/C Issuer to make available its tax returns
(or any other information relating to its taxes that it deems confidential) to the Borrower or any
other Person.




          3.02 Illegality. If any Lender determines that as a result of any Change in Law it becomes
unlawful, or that any Governmental Authority asserts that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund Eurocurrency Rate Loans, or to determine or
charge interest rates based upon the Eurocurrency Rate, or any Governmental Authority has imposed
material restrictions on the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower
through the Administrative Agent, any obligation of such Lender to make or continue Eurocurrency
Rate Loans or to convert Base Rate Loans to Eurocurrency Rate Loans, shall be suspended until such
Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to
such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand
from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all
such Eurocurrency Rate Loans of such Lender to Base Rate Loans, either on the last day of the
Interest Period therefor, if such Lender may lawfully continue to maintain such Eurocurrency Rate
Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such
Eurocurrency Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay
accrued interest on the amount so prepaid or converted.




          3.03 Inability to Determine Rates. If the Required Lenders determine that for any reason in
connection with any request for a Eurocurrency Rate Loan or a conversion to or continuation thereof
that (a) adequate and reasonable means do not exist for determining the Eurocurrency Rate for any
requested Interest Period with respect to a proposed Eurocurrency Rate Loan, or (b) the
Eurocurrency Rate for any requested Interest Period with respect to a proposed Eurocurrency Rate
Loan does not adequately and fairly reflect the cost to such Lenders of funding such Eurocurrency
Rate Loan, the Administrative Agent will promptly so notify the Borrower and each Lender.
Thereafter, the obligation of the Lenders to make or maintain Eurocurrency Rate Loans shall be
suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes
such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a
Borrowing of, conversion to or continuation of Eurocurrency Rate Loans or, failing that, will be
deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the
amount specified therein.




          3.04 Increased Costs; Reserves on Eurocurrency Rate Loans. (a) Increased Costs
Generally. If any Change in Law shall:





     (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance
charge or similar requirement against assets of, deposits with or for the account of, or credit
extended or participated in by, any Lender (except any reserve requirement reflected in the
Eurocurrency Rate contemplated by Section 3.04(e)) or the L/C Issuer; or



56









 






     (ii) impose on any Lender or the L/C Issuer or the London interbank market
any other condition, cost or expense affecting this Agreement or Eurocurrency Rate 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 Eurocurrency
Rate Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such
Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of
maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the
amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of
principal, interest or any other amount) then, upon written request of such Lender or the L/C
Issuer, the Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional
amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such
additional costs incurred or reduction suffered; provided, that before making any such demand, each
Lender agrees to use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be disadvantageous to it, in its
reasonable discretion, in any legal, economic or regulatory manner) to designate a different
Eurocurrency Rate lending office if the making of such designation would allow the Lender or its
Eurocurrency Rate lending office to continue to perform its obligation to make Eurocurrency Rate
Loans or to continue to fund or maintain Eurocurrency Rate Loans and avoid the need for, or reduce
the amount of, such increased cost.




          (b) Capital Requirements. If any Lender or the L/C Issuer determines that any Change in Law
affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender’s or
the L/C Issuer’s holding company, if any, regarding capital requirements has the effect of reducing
the rate of return on such Lender’s or the L/C Issuer’s capital or on the capital of such Lender’s
or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of
such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or
the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C
Issuer or such Lender’s or the L/C Issuer’s holding company could have achieved but for such Change
in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of
such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time
to time, after submission to the Borrower (with a copy to the Administrative Agent) of a written
request therefor, the Borrower will pay to such Lender or the L/C Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or
the L/C Issuer’s holding company for any such reduction suffered.




          (c) Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer setting
forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding
company, as the case may be, as specified in subsection (a) or (b) of this Section, describing the
basis therefore and showing the calculation thereof in reasonable detail, and delivered to the
Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender or the L/C
Issuer, as the case may be, the amount shown as due on any such certificate within 30 days after
receipt thereof.




          (d) Delay in Requests. Failure or delay on the part of any Lender or the L/C Issuer to
demand compensation pursuant to the foregoing provisions of this Section shall not





57









 







constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation,
provided, that the Borrower shall not be required to compensate a Lender or the L/C Issuer
pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions
suffered more than 90-days prior to the date that such Lender or the L/C Issuer, 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’s or the L/C Issuer’s intention to claim compensation therefor (except that, if
the Change in Law giving rise to such increased costs or reductions is retroactive, then the 90-
day period referred to above shall be extended to include the period of retroactive effect
thereof).




          (e) Additional Reserve Requirements. The Borrower shall pay to each Lender, (i) as long as
such Lender shall be required to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”),
additional interest on the unpaid principal amount of each Eurocurrency Rate Loan equal to the
actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender
in good faith, which determination shall be conclusive absent manifest error), and (ii) as long as
such Lender shall be required to comply with any reserve ratio requirement or analogous requirement
of any other central banking or financial regulatory authority imposed in respect of the
maintenance of the Commitments or the funding of the Eurocurrency Rate Loans, such additional costs
(expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal
places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as
determined by such Lender in good faith, which determination shall be conclusive absent manifest
error), which in each case shall be due and payable on each date on which interest is payable on
such Loan, provided the Borrower shall have received at least 10 Business Days’ prior
notice (with a copy to the Administrative Agent) of such additional interest or costs from such
Lender describing the basis therefor and showing the calculation thereof in reasonable detail. If a
Lender fails to give notice 10 Business Days prior to the relevant Interest Payment Date, such
additional interest or costs shall be due and payable within 30 days from receipt of such notice.




          3.05 Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative
Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such
Lender harmless from any loss, cost or expense incurred by it as a result of:





     (a) any conversion, payment or prepayment of any Eurocurrency Rate Loan, and any conversion of a
Base Rate Loan to a Eurocurrency Rate Loan, on a day other than the last day of the Interest Period
for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);




     (b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan)
to prepay, borrow, or continue any Eurocurrency Rate Loan, or to convert a Base Rate Loan to a
Eurocurrency Rate Loan, on the date or in the amount notified by the Borrower; or




     (c) any assignment of a Eurocurrency Rate Loan on a day other than the last day of the Interest
Period therefor as a result of a request by the Borrower pursuant to Section 10.13;



58









 




including any loss or expense arising from the liquidation or reemployment of funds obtained by it
to maintain such Loan or from fees payable to terminate the deposits from which such funds were
obtained, but excluding any loss of anticipated profits. The Borrower shall also pay any customary
administrative fees charged by such Lender in connection with the foregoing.



For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05,
each Lender shall be deemed to have funded each Eurocurrency Rate Loan made by it at the
Eurocurrency Rate for such Loan by a matching deposit or other borrowing in the London interbank
eurodollar market for a comparable amount and for a comparable period, whether or not such
Eurocurrency Rate Loan was in fact so funded.




          3.06 Mitigation Obligations; Replacement of Lenders. (a) Designation of a Different
Lending Office. If any Lender requests compensation under Section 3.04, or 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 3.01, or if any Lender gives a notice pursuant to
Section 3.02, 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 3.01 or 3.04, as the case may be, in the future, or eliminate the need for
the notice pursuant to Section 3.02, as applicable, and (ii) in each case, 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) Replacement of Lenders. If any Lender requests compensation under Section 3.04, 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 3.01, if any Lender gives a notice pursuant
to Section 3.02 or if any Lender is at such time a Defaulting Lender, then the Borrower may
replace such Lender in accordance with Section 10.13.




          3.07 Survival. All of the Borrower’s obligations under this Article III shall
survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.




ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS




          4.01 Conditions of Initial Credit Extension. The obligation of the L/C Issuer and each
Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following
conditions precedent:





     (a) The Administrative Agent’s receipt of the following, each of which shall be originals or
telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a
duly authorized officer of the signing Loan Party, each dated the Closing Date (or, in the case of
certificates of governmental officials, a recent date before



59









 




the Closing Date) and each in form and substance reasonably satisfactory to the Administrative
Agent:





     (i) executed counterparts of this Agreement and the Subsidiary Guaranty and a Lender Addendum
executed and delivered by each Lender and accepted by the Borrower;




     (ii) Notes executed by the Borrower in favor of each Lender requesting
Notes;




     (iii) a pledge and security agreement, in substantially the form of Exhibit G (together
with each other pledge and security agreement and pledge and security agreement supplement
delivered pursuant to Section 6.12, in each case as amended, the “Security
Agreement”), duly executed by each Loan Party, together with:




     (A) certificates representing the Pledged Equity Interests referred to therein which is in
certificated form accompanied by undated stock powers executed in blank and instruments evidencing
the Pledged Debt indorsed in blank,




     (B) proper financing statements in form appropriate for filing under the Uniform Commercial Code of
all jurisdictions that the Administrative Agent may deem necessary in order to perfect the Liens
created under the Security Agreement, covering the Collateral described in the Security Agreement,




     (C) completed requests for information, dated on or before the date of the initial Credit
Extension, listing the financing statements referred to in clause (B) above and all other effective
financing statements filed in the jurisdictions referred to in clause (B) above that name any Loan
Party as debtor, together with copies of such other financing statements,




     (D)
[Reserved], and




     (E) evidence that all other action that the Administrative Agent may deem necessary in order to
perfect the Liens created under the Security Agreement has been taken (including receipt of duly
executed payoff letters and UCC-3 termination statements);




     (iv) deeds of trust, trust deeds, deeds to secure debt, mortgages, leasehold mortgages and
leasehold deeds of trust, in substantially the form of Exhibit H (with such changes as may be
satisfactory to the Administrative Agent and its counsel to account for local law matters) and
covering the properties listed on Schedule 4.01(a)(iv) (together with the Assignments of
Leases and Rents



60









 




referred to therein and each other mortgage delivered pursuant to Section 6.12, in each
case as amended, the “Mortgages”), duly executed by the appropriate Loan Party, together
with:





     (A) evidence that counterparts of the Mortgages have been duly executed, acknowledged and delivered
and are in form suitable for filing or recording in all filing or recording offices that the
Administrative Agent may deem necessary or desirable in order to create a valid first and
subsisting Lien on the property described therein in favor of the Administrative Agent for the
benefit of the Secured Parties and that all filing, documentary, stamp, intangible and recording
taxes and fees have been paid,




     (B)
[Reserved]; and




     (C) evidence that all other action that the Administrative Agent may deem necessary or desirable in
order to create valid first and subsisting Liens on the property described in the Mortgages has
been taken;




provided, that the Administrative Agent may waive delivery of any of the items required by
this Section 4.01(a)(iv) on the Closing Date so long as the Borrower and each applicable
Loan Party comply with Section 6.21;




     (v) [Reserved];




     (vi) such certificates of resolutions or other action, incumbency certificates and/or other
certificates of duly authorized officers of each Loan Party as the Administrative Agent may
reasonably require evidencing the identity, authority and capacity of each officer of a Loan Party
executing the Loan Documents to which such Loan Party is a party;




     (vii) such documents and certifications as the Administrative Agent may reasonably require to
evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly
existing, in good standing and qualified to engage in business in each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business requires such
qualification,



61









 






except to the extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect;




     (viii) the executed opinion of Simpson Thacher & Bartlett LLP, counsel to the Borrower and special
New York counsel to the other Loan Parties, addressed to the Administrative Agent and each Lender,
as to the matters set forth in Exhibit I-1 and such other matters concerning the Loan
Parties and the Loan Documents as the Administrative Agent may reasonably request;




     (ix) the executed opinion of Bowles Rice McDavid Graff & Love LLP, Gordon & Gordon, PSC and Ziemer,
Stayman, Weitzel & Shoulders, LLP local counsel to the Loan Parties in West Virginia, Kentucky, and
Illinois, respectively, addressed to the Administrative Agent and each Lender, as to the matters
set forth in Exhibits I-2, I-3, and I-4 respectively, and such other
matters concerning the Loan Parties and the Loan Documents as the Administrative Agent may
reasonably request;




     (x) the executed opinion of Joseph W. Bean, Esq., special Missouri counsel to the Borrower and
in-house counsel to the other Loan Parties, addressed to the Administrative Agent and each Lender,
as to the matters set forth in Exhibit I-5;




     (xi) a certificate of a duly authorized officer of each Loan Party (i) either (A) attaching copies
of all consents, licenses and approvals required in connection with the execution, delivery and
performance by such Loan Party and the validity against such Loan Party of the Loan Documents to
which it is a party, and such consents, licenses and approvals shall be in full force and effect,
or (B) stating that no such consents, licenses or approvals are so required; and (ii) stating that
all consents, licenses and approvals required in connection with the consummation of such Loan
Party of the Transaction has been received;




     (xii) Audited Financial Statements and unaudited quarterly statements for the Borrower and its
Subsidiaries for each fiscal quarter of 2007 ended at least 45 days prior to the Effective Date and
financial projections through the year 2011;




     (xiii) a certificate signed by a Responsible Officer of the Borrower certifying (A) that the
conditions specified in Sections 4.02(a) and (b) have been satisfied, and (B) that
there has not occurred since June 30, 2007, a material adverse change in the business, assets,
operations, property or condition (financial or otherwise) of the Borrower and its Subsidiaries,
taken as a whole;




     (xiv) certificates attesting to the Solvency of the Borrower and its Subsidiaries on a consolidated
basis before and after giving effect to the Transaction, from its chief financial officer;




     (xv) evidence that all insurance required to be maintained pursuant to Section 6.07 has
been obtained and is in effect, together with the certificates of



62









 







insurance, naming the Administrative Agent, on behalf of the Lenders, as an additional insured or
loss payee, as the case may be, under all insurance policies maintained with respect to the assets
and properties of the Loan Parties that constitutes Collateral;




     (xvi) certified copies of each of the Separation Agreement, Coal Supply Agreement I, Coal Supply
Agreement II, the Tax Separation Agreement and the Liability Assumption Agreements, duly executed
by the parties thereto, together with all agreements, instruments and other documents delivered in
connection therewith as the Administrative Agent shall reasonably request;




     (xvii) evidence that the Borrower and each other Loan Party has been, or concurrently with the
Closing Date is being, released from its guaranty and all other obligations under the Peabody Loan
Documents;




     (xviii) an executed copy of the Consent Agreement; and




     (xix) such other assurances, certificates and documents as the Administrative Agent reasonably may
require.



          (b) Any fees required to be paid on or before the Closing Date to the Administrative Agent, the
Arranger or the Lenders for which invoices have been received at least one Business Day prior to
the Closing Date shall have been paid and the Administrative Agent shall have received an executed
original of the Fee Letter.




          (c) Unless waived by the Administrative Agent, the Borrower shall have paid all reasonable fees,
charges and disbursements of counsel to the Administrative Agent (directly to such counsel if
requested by the Administrative Agent) to the extent invoiced at least one Business Day prior to
the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall
constitute its reasonable estimate of such fees, charges and disbursements incurred or to be
incurred by it through the closing and customary post-closing proceedings included in such invoices
(provided, that such estimate shall not thereafter preclude a final settling of accounts
between the Borrower and the Administrative Agent).




          (d) The Closing Date shall have occurred on or before December 15, 2007.




          (e) The corporate and capital structure of the Borrower shall be substantially similar to that
disclosed in the Form 10.




          (f) The Spin-Off shall be consummated (subject only to the closing of the Facility) on terms
substantially similar to those described in the Form 10.



Without limiting the generality of the provisions of the last paragraph of Section 9.03,
for purposes of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to a Lender unless the Administrative





63









 







Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.




          4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor any Request for Credit Extension (other than a Borrowing Notice requesting only a conversion
of Loans to the other Type, or a continuation of Eurocurrency Rate Loans) is subject to the
following conditions precedent:





     (a) The representations and warranties of (i) the Borrower contained in Article V and (ii)
each Loan Party contained in each other Loan Document, or which are contained in any document
furnished at any time under or in connection herewith or therewith, shall be true and correct in
all material respects on and as of the date of such Credit Extension, except to the extent that
such representations and warranties specifically refer to an earlier date, in which case they shall
be true and correct in all material respects as of such earlier date, and except that for purposes
of this Section 4.02, the representations and warranties contained in Sections
5.05(a) and (b) shall be deemed to refer to the most recent statements furnished
pursuant to Sections 6.01(a) and (b), respectively.




     (b) No Default shall exist, or would result from such proposed Credit Extension or from the
application of the proceeds thereof.




     (c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have
received a Request for Credit Extension in accordance with the requirements hereof.



          Each Request for Credit Extension (other than a Borrowing Notice requesting only a conversion of
Loans to the other Type or a continuation of Eurocurrency Rate Loans) submitted by the Borrower
shall be deemed to be a representation and warranty that the conditions specified in Sections
4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.




ARTICLE V

REPRESENTATIONS AND WARRANTIES




          The Borrower represents and warrants to the Administrative Agent and the
Lenders that:




          5.01 Existence, Qualification and Power. Each Loan Party (a) (i) is duly organized or
formed and, validly existing and (ii) in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and
carry on its business and (ii) execute, deliver and perform its obligations under the Loan
Documents and Related Documents to which it is a party and consummate the Transactions, and (c) is
duly qualified and is licensed and, as applicable, in good standing, under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the conduct of its business
requires such qualification or license; except in each case referred to in clause (a)(ii), (b)(i)
or (c), to the extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect.


64









 







          5.02 Authorization; No Contravention. The execution, delivery and performance by each Loan
Party of each Loan Document and Related Document to which such Person is a party, (a) have been
duly authorized by all necessary corporate or other organizational action, and (b) do not and will
not (i) contravene the terms of any of such Person’s Organization Documents; (ii) conflict with or
result in any breach or contravention of, or the creation of any Lien (except for any Liens that
may arise under the Loan Documents) under, or require any payment to be made under (A) any
Contractual Obligation to which such Person is a party or affecting such Person or the properties
of such Person or any of its Subsidiaries or (B) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its property is subject; or
(c) violate any Law, except in each case referred to in clause (b)(ii) or (c) to the extent that
failure to do so could not reasonably be expected to have a Material Adverse Effect.




          5.03 Governmental Authorization; Other Consents. (a) No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any Governmental Authority and (b)
no material approval, consent, exemption, authorization, or other action by, or notice to, or
filing with any other Person, in each case, is necessary or required in connection with (i) the
execution, delivery or performance by any Loan Party of this Agreement or any other Loan Document
or Related Document, or for the consummation of the Transaction, (ii) the grant by any Loan Party
of the Liens granted by it pursuant to the Collateral Documents or (iii) the perfection of the
Liens created under the Collateral Documents (including the first priority nature thereof), (x)
except for those approvals, consents, exemptions, authorizations or other actions which have
already been obtained, taken, given or made and are in full force and effect, (y) any filings
required to perfect the Liens created under the Collateral Documents and (z) those landlord
consents required with respect to the leasehold mortgages required to be delivered hereunder. All
applicable waiting periods in connection with the Transactions have expired without any action
having been taken by any Governmental Authority restraining, preventing or imposing materially
adverse conditions upon the Transaction or the rights of the Loan Parties or their Subsidiaries
freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or
hereafter acquired by any of them.




          5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.
This Agreement constitutes, and each other Loan Document when so delivered will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other Laws relating to or affecting
creditors’ rights generally, general principles of equity, regardless of whether considered in a
proceeding in equity or at law and an implied covenant of good faith and fair dealing.




          5.05 Financial Statements; No Material Adverse Effect. (a) The Audited Financial Statements
of the Borrower and its Subsidiaries (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly
present in all material respects the financial condition of the Borrower and its Subsidiaries as of
the date thereof and their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby,





65









 







except as otherwise expressly noted therein; and (iii) show all material indebtedness and other
material liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date
thereof, including material liabilities for Taxes, material commitments and material Indebtedness.




          (b) The unaudited consolidated balance sheet of the Borrower and its Subsidiaries dated June 30,
2007, and the related consolidated statements of income or operations, shareholders’ equity and
cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise expressly noted
therein, and (ii) fairly present in all material respects the financial condition of the Borrower
and its Subsidiaries as of the date thereof and their results of operations for the period covered
thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal
year-end audit adjustments.




          (c) Since June 30, 2007, there has been no event or circumstance, either individually or in the
aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.




          (d) The consolidated pro forma balance sheet of the Borrower and its Subsidiaries as at June 30,
2007, and the related consolidated pro forma statements of income and cash flows of the Borrower
and its Subsidiaries for the six months then ended, certified by the chief financial officer or
treasurer of the Borrower, copies of which have been furnished to the Administrative Agent, fairly
present in all material respects the consolidated pro forma financial condition of the Borrower and
its Subsidiaries as at such date and the consolidated pro forma results of operations of the
Borrower and its Subsidiaries for the period ended on such date, in each case giving effect to the
Transaction, all in accordance with GAAP.




          (e) The consolidated forecasted balance sheet and statements of income and cash flows of the
Borrower and its Subsidiaries delivered pursuant to Section 4.01 or Section 6.01(d)
were prepared in good faith on the basis of the assumptions stated therein, which assumptions were
believed to be reasonable in light of the conditions existing at the time of delivery of such
forecasts.




          5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or,
to the knowledge of the Borrower, threatened, at law, in equity, in arbitration or before any
Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of
their properties or revenues that (a) purport to affect or pertain to this Agreement, any other
Loan Document, any Related Document or the consummation of the Transaction, or (b) except as
specifically disclosed in public filings prior to the date hereof, as to which there is a
reasonable possibility of an adverse determination and that could reasonably be expected to have a
Material Adverse Effect.




          5.07 No Default. Neither the Borrower nor any Subsidiary is in default under or with
respect to any Contractual Obligation that could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing
or would result from the consummation of the transactions contemplated by this Agreement or any
other Loan Document.


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          5.08 Ownership of Property; Liens; Investments. (a) The Borrower and each of its
Subsidiaries has good record title to, or valid leasehold, easement or other sufficient real
property interests in, all real property necessary or used in the ordinary conduct of its business,
except for such defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.




          (b) Schedule 7.01 sets forth a complete and accurate list as of the Closing Date of all
Liens on the property or assets of the Borrower and each of its Subsidiaries, showing as of the
date hereof the lienholder thereof, the principal amount of the obligations secured thereby and the
property or assets of the Borrower or such Subsidiary subject thereto.




          (c) Schedule 5.08(c) sets forth a complete and accurate list as of the Closing Date of the
locations of all mines owned or leased by the Borrower or any of its Subsidiaries.




          (d) To the best knowledge of the Borrower, the legal description attached as Exhibit A to each
Mortgage accurately and completely describes the Mortgaged Property intended to be covered thereby.




          (e) Schedule 7.03 sets forth a complete and accurate list as of the Closing Date of all
Investments held by the Borrower and any of its Subsidiaries on the date hereof, showing as of the
date hereof the amount, obligor or issuer and maturity, if any, thereof.




          5.09 Environmental Compliance. Except as disclosed in the Borrower’s most recent annual and
quarterly reports filed with the SEC or on Schedule 5.09, or as otherwise could not
reasonably be expected to have a Material Adverse Effect:




          (a) The facilities and properties currently or formerly owned, leased or operated by the Borrower
or any of its Subsidiaries (the “Properties”) do not contain, and have not previously
contained, any Hazardous Materials in amounts or concentrations which (i) constitute or constituted
a violation of, or (ii) could reasonably be expected to give rise to liability under, any
applicable Environmental Law.




          (b) None of the Borrower nor any of its Subsidiaries has received any notice of violation, alleged
violation, non-compliance, liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the Properties or the business operated by
the Borrower or any of its Subsidiaries (the “Business”), or any prior business for which
the Borrower has retained liability under any Environmental Law.




          (c) Hazardous Materials have not been transported or disposed of from the Properties in violation
of, or in a manner or to a location which could reasonably be expected to give rise to liability
under, any applicable Environmental Law, nor have any Hazardous Materials been generated, treated,
stored or disposed of at, on or under any of the Properties in violation of, or in a manner that
could reasonably be expected to give rise to liability under, any applicable Environmental Law.




          (d) No judicial proceeding or governmental or administrative action is pending or, to the knowledge
of the Borrower, threatened under any Environmental Law to


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which the Borrower or any of its Subsidiaries is or, to the knowledge of the Borrower, will be
named as a party or with respect to the Properties or the Business, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other orders, or other similar
administrative or judicial requirements outstanding under any Environmental Law with respect to the
Properties or the Business.




          (e) There has been no release or threat of release of Hazardous Materials at or from the
Properties, or arising from or related to the operations of the Borrower or any of its Subsidiaries
in connection with the Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could reasonably be expected to give rise to liability under any
applicable Environmental Laws.




          (f) The Properties and all operations at the Properties are in compliance with all applicable
Environmental Laws.




          (g) The Borrower and each of its Subsidiaries (i) hold all Environmental Permits (each of which is
in full force and effect and is not subject to appeal) required for any of their current operations
or for the current ownership, operation or use of the Properties, including all Environmental
Permits required for the coal mining-related operations of the Borrower or any of its Subsidiaries
or any pending construction or expansion related thereto; (ii) are, or have been, in compliance
with all Environmental Permits; and (iii) have used commercially reasonable efforts to cause all
contractors, lessees and other Persons occupying, operating or using the mines on the Properties to
comply with all Environmental Laws and obtain all Environmental Permits required for the operation
of the mines.




          (h) To the knowledge of the Borrower, none of the Properties have any associated direct or indirect
acid mine drainage.




          5.10 Mining.




          (a) The Borrower and each of its Subsidiaries has, in the amounts and forms required pursuant to
Environmental Law, obtained all performance bonds and surety bonds, or otherwise provided any
financial assurance required under Environmental Law for Reclamation or otherwise (collectively,
“Mining Financial Assurances”).




          (b) There have been no accidents, explosions, implosions, collapses or flooding at or otherwise
related to the Properties that have, directly or indirectly, resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.




          5.11 Insurance. The properties of the Borrower and its Subsidiaries are insured with
financially sound and reputable insurance companies which may be Affiliates of the Borrower, in
such amounts (after giving effect to any self-insurance compatible with the following standards),
with such deductibles and covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where the Borrower or the applicable
Subsidiary operates.




          5.12 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and other tax
returns and reports required to be filed, and have paid all Federal, state and other Taxes,



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assessments, fees and other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable (other than those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate reserves have been
provided in accordance with GAAP), except where the failure to do any of the foregoing could not
reasonably be expected to result in a Material Adverse Effect; no material tax Lien has been filed
and, to the knowledge of the Borrower, no material claim is being asserted or audit being
conducted, with respect to any material Tax, fee or other charge of the Borrower or any of its
Subsidiaries. There is no proposed tax assessment against the Borrower or any Subsidiary that
would, reasonably be likely to have a Material Adverse Effect. Neither any Loan Party nor any
Subsidiary thereof is party to any tax sharing agreement, other than the Tax Separation Agreement.
The Spin-Off will not be taxable to the Borrower, Peabody or any of their respective Subsidiaries
or Affiliates.




          5.13 ERISA Compliance.




          (a) Except as could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws (except that with respect to any
Multiemployer Plan which is a Plan, such representation is deemed made only to the knowledge of the
Borrower). With respect to each Plan, no “accumulated funding deficiency” (within the meaning of
Section 412 of the Code) has occurred, and no application for a funding waiver or an extension of
any amortization period pursuant to Section 412 of the Code has been made.




          (b) There are no pending or, to the knowledge of the Borrower, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably
be expected to have a Material Adverse Effect. There has been no nonexempt “prohibited transaction”
(as defined in Section 406 of ERISA) or violation of the fiduciary responsibility rules with
respect to any Plan that has resulted or could reasonably be expected to result in a Material
Adverse Effect.




          (c) Except as could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect: (i) No ERISA Event has occurred or is reasonably expected to occur; (ii)
no Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.




          5.14 Subsidiaries; Equity Interests; Loan Parties. As of the Closing Date, the Borrower has
no Subsidiaries other than those specifically disclosed in Schedule 5.14, and all of the
outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and
non-assessable and are owned by each Person in the percentages specified on Schedule 5.14
free



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and clear of all Liens except those created under the Collateral Documents or permitted by this
Agreement and the other Loan Documents. Schedule 5.14 indicates which subsidiaries are Loan
Parties as of the Closing Date showing (as to each Loan Party) the jurisdiction of its
incorporation, the address of its principal place of business and its U.S. taxpayer identification
number or, in the case of any non-U.S. Loan Party that does not have a U.S. taxpayer identification
number, its unique identification number issued to it by the jurisdiction of its incorporation.




          5.15 Margin Regulations; Investment Company Act. (a) The Borrower is not engaged and will
not engage, principally or as one of its important activities, in the business of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit
for the purpose of purchasing or carrying margin stock. Following the application of the proceeds
of each Borrowing or drawing under each Letter of Credit, not more than 25% of the value of the
assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated
basis) subject to the provisions of Section 7.01, Section 7.04 or Section 7.05 or
subject to any restriction contained in any agreement or instrument between the Borrower and any
Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section
8.01(e) will be margin stock.




          (b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is required
to be registered as an “investment company” under the Investment Company Act of 1940.




          5.16 Disclosure. No report, financial statement, certificate or other information furnished
(in writing) by or on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document, taken as a whole with any other information
furnished or publicly available, contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the circumstances under
which they were made, not materially misleading as of the date when made or delivered;
provided, that with respect to any forecast, projection or other statement regarding future
performance, future financial results or other future developments, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed to be reasonable
at the time such information was prepared (it being understood that any such information is subject
to significant uncertainties and contingencies, may of which are beyond the Borrower’s control, and
that no assurance can be given that the future developments addressed in such information can be
realized).




          5.17 Compliance with Laws. The Borrower and each Subsidiary thereof is in compliance in all
material respects with the requirements of all Laws (including any zoning, building, ordinance,
code or approval or any building or mining permits) and all orders, writs, injunctions and decrees
applicable to it or to its properties, except in such instances in which (a) such requirement of
Law or order, writ, injunction or decree is being contested in good faith by appropriate
proceedings diligently conducted or (b) the failure to comply therewith, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse Effect.


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          5.18 Intellectual Property; Licenses, Etc. The Borrower and each of its Subsidiaries own,
or possess the right to use, all of the trademarks, service marks, trade names, copyrights,
patents, patent rights, franchises, licenses and other intellectual property rights (collectively,
“IP Rights”) that are reasonably necessary for the operation of their respective
businesses, except where the failure to own or possess the right to use such IP Rights could not
reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Borrower,
the use of such IP Rights by the Borrower or any Subsidiary does not infringe upon any rights held
by any other Person, except for any infringement that could not reasonably be expected to have a
Material Adverse Effect. Except as specifically disclosed in Schedule 5.18, no claim or
litigation regarding any of the foregoing is pending or, to the best knowledge of the Borrower,
threatened, which, either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.




          5.19 Solvency. (a) As of the Closing Date, after giving effect to the Transaction on such
date, the Borrower is together with its Subsidiaries on a consolidated basis, Solvent.




          (b) The Borrower does not intend to, and does not believe that it or any of its Subsidiaries will,
incur debts beyond its ability to pay such debts as they mature, taking into account the timing and
amounts of cash to be received by it or any such Subsidiary and the timing and amounts of cash to
be payable on or in respect of its Indebtedness or the Indebtedness of any such Subsidiary,




          5.20 Casualty, Etc. Neither the businesses nor the properties of the Borrower or any of its
Subsidiaries have been affected by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.




          5.21 Labor Matters. Except as specifically disclosed on Schedule 5.21, there are no
collective bargaining agreements or Multiemployer Plans covering the employees of the Borrower or
any of its Subsidiaries as of the Closing Date. (a) As of the Closing Date, neither the Borrower
nor any Subsidiary has suffered any strikes, walkouts, work stoppages or other material labor
difficulty within the last five years, and (b) since the Closing Date, neither the Borrower not any
subsidiary has suffered any strikes, walkouts, work stoppages or other material labor difficulty
that could reasonably be expected to result in a Material Adverse Effect.




          5.22 Collateral Documents. The provisions of the Collateral Documents are effective to
create in favor of the Administrative Agent for the benefit of the Secured Parties a legal, valid
and enforceable Lien on all right, title and interest of the Collateral owned by the Loan Parties
and described therein. Except for filings contemplated hereby and by the Collateral Documents, no
filing or other action will be necessary to perfect such Liens.




          5.23 Use of Proceeds. The Borrower will use the proceeds of the Loans solely as provided
for in Section 6.11.


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          5.24 Coal Act; Black Lung Act.




          (a) The Borrower, each of its Subsidiaries and its “related persons” (as defined in the Coal Act)
are in compliance in all material respects with the Coal Act and any regulations promulgated
thereunder, and none of the Borrower, its Subsidiaries or its related persons has any liability
under the Coal Act, except as disclosed in the Borrower’s financial statements or which could
reasonably be expected to have a Material Adverse Effect or with respect to premiums or other
material payments required thereunder which have been paid when due.




          (b) The Borrower and each of its Subsidiaries are in compliance in all material respects with the
Black Lung Act, and neither the Borrower nor any of its Subsidiaries has either incurred any Black
Lung Liability or assumed any other Black Lung Liability, except as disclosed in the Borrower’s
financial statements or which could reasonably be expected to have a Material Adverse Effect or
with respect to premiums, contributions or other material payments required thereunder which have
been paid when due.




ARTICLE VI

AFFIRMATIVE COVENANTS




          So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder
shall remain unpaid or unsatisfied (other than in respect of contingent obligations, indemnities
and expenses related thereto not then payable or in existence as of the later of the Maturity Date
or the Letter of Credit Expiration Date), or any Letter of Credit shall remain outstanding, the
Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01 and 6.02
(a) — (g)) cause each Subsidiary to:




          6.01 Financial Statements. Deliver to the Administrative Agent and each Lender, in form and
detail reasonably satisfactory to the Administrative Agent:





     (a) as soon as available, but in any event within 90 days after the end of each fiscal year of the
Borrower (commencing with the fiscal year ended December 31, 2007), a consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated
statements of income or operations, changes in shareholders’ equity and cash flows for such fiscal
year, setting forth in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be
audited and accompanied by a report and opinion of an independent certified public accountant of
nationally recognized standing, which report and opinion shall be prepared in accordance with
generally accepted auditing standards and shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of such audit; and




     (b) as soon as available, but in any event within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower (commencing with the fiscal quarter ended March
31, 2008), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such
fiscal quarter, and the related consolidated



72









 







statements of income or operations, changes in shareholders’ equity and cash flows for such fiscal
quarter and for the portion of the Borrower’s fiscal year then ended, setting forth in each case in
comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and
the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated
statements to be certified by a Responsible Officer of the Borrower as fairly presenting in all
material respects the financial condition, results of operations, changes in shareholders’ equity
and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes.


As to any information contained in materials furnished pursuant to Section 6.02(d), the
Borrower shall not be separately required to furnish such information under Section 6.01(a)
or (b) above, but the foregoing shall not be in derogation of the obligation of the
Borrower to furnish the information and materials described in Sections 6.01(a) and
(b) above at the times specified therein.




          6.02 Certificates; Other Information. Deliver to the Administrative Agent, in form and
detail reasonably satisfactory to the Administrative Agent:





     
(a) concurrently with the delivery of the financial statements referred to in Section
6.01(a), a certificate of its independent certified public accountants reporting on such
financial statements and stating that in performing their audit nothing came to their attention
that caused them to believe the Borrower failed to comply with the financial covenants set forth in
Section 7.11, except as specified in such certificate;




     (b) concurrently with the delivery of the financial statements referred to in Sections
6.01(a) and (b) (commencing with the delivery of the financial statements for the
fiscal quarter ended March 31, 2008), a duly completed Compliance Certificate signed by a
Responsible Officer of the Borrower, which shall include detailed computations of the financial
covenants;




     (c) promptly after any request by the Administrative Agent, copies of any detailed audit reports,
management letters or recommendations submitted to the board of directors (or the audit committee
of the board of directors) of any Loan Party by independent accountants in connection with the
accounts or books of the Borrower or any of its Subsidiaries, or any audit of any of them;




     (d) promptly after the same are available, copies of each annual report, proxy or financial
statement or other report or communication sent to the stockholders of the Borrower, and copies of
all annual, regular, periodic and special reports and registration statements which the Borrower
may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange
Act of 1934, or with any national securities exchange, and in any case not otherwise required to be
delivered to the Administrative Agent pursuant hereto;




     (e) unless otherwise required to be delivered to the Lenders hereunder, promptly after the
furnishing thereof, copies of any statement or report furnished to any holder of



73









 







debt securities of any Loan Party or of any of its Subsidiaries pursuant to the terms of any
indenture or similar agreement and not otherwise required to be furnished to the Lenders pursuant
to Section 6.01 or any other clause of this Section 6.02;




     (f) as soon as available, but in any event prior to the date audited financial statements are
required to be delivered, a report summarizing the insurance coverage (specifying type, amount and
carrier) in effect for each Loan Party and its Subsidiaries and containing such additional
information as the Administrative Agent, or any Lender through the Administrative Agent, may
reasonably specify;




     (g) promptly, and in any event within five Business Days after receipt thereof by the Borrower or
any Subsidiary, copies of each material notice or other correspondence received from the SEC (or
comparable agency in any applicable non-U.S. jurisdiction) concerning any material investigation or
possible material investigation or other material inquiry by such agency regarding financial or
other operational results of the Borrower or any Subsidiary;




     (h) unless otherwise required to be delivered to the Lenders hereunder, not later than ten days
after receipt thereof by the Borrower or any Subsidiary, copies of all notices of default,
non-compliance or any other material matters (excluding those delivered pursuant to the relevant
agreement in the ordinary course of business), material requests and other material documents
(including amendments, waivers and other modifications) so received under or pursuant to any
Related Document and, from time to time upon request by the Administrative Agent, such other
information and reports regarding the Related Documents as the Administrative Agent may reasonably
request;




     (i) as soon as available, but in any event within the time period in which the Borrower must
deliver its annual audited financials under Section 6.01(a), a report supplementing Schedule
5.08(c), identifying all Material Owned Real Property and Material Leased Real Property
acquired or disposed of by any Loan Party during such fiscal year;




     (j) promptly, such additional information regarding the business, financial, legal or corporate
affairs of the Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as
the Administrative Agent or any Lender may from time to time reasonably request;




     (k) not later than 90 days after the end of each fiscal year of the Borrower, a copy of summary
projections by the Borrower of the operating budget and cash flow budget of the Borrower and its
Subsidiaries for the succeeding fiscal year, such projections to be accompanied by a certificate of
a Responsible Officer to the effect that such projections have been prepared based on assumptions
believed by the Borrower to be reasonable.



          Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(d) (to the extent any such documents are included in materials otherwise filed
with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been





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delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on
the Borrower’s website on the Internet at the website address listed on Schedule 10.02;
(ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative Agent); or (iii) on
which such documents are filed for public availability of the SEC’s Electronic Data Gathering and
Retrieval system; provided, that the Borrower shall notify the Administrative Agent and
each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to
the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of the
documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(a). Notwithstanding anything contained herein, in every instance the Borrower
shall be required to provide paper copies of the Compliance Certificates required by Section
6.02(b) to the Administrative Agent. Except for such Compliance Certificates, the
Administrative Agent shall have no obligation to request the delivery or to maintain copies of the
documents referred to above, and in any event shall have no responsibility to monitor compliance by
the Borrower with any such request for delivery, and each Lender shall be solely responsible for
requesting delivery to it or maintaining its copies of such documents.




          The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will make
available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf
of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower
Materials on IntraLinks or another similar electronic system (the “Platform”) and (b)
certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive
material non-public information with respect to the Borrower or its securities) (each, a
“Public Lender”). The Borrower hereby agrees that so long as the Borrower is the issuer of
any outstanding debt or equity securities that are registered or issued pursuant to a private
offering or is actively contemplating issuing any such securities (w) all Borrower Materials that
are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC”
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page
thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have
authorized the Administrative Agent, the Arranger, the L/C Issuer and the Lenders to treat the
Borrower Materials as not containing any material non-public information with respect to the
Borrower or its securities for purposes of United States Federal and state securities laws
(provided, however, that to the extent the Borrower Materials constitute
Information, they shall be treated as set forth in Section 10.07); (y) all Borrower
Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform
designated “Public Investor;” and (z) the Administrative Agent and the Arranger shall be entitled
to treat the Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on
a portion of the Platform not designated “Public Investor.” Notwithstanding the foregoing, the
Borrower shall not be under any obligation to mark the Borrower Materials “PUBLIC.” In connection
with the foregoing, each party hereto acknowledges and agrees that the foregoing provisions are not
in derogation of their confidentiality obligations under Section 10.07.




          6.03 Notices. Notify the Administrative Agent:




          (a) promptly, of the occurrence of any Default or Event of Default;





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     (b) promptly, of any event which could reasonably be expected to have a Material Adverse Effect;




     (c) of the occurrence of any ERISA Event that, individually, or in the aggregate, would be
reasonably likely to have a Material Adverse Effect, as soon as possible and in any event within 30
days after the Borrower knows or has obtained notice thereof;




     (d) of any material change in accounting policies or financial reporting practices by any Loan
Party or any Subsidiary thereof, including any determination by the Borrower referred to in
Section 2.10(b);




     (e) promptly after the occurrence thereof, notice of any Environmental Liability Claim against or
by the Borrower or any of its Subsidiaries that could (i) reasonably be expected to have a Material
Adverse Effect or (ii) cause any property described in the Mortgages to be subject to any
additional material restrictions on ownership, occupancy, use or transferability under any
Environmental Law;




     (f) promptly after the occurrence thereof, notice of any accidents, explosions, implosions,
collapses or flooding at or otherwise related to the Properties that result in (i) any fatality or
(ii) the trapping of any Person in any mine for more than twenty-four hours; and




     (g) promptly after the occurrence thereof, notice of any matter that could reasonably be expected
to result in an injunction or the issuance of any closure order pursuant to any Environmental Law
or pursuant to any Environmental Permit that could reasonably be expected to directly or indirectly
result in the closure or cessation of operation of any mine for a period of more than 5 consecutive
days.



          Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer
of the Borrower setting forth details of the occurrence referred to therein and stating what action
the Borrower has taken and proposes to take with respect thereto.




          6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable (a)
all Tax liabilities, assessments and governmental charges or levies upon it or its properties or
assets, unless the same are being contested in good faith by appropriate proceedings diligently
conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or
such Subsidiary, except where failure to do so could not reasonably be expected to result in a
Material Adverse Effect; (b) all lawful claims which, if unpaid, would by law become a Lien upon
any material portion of the Collateral; and (c) all Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or agreement evidencing such
Indebtedness, except where failure to do so could not reasonably be expected to result in a
Material Adverse Effect.




          6.05 Preservation of Existence, Etc. With respect to the Borrower and each of its
Subsidiaries, (a) preserve, renew and maintain in full force and effect its legal existence and
good standing under the Laws of the jurisdiction of its organization except in a transaction
permitted by Section 7.04 or 7.05; provided, however, that the
Borrower and its Subsidiaries may consummate the Spin-Off; (b) take all reasonable action to
maintain all rights, privileges,





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permits, licenses and franchises necessary for the normal conduct of its business, except to the
extent that failure to do so could not reasonably be expected to have a Material Adverse Effect;
and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks,
the non-preservation of which could reasonably be expected to have a Material Adverse Effect.




          6.06 Maintenance of Properties. With respect to the Borrower and each of its Subsidiaries,
maintain, preserve and protect all of its material properties and equipment necessary in the
operation of its business in good working order and condition (ordinary wear and tear and damage by
fire or other casualty or taking by condemnation excepted); except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect.




          6.07 Maintenance of Insurance. Maintain with financially sound and reputable insurance
companies which may be Affiliates of the Borrower, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by Persons engaged in the
same or similar business, of such types and in such amounts (after giving effect to any
self-insurance compatible with the following standards) as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where the Borrower or the
applicable Subsidiary operates, except to the extent the failure to do so could not reasonably be
expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, the
Borrower and its Subsidiaries will maintain or cause to be maintained (a) flood insurance with
respect to each Flood Hazard Property that is located in a community that participates in the
National Flood Insurance Program, in each case in compliance with any applicable regulations of the
Board of Governors of the Federal Reserve System, (b) liability insurance, (c) business
interruption insurance, and (d) replacement value casualty insurance on the Collateral under such
policies of insurance, with such insurance companies, in such amounts, with such deductibles, and
covering such risks as would be carried or maintained under similar circumstances by Persons of
established reputation engaged in similar businesses. Each such policy of insurance shall (i) name
the Administrative Agent, on behalf of Secured Parties, as an additional insured thereunder as its
interests may appear, (ii) in the case of each casualty insurance policy, contain a loss payable
clause or endorsement, reasonably satisfactory in form and substance to the Administrative Agent,
that names the Administrative Agent, on behalf of the Secured Parties, as the loss payee thereunder
and provide for at least thirty days’ prior written notice to the Administrative Agent of any
modification or cancellation of such policy.




          6.08 Compliance with Laws. Comply in all material respects with the requirements of all
Laws and all orders, writs, injunctions and decrees applicable to it or to its business or
property, except in such instances in which (a) such requirement of Law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b)
the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.




          6.09 Books and Records. (a) Maintain proper books of record and account, in which in all
material respects full, true and correct entries in conformity with GAAP consistently applied shall
be made of all material financial transactions and matters involving the assets and business of the
Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account
in material conformity with all applicable requirements of any Governmental





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Authority having regulatory jurisdiction over the Borrower or such Subsidiary, as the case may be.




          6.10 Inspection Rights. Permit representatives and independent contractors of the
Administrative Agent and each Lender to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts therefrom (except
to the extent (i) any such access is restricted by a Requirement of Law or (ii) any such
agreements, contracts or the like are subject to a written confidentiality agreement with a non-
Affiliate that prohibits the Borrower or any of its Subsidiaries from granting such access to the
Administrative Agent or the Lenders; provided, that with respect to such confidentiality
restrictions affecting the Borrower or any of its Subsidiaries, a Responsible Officer is made
available to such Lender to discuss such confidential information to the extent permitted), and to
discuss the business, finances and accounts with its officers and independent public accountants at
such reasonable times during normal business hours and as often as may be reasonably desired,
provided, that the Administrative Agent or such Lender shall give Borrower reasonable
advance notice prior to any contact with such accountants and give the Borrower the opportunity to
participate in such discussions.




          6.11 Use of Proceeds. Use the proceeds of the Credit Extensions for working capital,
capital expenditures and other general corporate purposes.




          6.12 Covenant to Guarantee Obligations and Give Security. (a) Upon the formation or
acquisition of any new direct or indirect Guarantor Subsidiary by any Loan Party, then the Borrower
shall, at the Borrower’s expense:





     (i) within 30 days after such formation or acquisition, cause such Guarantor Subsidiary, to duly
execute and deliver to the Administrative Agent a counterpart of the Subsidiary Guaranty,
guaranteeing the other Loan Parties’ obligations under the Loan Documents;




     (ii) within 30 days after such formation or acquisition, furnish to the Administrative Agent a
description any Material Owned Real Property and Material Owned Leased Property of such Guarantor
Subsidiary, in detail reasonably satisfactory to the Administrative Agent;




     (iii) (A) cause such Guarantor Subsidiary to duly execute and deliver to the Administrative Agent
within 90 days after such formation or acquisition, deeds of trust, trust deeds, deeds to secure
debt and/or mortgages covering Material Owned Real Property of such Guarantor Subsidiary, (B) cause
such Guarantor Subsidiary to duly execute and deliver to the Administrative Agent within 120 days
after such formation or acquisition, leasehold mortgages or leasehold deeds of trust with respect
to all Material Leased Real Property of such Guarantor Subsidiary where the terms of the lease of
such Material Leased Property (or applicable state law, if such lease is silent on the issue) do
not prohibit a mortgage thereof, (C) cause such Guarantor Subsidiary to use commercially reasonable
efforts to duly execute and deliver to the Administrative Agent within 120 days after such
formation or acquisition, leasehold mortgages or leasehold deeds of trust with respect to all
Material Leased Real Property of such Guarantor



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Subsidiary where the terms of the lease of such Material Leased Property (or applicable state law,
if such lease is silent on the issue) prohibit a mortgage thereof; provided, that the
Borrower shall use commercially reasonable efforts to deliver estoppel and consent agreements
executed by the lessors of such Material Leased Real Property; provided, further,
that the Borrower shall (x) deliver the initial requested form of consent to the lessor within 30
days after such formation or acquisition and (y) initiate communications with the lessors on the
status of all such consents within 60 days after such formation or acquisition; provided,
however, that if any consent has not been executed and returned to the Administrative Agent
in a form reasonably satisfactory to the Administrative Agent within 90 days after such formation
or acquisition, then the Administrative Agent shall determine in its reasonable discretion whether
such Subsidiary Guarantor has satisfied its obligations hereunder or whether such Subsidiary
Guarantor’s obligations hereunder shall be extended for an additional period of time to be
determined by the Administrative Agent, and (D) cause such Guarantor Subsidiary to duly execute and
deliver to the Administrative Agent within 60 days after such formation or acquisition, supplements
to the Security Agreement, supplements to the Intellectual Property Security Agreements and other
security and pledge agreements, in all such cases, as specified by and in form and substance
reasonably satisfactory to the Administrative Agent (including delivery of all Pledged Interests in
and of such Guarantor Subsidiary, and other instruments of the type specified in Section
4.01(a)(iii)), in all such cases to the same extent that such documents and instruments would
have been required to have been delivered by Persons that were Guarantor Subsidiaries on the
Closing Date, securing payment of all the Obligations of such Guarantor Subsidiary under the Loan
Documents;




     (iv) (A) within 60 days after such formation or acquisition in the case of personal property, (B)
within 90 days after such formation or acquisition in the case of Material Owned Real Property, and
(C) within 120 days after such formation or acquisition in the case of Material Leased Real
Property, cause such Guarantor Subsidiary to take, or, in the case of Material Leased Real Property
where the terms of the lease of such Material Leased Real Property (or applicable state law, if
such lease is silent on the issue) prohibit a mortgage thereof, cause such Guarantor Subsidiary to
use commercially reasonable efforts to take, whatever additional action (including the recording of
mortgages, the filing of Uniform Commercial Code financing statements, the giving of notices and
the endorsement of notices on title documents) may be necessary in the reasonable opinion of the
Administrative Agent to vest in the Administrative Agent (or in any representative of the
Administrative Agent designated by it) valid and subsisting Liens on the properties purported to be
subject to the deeds of trust, trust deeds, deeds to secure debt and/or mortgages, leasehold
mortgages or leasehold deeds of trust, supplements to the Security Agreement, supplements to the
Intellectual Property Security Agreements and security and pledge agreements delivered pursuant to
Section 6.12(a)(iii), enforceable against all third parties, in all such cases to the same
extent that such action would have been required to have been taken by Persons that were Guarantor
Subsidiaries on the Closing Date;




     (v) deliver to the Administrative Agent, upon the request of the Administrative Agent in its
reasonable discretion, a signed copy of an opinion, addressed to the Administrative Agent and the
other Secured Parties, of counsel for the Loan Parties



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reasonably acceptable to the Administrative Agent (A) as to the validity and enforceability of the
agreements entered into pursuant to clause (iii)(A) above, and as to such other related matters as
the Administrative Agent may reasonably request, within 90 days after such formation or
acquisition, (B) as to the validity and enforceability of the agreements entered into pursuant to
clause (iii)(B) and, to the extent a mortgage is filed thereon, (iii)(C) above, and as to such
other related matters as the Administrative Agent may reasonably request, within 120 days after
such formation or acquisition, and (C) as to the validity and enforceability of the agreements
entered into pursuant to clauses (i) and (iii)(D) above, and as to such other related matters as
the Administrative Agent may reasonably request, within 60 days after such formation or
acquisition; and




     (vi) (A) within 90 days after such formation or acquisition in the case of Material Owned Real
Property and (B) within 120 days after such formation or acquisition in the case of Material Leased
Real Property, cause such Guarantor Subsidiary to provide, or, in the case of Material Leased Real
Property where the terms of the lease of such Material Leased Real Property (or applicable state
law, if such lease is silent on the issue) prohibit a mortgage thereof, cause such Guarantor
Subsidiary to use commercially reasonable efforts to provide, the Administrative Agent with a legal
description of all Material Owned Real Property and Material Leased Real Property, as applicable,
from which any As-Extracted Collateral (as defined in the Security Agreement) will be severed or to
which As-Extracted Collateral (as defined in the Security Agreement) otherwise relates, together
with the name of the record owner of such Material Owned Real Property or Material Leased Real
Property, as applicable, the county in which such Material Owned Real Property or Material Leased
Real Property, as applicable, is located and such other information as may be necessary or
desirable to file real property related financing statements, deeds of trust, trust deeds, deeds to
secure debt, mortgages, leasehold mortgages and/or leasehold deeds of trust under Section 9-502(b)
or 9-502(c) of the UCC or any similar legal requirements.



          (b) Upon the acquisition of any Material Owned Real Property or Material Leased Real Property by
any Loan Party other than pursuant to any acquisition covered by Section 6.12(a), the
Borrower shall, at the Borrower’s expense:





     (i) within 30 days after such acquisition, furnish to the Administrative Agent a description of the
property so acquired in detail reasonably satisfactory to the Administrative Agent;




     (ii) (A) with respect to Material Owned Real Property, cause the applicable Loan Party to duly
execute and deliver to the Administrative Agent within 90 days after such acquisition, deeds of
trust, trust deeds, deeds to secure debt and/or mortgages, (B) with respect to Material Leased Real
Property where the terms of the lease of such Material Leased Real Property (or applicable state
law, if such lease is silent on the issue) do not prohibit a mortgage thereof, cause the applicable
Loan Party to duly execute and deliver to the Administrative Agent within 120 days after such
acquisition, leasehold mortgages or leasehold deeds of trust, and (C) with respect to Material
Leased Real Property where the terms of the lease of such Material Leased Real Property (or
applicable state law, if such lease is silent on the issue) prohibit a mortgage thereof, cause



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the applicable Loan Party to use commercially reasonable efforts to duly execute and deliver to the
Administrative Agent within 120 days after such acquisition, leasehold mortgages or leasehold deeds
of trust; provided, that the Borrower shall use commercially reasonable efforts to deliver
estoppel and consent agreements executed by the lessors of such Material Leased Real Property;
provided, further, that the Borrower shall (x) deliver the initial requested form
of consent to the lessor within 30 days after such acquisition and (y) initiate communications with
the lessors on the status of all such consents within 60 days after such acquisition;
provided, however, that if any consent has not been executed and returned to the
Administrative Agent in a form reasonably satisfactory to the Administrative agent within 90 days
after such acquisition, then the Administrative Agent shall determine in its reasonable discretion
whether such Subsidiary Guarantor has satisfied its obligations hereunder or whether such
Subsidiary Guarantor’s obligations hereunder shall be extended for an additional period of time to
be determined by the Administrative Agent, in the case of clauses (A), (B) and (C), in form and
substance reasonably satisfactory to the Administrative Agent, securing payment of all the
Obligations of the applicable Loan Party under the Loan Documents;




     (iii) (A) within 90 days after such acquisition in the case of Material Owned Real Property, and
(B) within 120 days after such formation or acquisition in the case of Material Leased Real
Property, cause the applicable Loan Party to take, or, in the case of Material Leased Real Property
where the terms of the lease of such Material Leased Real Property do not permit a mortgage
thereof, cause such Loan Party to use commercially reasonable efforts to take, whatever additional
action (including the recording of mortgages and the filing of Uniform Commercial Code financing
statements) may be necessary in the reasonable opinion of the Administrative Agent to vest in the
Administrative Agent (or in any representative of the Administrative Agent designated by it) valid
and subsisting Liens on such property, enforceable against all third parties;




     (iv) deliver to the Administrative Agent, upon the request of the Administrative Agent in its
reasonable discretion, a signed copy of an opinion, addressed to the Administrative Agent and the
other Secured Parties, of counsel for the Loan Parties acceptable to the Administrative Agent (A)
as to the validity and enforceability of the Collateral Documents entered into pursuant to clause
(ii)(A) above and as to such other related matters as the Administrative Agent may reasonably
request, within 90 days after such acquisition and (B) as to the validity and enforceability of the
Collateral Documents entered into pursuant to clause (ii)(B) and, to the extent a mortgage is filed
thereon, (ii)(B) above and as to such other related matters as the Administrative Agent may
reasonably request, within 120 days after such acquisition; and




     (v) (A) within 90 days after such acquisition in the case of Material Owned Real Property and (B)
within 120 days after such acquisition in the case of Material Leased Real Property, cause such
Guarantor Subsidiary to provide, or, in the case of Material Leased Real Property where the terms
of the lease of such Material Leased Real Property (or applicable state law, if such lease is
silent on the issue) prohibit a mortgage thereof, cause such Guarantor Subsidiary to use
commercially reasonable efforts to provide, the Administrative Agent with a legal description of
all Material Owned Real Property and Material Leased Real Property, as applicable, from which any
As-Extracted



81









 






Collateral (as defined in the Security Agreement) will be severed or to which As-Extracted
Collateral (as defined in the Security Agreement) otherwise relates, together with the name of the
record owner of such Material Owned Real Property or Material Leased Real Property, as applicable,
the county in which such Material Owned Real Property or Material Leased Real Property, as
applicable, is located and such other information as may be necessary or desirable to file real
property related financing statements, deeds of trust, trust deeds, deeds to secure debt,
mortgages, leasehold mortgages and/or leasehold deeds of trust under Section 9-502(b) or 9-502(c)
of the UCC or any similar legal requirements.



          (c) Use commercially reasonable efforts to not enter into any lease prohibiting the granting of any
mortgage or other security interest thereon (and the exercise of remedies with respect thereto), in
each case to the Administrative Agent for the benefit of the Secured Parties, with respect to any
Material Leased Real Property acquired after the Closing Date.




          The foregoing requirements of Section 6.12(a) and (b) shall not apply to (i) those
assets over which the granting of security interests in such assets would be prohibited by
contract, applicable law or regulation or, with respect to the assets of any non-wholly owned
subsidiary, the organizational documents of such non-wholly owned subsidiary, (ii) payroll, tax and
other trust accounts, and (iii) those assets as to which the Administrative Agent and the Borrower
reasonably determine that the cost of obtaining such security interest or perfection thereof are
excessive in relation to the benefit to the Lenders of the security to be afforded thereby.




          6.13 Compliance with Environmental Laws. (a) Comply, and use commercially reasonable
efforts to cause all lessees and other Persons operating or occupying its properties to comply, in
all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and
renew all Environmental Permits necessary for its operations and properties, except where the
failure to so comply, obtain or renew could not reasonably be expected to have Material Adverse
Effect; and (b) undertake and perform any cleanup, removal, remedial or other action necessary to
remove and clean up all Hazardous Materials from any of its properties, in accordance with the
requirements of all Environmental Laws, except where the failure to so undertake and perform could
not reasonably be expected to have a Material Adverse Effect.




          6.14 Preparation of Environmental Reports. Not more often than once per Property 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 shall provide to the Lenders within 60
days after such request, at the expense of the Borrower, an environmental or mining site assessment
or audit report for any of its Properties described in such request, prepared by an environmental
or mining consulting firm reasonably acceptable to the Administrative Agent and indicating the
presence or absence of Hazardous Materials and the estimated cost of any compliance or remedial
action in connection with such Properties and the estimated cost of curing any violation or
non-compliance of any Environmental Law.




          6.15 Further Assurances. Promptly upon request by the Administrative Agent, or any Lender
through the Administrative Agent, (a) correct any material defect or error that may





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be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation
thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and
reregister any and all such further acts, deeds, certificates, assurances and other instruments as
the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require
from time to time in order to (i) carry out more effectively the purposes of the Loan Documents,
(ii) to the fullest extent permitted by applicable law, subject the Borrower’s or any of its
Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter intended to be
covered by any of the Collateral Documents, and (iii) perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be
created thereunder.



          6.16 Compliance with Terms of Leaseholds and Related Documents. (a) Make all payments and
otherwise perform all obligations in respect of all leases of real property to which the Borrower
or any of its Subsidiaries is a party, keep such leases in full force and effect and not allow such
leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled,
except, in any case, where the failure to do so, either individually or in the aggregate, could not
be reasonably likely to have a Material Adverse Effect.




          (b) Make all payments and otherwise perform all obligations in respect of all Related Documents,
keep such Related Documents in full force and effect and not allow such Related Documents to lapse
or be terminated or any rights to renew such Related Documents to be forfeited or cancelled,
except, in any case, where the failure to do so, either individually or in the aggregate, could not
be reasonably likely to have a Material Adverse Effect.




          6.17 [Reserved].




          6.18 [Reserved].




          6.19 Certain Long Term Liabilities and Environmental Reserves. To the extent required by
GAAP, maintain adequate reserves for (i) future costs associated with any lung disease claim
alleging pneumoconiosis or silicosis or arising out of exposure or alleged exposure to coal dust or
the coal mining environment, (ii) future costs associated with retiree and health care benefits,
(iii) future costs associated with Reclamation of disturbed acreage, removal of facilities and
other closing costs in connection with its mining operations and (iv) future costs associated with
other potential Environmental Liabilities.




          6.20 Mining Financial Assurances. Maintain all material Mining Financial Assurances to the
extent required pursuant to any Environmental Law.




          6.21 Post-Closing Obligations. Perform the obligations set forth on Schedule 6.21,
as and when set forth therein.




ARTICLE VII

NEGATIVE COVENANTS




          So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder
shall remain unpaid or unsatisfied (other than in respect of contingent obligations, indemnities
and costs and expenses related thereto not then payable or in existence





83









 







as of the later of the Maturity Date or the Letter of Credit Expiration Date), or any Letter of
Credit shall remain outstanding, the Borrower shall not, nor shall it permit any Subsidiary to,
directly or indirectly:




          7.01 Liens. Create, incur, assume or suffer to exist any Lien upon, or exception to title
to, any of its property, assets or revenues, whether now owned or hereafter acquired, or sign or
file under the Uniform Commercial Code of any jurisdiction a financing statement that names the
Borrower or any of its Subsidiaries as debtor, or assign any accounts or other right to receive
income, other than the following:





     (a) Liens pursuant to any Loan Document;




     (b) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or
extensions thereof, provided, that (i) the property covered thereby is not changed, (ii)
the amount secured or benefited thereby is not increased, and (iii) any renewal or extension of the
obligations secured or benefited thereby is permitted by Section 7.02(c);




     (c) Liens for Taxes not yet due or which are being contested in good faith and by appropriate
proceedings, if adequate reserves with respect thereto are maintained on the books of the
applicable Person in accordance with GAAP;




     (d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising
in the ordinary course of business which are not overdue for a period of more than 60 days or which
are being contested in good faith and by appropriate proceedings, if adequate reserves with respect
thereto are maintained on the books of the applicable Person;




     (e) pledges or deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation and deposits securing
liability to insurance carriers under insurance or self-insurance arrangements;




     (f) (i) deposits to secure the performance of bids, trade contracts and leases (other than
Indebtedness), reclamation bonds, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of business and (ii) Liens
on assets to secure obligations under surety bonds obtained as required in connection with the
entering into of new federal coal leases;




     (g) easements, covenants, conditions, rights-of-way, zoning restrictions, other restrictions and
other similar encumbrances which, in the aggregate, are not substantial in amount, and which do not
in any case materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the applicable Person;




     (h) Liens securing attachments or judgments for the payment of money not constituting an Event of
Default under Section 8.01(h) or securing appeal or surety bonds related to such
attachments or judgments;



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     (i) Liens securing Indebtedness of the Borrower and its Subsidiaries permitted by Section
7.02(e) incurred to finance the acquisition of fixed or capital assets; provided, that
(i) such Liens shall be created substantially simultaneously with the acquisition of such fixed or
capital assets, (ii) such Liens do not at any time encumber any property other than the property
financed by such Indebtedness (other than after-acquired title in or on such property and proceeds
of the existing collateral in accordance with the instrument creating such Lien), (iii) the
principal amount of Indebtedness secured by any such Lien shall at no time exceed 100% of the
original purchase price of such property at the time it was acquired, and (iv) if the terms of such
Indebtedness require any Lien hereunder to be subordinated to such Liens, then the Lien hereunder
shall be subordinated on terms reasonably acceptable to the Administrative Agent;




     (j) Liens on the property or assets of a Person which becomes a Guarantor Subsidiary after the date
hereof securing Indebtedness permitted by Section 7.02 not to exceed $15,000,000 at any
time outstanding, provided, that (i) such Liens existed at the time such entity became a
Guarantor Subsidiary and were not created in anticipation thereof, (ii) any such Lien is not
expanded to cover any other property or assets of such Person (other than the proceeds of the
property or assets subject to such Lien) or of the Borrower or any Guarantor Subsidiary, (iii) the
amount of Indebtedness secured thereby is not increased, and (iv) if the terms of such Indebtedness
require any Lien hereunder to be subordinated to such Liens, then the Lien hereunder shall be
subordinated on terms reasonably acceptable to the Administrative Agent;




     (k) Liens on the property of the Borrower or any of its Subsidiaries, as a tenant under a lease or
sublease entered into in the ordinary course of business by such Person, in favor of the landlord
under such lease or sublease, securing the tenant’s performance under such lease or sublease, as
such Liens are provided to the landlord under applicable law and not waived by the landlord;




     (l) Liens arising from precautionary Uniform Commercial Code financing statement filings with
respect to operating leases or consignment arrangements entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business;




     (m) Liens securing Refinancing Indebtedness, to the extent that the Indebtedness being refinanced
was originally secured in accordance with this Section 7.01, provided, that such
Lien does not apply to any additional property or assets of the Borrower or any of its Subsidiaries
(other than the proceeds of the property or assets subject to such Lien);




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




     (o) leases, subleases, licenses and rights-of-use granted to others incurred in the ordinary course
of business and that do not materially and adversely affect the use of the property encumbered
thereby for its intended purpose;



85









 






     (p) Liens in favor of a banking institution arising by operation of law or any contract 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;




     (q) Liens on receivables and rights related to such receivables created pursuant to any Permitted
Securitization Programs (to the extent that any such Disposition of receivables is deemed to give
rise to a Lien);




     (r) Liens on assets of the Borrower and its Subsidiaries that are not Collateral with a value
(determined immediately prior to the incurrence of such Lien) in an aggregate amount (at actual
cost, without adjustment for subsequent increases or decreases in the value of such asset) not in
excess of $12,000,000 in the aggregate;




     (s) Liens in favor of an escrow agent arising under an escrow arrangement incurred in connection
with the issuance of notes with respect of the proceeds of such notes and anticipated interest
expenses with respect to such notes;




     (t) rights of owners of interests in overlying, underlying or intervening strata and/or mineral
interests not owned by Borrower or on of its Subsidiaries, with respect to tracts of 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, and




     (u) other defects and exceptions to title of real property where such defects or exceptions could
not be reasonably be expected to have a Material Adverse Effect.



          7.02 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness,
except:





     (a) Indebtedness under the Loan Documents;




     (b) Indebtedness outstanding on the date hereof and listed on Schedule 7.02;




     (c) any refinancings, refundings, renewals or extensions of Indebtedness permitted under
Section 7.02(b); provided, that (i) the amount of such Indebtedness (the
“Refinancing Indebtedness”) is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable premium or other reasonable amount
paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an
amount equal to any existing commitments unutilized thereunder, (ii) the direct or any contingent
obligor with respect thereto is not changed, as a result of or in connection with such refinancing,
refunding, renewal or extension and (iii) the terms relating to principal amount, amortization,
maturity, collateral (if any) and subordination (if any), and other material terms taken as a
whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement
entered into and of any instrument issued in connection therewith, are no less favorable in any
material respect to the Loan Parties or the Lenders than the terms of any agreement or instrument
governing the Indebtedness being refinanced, refunded, renewed or



86









 






extended and the interest rate applicable to any such refinancing, refunding, renewing or extending
Indebtedness does not exceed the then applicable market interest rate (as determined in good faith
by the Board of Directors of the Borrower);




     (d) Guarantees of the Borrower or any of its Subsidiaries in respect of Indebtedness otherwise
permitted hereunder of the Borrower or any other Loan Party;




     (e) Indebtedness in respect of Capital Lease Obligations and purchase money obligations for fixed
or capital assets within the limitations set forth in Section 7.01(i); provided,
however, that the aggregate amount of all such Indebtedness at any one time outstanding
shall not exceed 1.0% of Tangible Assets of the Loan Parties;




     (f) Indebtedness in respect of Swap Contracts incurred in the ordinary course of business and
consistent with prudent business practice;




     (g) Indebtedness of the Borrower or any other Loan Party to any other Loan Party and of any
non-Loan Party Subsidiary to any Loan Party or any other non-Loan Party; provided, that
such Indebtedness must be subordinated to the Obligations on customary terms;




     (h) Intercompany current liabilities incurred in the ordinary course of business of the Borrower
and its Subsidiaries;




     (i) Indebtedness incurred in connection with any Permitted Securitization Program in an aggregate
principal amount not to exceed $50,000,000; and




     (j) Indebtedness in respect of netting services, automatic clearinghouse arrangements, overdraft
protections and similar arrangements in each case in connection with deposit accounts and in the
ordinary course of business;




     (k) Indebtedness representing deferred or equity compensation to employees of the Borrower or any
of its Subsidiaries incurred in the ordinary course of business;




     (l) Indebtedness in an aggregate principal amount not to exceed 5% of Tangible Assets of the
Borrower and its Subsidiaries at any time outstanding; provided, that (i) the covenants and events
of default of such Indebtedness are, as a whole, no more restrictive to the obligors or the lenders
thereon than the Revolving Credit Loans and (ii) such Indebtedness shall not be Guaranteed by any
Subsidiary of the Borrower that is not a Subsidiary Guarantor hereunder; and




     (m) Indebtedness in the form of bank guaranties, bid, performance, reclamation bonds, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business, in an aggregate amount not to exceed $200,000,000;
provided that such Indebtedness described in this clause (m) is not secured by any Lien other than
a Lien on cash described in Section 7.01(f).



          7.03 Investments. Make or hold any Investments, except:





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     (a) Investments held by the Borrower or any of its Subsidiaries in the form of Cash Equivalents;




     (b) advances to officers, directors and employees of the Borrower and Subsidiaries in an aggregate
amount not to exceed $500,000 at any time outstanding, for travel, entertainment, relocation and
analogous ordinary business purposes;




     (c) Investments consisting of extensions of credit in the nature of accounts receivable or notes
receivable arising from the grant of trade credit in the ordinary course of business, and
Investments received in satisfaction or partial satisfaction thereof from financially troubled
account debtors to the extent reasonably necessary in order to prevent or limit loss;




     (d) Investments (including debt obligations and Equity Interests) received in satisfaction of
judgments or in connection with the bankruptcy or reorganization of suppliers and customers of the
Borrower and its Subsidiaries and in settlement of delinquent obligations of, and other disputes
with, such customers and suppliers arising in the ordinary course of business;




     (e) Investments in the nature of 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;




     (f) Investments existing on the date hereof and set forth on Schedule 7.03 and extensions,
renewals, modifications, restatements or replacements thereof; provided, that no such extension,
renewal, modification or restatement shall increase the amount of the original loan, advance or
investment, except by an amount equal to any premium or other reasonable amount paid in respect of
the underlying obligations and fees and expenses incurred in connection with such replacement,
renewal or extension;




     (g) promissory notes and other similar non-cash consideration received by the Borrower and its
Subsidiaries in connection with Dispositions not otherwise prohibited under this Agreement;




     (h) Investments in any assets constituting a business unit received by the Borrower or its
Subsidiaries by virtue of an asset exchange or swap with a third party or acquired as a capital
expenditure;




     (i) Swap Contracts permitted under Section 7.02(f);




     (j) Investments by the Borrower or its Subsidiaries in any Loan Party or entity that becomes a Loan
Party as a result of such Investment and Investments by any non-Loan Party in any other non-Loan
Party; provided, that if the Investment is in the form of Indebtedness, such Indebtedness
must be permitted pursuant to Section 7.02(g);




     (k) Permitted Acquisitions;



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     (l) Investments by the Borrower or its Subsidiaries to acquire the remaining 18.5% of Capital Stock
of KE Ventures, LLC in an aggregate principal amount not to exceed $34,000,000; and




     (m) Investments by the Borrower or any of its Subsidiaries not otherwise permitted under this
Section 7.03 in an aggregate amount not in excess of 2.5% of Tangible Assets of the
Borrower and Subsidiaries.



          7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another
Person, or Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any
Person, except that, so long as no Default exists or would result therefrom:





     (a) any Subsidiary may merge with (i) the Borrower, provided, that the Borrower shall be
the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided,
that when any Subsidiary that is a Loan Party is merging with another Subsidiary, the Loan Party
shall be the continuing or surviving Person;




     (b) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or to another Subsidiary; provided, that if the
transferor in such a transaction is a Loan Party, then the transferee must either be the Borrower
or another Loan Party;




     (c) the Borrower and any Subsidiary may merge or consolidate with any other Person in a transaction
in which the Borrower is the surviving or continuing Person;




     (d) the Borrower and its Subsidiaries may consummate the Spin-Off; and




     (e) the Borrower and its Subsidiaries may consummate any transaction that would be permitted as an
Investment under Section 7.03.



          7.05 Dispositions. Make any Disposition or enter into any agreement to make any
Disposition, except:





     (a) Dispositions of used, worn out, obsolete or surplus property by the Borrower or any of its
Subsidiaries in the ordinary course of business or the abandonment or allowance to lapse or expire
or other Disposition of Intellectual Property in the ordinary course of business that is, in the
reasonable judgment of the Borrower, no longer economically practicable to maintain or useful in
the conduct of the Borrower and its Subsidiaries taken as a whole;




     (b) Dispositions of inventory in the ordinary course of business;




     (c) Dispositions of equipment or real property to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement property or (ii) the proceeds of such
Disposition are reasonably promptly applied to the purchase price of such replacement property;



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     (d) Dispositions of property by any Subsidiary to the Borrower or to a whollyowned Subsidiary;
provided, that if the transferor of such property is a Loan Party, the transferee thereof
must either be the Borrower or a another Loan Party;




     (e) Dispositions permitted by Section 7.04;




     (f) Dispositions by the Borrower and its Subsidiaries of property pursuant to saleleaseback
transactions, provided, that the book value of all property so Disposed of, from and after
the Closing Date, shall not exceed 2.0% of Tangible Assets;




     (g) Dispositions by the Borrower and its Subsidiaries not otherwise permitted under this
Section 7.05; provided, that (i) at the time of such Disposition, no Default shall
exist or would result from such Disposition, and (ii) the aggregate book value of all property
Disposed of in reliance on this clause (g) in any fiscal year shall not exceed 2.5% of Tangible
Assets;




     (h) so long as no Default shall occur and be continuing, the grant of any option or other right to
purchase any asset in a transaction that would be permitted under the provisions of this
Section 7.05;




     (i) leases, subleases, assignments, licenses, sublicenses of real or personal property or
Intellectual Property in the ordinary course of business and in accordance with the applicable
Collateral Documents; provided, however, that any license or sublicense of
intellectual property shall be on the non-exclusive basis;




     (j) sales or discounts (without recourse) of accounts receivable arising in the ordinary course of
business in connection with the compromise of collection thereof;




     (k) sales, transfers and other dispositions of Investments in joint ventures to the extent required
by, or make pursuant to customary buy/sell arrangement between, the joint venture parties set forth
in joint venture arrangements and similar binding arrangements;




     (l) transfers of property subject to casualty or condemnation events upon receipt of the Net Cash
Proceeds constituting and Extraordinary Receipt; and




     (m) Permitted Securitization Programs.


provided, however, that any Disposition pursuant to Section 7.05(a), (b),
(c), (f), (g), (l), and (m) shall be for fair market value.




          7.06 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, except that, so long as no Default shall have occurred and be continuing at the
time of any action described below or would result therefrom:





     (a) each Subsidiary may make Restricted Payments to the Borrower, the Subsidiary Guarantors and any
other Person that owns a direct Equity Interest in such



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Subsidiary, ratably according to their respective holdings of the type of Equity Interest in
respect of which such Restricted Payment is being made;




     (b) the Borrower and each Subsidiary may declare and make dividend payments or other distributions
payable solely in the common stock or other Equity Interests of such Person;




     (c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests
issued by it with the proceeds received from the substantially concurrent issue of new shares of
its common Equity Interests;




     (d) the Borrower may declare or pay cash dividends to its stockholders and purchase, redeem, or
otherwise acquire for cash Equity Interests issued by it solely out of 25% of consolidated net
income of the Borrower and its Subsidiaries arising after December 31, 2008 and computed on a
cumulative consolidated basis with other such transactions by the Borrower since such date;
provided, that at the time of such declaration (in the case of dividends) or the date of
any such Restricted Payment (in the case of any other Restricted Payment), and after giving
effective thereto, no Default shall have occurred and be continuing and the Borrower is in
compliance with the financial covenants set forth in Section 7.11; and




     (e) the Borrower or any of its Subsidiaries may purchase (i) Equity Interests in any Loan Party or
options with respect thereto held by directors, officers or employees of the Borrower or any
Subsidiary (or their estates or authorized representatives) in connection with the death,
disability or termination of employment of any such director, officer or employee and (ii) Equity
Interests in any Loan Party for future issuance under any employee stock plan.



          7.07 Change in Nature of Business. Engage in any material line of business other than a
Similar Business.




          7.08 Transactions with Affiliates. Enter into any transaction of any kind with any
Affiliate, including, without limitation, any purchase, sale, lease or exchange of property or the
rendering of any service, unless such transaction is (a) not prohibited by this Agreement and (b)
upon fair and reasonable terms substantially as favorable to the Borrower or such Subsidiary as
would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length
transaction with a Person other than an Affiliate. The foregoing restrictions shall not apply to
the following:




          (a) transactions between or among the Borrower and any other Loan Parties or between and among any
Loan Parties;




          (b) the payment of reasonable and customary fees and reimbursement of expenses payable to directors
of the Borrower or any Subsidiary or to any Plan, Plan administrator or Plan trustee;




          (c) loans and advances to directors, officers and employees to the extent permitted by Section
7.03;





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          (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) payments to directors and officers of the Borrower and its Subsidiaries in respect of the
indemnification of such Persons in such respective capacities from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements, as the case may be, pursuant to the Organization Documents or other corporate action
of the Borrower or its Subsidiaries, respectively, or pursuant to applicable law; and




          (f) Restricted Payments permitted by Section 7.06.




          7.09 Burdensome Agreements. Enter into any Contractual Obligation (other than this Agreement or any
other Loan Document) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments
to the Borrower or any Subsidiary Guarantor or to otherwise transfer property to or invest in the
Borrower or any Subsidiary Guarantor, unless such Contractual Obligations could not reasonably be
expected to materially hinder the Borrower’s ability to meet its obligations under this Agreement.




          7.10 Use of Proceeds. Use the proceeds of any Credit Extension, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock
(within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.




          7.11 Financial Covenants. (a) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio as of the end of any fiscal quarter of the Borrower,
commencing with the fiscal quarter ending March 31, 2008, for the period of four consecutive fiscal
quarters of the Borrower ending on such date to be less than 4.00:1.00; provided, that (i)
the Consolidated Interest Coverage Ratio for the fiscal quarter ending March 31, 2008, shall be
measured for such fiscal quarter only, (ii) the Consolidated Interest Coverage Ratio for the fiscal
quarter ending June 30, 2008, shall be measured for a period of two consecutive fiscal quarters of
the Borrower ending on such date, and (iii) the Consolidated Interest Coverage Ratio for the fiscal
quarter ending September 30, 2008, shall be measured for a period of three consecutive fiscal
quarters of the Borrower ending on such date.




          (b) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as of the end of
any fiscal quarter of the Borrower, commencing with the fiscal quarter ending March 31, 2008, for
any period of four consecutive fiscal quarters of the Borrower ending on such date to be greater
than 2.75:1.00.




          7.12 Capital Expenditures. Make or become legally obligated to make any Capital
Expenditure, except for Capital Expenditures in the ordinary course of business not





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exceeding, in the aggregate for the Borrower and its Subsidiaries during each fiscal year set forth
below, the amount set forth opposite such fiscal year:




	 	 	 	 	 
	Fiscal Year	 	Amount
	2008
	 	$	95,000,000	 
	2009
	 	$	100,000,000	 
	2010
	 	$	100,000,000	 
	2011
	 	$	100,000,000	 





; provided, however, that so long as no Default has occurred and is continuing or
would result from such expenditure, any portion of any amount set forth above, if not expended in
the fiscal year for which it is permitted above, may be carried over for expenditure in the next
following fiscal year; and provided, further, if any such amount is so carried
over, it will be deemed used in the applicable subsequent fiscal year before the amount set forth
opposite such fiscal year above.




          7.13 Amendments of Organization Documents. Amend any of its Organization Documents in any
respect materially adverse to the Lenders.




          7.14 Accounting Changes. Make any change in (a) its accounting policies or reporting
practices, except as required or permitted by GAAP, or (b) its fiscal year.




          7.15 Prepayments, Etc. of Indebtedness. If an Event of Default under Sections
8.01(a) or (b) (only with respect to an Event of Default under Section 7.11)
shall have occurred and be continuing, voluntarily prepay, redeem, purchase, defease or otherwise
satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of
any subordination terms of, any Indebtedness, except (a) the prepayment of the Credit Extensions in
accordance with the terms of this Agreement and (b) regularly scheduled or required repayments or
redemptions of Indebtedness set forth in Schedule 7.02 and refinancings and refundings of
such Indebtedness in compliance with Section 7.02(c).




          7.16 Amendment, Etc. of Related Documents and Indebtedness. (a) Cancel or terminate any
Related Document or consent to or accept any cancellation or termination thereof, other than in
accordance with its terms (b) amend, modify or change in any manner any term or condition of any
Related Document or give any consent, waiver or approval thereunder, (c) waive any default under or
any breach of any term or condition of any Related Document, (d) take any other action in
connection with any Related Document, in the case of each of clauses (a) through (d), that would
materially impair the value of the interest or rights of any Loan Party thereunder or that would
materially impair the ability of the Lenders to be repaid hereunder or (e) if an Event of Default
under Sections 8.01(a) or (b) (only with respect to an Event of Default under
Section 7.11) shall have occurred and be continuing, amend, modify or change in any manner
any term or condition of any Indebtedness set forth in Schedule 7.02, except for any
refinancing, refunding, renewal or extension thereof permitted by Section 7.02(c).




          7.17 Limitation on Negative Pledge Clauses. Enter into any Contractual Obligation (other
than this Agreement or any other Loan Document) that limits the ability of the Borrower or any
Subsidiary Guarantor to create, incur, assume or suffer to exist any Lien upon





93









 







any of its property to secure the Obligations hereunder; provided, however, that
the foregoing clause shall not apply to Contractual Obligations which:




          (a) exist on the date hereof and (to the extent not otherwise permitted by this Section
7.17) are listed on Schedule 7.17 hereto;




          (b) are binding on a Subsidiary at the time such Subsidiary first becomes a Subsidiary of the
Borrower, so long as such Contractual Obligations were not entered into solely in contemplation of
such Person becoming a Subsidiary of the Borrower;




          (c) arise in connection with any Lien permitted by Section 7.01 to the extent such
restrictions relate solely to the assets (and any proceeds in respect thereof) which are the
subject of such Lien;




          (d) represent Indebtedness permitted by Section 7.02 (b), (c), (d), (e), (k) and
(l); provided, that such Indebtedness shall not conflict with (i) any terms of this
Agreement, any other Loan Document or the terms of any other Indebtedness and (ii) the Borrower’s
obligation to grant Liens to the Administrative Agent for the benefit of the Secured Parties in
Collateral acquired after the Closing Date in accordance with the terms of the Loan Documents;




          (e) represent secured Indebtedness permitted by Section 7.01(j) to the extent that such
restrictions apply only to the Subsidiaries incurring or guaranteeing such Indebtedness (and the
Subsidiaries of such Subsidiaries);




          (f) arise in connection with any Disposition permitted by Section 7.05, with respect to the
assets so Disposed;




          (g) are customary provisions in joint venture agreements and other similar agreements applicable
solely to such joint venture or the Equity Interests therein;




          (h) are customary restrictions on leases, subleases, licenses or asset sale agreements otherwise
permitted hereby so long as such restrictions relate to the assets subject thereto;




          (i) are customary provisions restricting subletting or assignment of any lease governing a
leasehold interest of the Borrower or any Subsidiary;




          (j) are customary limitations (including financial maintenance covenants) existing under or by
reason of leases entered into in the ordinary course of business;




          (k) are restrictions on cash or other deposits imposed under contracts entered into in the ordinary
course of business;




          (l) are customary provisions restricting assignment of any agreements; or




          (m) are restrictions
imposed by any agreement relating to any Permitted Securitization Program to the extent that such
restrictions relate to the assets (and any proceeds in respect thereof) that are the subject of
such Permitted Securitization Program; or





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          (n) are set forth in any agreement evidencing an amendment, modification, restatement, renewal,
increase, supplement, refunding, replacement or refinancing of the Contractual Obligations referred
to in clauses (a) through (l) above; provided, that such amendment, modification, restatement,
renewal, increase, supplement, refunding, replacement or refinancing is, in the good faith judgment
of the Borrower, not materially less favorable to the Loan Parties and the Lenders with respect to
such limitations than those applicable pursuant to such Contractual Obligations prior to such
amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or
refinancing.




ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES




          8.01 Events of Default. Any of the following shall constitute an Event of Default:





     (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and as required
to be paid herein, any amount of principal of any Loan or any L/C Obligation or (ii) within three
days after the same becomes due, any interest on any Loan or on any L/C Obligation, any fee due
hereunder, or any other amount payable hereunder or under any other Loan Document; or




     (b) Specific Covenants. (i) The Borrower fails to perform or observe any term, covenant or
agreement contained in any of Sections 6.03(a), 6.03(b), 6.03(c),
6.05(a), 6.07, 6.08, 6.10, 6.11, 6.12,
6.15, 6.16, 6.20, 6.21 or Article VII, (ii) any of the
Subsidiary Guarantors fails to perform or observe any term, covenant or agreement contained in
Section IV of the Subsidiary Guaranty (but only to the extent it relates to a default under one of
the covenants listed in clause (i) above) or (iii) any of the Loan Parties fails to perform or
observe any term, covenant or agreement contained in Section 4 of the Security Agreement;
or




     (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or
agreement (not specified in Section 8.01(a) or (b) above) contained in any Loan
Document on its part to be performed or observed and such failure continues for 30 days; or




     (d) Representations and Warranties. Any representation, warranty, certification or
statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party
herein, in any other Loan Document, or in any document delivered in connection herewith or
therewith shall be incorrect or misleading in any material respect when made or deemed made; or




     (e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any payment when
due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in
respect of any Indebtedness or Guarantee (other than Indebtedness hereunder, Indebtedness under
Swap Contracts or Guarantees of the Obligations), in each case having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing to all creditors
under any




95












 




combined or syndicated credit agreement) of more than the Threshold Amount, beyond the period of
grace, if any, provided in the instrument or agreement under which such Indebtedness or Guarantee
was created or (B) fails to observe or perform any other agreement or condition relating to any
such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or other event is to
permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such
Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity, or such Guarantee to become due or payable; (ii) there occurs under
any Swap Contract an Early Termination Date (as defined under such Swap Contract) resulting from
(A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary
thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as
so defined) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an
Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Loan
Party or such Subsidiary as a result thereof is greater than the Threshold Amount; or (iii) there
occurs under any of the Coal Supply Agreements, the Coal Supply Agreement I, the Coal Supply
Agreement II, or any Liability Assumption Agreement an early termination of such agreement for any
reason which could reasonably be expected to have an adverse effect on any Loan Party or that would
impair the ability of the Lenders to be repaid in full hereunder.





     (f) Insolvency Proceedings, Etc. The Borrower or any of its Subsidiaries institutes or
consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment
for the benefit of creditors; or applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or
any substantial part of its property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent of such Person and
the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under
any Debtor Relief Law relating to any such Person or to all or any substantial part of its property
is instituted without the consent of such Person and continues undismissed or unstayed for 60
calendar days, or an order for relief is entered in any such proceeding; or




     (g) Inability to Pay Debts; Attachment. (i) The Borrower or any of its Subsidiaries becomes
unable or admits in writing its inability or fails generally to pay its debts as they become due,
or (ii) any writ or warrant of attachment or execution or similar process is issued or levied
against all or any substantial part of the property of any such Person and is not released, vacated
or fully bonded within 60 days after its issue or levy; or




     (h) Judgments. There is entered against the Borrower or any of its Subsidiaries one or more
final judgments or orders for the payment of money in an aggregate amount (as to all such judgments
and orders) exceeding the Threshold Amount (to the extent not covered by independent third-party
insurance), and, such judgments or orders shall not have been vacated, discharged, stayed or bonded
pending appeal within 60 days from the entry thereof; or



96









 






     (i) ERISA. (i) The occurrence of any of the following events that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect: (i) an ERISA Event
occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably
be expected to result in an actual obligation to pay money of the Borrower under Title IV of ERISA
to the Pension Plan, Multiemployer Plan or the PBGC or (ii) the Borrower or any ERISA Affiliate
fails to pay when due, after the expiration of any applicable grace period, any installment payment
with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan; or




     (j) Invalidity of Loan Documents. Any Loan Document, at any time after its execution and
delivery and for any reason other than as expressly permitted hereunder or satisfaction in full of
all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person
contests in any manner the validity or enforceability of any Loan Document; or any Loan Party
denies that it has any or further liability or obligation under any Loan Document, or purports to
revoke, terminate or rescind any Loan Document; or




     (k) Change of Control. There occurs any Change of Control;




     (l) Collateral Documents. Any Collateral Document after delivery thereof pursuant to
Section 4.01 or 6.12 shall for any reason (other than pursuant to the terms hereof
or thereof, including as a result of a transaction permitted by Section 7.04 or
7.05) cease to create a valid and perfected Lien, with the priority required hereby or
thereby (subject to Liens permitted by Section 7.01), on the Collateral purported to be
covered thereby, except to the extent that any such loss of perfection or priority results from the
failure of the Administrative Agent to maintain possession of certificates actually delivered to it
representing securities pledged under the Collateral Documents or to file UCC continuation
statements and except as to Collateral consisting of real property to the extent that such losses
are covered by a lender’s title insurance policy and such insurer has not denied or failed to
acknowledge coverage; or




     (m) Tax Matters. (i) The Spin-Off fails to qualify under Section 355 of the Code, (ii) the
Capital Stock of Borrower distributed in connection with the Spin-Off fails to be treated as
qualified property pursuant to Section 355(e) of the Code or (iii) the contribution of assets by
Peabody to Borrower in connection with the Spin-Off fails to qualify under Section 368 of the Code
or Peabody recognizes any gain in connection with such contribution.



          8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the
Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders,
take any or all of the following actions:





     (a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to
make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be
terminated;



97









 






     (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid
thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Borrower;




     (c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the
then Outstanding Amount thereof); and




     (d) exercise on behalf of itself, the Lenders and the L/C Issuer all rights and remedies available
to it, the Lenders and the L/C Issuer under the Loan Documents or applicable law;


provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Debtor Relief Laws of the United States,
the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit
Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and
all interest and other amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the Administrative Agent or any
Lender.




          8.03 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or
after the Loans have automatically become immediately due and payable and the L/C Obligations have
automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02),
any amounts received on account of the Obligations shall be applied by the Administrative Agent in
the following order:





     First, to payment of that portion of the Obligations constituting fees, indemnities,
expenses and other amounts (including fees, charges and disbursements of counsel to the
Administrative Agent and amounts payable under Article III) payable to the Administrative
Agent in its capacity as such;




     Second, to payment of that portion of the Obligations constituting fees, indemnities and
other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and
the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders and
the L/C Issuer (including fees and time charges for attorneys who may be employees of any Lender or
the L/C Issuer) and amounts payable under Article III, ratably among them in proportion to
the respective amounts described in this clause Second payable to them;




     Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter
of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations, ratably among the
Lenders and the L/C Issuer in proportion to the respective amounts described in this clause
Third payable to them;




     Fourth, to payment of that portion of the Obligations constituting unpaid principal of the
Loans, L/C Borrowings and amounts owing under Secured Hedge Agreements and



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Secured Cash Management Agreements, ratably among the Lenders, the L/C Issuer, the Hedge Banks and
the Cash Management Banks in proportion to the respective amounts described in this clause Fourth
held by them;




     Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize
that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit; and




     Last, the balance, if any, after all of the Obligations have been indefeasibly paid in
full, to the Borrower or as otherwise required by Law.


Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount
of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such
Letters of Credit as they occur. If any amount remains on deposit as cash collateral after all
Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied
to the other Obligations, if any, in the order set forth above.




ARTICLE IX

ADMINISTRATIVE AGENT




          9.01 Appointment and Authority. (a) Each of the Lenders and the L/C Issuer hereby
irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and
under the other Loan Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof
or thereof, together with such actions and powers as are reasonably incidental thereto. The
provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and
the L/C Issuer, and neither the Borrower nor any other Loan Party shall have rights as a third
party beneficiary of any of such provisions.



          (b) The Administrative Agent shall also act as the “collateral agent” under the Loan
Documents, and each of the Lenders (in its capacities as a Lender, Swing Line Lender (if
applicable), potential Hedge Bank and potential Cash Management Bank) and the L/C Issuer hereby
irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and
the L/C Issuer for purposes of acquiring, holding and enforcing any and all Liens on Collateral
granted by any of the Loan Parties to secure any of the Obligations, together with such powers and
discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as
“collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the
Administrative Agent pursuant to Section 9.05 for purposes of holding or enforcing any Lien
on the Collateral (or any portion thereof) granted under the Collateral Documents, or for
exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall
be entitled to the benefits of all provisions of this Article IX and Article X
(including Section 10.04(c), as though such co-agents, sub-agents and attorneys-in-fact
were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect
thereto.



          9.02 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender



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and may exercise the same as though it were not the Administrative Agent and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires,
include the Person serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or
in any other advisory capacity for and generally engage in any kind of business with the Borrower
or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent
hereunder and without any duty to account therefor to the Lenders.



          9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, the Administrative Agent:




     (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default
has occurred and is continuing;




     (b) shall not have any duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents
that the Administrative Agent is required to exercise as directed in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided, that the Administrative Agent shall not
be required to take any action that, in its opinion or the opinion of its counsel, may expose the
Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and




     (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty
to disclose, and shall not be liable for the failure to disclose, any information relating to the
Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the
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 (i) with the
consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii)
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 notice describing such Default is
given to the Administrative Agent by the Borrower, a Lender or the L/C Issuer.



          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 this Agreement or any
other Loan Document, (ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance
of any of the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or document, or the creation,
perfection or priority of any Lien purported to be created by the Collateral Documents, (v) the
value or the sufficiency of any



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Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere
herein, other than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.



          9.04 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing (including any electronic message,
Internet or intranet website posting or other distribution) believed by it to be genuine and to
have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the
Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C
Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender
or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The
Administrative Agent may consult with legal counsel (who may be counsel for the Borrower),
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.



          9.05 Delegation of Duties. The Administrative Agent may perform any and all of its duties
and exercise its rights and powers hereunder or under any other Loan Document by or through any one
or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and powers by or through
their respective Related Parties. The exculpatory provisions 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 their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.



          9.06 Resignation of Administrative Agent. The Administrative Agent may at any time give
notice of its resignation to the Lenders, the L/C Issuer and the Borrower. Upon receipt of any such
notice of resignation, the Required Lenders shall have the right, with the approval of the Borrower
(such approval not to be unreasonably withheld), to appoint a successor, which shall be a bank with
an office in the United States, or an Affiliate of any such bank with an office in the United
States. If no such 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 L/C
Issuer, appoint a successor Administrative Agent meeting the qualifications set forth above;
provided, that if the Administrative Agent shall notify the Borrower and the Lenders that
no qualifying Person has accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (a) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan Documents (except
that in the case of any collateral security held by the Administrative Agent on behalf of the
Lenders or the L/C Issuer under any of the Loan Documents, the retiring Administrative Agent shall
continue to hold such collateral security until



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such time as a successor Administrative Agent is appointed) and (b) all payments, communications
and determinations provided to be made by, to or through the Administrative Agent shall instead be
made by or to each Lender and the L/C Issuer directly, until such time as the Required Lenders
appoint a successor Administrative Agent as provided for above in this Section. Upon the acceptance
of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the retiring (or retired)
Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its
duties and obligations hereunder or under the other Loan Documents (if not already discharged
therefrom as provided above in this Section). The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the retiring Administrative Agent’s resignation
hereunder and under the other Loan Documents, the provisions of this Article and Section
10.04 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.



          Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also
constitute its resignation as L/C Issuer and Swing Line Lender. Upon the acceptance of a
successor’s appointment as Administrative Agent hereunder, (i) such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer and
Swing Line Lender, (ii) the retiring L/C Issuer and Swing Line Lender shall be discharged from all
of their respective duties and obligations hereunder or under the other Loan Documents, and (iii)
the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit,
if any, outstanding at the time of such succession or make other arrangements satisfactory to the
retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect
to such Letters of Credit.



          9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the L/C Issuer
acknowledges that it has, independently and without reliance upon the Administrative Agent or any
other Lender or any of their Related Parties 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 and the L/C Issuer also acknowledges that it will, independently and without reliance upon
the Administrative Agent or any other Lender or any of their Related Parties and based on such
documents and information as it shall from time to time deem appropriate, continue to make its own
decisions in taking or not taking action under or based upon this Agreement, any other Loan
Document or any related agreement or any document furnished hereunder or thereunder.



          9.08 No Other Duties, Etc. Except as expressly set forth herein, none of the Book Manager,
Arranger or other titles listed on the cover page hereof shall have any powers, duties or
responsibilities under this Agreement or any of the other Loan Documents, except in its capacity,
as applicable, as the Administrative Agent, a Lender or the L/C Issuer hereunder.



          9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or any other judicial proceeding relative to any Loan Party, the



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Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall
then be due and payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise




     (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid
in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to
file such other documents as may be necessary or advisable in order to have the claims of the
Lenders, the L/C Issuer and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer and the
Administrative Agent and their respective agents and counsel and all other amounts due the Lenders,
the L/C Issuer and the Administrative Agent under Sections 2.03(i) and (j),
2.09 and 10.04) allowed in such judicial proceeding; and




     (b) to collect and receive any monies or other property payable or deliverable on any such claims
and to distribute the same;


and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such
payments to the Administrative Agent and, in the event that the Administrative Agent shall consent
to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and
advances of the Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.09 and 10.04.




          Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the
L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or
the L/C Issuer or in any such proceeding.



          9.10 Collateral and Guaranty Matters. The Lenders and the L/C Issuer irrevocably authorize
the Administrative Agent, at its option and in its discretion,




     (a) to release any Lien on any property granted to or held by the Administrative Agent under any
Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all
Obligations (other than contingent indemnification obligations) and the expiration or termination
of all Letters of Credit, (ii) that is sold or to be sold as part of or in connection with any sale
permitted hereunder or under any other Loan Document, or (iii) if approved, authorized or ratified
in writing in accordance with Section 10.01;




     (b) to release any Subsidiary Guarantor from its obligations under the Subsidiary Guaranty if such
Person ceases to be a Subsidiary as a result of a transaction permitted hereunder; and



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     (c) to subordinate any Lien on any property granted to or held by the Administrative Agent under
any Loan Document to the holder of any Lien on such property that is permitted by Section
7.01(i).



          Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing
the Administrative Agent’s authority to release any Lien or subordinate its interest in particular
types or items of property, or to release any Subsidiary Guarantor from its obligations under the
Subsidiary Guaranty pursuant to this Section 9.10. In each case as specified in this
Section 9.10, the Administrative Agent will, at the Borrower’s expense, execute and deliver
to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence
the release of such item of Collateral from the assignment and security interest granted under the
Collateral Documents or to subordinate its interest in such item, or to release such Guarantor from
its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents
and this Section 9.10.



          9.11 Indemnification. If the IRS or any other Governmental Authority of the United States
or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax
from amounts paid to or for the account of any Lender or L/C Issuer due to a failure on the part of
such Lender or L/C Issuer (because the appropriate form was not delivered, was not properly
executed, or because such Lender or L/C Issuer failed to notify the Administrative Agent of a
change in circumstances which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason), such Lender or L/C Issuer shall indemnify and hold the
Administrative Agent harmless for all amounts paid, directly or indirectly, by the Administrative
Agent, as tax or otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Administrative Agent under this Section 9.11,
together with all costs and expenses (including attorneys fees and expenses). The obligation of the
Lenders and the L/C Issuer under this subsection shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Administrative Agent.



ARTICLE X

MISCELLANENOUS




          10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any
other Loan Document, and no consent to any departure by the Borrower or any other Loan Party
therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or
the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and
each such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such amendment, waiver or
consent shall:




     (a) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated
pursuant to Section 8.02) without the written consent of such Lender;



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     (b) postpone any date fixed by this Agreement or any other Loan Document for any payment or
mandatory prepayment of principal, interest, fees or other amounts due to the Lenders (or any of
them) or any mandatory reduction of the Aggregate Commitments hereunder without the written consent
of each Lender directly adversely affected thereby;




     (c) reduce the principal of, or the stated rate of interest specified herein on, any Loan or
Unreimbursed Amount, or (subject to clause (iv) of the second proviso to this Section
10.01) any fees or other amounts payable hereunder; provided, however, that
only the consent of the Required Lenders shall be necessary (i) to amend the definition of “Default
Rate” or to waive any obligation of the Borrower to pay interest or Letter of Credit Fees at the
Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used therein)
even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C
Borrowing or to reduce any fee payable hereunder;




     (d) change Section 2.13 or Section 8.03 in a manner that would alter the pro rata
sharing of payments required thereby without the written consent of each Lender;




     (e) change any provision of this Section 10.01 or the definition of “Required Lenders” or
any other provision hereof specifying the number or percentage of Lenders required to amend, waive
or otherwise modify any rights hereunder or make any determination or grant any consent hereunder
without the written consent of each Lender;




     (f) other than as permitted by Section 9.10, release all or substantially all of the
Collateral in any transaction or series of related transactions, without the written consent of
each Lender; or




     (g) release all or substantially all of the Subsidiary Guarantors, without the written consent of
each Lender, except to the extent the release of any Guarantor is permitted pursuant to Section
9.10 (in which case such release may be made by the Administrative Agent acting alone);


and provided, further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights
or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of
Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing
and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Line Lender under this Agreement; and (iii) no amendment, waiver or consent
shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required
above, affect the rights or duties of the Administrative Agent under this Agreement or any other
Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived,
in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein,
no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Commitment of such Lender may not be increased or extended without the
consent of such Lender.




     In addition, notwithstanding the foregoing, this Agreement may be amended (or amended and restated)
with the written consent of the Required Lenders, the Administrative Agent and the



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Borrower (x) to add one or more additional credit facilities to this Agreement and to permit the
extensions of credit from time to time outstanding thereunder and the accrued interest and fees in
respect thereof (collectively, the “Additional Extensions of Credit”) to share ratably in
the benefits of this Agreement and the other Loan Documents with the Revolving Credit Loans and the
accrued interests and fees in respect thereof and (y) to include appropriately the Lenders holding
such credit facilities in any determination of the Required Lenders; provided,
however, that (i) no such amendment shall permit the Additional Extensions of Credit to
share ratably with or with preference to the Revolving Credit Loans in the application of any
mandatory prepayments without the consent of the Required Revolving Lenders and (ii) the terms of
such amendment shall be no more favorable to the Lenders under such Additional Extensions of Credit
than the terms of this agreement are to the Lenders, including, but not limited to, with respect to
the pricing of such Additional Extension of Credit.



     If any Lender does not consent to a proposed amendment, waiver, consent or release with respect to
any Loan Document that requires the consent of each Lender and that has been approved by the
Required Lenders, the Borrower may replace each non-consenting Lender in accordance with
Section 10.13; provided, that such amendment, waiver, consent or release can be
effected as a result of all such assignments.



     Any such waiver and any such amendment or modification pursuant to this Section 10.01 shall
apply equally to each of the Lenders and shall be binding upon the Borrower, the Lenders, the L/C
Issuer, the Swing Line Lender, the Administrative Agent and all future holders of the Loans. In the
case of any waiver, the Borrower, the Lenders, the L/C Issuer, the Swing Line Lender and the
Administrative Agent shall be restored to their former positions and rights hereunder and under the
other Loan Documents, and any Default or Event of Default that is waived pursuant to this
Section 10.01 shall be deemed to be cured and not continuing during the period of such
waiver.



          10.02 Notices; Effectiveness; Electronic Communications. (a) Notices Generally.
Except in the case of notices and other communications expressly permitted to be given by telephone
(and except as provided in subsection (b) below), 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 telecopier as follows, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:




     (i) if to the Borrower, the Administrative Agent, the L/C Issuer or the Swing Line Lender, to the
address, telecopier number, electronic mail address or telephone number specified for such Person
on Schedule 10.02; and




     (ii) if to any other Lender, to the address, telecopier number, electronic mail address or
telephone number specified in its Administrative Questionnaire or on Schedule 1 to the Lender
Addendum to which such Lender is a party.


Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall
be deemed to have been given when received; notices sent by telecopier shall be deemed to have been
given when sent (except that, if not given during normal business hours for the recipient,





106









 







shall be deemed to have been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent provided in
subsection (b) below shall be effective as provided in such subsection (b).




          (b) Electronic Communications. Notices and other communications to the Lenders and the L/C
Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and
Internet or intranet websites) pursuant to procedures approved by the Administrative Agent,
provided, that the foregoing shall not apply to notices to any Lender or the L/C Issuer
pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such Article by electronic
communication. 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.



          Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to
the Lenders and the L/C Issuers to an e-mail address shall be deemed received upon the sender’s
receipt of an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written acknowledgement),
provided, that if such notice or other communication is not sent during the normal business
hours of the recipient, such notice or communication shall be deemed to have been sent at the
opening of business on the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause (i) of notification
that such notice or communication is available and identifying the website address therefor.



          (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES
(AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE
ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE
BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON- INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE
BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its
Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any
Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of
any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the
Administrative Agent’s transmission of Borrower Materials through the Internet, except to the
extent that such losses, claims, damages, liabilities or expenses have resulted from the gross
negligence or willful misconduct of such Agent Party; provided, however, that in no
event shall any Agent Party have any liability to the Borrower, any Lender, the L/C Issuer or any
other Person for indirect, special, incidental, consequential or punitive damages (as opposed to
direct or actual damages).



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          (d) Change of Address, Etc. Each of the Borrower, the Administrative Agent, the L/C Issuer
and the Swing Line Lender may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to the other parties hereto. Each other Lender may change
its address, telecopier or telephone number for notices and other communications hereunder by
notice to the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender. In
addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that
the Administrative Agent has on record (i) an effective address, contact name, telephone number,
telecopier number and electronic mail address to which notices and other communications may be sent
and (ii) accurate wire instructions for such Lender.



          (e) Reliance by Administrative Agent, L/C Issuer and Lenders. The Administrative Agent, the
L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic
Borrowing Notices and Swing Line Loan Notices) purportedly given by or on behalf of the Borrower
even if (i) such notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as
understood by the recipient, varied from any confirmation thereof. All telephonic notices to and
other telephonic communications with the Administrative Agent may be recorded by the Administrative
Agent, and each of the parties hereto hereby consents to such recording.



          10.03 No Waiver; Cumulative Remedies. No failure by any Lender, the L/C Issuer or the
Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided, and provided under each
other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.



          10.04 Expenses; Indemnity; Damage Waiver. (a) Costs and Expenses. The Borrower
shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative
Agent and its Affiliates (including the reasonable and documented fees, charges and disbursements
of counsel for the Administrative Agent), in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution, delivery, administration
and enforcement of this Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred
by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of
Credit or any demand for payment thereunder and (iii) all reasonable and documented out-of-pocket
expenses incurred by the Administrative Agent, any Lender or the L/C Issuer (including the
reasonable and documented fees, charges and disbursements of any counsel for the Administrative
Agent, any Lender or the L/C Issuer) in connection with the enforcement or protection of its rights
(A) in connection with this Agreement and the other Loan Documents, including its rights under this
Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including
all such all reasonable and documented out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.



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          (b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent
(and any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and related reasonable
out-of-pocket costs and expenses (including the reasonable fees, charges and disbursements of any
counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any
third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement
or instrument contemplated hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its
Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any
Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any
refusal by the L/C Issuer 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 Materials on or from any
property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries, 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, whether brought by a third party or by the
Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto;
provided, that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses (x) have resulted from the gross
negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the
Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s
obligations hereunder or under any other Loan Document.



          (c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to
indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it
to the Administrative Agent (or any sub-agent thereof), the L/C Issuer or any Related Party of any
of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such
sub-agent), the L/C Issuer or such Related Party, as the case may be, such Lender’s Applicable
Percentage (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 (or any such subagent) or the L/C Issuer in its capacity as such,
or against any Related Party of any of the foregoing acting for the Administrative Agent (or any
such sub-agent) or L/C Issuer in connection with such capacity. The obligations of the Lenders
under this subsection (c) are subject to the provisions of Section 2.12(d).



          (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable
law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for 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, any other
Loan Document or any agreement or instrument contemplated hereby, the



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transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the
proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages
arising from the use by unintended recipients of any information or other materials distributed by
it through telecommunications, electronic or other information transmission systems in connection
with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby,
except to the extent such damages result from the gross negligence or willful misconduct of such
Indemnitee.



          (e) Payments. All amounts due under this Section shall be payable not later than ten
Business Days after demand therefor.



          (f) Survival. The agreements in this Section shall survive the resignation of the
Administrative Agent, the L/C Issuer and the Swing Line Lender, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the
other Obligations.



          10.05 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is
made to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the
L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the Administrative
Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a)
to the extent of such recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had not been made or
such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the
Administrative Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to the Overnight Rate
from time to time in effect. The obligations of the Lenders and the L/C Issuer under clause (b) of
the preceding sentence shall survive the payment in full of the Obligations and the termination of
this Agreement.



          10.06 Successors and Assigns. (a) Successors and Assigns Generally. The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Loan Party may assign or
otherwise transfer any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of Section 10.06(b), (ii) by way of participation in accordance with the
provisions of Section 10.06(d), or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of Section 10.06(f). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the extent provided in
subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.



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          (b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans (including for purposes of this Section 10.06(b),
participations in L/C Obligations and in Swing Line Loans) at the time owing to it);
provided, that:




     (i) except in the case of an assignment of the entire remaining amount of the assigning Lender’s
Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is
not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject
to each such assignment, determined as of the date the Assignment and Assumption with respect to
such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the
Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000, unless each of
the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the
Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed);
provided, however, that concurrent assignments to members of an Assignee Group and
concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an
Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for
purposes of determining whether such minimum amount has been met;




     (ii) 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 with respect to the Loans or the
Commitment assigned, except that this clause (ii) shall not apply to rights in respect of Swing
Line Loans;




     (iii) any assignment of a Commitment must be approved by the Administrative Agent, the L/C Issuer
and the Swing Line Lender unless the Person that is the proposed assignee is itself a Lender
(whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and




     (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500;
provided, however, that the Administrative Agent may, in its sole discretion, elect
to waive such processing and recordation fee in the case of any assignment. The Eligible Assignee,
if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.


Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c)
of this Section, from and after the effective date specified in each Assignment and Assumption, the
Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest
assigned by such Assignment and Assumption, 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 and Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering





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all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease
to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01,
3.04, 3.05 and 10.04 with respect to facts and circumstances occurring
prior to the effective date of such assignment. Upon request, the Borrower (at its expense) shall
execute and deliver a Note to the assignee Lender. 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 Section 10.06(d).




          (c) Register. The Administrative Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and addresses of the
Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Borrower and the L/C Issuer, at any reasonable time and
from time to time upon reasonable prior notice.



          (d) Participations. Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agent, sell participations to any Person (other than a natural
person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations and/or Swing Line 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, the Administrative Agent, the Lenders and the L/C Issuer 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 this Agreement and to approve
any amendment, modification or waiver of any provision of this Agreement; provided, that
such agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in clauses (a), (b),
(c) and (f) of the first proviso to Section 10.01 that affects such Participant. Subject to
subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled
to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it
were a Lender and had acquired its interest by assignment; provided, that in the case of
Section 3.01, such Participant shall have complied with the requirements of such section.
To the extent permitted by law, each Participant also shall be entitled to the benefits of
Section 10.08 as though it were a Lender, provided such Participant agrees to be subject to
Section 2.13 as though it were a Lender.



          (e) Limitations upon Participant Rights. A Participant shall not be entitled to receive any
greater payment under Section 3.01 or 3.04 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such Participant, unless the
sale



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of the participation to such Participant is made with the Borrower’s prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 3.01 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 3.01(e) as though it were a Lender.



          (f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement (including under its Note, if any) to secure
obligations of such Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided, that no such pledge or assignment shall release such Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a
party hereto.



          (g) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and
words of like import in any Assignment and Assumption shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state Laws based on the Uniform
Electronic Transactions Act.



          (h) Resignation as L/C Issuer or Swing Line Lender after Assignment. Notwithstanding
anything to the contrary contained herein, if at any time Bank of America or any other L/C Issuer
assigns all of its Commitment and Revolving Credit Loans pursuant to Section 10.06(b), Bank
of America or any L/C Issuer may, (i) upon 30 days’ notice to the Borrower and the Lenders, resign
as L/C Issuer and/or (ii) upon 30 days’ notice to the Borrower, resign as Swing Line Lender. In the
event of any such resignation as L/C Issuer or Swing Line Lender, the Borrower shall be entitled to
appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder;
provided, however, that no failure by the Borrower to appoint any such successor
shall affect the resignation of such L/C Issuer or Swing Line Lender, as the case may be. If Bank
of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of
the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date
of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right
to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts
pursuant to Section 2.03(c)). If Bank of America resigns as Swing Line Lender, it shall
retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line
Loans made by it and outstanding as of the effective date of such resignation, including the right
to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing
Line Loans pursuant to Section 2.04(c). Upon the appointment of a successor L/C Issuer
and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case
may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession or make other arrangements
satisfactory to such L/C Issuer to effectively assume the obligations of such L/C Issuer with
respect to such Letters of Credit.



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          10.07 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent,
the Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) on a need-to-know basis to its
Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees,
agents, advisors and representatives (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), (b) to the extent requested by any regulatory authority purporting to
have jurisdiction over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (c) to the extent required by applicable Laws or
regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this Agreement or any
Eligible Assignee invited to be a Lender pursuant to Section 2.14(c) or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction relating to the
Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such
Information becomes publicly available other than as a result of a breach of this Section.



          For purposes of this Section, “Information” means all information received from the
Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective
businesses, other than any such information that is available to the Administrative Agent, any
Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by the Borrower or any
Subsidiary, provided, that in the case of information received from the Borrower or any
such Subsidiary after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of Information as
provided in this Section shall be considered to have complied with its obligation to do so if such
Person has exercised reasonable care to protect such Information, and in no event less than the
same degree of care to maintain the confidentiality of such Information as such Person would accord
to its own confidential information.



          Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the
Information may include material non-public information concerning the Borrower or a Subsidiary, as
the case may be, (b) it has developed compliance procedures regarding the use of material
non-public information and (c) it will handle such material non-public information in accordance
with applicable Law, including Federal and state securities laws.



          10.08 Right of Setoff. Upon any amount becoming due and payable hereunder (whether at
stated maturity, by acceleration or otherwise), each Lender, the L/C Issuer and each of their
respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final, in whatever currency) at any time held and other obligations (in
whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for
the credit or the account of the Borrower or any other Loan Party against any and all of the
obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement or
any other Loan Document to such Lender or the L/C Issuer, irrespective of



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whether or not such Lender or the L/C Issuer shall have made any demand under this Agreement or any
other Loan Document or are owed to a branch or office of such Lender or the L/C Issuer different
from the branch or office holding such deposit or obligated on such indebtedness. The rights of
each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to
other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or
their respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify the Borrower
and the Administrative Agent promptly after any such setoff and application, provided, that
the failure to give such notice shall not affect the validity of such setoff and application.



          10.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any
Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If
the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the Borrower. In determining whether the interest contracted for,
charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person
may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations hereunder.



          10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement and the other Loan Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an
executed counterpart of a signature page of this Agreement or of a Lender Addendum by telecopy
shall be effective as delivery of a manually executed counterpart of this Agreement.



          10.11 Survival of Representations and Warranties. All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or
in connection herewith or therewith shall survive the execution and delivery hereof and thereof.
Such representations and warranties have been or will be relied upon by the Administrative Agent
and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or
on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall continue in full force
and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied
or any Letter of Credit shall remain outstanding.




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          10.12 Severability. If any provision of this Agreement or the other Loan Documents is held
to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the
remaining provisions of this Agreement and the other Loan Documents shall not be affected or
impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable provisions. The
invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.




          10.13 Replacement of Lenders. If (a) any Lender requests compensation under Section
3.04, (b) 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 3.01, (c) any
Lender is at such time a Defaulting Lender or has given notice pursuant to Section 3.02 or
(d) 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 (and such Lender shall) assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in, and consents required by, Section 10.06), all of
its interests, rights and obligations under this Agreement and the related Loan Documents to an
assignee selected by the Borrower that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment), provided, that:




          (a) the Administrative Agent shall have received the assignment fee specified in Section
10.06(b);




          (b) such Lender shall have received payment of an amount equal to the outstanding principal of its
Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it
hereunder and under the other Loan Documents (including any amounts under Section 3.05)
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);




          (c) in the case of any such assignment resulting from a claim for compensation under Section
3.04 or payments required to be made pursuant to Section 3.01, such assignment will
result in a reduction in such compensation or payments thereafter;




          (d) such assignment does not conflict with applicable Laws; and




          (e) neither the Administrative Agent nor any Lender shall be obligated to be or to find the
assignee.




          A Lender shall not be required to make any such assignment or 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





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          Lender.” Any such replacement shall not be deemed a waiver of any rights that the Borrower
shall have against the replaced Lender.




          10.14 Governing Law; Jurisdiction; Etc. (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.




          (b) SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT
OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES 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 FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN
SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT
SHALL AFFECT ANY RIGHT TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.




          (c) WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS
SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.




          (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF
ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.




          10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE





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LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON 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 AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.




          10.16 Delivery of Lender Addenda. Each initial Lender shall become a party to this
Agreement by delivering to the Administrative Agent a Lender Addendum duly executed by such Lender,
the Borrower and the Administrative Agent.




          10.17 No Advisory or Fiduciary Responsibility. In connection with all aspects of each
transaction contemplated hereby (including in connection with any amendment, waiver or other
modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that: (i)
(A) the arranging and other services regarding this Agreement provided by the Administrative Agent
and the Arranger are arm’s-length commercial transactions between the Borrower and its Affiliates,
on the one hand, and the Administrative Agent and the Arranger, on the other hand, (B) the Borrower
has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed
appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms,
risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii)
(A) the Administrative Agent and the Arranger each is and has been acting solely as a principal
and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will
not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any
other Person and (B) neither the Administrative Agent nor the Arranger has any obligation to the
Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents; and (iii) the
Administrative Agent and the Arranger and their respective Affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the Borrower and its
Affiliates, and neither the Administrative Agent nor the Arranger has any obligation to disclose
any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law,
the Borrower hereby waives and releases any claims that it may have against the Administrative
Agent and the Arranger with respect to any breach or alleged breach of agency or fiduciary duty in
connection with any aspect of any transaction contemplated hereby.




          10.18 USA PATRIOT Act Notice. Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender)
hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain,
verify and record information that identifies each Loan Party, which information includes the





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name and address of each Loan Party and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify each Loan Party in accordance with the Act.




          10.19 Time of the Essence. Time is of the essence of the Loan Documents.





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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the
date first above written.




	 	 	 	 	 
	 	PATRIOT COAL CORPORATION

 	 
	 	By:  	/s/ Mark
N. Schroeder	 
	 	 	Name:  	Mark
N. Schroeder	 
	 	 	Title:  	Senior
Vice President & Chief Financial Officer	 
	 



[Patriot Coal Credit Agreement]





 









 








	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as 

Administrative Agent

 	 
	 	By:  	/s/ Todd
Mac Neill	 
	 	 	Name:  	Todd
Mac Neill	 
	 	 	Title:  	Vice
President	 
	 



[Patriot Coal Credit Agreement]




 









 








	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as a Lender, L/C 

Issuer and Swing Line Lender

 	 
	 	By:  	/s/ Adam
H. Fey	 
	 	 	Name:  	Adam
H. Fey	 
	 	 	Title:  	Vice President
	 
	 



[Patriot Coal Credit Agreement]





 









 








Schedule 6.12




Post-Closing Obligations



1. Borrower shall use commercially reasonable efforts to deliver to the Administrative Agent within
120 days after the Closing Date, estoppel and consent agreements executed by each of the lessors of
the leased real properties listed on Schedule 5.08(c), along with (1) a memorandum of lease
in recordable form with respect to such leasehold interest, executed and acknowledged by the owner
of the affected real property, as lessor, or (2) evidence that the applicable lease with respect to
such leasehold interest or a memorandum thereof has been recorded in all places necessary or
desirable, in the Administrative Agent’s reasonable judgment, to give constructive notice to
third-party purchasers of such leasehold interest, or (3) if such leasehold interest was acquired
or subleased from the holder of a recorded leasehold interest, the applicable assignment or
sublease document, executed and acknowledged by such holder, in each case in form sufficient to
give such constructive notice upon recordation and otherwise in form satisfactory to the
Administrative Agent; provided, that the Borrower shall (x) deliver the initial requested
form of consent to the lessor within 30 days after the Closing Date and (y) initiate communications
with the lessors on the status of all such consents within 60 days after the Closing Date;
provided, however, that if any consent has not been executed and returned to the
Administrative Agent in a form reasonably satisfactory to the Administrative Agent within 90 days
after the Closing Date, then the Administrative Agent shall determine in its reasonable discretion
whether the Borrower has satisfied its obligations hereunder or whether the Borrower’s obligations
hereunder shall be extended for an additional period of time to be determined by the Administrative
Agent.



2. Within 60 days after the Closing Date, the Borrower shall examine the terms of the leases for
its leased real property and shall work in good faith with the Administrative Agent to file As-
Extracted Collateral (as defined in the Security Agreement) filings in favor of the Administrative
Agent for the benefit of the Secured Parties on any leased real property where the terms of the
lease (or applicable state law, if such lease is silent on the issue) do not prohibit a filing
thereof; provided, that if any As-Extracted Collateral filing has not been made in a form
reasonably acceptable to the Administrative Agent within such 60 day period, then the
Administrative Agent shall determine in its reasonable discretion whether the Borrower has
satisfied its obligations hereunder or whether the Borrower’s obligations hereunder shall be
extended for an additional 30 day period or such other additional period or periods as determined
by the Administrative Agent.



3. Within 20 days after the Closing Date, the Borrower shall ensure that the Administrative Agent
has Control (as defined in the Security Agreement) of any Deposit Account existing on the Closing
Date.



4. The Borrower shall cooperate with the Administrative Agent in making any required filings under
the Assignment of Claims Act with respect to receivables related to the Tennessee Valley Authority.



5. Within
60 days after the Closing Date, the Borrower shall deliver to the
Administrative Agent flood certifications with respect to all Mortgaged Properties owned in fee
that have at least one improved structure located thereon and evidence of flood insurance with
respect to each Flood Hazard Property that is located in a community that participates in the
National Flood Insurance Program, in each case in compliance with any applicable regulations of the
Board of Governors, in form and substance reasonably satisfactory to the Administrative Agent.