Exhibit 4.1

 

EXECUTION VERSION

 

	
 
    


 

 

WALTER ENERGY, INC.

 

AND EACH OF THE GUARANTORS PARTY HERETO

 

11.0%/12.0% SENIOR SECURED SECOND LIEN PIK TOGGLE NOTES DUE 2020

 

 




 

INDENTURE

 

Dated as of March 27, 2014

 




 

 

Wilmington Trust, National Association

 

Trustee and Collateral Agent

 




 

	
 
    


 











 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    
	
ARTICLE 1
    
	
DEFINITIONS AND INCORPORATION
    
	
BY REFERENCE
    
	
 
    
	
Section 1.01
    	
Definitions
    	
1
    
	
Section 1.02
    	
Other Definitions
    	
32
    
	
Section 1.03
    	
Rules of Construction
    	
33
    
	
 
    	
 
    	
 
    
	
ARTICLE 2
    
	
THE NOTES
    
	
 
    
	
Section 2.01
    	
Form and Dating
    	
33
    
	
Section 2.02
    	
Execution and Authentication
    	
34
    
	
Section 2.03
    	
Registrar and Paying Agent
    	
34
    
	
Section 2.04
    	
Paying Agent to Hold Money in Trust
    	
35
    
	
Section 2.05
    	
Holder Lists
    	
35
    
	
Section 2.06
    	
Transfer and Exchange
    	
36
    
	
Section 2.07
    	
Replacement Notes
    	
46
    
	
Section 2.08
    	
Outstanding Notes
    	
46
    
	
Section 2.09
    	
Treasury Notes
    	
46
    
	
Section 2.10
    	
Temporary Notes
    	
46
    
	
Section 2.11
    	
Cancellation
    	
47
    
	
Section 2.12
    	
Defaulted Interest
    	
47
    
	
 
    	
 
    	
 
    
	
ARTICLE 3
    
	
REDEMPTION AND PREPAYMENT
    
	
 
    
	
Section 3.01
    	
Notices to Trustee
    	
47
    
	
Section 3.02
    	
Selection of Notes to Be Redeemed or Purchased
    	
48
    
	
Section 3.03
    	
Notice of Redemption
    	
48
    
	
Section 3.04
    	
Effect of Notice of Redemption
    	
49
    
	
Section 3.05
    	
Deposit of Redemption or Purchase Price
    	
49
    
	
Section 3.06
    	
Notes Redeemed or Purchased in Part
    	
49
    
	
Section 3.07
    	
Optional Redemption
    	
50
    
	
Section 3.08
    	
Mandatory Redemption
    	
50
    
	
Section 3.09
    	
Offer to Purchase by Application of Excess Proceeds
    	
51
    
	
 
    	
 
    	
 
    
	
ARTICLE 4
    
	
COVENANTS
    
	
 
    
	
Section 4.01
    	
Payment of Notes
    	
53
    
	
Section 4.02
    	
Maintenance of Office or Agency
    	
53
    
	
Section 4.03
    	
Reports
    	
53
    
	
Section 4.04
    	
Compliance Certificate
    	
54
    
	
Section 4.05
    	
Taxes
    	
55
    
	
Section 4.06
    	
Stay, Extension and Usury Laws
    	
55
    
	
Section 4.07
    	
Restricted Payments
    	
55
    


 

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Section 4.08
    	
Dividend and Other Payment Restrictions Affecting   Restricted Subsidiaries
    	
59
    
	
Section 4.09
    	
Incurrence of Indebtedness and Issuance of Preferred Equity
    	
60
    
	
Section 4.10
    	
Asset Sales
    	
65
    
	
Section 4.11
    	
Transactions with Affiliates
    	
66
    
	
Section 4.12
    	
Liens
    	
68
    
	
Section 4.13
    	
Corporate Existence
    	
68
    
	
Section 4.14
    	
Offer to Repurchase Upon Change of Control
    	
68
    
	
Section 4.15
    	
Payments for Consent
    	
70
    
	
Section 4.16
    	
Additional Note Guarantees
    	
70
    
	
Section 4.17
    	
Designation of Restricted and Unrestricted Subsidiaries
    	
70
    
	
Section 4.18
    	
Covenant Termination
    	
71
    
	
Section 4.19
    	
After-Acquired Collateral
    	
71
    
	
Section 4.20
    	
Additional Security; Further Assurances; etc.
    	
71
    
	
 
    	
 
    	
 
    
	
ARTICLE 5
    
	
SUCCESSORS
    
	
 
    
	
Section 5.01
    	
Merger, Consolidation, or Sale of Assets
    	
73
    
	
Section 5.02
    	
Successor Substituted
    	
74
    
	
 
    	
 
    	
 
    
	
ARTICLE 6
    
	
DEFAULTS AND REMEDIES
    
	
 
    
	
Section 6.01
    	
Events of Default
    	
75
    
	
Section 6.02
    	
Acceleration
    	
77
    
	
Section 6.03
    	
Other Remedies
    	
77
    
	
Section 6.04
    	
Waiver of Past Defaults
    	
78
    
	
Section 6.05
    	
Control by Majority
    	
78
    
	
Section 6.06
    	
Limitation on Suits
    	
78
    
	
Section 6.07
    	
Rights of Holders of Notes to Receive Payment
    	
78
    
	
Section 6.08
    	
Collection Suit by Trustee
    	
79
    
	
Section 6.09
    	
Trustee May File Proofs of Claim
    	
79
    
	
Section 6.10
    	
Priorities
    	
79
    
	
Section 6.11
    	
Undertaking for Costs
    	
80
    
	
 
    	
 
    	
 
    
	
ARTICLE 7
    
	
TRUSTEE
    
	
 
    
	
Section 7.01
    	
Duties of Trustee
    	
80
    
	
Section 7.02
    	
Rights of Trustee
    	
81
    
	
Section 7.03
    	
Individual Rights of Trustee
    	
82
    
	
Section 7.04
    	
Trustee’s Disclaimer
    	
83
    
	
Section 7.05
    	
Notice of Defaults
    	
83
    
	
Section 7.06
    	
Compensation and Indemnity
    	
83
    
	
Section 7.07
    	
Replacement of Trustee
    	
84
    
	
Section 7.08
    	
Successor Trustee by Merger, etc.
    	
85
    
	
Section 7.09
    	
Eligibility; Disqualification
    	
85
    


 

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ARTICLE 8
    
	
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
    
	
 
    
	
Section 8.01
    	
Option to Effect Legal Defeasance or Covenant Defeasance
    	
85
    
	
Section 8.02
    	
Legal Defeasance and Discharge
    	
85
    
	
Section 8.03
    	
Covenant Defeasance
    	
86
    
	
Section 8.04
    	
Conditions to Legal or Covenant Defeasance
    	
86
    
	
Section 8.05
    	
Deposited Money and Government Securities to be Held in   Trust; Other Miscellaneous Provisions
    	
87
    
	
Section 8.06
    	
Repayment to Issuer
    	
88
    
	
Section 8.07
    	
Reinstatement
    	
88
    
	
 
    	
 
    	
 
    
	
ARTICLE 9
    
	
AMENDMENT, SUPPLEMENT AND WAIVER
    
	
 
    
	
Section 9.01
    	
Without Consent of Holders of Notes
    	
88
    
	
Section 9.02
    	
With Consent of Holders of Notes
    	
89
    
	
Section 9.03
    	
Revocation and Effect of Consents
    	
91
    
	
Section 9.04
    	
Notation on or Exchange of Notes
    	
91
    
	
Section 9.05
    	
Trustee to Sign Amendments, etc.
    	
91
    
	
 
    	
 
    	
 
    
	
ARTICLE 10
    
	
COLLATERAL AND SECURITY
    
	
 
    
	
Section 10.01
    	
Second-Lien Notes Collateral Documents
    	
91
    
	
Section 10.02
    	
Collateral Agent
    	
92
    
	
Section 10.03
    	
Authorization of Actions to Be Taken
    	
94
    
	
Section 10.04
    	
Release of Collateral
    	
95
    
	
Section 10.05
    	
Powers Exercisable by Receiver or Trustee
    	
95
    
	
Section 10.06
    	
Release upon Termination of the Issuer’s Obligations
    	
96
    
	
Section 10.07
    	
Intercreditor Agreement Controls
    	
96
    
	
 
    	
 
    	
 
    
	
ARTICLE 11
    
	
NOTE GUARANTEES
    
	
 
    
	
Section 11.01
    	
Guarantee
    	
96
    
	
Section 11.02
    	
Limitation on Guarantor Liability
    	
97
    
	
Section 11.03
    	
Execution and Delivery of Note Guarantee
    	
97
    
	
Section 11.04
    	
Guarantors May Consolidate, etc., on Certain   Terms
    	
98
    
	
Section 11.05
    	
Releases
    	
99
    
	
 
    	
 
    	
 
    
	
ARTICLE 12
    
	
SATISFACTION AND DISCHARGE
    
	
 
    
	
Section 12.01
    	
Satisfaction and Discharge
    	
99
    
	
Section 12.02
    	
Application of Trust Money
    	
100
    
	
 
    	
 
    	
 
    
	
ARTICLE 13
    
	
MISCELLANEOUS
    
	
 
    
	
Section 13.01
    	
Notices
    	
101
    


 

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Section 13.02
    	
Certificate and Opinion as to Conditions Precedent
    	
102
    
	
Section 13.03
    	
Statements Required in Certificate or Opinion
    	
102
    
	
Section 13.04
    	
Rules by Trustee and Agents
    	
103
    
	
Section 13.05
    	
No Personal Liability of Directors, Officers, Employees,   Stockholders and Members
    	
103
    
	
Section 13.06
    	
Governing Law
    	
103
    
	
Section 13.07
    	
No Adverse Interpretation of Other Agreements
    	
103
    
	
Section 13.08
    	
Successors
    	
103
    
	
Section 13.09
    	
Severability
    	
103
    
	
Section 13.10
    	
Counterpart Originals
    	
103
    
	
Section 13.11
    	
Table of Contents, Headings, etc.
    	
104
    


 

EXHIBITS

 

	
Exhibit A
    	
FORM OF NOTE
    	
 
    
	
Exhibit B
    	
FORM OF   CERTIFICATE OF TRANSFER
    	
 
    
	
Exhibit C
    	
FORM OF   CERTIFICATE OF EXCHANGE
    	
 
    
	
Exhibit D
    	
FORM OF   CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
    	
 
    
	
Exhibit E
    	
FORM OF   SUPPLEMENTAL INDENTURE
    	
 
    


 

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INDENTURE dated as of March 27, 2014, among Walter Energy, Inc., a Delaware corporation, the Guarantors (as defined herein) and Wilmington Trust, National Association, as trustee and collateral agent.

 

The Issuer, the Guarantors, the Trustee (as defined herein) and the Collateral Agent (as defined herein) agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined herein) of the 11.0%/12.0% Senior Secured Second Lien PIK Toggle Notes due 2020 (the “Notes”):

 

ARTICLE 1
 DEFINITIONS AND INCORPORATION 
 BY REFERENCE

 

Section 1.01          Definitions.

 

“144A Global Note” means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.

 

“2020 Notes” means the Issuer’s 9.875% Senior Notes due 2020.

 

“2020 Notes Issue Date” means November 21, 2012.

 

“2021 Notes” means the Issuer’s 8.500% Senior Notes due 2021.

 

“2021 Notes Issue Date” means March 27, 2013.

 

“Acquired Debt” means, with respect to any specified Person:

 

(1)           Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and

 

(2)           Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

 

“Additional First-Lien Obligations” means any First-Lien Notes Obligations and any other Obligations with respect to Indebtedness incurred after the date of the First-Lien Notes Indenture secured by the Shared Collateral on a first-priority basis pursuant to any First-Lien Security Documents entered into for the purpose of granting a Lien in favor of Additional First-Lien Secured Parties.

 

“Additional First-Lien Secured Party” means the holder of any Additional First-Lien Obligations, including the holders of First-Lien Notes, and any Authorized First-Lien Representative with respect thereto, including the applicable trustee.

 

“Additional Notes” means additional Notes (other than the Initial Notes) issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof, as part of the same series as the Notes, issued as Initial Notes.

 











 

“Additional Second-Lien Obligations” means any Obligations with respect to Indebtedness incurred after the date of this Indenture secured by the Shared Collateral on a second-priority basis pursuant to any Second-Lien Security Documents entered into for the purpose of granting a Lien in favor of Additional Second-Lien Secured Parties.

 

“Additional Second-Lien Secured Party” means the holder of any Additional Second-Lien Obligations and any Authorized Second-Lien Representative with respect thereto, including the Trustee.

 

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.  For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

 

“Agent” means the Collateral Agent and any Registrar, co-Registrar, Paying Agent or additional paying agent.

 

“Applicable Premium” means, with respect to any Note on any redemption date, the greater of:

 

(1)           1.0% of the principal amount of the Note; or

 

(2)           the excess of:

 

(a)           the present value at such redemption date of (i) the redemption price of the Note at April 1, 2017 (such redemption price being set forth in the table appearing in Section 3.07(d) hereof), plus (ii) all required interest payments (and assuming that the rate of interest on the Notes is the Cash Interest rate) due on the Note through April 1, 2017 (excluding accrued but unpaid interest to the applicable redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over

 

(b)           the principal amount of the Note.

 

“Applicable Procedures” means, with respect to any transfer or exchange of or for book-entry interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

 

“Asset Acquisition” means:

 

(1)           an Investment by the Issuer or any Restricted Subsidiary of the Issuer in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Issuer or any Restricted Subsidiary of the Issuer, or shall be merged with or into or consolidated with the Issuer or any Restricted Subsidiary of the Issuer; or

 

(2)           the acquisition by the Issuer or any Restricted Subsidiary of the Issuer of the assets of any Person (other than a Restricted Subsidiary of the Issuer) which constitute all or substantially all of the assets of such Person or comprise any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business.

 

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“Asset Sale” means any sale, transfer or other disposition by the Issuer or any of the Restricted Subsidiaries to any person other than the Issuer or any other Restricted Subsidiary of any asset or group of related assets, including Equity Interests of any Subsidiary, in one or a series of related transactions, the gross proceeds from which exceed $50 million; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer and its Restricted Subsidiaries taken as a whole will be governed by the provisions of Sections 4.14 and/or 5.01 hereof and not by the provisions of Section 4.10 hereof.

 

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

 

(1)           any sale, transfer or other disposition of inventory, surplus, obsolete or worn-out equipment, assets determined by management of the Issuer to be no longer useful or necessary in the operation of the business of the Issuer and its Restricted Subsidiaries, Permitted Investments or any other asset, all in the ordinary course of business;

 

(2)           any sale, transfer or other disposition of any assets of a Restricted Subsidiary to the Issuer or any other Restricted Subsidiary;

 

(3)           any sale, transfer or other disposition of unrestricted cash, Cash Equivalents or Permitted Investments of the Issuer or any of the Restricted Subsidiaries;

 

(4)           a sale leaseback transaction so long as at the time the lease in connection therewith is entered into, and after giving effect to the entering into of such lease (a) no Event of Default is continuing or would result therefrom and (b) any such sale leaseback transaction shall be consummated for Fair Market Value as determined at the time of consummation in good faith as determined by the Issuer;

 

(5)           the sale or other transfer (including by capital contribution) of assets pursuant to Qualified Receivables Financings;

 

(6)           the sale of defaulted receivables in the ordinary course of business and not as part of an accounts receivables financing transaction;

 

(7)           licensing, sublicensing and cross-licensing arrangements involving any technology or other intellectual property of the Issuer or any Restricted Subsidiary in the ordinary course of business;

 

(8)           any exchange of assets related to a Permitted Business for assets of comparable market value related to a Permitted Business, as determined in good faith by the Issuer;

 

(9)           Liens permitted under Section 4.12 hereof; Restricted Payments permitted under Section 4.07 hereof and Permitted Investments permitted under this Indenture;

 

(10)         any sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

 

(11)         the surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind;

 

(12)         the sale or discounting of accounts receivable in the ordinary course of business;

 

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(13)         any sale of assets received by the Issuer or any of its Restricted Subsidiaries upon the foreclosure of a Lien; and

 

(14)         the sale or other disposition (whether or not in the ordinary course of business) of coal properties, provided at the time of such sale or other disposition such properties do not have associated with them any proved reserves.

 

“Authorized First-Lien Representative” means, at any time, (i) in the case of any Credit Agreement Obligations or the Credit Agreement Secured Parties, the administrative agent under the Credit Agreement, (ii) in the case of the First-Lien Notes Obligations or the holders of First-Lien Notes, the First-Lien Notes Collateral Agent and (iii) in the case of any other Series of Additional First-Lien Obligations or Additional First-Lien Secured Parties that become subject to the Intercreditor Agreement, the authorized representative named for such Series in the applicable joinder agreement.

 

“Authorized Representative” means any (i) Authorized First-Lien Representative or (ii) Authorized Second-Lien Representative.

 

“Authorized Second-Lien Representative” means, at any time, (i) in the case of the Second-Lien Notes Obligations or the Holders of the Notes, the Collateral Agent and (ii) in the case of any Series of Additional Second-Lien Obligations or Additional Second-Lien Secured Parties that become subject to the Intercreditor Agreement, the authorized representative named for such Series in the applicable joinder agreement.

 

“Bankruptcy Code” means Section 364 of Title II of the United States Code, as amended.

 

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

 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time.  The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

 

“Board of Directors” means:

 

(1)           with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

 

(2)           with respect to a partnership, the Board of Directors or other governing body of the general partner of the partnership;

 

(3)           with respect to a limited liability company, the Board of Directors or other governing body, and in the absence of same, the manager or board of managers or the managing member or members or any controlling committee thereof; and

 

(4)           with respect to any other Person, the board or committee of such Person serving a similar function.

 

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“Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions are authorized or required by law to close in New York State.

 

“Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet (excluding the footnotes thereto) prepared in accordance with GAAP and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

 

“Capital Stock” means:

 

(1)           in the case of a corporation, corporate stock;

 

(2)           in the case of an association or business entity that is not a corporation, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

 

(3)           in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and

 

(4)           any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

 

“Cash Equivalents” means:

 

(1)           United States dollars or any other currencies held from time to time in the ordinary course of business;

 

(2)           securities issued by the United States government or any agency or instrumentality of the United States government having maturities of not more than two years from the date of acquisition;

 

(3)           certificates of deposit, time deposits, money market deposits and eurodollar time deposits with maturities of two years or less from the date of acquisition, bankers’ acceptances with maturities of two years or less and overnight bank deposits, in each case with any lender party to the Credit Agreement or with any domestic commercial bank having capital and surplus in excess of $500 million;

 

(4)           repurchase obligations for underlying securities of the types described in clauses (2), (3) and (6) of this definition entered into with any financial institution meeting the qualifications specified in clause (3) above;

 

(5)           commercial paper rated at least P-2 by Moody’s or at least A-2 by S&P and, in each case, maturing within two years after the date of acquisition;

 

(6)           securities issued or fully guaranteed by any state or commonwealth of the United States, or by any political subdivision or taxing authority thereof, and rated at least Baa3 by Moody’s or BBB- by S&P and, in each case, maturing within two years after the date of acquisition;

 

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(7)           mutual funds whose investment guidelines restrict 90% of such funds’ investments to those satisfying the provisions of clauses (1) through (6) above;

 

(8)           money market funds that (i) comply with the criteria set forth in Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $500 million;

 

(9)           time deposit accounts, certificates of deposit and money market deposits in an aggregate face amount not in excess of 1⁄2 of 1% of the total assets of the Issuer and the Subsidiaries, on a consolidated basis, as of the end of the Issuer’s most recently completed fiscal year; and

 

(10)         Indebtedness or preferred stock issued by Persons rated at least A-2 by Moody’s or A by S&P.

 

“Change of Control” means the occurrence of any of the following:

 

(1)           the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d) of the Exchange Act);

 

(2)           the adoption of a plan relating to the liquidation or dissolution of the Issuer; or

 

(3)           the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any “person” (as that term is used in Section 13(d) of the Exchange Act) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Issuer measured by voting power rather than number of shares.

 

“Closing Date Mortgaged Property” means (i) properties located at 3500 35th Ave. North, Birmingham, Jefferson County, Alabama held by Walter Coke, Inc. (covered by one fee Mortgage), (ii) properties located in Tuscaloosa County, Alabama, held by Jim Walter Resources, Inc. (covered by one fee Mortgage and one leasehold Mortgage) and (iii) properties located in Jefferson County, Alabama, held by Jim Walter Resources, Inc. (covered by two fee Mortgages and two leasehold Mortgages).

 

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

 

“Collateral” has the meaning assigned to it in the Second-Lien Notes Collateral Documents.

 

“Collateral Agent” means Wilmington Trust, National Association, in its capacity as collateral agent under this Indenture, until a successor replaces it in accordance with Section 10.02 hereof and thereafter means the successor serving hereunder.

 

“Consolidated Cash Flow” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period (A) plus, without duplication, to the extent the same was deducted in calculating Consolidated Net Income:

 

(1)           provision for taxes based on income, profits or capital, including without limitation state, franchise and similar taxes (such as the West Virginia franchise tax), of such Person and its Restricted Subsidiaries for such period; plus

 

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(2)           the Fixed Charges of such Person and its Restricted Subsidiaries for such period; plus

 

(3)           depreciation, depletion, amortization (including amortization of intangibles, deferred financing fees and any amortization included in pension, OPEB or other employee benefit expenses, but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (including without limitation write-downs and impairment of property, plant, equipment and intangibles and other long-lived assets and the impact of purchase accounting, but excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period; plus

 

(4)           the amount of any unusual or non-recurring losses or charges, business optimization expenses and other restructuring charges (which, for the avoidance of doubt, shall include retention, severance, systems establishment cost or excess pension, OPEB, black lung settlement, curtailment or other excess charges and fees, expenses, charges or premiums related to any offering or modification of Indebtedness of such person permitted to be incurred); plus

 

(5)           the noncash portion of “straight-line” rent expense; plus

 

(6)           the income attributable to the minority equity interests of third parties in any non-Wholly Owned Subsidiary in such period or any prior period, except to the extent of dividends declared or paid on Equity Interests held by third parties; plus

 

(7)           any net loss (or minus any net gain) attributable to the early extinguishment of Indebtedness, including, without limitation, any premiums or similar charges related to any refinancing transaction or any amendment or modification of any Indebtedness; plus

 

(8)           accretion of asset retirement obligations in accordance with Accounting Standards Codifications (“ASC”) 410 Asset Retirement and Environmental Obligations, and any similar accounting in prior periods; minus

 

(9)           (1) non-cash items increasing such Consolidated Net Income for such period, other than any items which represent the reversal of any accrual of, or cash reserve for, anticipated charges in any prior period where such accrual or reserve is no longer required, (2) the losses attributable to the minority equity interests of third parties in any non-Wholly Owned Subsidiary, in each case, on a consolidated basis and determined in accordance with GAAP and (3) the cash portion of “straight line” rent expense which exceeds the amount expensed in respect of such rent expense.

 

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

 

(1)           any net after-tax extraordinary, unusual or nonrecurring gains or losses or income or expense or charges (including, without limitation, income, expenses and charges from litigation and arbitration settlements, severance, retention, relocation and other restructuring costs), less all fees and expenses relating thereto, shall be excluded;

 

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(2)           fees, expenses or charges related to any Asset Sale, any Asset Acquisition (or any similar transaction or transactions), any incurrence or repayment of Indebtedness, including any refinancing transaction or any amendment or modification of any Indebtedness, or the issuance of any Equity Interests and including any such transaction occurring on, prior to or after the Issue Date (in each case, whether or not successful) shall be excluded;

 

(3)           any net after-tax income or loss from discontinued operations and any net after-tax gain or loss on disposal of discontinued operations shall be excluded;

 

(4)           any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to business dispositions or asset dispositions other than in the ordinary course of business (as determined in good faith by the Board of Directors of the Issuer) shall be excluded;

 

(5)           any net after-tax income or loss (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of indebtedness, Hedging Obligations or other derivative instruments shall be excluded;

 

(6)           (A) the Net Income for such period of any Person that is not a Subsidiary or that is an Unrestricted Subsidiary of the Issuer, or that is accounted for by the equity method of accounting (including the JV Subsidiary), shall be included only to the extent of the amount of dividends or distributions or other payments in respect of equity that are actually paid in cash (or to the extent converted into cash) by the referent Person to the Issuer or a Restricted Subsidiary thereof in respect of such period and (B) the Net Income for such period shall include any dividend, distribution or other payments in respect of equity paid in cash by such Person to the Issuer or a Restricted Subsidiary thereof in excess of the amount included in clause (A);

 

(7)           any increase in depreciation, depletion or amortization or any one-time non-cash charges (such as purchased in-process research and development or capitalized manufacturing profit in inventory) resulting from purchase accounting in connection with any acquisition that is consummated prior to or after the Issue Date shall be excluded;

 

(8)           any non-cash impairment charges resulting from the application of ASC 350 Intangibles—Goodwill and Other and ASC 360 Property, Plant and Equipment and the amortization of intangibles pursuant to ASC 805 Business Combinations shall be excluded;

 

(9)           any long-term incentive plan accruals and any non-cash compensation expense realized from grants of stock appreciation or similar rights, stock options or other rights to officers, directors and employees of such Person or any of its Restricted Subsidiaries shall be excluded;

 

(10)         (A) any net unrealized gain or loss (after any offset) resulting in such period from obligations under any Hedging Obligations and the application of ASC 815 Derivatives and Hedging and (B) any net unrealized gain or loss (after any offset) resulting in such period from currency translation gains or losses shall be excluded;

 

(11)         solely for the purpose of determining the amount available for Restricted Payments under Section 4.07(a)(C)(i), the Net Income of any Restricted Subsidiary that is not a Subsidiary Guarantor will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or,

 

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directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders or members, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided that Consolidated Net Income of such Person shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash) by such Person to the Issuer or another Restricted Subsidiary thereof in respect of such period, to the extent not already included therein;

 

(12)         the cumulative effect of a change in accounting principles will be excluded;

 

(13)         any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (b) the disposition of any securities by such Person or any of its Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Subsidiaries shall be excluded; and

 

(14)         the Consolidated Net Income of the JV Subsidiary shall be excluded except as provided in clause (6) above.

 

“Corporate Trust Office” will be at the address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Issuer.

 

“Credit Agreement” means the Credit Agreement among the Issuer, as U.S. Borrower, Western Coal Corp and Walter Energy Canada Holdings, Inc., as Canadian Borrowers and various other parties thereto, dated as of April 1, 2011, and any amendments thereto, as in effect on the Issue Date.

 

“Credit Agreement Obligations” means, collectively, (i) all Obligations of the Issuer and the Guarantors in respect of the Credit Agreement and (ii) all amounts owing to any “Other Creditors” (as defined in the U.S. Guarantee and Collateral Agreement) pursuant to the terms of any “Secured Hedging Agreement” (as defined in the U.S. Guarantee and Collateral Agreement), including, without limitation, all amounts in respect of any principal, premium, interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the respective Secured Hedging Agreement, whether or not such interest is an allowed claim under any such proceeding or under applicable state, federal or foreign law), penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities, and guarantees of the foregoing amounts.

 

“Credit Agreement Secured Parties” means the “Secured Creditors” under the U.S. Guarantee and Collateral Agreement.

 

“Credit Facilities” means, with respect to the Issuer or any of its Restricted Subsidiaries, one or more debt facilities, including the Credit Agreement, or other financing arrangements (including, without limitation, commercial paper facilities or indentures) providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), letters of credit or other long term Indebtedness, including any notes, bonds, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings, replacements (whether upon or after termination or otherwise) or refinancing thereof and any indentures or credit facilities or commercial paper facilities or debt securities that replace, refund or refinance any part of the Indebtedness or commitments thereunder, including any such replacement, refunding or refinancing that increases the amount permitted to be

 

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borrowed thereunder or alters the maturity thereof (provided that such increase in borrowings is permitted under Section 4.09 hereof) or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, lender or group of lenders.

 

“Custodian” means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.

 

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

 

“Definitive Note” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

 

“Depositary” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture.

 

“Designated Non-cash Consideration” means the Fair Market Value of non-cash consideration received by the Issuer or any of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as “Designated Non-cash Consideration” pursuant to an Officers’ Certificate, setting forth the basis of such valuation.

 

“Designated Preferred Stock” means preferred stock of the Issuer (other than Disqualified Stock) that is issued for cash (other than to the Issuer or any of its Restricted Subsidiaries or an employee stock ownership plan or trust established by the Issuer or any of its Restricted Subsidiaries) and is so designated as Designated Preferred Stock, pursuant to an Officers’ Certificate, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in Section 4.07(a)(C)(ii) hereof.

 

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature.  Notwithstanding the preceding sentence, (x) any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Issuer or the Subsidiary that issued such Capital Stock to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock, (y) any Capital Stock that would constitute Disqualified Stock solely as a result of any redemption feature that is conditioned upon, and subject to, compliance with Section 4.07 hereof will not constitute Disqualified Stock and (z) any Capital Stock issued to any plan for the benefit of employees will not constitute Disqualified Stock solely because it may be required to be repurchased by the Issuer or the Subsidiary that issued such Capital Stock in order to satisfy applicable statutory or regulatory obligations.  The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Indenture will be the maximum amount that the Issuer and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

 

“Domestic Subsidiary” means any Subsidiary of the Issuer that was formed under the laws of the United States or any state of the United States or the District of Columbia.

 

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“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

 

“Equity Offering” means a public or private offering of Capital Stock (other than Disqualified Stock) of the Issuer (other than a registration statement on Form S-8 or otherwise relating to equity securities issuable under any employee benefit plan of the Issuer).

 

“Excess Exempted Foreign Entity Equity Interests” means (i) the Voting Equity Interests of any directly owned Exempted Foreign Entity in excess of 66% of the total combined voting power of all classes of Voting Equity Interests of such Exempted Foreign Entity and (ii) the Equity Interests of any indirectly owned Exempted Foreign Entity.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Excluded Assets” means:

 

(1)                                 any property, General Intangibles or other rights arising under leases, licenses, contracts, agreements or other documents for so long as the grant of such security interest shall constitute or result in (A) the abandonment, invalidation or unenforceability of any right, title or interest of any assignor therein, (B) a breach or termination pursuant to the terms of, or a default under, any such General Intangible, lease, license, contract, agreement or other document, (C) a breach of any law or regulation which prohibits the creation of a security interest thereunder (other than to the extent that any such term specified in clause (A), (B) or (C) above is rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the New York UCC (or any successor provision or provisions) of any relevant jurisdiction or any other then-applicable law (including the Bankruptcy Code) or principles of equity) or (D) require the consent of a Governmental Authority to permit the grant of a security interest therein (and such consent has not been obtained); provided, however, that such security interest shall attach immediately at such time as the condition causing such abandonment, invalidation, unenforceability breach or termination shall no longer be effective and to the extent severable, shall attach immediately to any portion of such General Intangible, lease, license, contract, agreement or other document that does not result in any of the consequences specified in clause (A), (B), (C) or (D) above;

 

(2)                                 Excess Exempted Foreign Entity Equity Interests;

 

(3)                                 the Equity Interests of Jim Walter Homes, LLC so long as Jim Walter Homes, LLC constitutes an Inactive Subsidiary;

 

(4)                                 all Equity Interests in Persons that are not Wholly Owned Subsidiaries of the Issuer or any of its Subsidiaries, but only to the extent such Person is, or its equity holders are, contractually prohibited from pledging such Equity Interests; provided that the Issuer or any of its Subsidiaries does not encourage the creation of any contractual prohibitions;

 

(5)                                 all Equity Interests in Persons created after the Issue Date, but only to the extent such Person is, or its equity holders are, legally (including pursuant to regulations of a Governmental Authority) prohibited from pledging such Equity Interests;

 

(6)                                 any owned Real Property the fair market value of which is less than $10,000,000, any Leasehold for which the aggregate annual rental payments are less than $1,500,000 or any Leasehold with respect to which the Issuer or the respective Guarantor has not obtained (after

 

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using commercially reasonable efforts to obtain same) the consent of the lessor to grant a mortgage in such Leasehold; and

 

(7)                                 assets secured pursuant to Liens described in clauses (4)(a), (5), (7), (11), (12), (13) and (16) of the definition of “Permitted Liens” if the contract or other agreement pursuant to which such Lien is granted prohibits the creation of any other Lien on such assets, but only for so long as such prohibition is in effect and only with respect to the portion of such assets as to which such Lien attaches and such prohibition applies;

 

provided that any property or asset that is required to be pledged to the Collateral Agent pursuant to Section 4.19 shall not constitute an Excluded Asset.

 

“Excluded Contributions” means the net cash proceeds received by the Issuer after the Issue Date from:

 

(1)                                 contributions to its common equity capital, and

 

(2)                                 the sale (other than to a Subsidiary of the Issuer) of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Issuer,

 

in each case designated as “Excluded Contributions” pursuant to an Officers’ Certificate executed by an Officer of the Issuer, the net cash proceeds of which are excluded from the calculation set forth in Section 4.07(a)(C)(ii) hereof.

 

“Exempted Foreign Entity” means any entity organized under the laws of a jurisdiction other than the United States or any State or territory thereof that is treated as a corporation or an association taxable as a corporation for U.S. Federal income tax purposes.

 

“Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by (i) the principal financial officer of the Issuer for transactions less than $50.0 million and (ii) the Board of Directors of the Issuer (unless otherwise provided in this Indenture) for transactions valued at, or in excess of, $50.0 million.

 

“First-Lien Note Guarantee” means the Guarantee by each guarantor of the Issuer’s obligations under the First-Lien Notes Indenture and the First-Lien Notes.

 

“First-Lien Notes” means the Issuer’s 9.500% Senior Secured Notes due 2019.

 

“First-Lien Notes Collateral Agent” means Union Bank, N.A. until a successor replaces it in accordance with the First-Lien Notes Indenture and thereafter means the successor serving thereunder.

 

“First-Lien Notes Collateral Documents” means the Intercreditor Agreement and the security agreements, collateral agreements, pledge agreements, Mortgages (as defined in the First-Lien Notes Indenture), collateral assignments, control agreements and related agreements (including, without limitation, financing statements under the UCC of the relevant states), each as amended, supplemented, restated, renewed, replaced or otherwise modified from time to time, that secure any Obligations under the First-Lien Notes Indenture, the First-Lien Notes, the First-Lien Note Guarantees and the First-Lien Notes Collateral Documents or under which rights or remedies with respect to any such Lien are governed.

 

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“First-Lien Notes Indenture” means the Indenture, dated as of September 27, 2013, among the Issuer, the guarantors party thereto and Union Bank, N.A., as trustee and collateral agent (and any successor trustee and collateral agent), governing the First-Lien Notes.

 

“First-Lien Notes Initial Issue Date” means September 27, 2013.

 

“First-Lien Notes Obligations” means Obligations in respect of the First-Lien Notes, the First-Lien Note Guarantees, the First-Lien Notes Indenture or the First-Lien Notes Collateral Documents.

 

“First-Lien Obligations” means, collectively, (i) the Credit Agreement Obligations and (ii) each Series of Additional First-Lien Obligations (including the First-Lien Notes Obligations).

 

“First-Lien Secured Parties” means (i) the Credit Agreement Secured Parties and (ii) the Additional First-Lien Secured Parties with respect to each Series of Additional First-Lien Obligations and any Authorized First-Lien Representative thereof.

 

“First-Lien Security Documents” means the First-Lien Notes Collateral Documents, the Security Documents (as defined in the Credit Agreement) and each other agreement entered into in favor of the applicable Authorized First-Lien Representative for the purpose of securing any Series of Additional First-Lien Obligations.

 

“Fixed Charge Coverage Ratio” means with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period.  In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than (i) ordinary working capital borrowings and (ii) in the case of revolving credit borrowings or revolving advances under any Qualified Receivables Financing, in which case interest expense will be computed based upon the average daily balance of such Indebtedness during the applicable period) or issues, repurchases or redeems preferred equity or Disqualified Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred equity or Disqualified Stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period.

 

In addition, for purposes of calculating the Fixed Charge Coverage Ratio, Asset Acquisitions, dispositions, mergers, consolidations and discontinued operations (as determined in accordance with GAAP), and any related financing transactions, that the specified Person or any of its Restricted Subsidiaries has made after the Issue Date and during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Calculation Date shall be calculated on a pro forma basis assuming that all such Asset Acquisitions, dispositions, mergers, consolidations and discontinued operations (and the change of any associated Fixed Charges and the change in Consolidated Cash Flow resulting therefrom) had occurred on the first day of the four-quarter reference period, including any pro forma expense and cost reductions and other operating improvements that have occurred or are reasonably expected to occur, in the reasonable judgment of the chief financial officer of the Issuer (regardless of whether these cost savings or operating improvements could then be reflected in pro forma financial statements in accordance with Regulation S-X promulgated under the Securities Act or any other regulation or policy of the SEC related thereto).  Any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-

 

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quarter period, and if, since the beginning of the four-quarter reference period, any Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any of its other Restricted Subsidiaries since the beginning of such period shall have made any acquisition, Investment, disposition, merger, consolidation or discontinued operation, in each case with respect to an operating unit of a business, that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be adjusted giving pro forma effect thereto for such period as if such Asset Acquisition, disposition, discontinued operation, merger or consolidation had occurred at the beginning of the applicable four-quarter reference period.  Any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period.

 

For purposes of this definition, whenever pro forma effect is to be given to any transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Issuer.  If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness if such Hedging Obligation has a remaining term in excess of 12 months).  Interest on a Capital Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Issuer to be the rate of interest implicit in such Capital Lease Obligation in accordance with GAAP.  Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Issuer may designate.  Any such pro forma calculation may include adjustments appropriate, in the reasonable determination of the Issuer as set forth in an Officers’ Certificate, to reflect operating expense reductions reasonably expected to result from any acquisition or merger.

 

“Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

 

(1)                                 the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, excluding amortization of debt issuance costs, deferred financing fees, the expensing of any bridge or other financing fees, any non-cash interest payments attributable to the movement in the mark-to-market valuation of Hedging Obligations or other derivative instruments pursuant to GAAP and any non-cash interest expense imputed on any convertible debt securities in accordance with FASB APB 14-1, but including original issue discount, non-cash interest payments, the interest component of any deferred payment obligations (classified as Indebtedness under this Indenture), the interest component of all payments associated with Capital Lease Obligations and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus

 

(2)                                 the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

 

(3)                                 all cash dividend payments or other cash distributions on any series of preferred equity of such Person and all other dividend payments or other distributions on the Disqualified Stock of such Person.

 

“Foreign Subsidiary” means any Subsidiary that is incorporated or organized under the laws of any jurisdiction other than the United States of America, any State thereof or the District of Columbia.

 

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“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the 2020 Notes Issue Date.

 

“General Intangibles” means “general intangibles” as such term is defined in the Uniform Commercial Code as in effect on the Issue Date in the State of New York.

 

“Global Note Legend” means the legend set forth in Section 2.06(f)(2) hereof, which is required to be placed on all Global Notes issued under this Indenture.

 

“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes deposited with or on behalf of and registered in the name of the Depository or its nominee, substantially in the form of Exhibit A hereto and that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, issued in accordance with Section 2.01, 2.06(b)(3), 2.06(b)(4) or 2.06(d) hereof.

 

“Government Securities” means direct obligations of, or obligations guaranteed by, the United States of America (including any agency or instrumentality thereof) and the payment for which the United States pledges its full faith and credit.

 

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

 

“Guarantee” means a guarantee, other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner, including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise).

 

“Guarantors” means each of:

 

(1)                                 the Restricted Subsidiaries of the Issuer that execute this Indenture on the Issue Date; and

 

(2)                                 any other Restricted Subsidiary of the Issuer that executes a supplemental indenture in accordance with the provisions of this Indenture,

 

and their respective successors and assigns, in each case, until the Note Guarantee of such Person has been released in accordance with the provisions of this Indenture.

 

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:

 

(1)                                 interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements or other similar agreements or arrangements;

 

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(2)                                 any commodity forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement;

 

(3)                                 any foreign exchange contract, currency swap agreement, futures contract, option agreement or other similar agreement or arrangement; or

 

(4)                                 other agreements or arrangements designed to protect such Person against fluctuations in interest rates, commodity prices or currency exchange rates.

 

“Holder” means a Person in whose name a Note is registered.

 

“Inactive Subsidiary” shall mean, as of any date of determination, a Subsidiary (other than the Issuer, the Guarantors or any other issuer or guarantor under the Credit Agreement) (a) whose consolidated total assets do not exceed $2,500,000, (b) which does not engage in any trade or business and (c) does not own Equity Interests in any Person other than one or more other Inactive Subsidiaries.  At any time when a Subsidiary which was an Inactive Subsidiary ceases to meet the tests contained above, such Subsidiary shall no longer constitute an Inactive Subsidiary.

 

“IAI Global Note” means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes transferred to Institutional Accredited Investors in compliance with the Securities Act.

 

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent:

 

(1)                                 in respect of borrowed money;

 

(2)                                 evidenced by bonds, notes, debentures or similar instruments evidencing obligations for borrowed money or letters of credit;

 

(3)                                 representing Capital Lease Obligations;

 

(4)                                 representing the balance deferred and unpaid of the purchase price of any property or services due more than one year after such property is acquired or such services are completed (except trade accounts payable and accrued expenses arising in the ordinary course of business);

 

(5)                                 representing the net obligations under any Hedging Obligations in the event of an early termination; or

 

(6)                                 to the extent not otherwise included, with respect to the Issuer and its Restricted Subsidiaries, the amount then outstanding (i.e., advanced, and received by, and available for use by, the Issuer or any of its Restricted Subsidiaries) under any Receivables Financing (as set forth in the books and records of the Issuer or any Restricted Subsidiary and confirmed by the agent, trustee or other representative of the institution or group providing such Receivables Financing),

 

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP.  In addition, the term “Indebtedness” includes (i) all Indebtedness of others secured by a Lien on

 

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any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person); provided, however, that the amount of such Indebtedness shall be the lesser of (x) the Fair Market Value of such asset at such date of determination and (y) the amount of such Indebtedness of such other Person; and (ii) to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. “Indebtedness” shall not include (a) with respect to any equity-linked security, the equity credit reflected on the most recent balance sheet of the Issuer, (b) obligations not incurred in connection with borrowed money, except to the extent expressly provided above, and without limitation shall not include (i) bid bonds, performance bonds, completion bonds, surety bonds, appeal bonds and other similar bonds, guarantees or obligations, (ii) purchase price adjustments, earn outs or similar obligations incurred in connection with the disposition of any assets, (iii) reimbursement obligations, (iv) indemnification obligations, (v) letters of credit, bank guarantees or similar instruments to secure any of the foregoing, to the extent such letters of credit, bank guarantees or similar instruments have not been drawn upon or, if drawn upon, not reimbursed thereafter within sixty (60) days or (vi) obligations resulting from cash management services and (c) any liabilities of the Issuer or any Restricted Subsidiary to the Issuer or any Restricted Subsidiary.

 

“Indenture” means this Indenture, as amended or supplemented from time to time.

 

“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

 

“Initial Notes” means the first $350,000,000 aggregate principal amount of Notes issued under this Indenture on the date hereof.

 

“Initial Purchasers” means Morgan Stanley & Co. LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Goldman, Sachs & Co., J.P. Morgan Securities LLC, Scotia Capital (USA) Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, BBVA Securities Inc., BMO Capital Markets Corp., Comerica Securities, Inc., Fifth Third Securities, Inc., ING Financial Markets LLC, Mizuho Securities USA, Inc., Regions Securities LLC and TD Securities (USA) LLC.

 

“Institutional Accredited Investor” means an institution that is an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who is not also a QIB.

 

“Intercreditor Agreement” means the Intercreditor Agreement among the Issuer, Morgan Stanley Senior Funding, Inc., as Credit Agreement collateral agent and Authorized First-Lien Representative for the Credit Agreement Secured Parties, Wilmington Trust, National Association, as second-lien notes collateral agent and second-lien notes authorized representative for the second-lien notes secured parties, and various other parties thereto, to be dated as of the Issue Date, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Interest Period” means the period commencing on and including an Interest Payment Date and ending on and including the day immediately preceding the next succeeding Interest Payment Date, with the exception that the first Interest Period shall commence on and include the Issue Date and end on and include September 30, 2014 (the Interest Payment Date for any Interest Period shall be the Interest Payment Date occurring on the day immediately following the last day of such Interest Period).

 

“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding accounts receivable, trade credit and advances to customers and commission, travel and similar advances to officers, employees and consultants made in the ordinary

 

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course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.  If the Issuer or any Restricted Subsidiary of the Issuer sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary of the Issuer such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Issuer, the Issuer will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Issuer’s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in Section 4.07(c) hereof.  The outstanding amount of any Investment shall be the original cost thereof, reduced by all returns on such Investment (including dividends, interest, distributions and returns of principal).

 

“Issue Date” means March 27, 2014.

 

“Issuer” means Walter Energy, Inc. and all successors thereto.

 

“JV Subsidiary” means Belcourt Saxon Coal, L.P., a British Columbia Limited Partnership.

 

“Leaseholds” of any Person shall mean all the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures.

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the UCC (or equivalent statutes) of any jurisdiction, except in connection with any Qualified Receivables Financing.

 

“Mandatory Principal Redemption Amount” means, as of each AHYDO Redemption Date, the portion of a Note required to be redeemed to prevent such Note from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code.

 

“Mineral Rights Mortgage” shall mean, individually or collectively as the context may indicate, those mortgages, leasehold mortgages, deeds of trust, leasehold deeds of trust, deeds to secure debt, leasehold deeds to secure debt, debentures and comparable real estate Lien documents delivered on or after the Issue Date to the Collateral Agent with respect to any Mortgaged Coal Property.

 

“Moody’s” means Moody’s Investors Service, Inc. and its successors and assigns.

 

“Mortgage Policy” shall mean a lender’s title insurance policy (Form 2006) or its equivalent.

 

“Mortgaged Coal Property” shall mean, collectively, the leasehold or other rights of the Issuer or any of its Subsidiaries or any other Person, as applicable, to mine or otherwise extract coal on certain Real Property as may be granted to the Collateral Agent on the Issue Date or from time to time thereafter in accordance with the terms of this Indenture pursuant to a Mineral Rights Mortgage, it being understood that some parcels of Real Property may constitute both Mortgaged Coal Property and Mortgaged Property.

 

“Mortgaged Coal Property Support Documents” shall mean, for each Mortgaged Coal Property, (i) the title searches pertaining thereto, if delivered to the administrative agent under the Credit Agreement, (ii) such lessor’s estoppel, waiver and consent certificates if delivered to, and as the administrative agent under the Credit Agreement may reasonably require and the Issuer can deliver using

 

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its reasonable best efforts (which shall not require the expenditure of cash or the making of any material concessions under the relevant lease unless the administrative agent under the Credit Agreement reasonably determines that such Mortgaged Coal Property constitutes a material part of the overall Collateral consisting of coal for the Obligations and the obtaining of such waiver and/or consent is necessary for the effective grant of a second-priority, perfected mortgage on such Mortgaged Coal Property) and subordination, nondisturbance and attornment agreements as the administrative agent under the Credit Agreement may reasonably require and the Issuer can deliver using its reasonable best efforts (which shall not require the expenditure of cash or the making of any material concessions under the relevant lease), (iii) such opinions of local counsel with respect to the Mineral Rights Mortgages, as applicable, as the Collateral Agent may reasonably require, and (iv) such other documentation as delivered to the administrative agent under the Credit Agreement, in each case as shall be in form reasonably acceptable to the Collateral Agent.

 

“Mortgaged Property” shall mean any Real Property owned or leased by the Issuer or any of its Subsidiaries which is encumbered (or required to be encumbered) by a Mortgage pursuant to the terms of this Indenture, it being understood that Mortgaged Property shall include Mortgaged Coal Property and Closing Date Mortgaged Property.

 

“Mortgages” means each mortgage, leasehold mortgage, deed of trust, leasehold deed of trust, deed to secure debt, leasehold deed to secure debt, debenture or similar document under which any Lien on real property owned or leased by the Issuer or any Guarantor is granted to secure any Obligations under this Indenture, the Notes, the Note Guarantees and the Second-Lien Notes Collateral Documents, or under which rights or remedies with respect to any such Liens are governed; provided that a Mineral Rights Mortgage shall constitute a Mortgage for purposes of this definition.

 

“Net Income” means, with respect to any Person for any period, the net income (loss) attributable to such Person for such period, determined in accordance with GAAP and before any reduction in respect of dividends on preferred interests.

 

“Net Proceeds” means the aggregate cash proceeds received by the Issuer or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any Designated Non-cash Consideration received in any Asset Sale and any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding the assumption by the acquiring Person of Indebtedness relating to the disposed assets or other consideration received in any non-cash form), net of the direct costs relating to such Asset Sale and the sale of such Designated Non-cash Consideration, including, without limitation, title and recording tax expenses, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale or taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements.

 

“Non-Recourse Debt” means Indebtedness:

 

(1)                                 as to which neither the Issuer nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) other than a pledge of the Equity Interests of any Unrestricted Subsidiaries, (b) is directly or indirectly liable (as a guarantor or otherwise) other than by virtue of a pledge of the Equity Interests of any Unrestricted Subsidiaries, or (c) constitutes the lender; and

 

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(2)                                 no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit, upon notice, lapse of time or both, any holder of any other Indebtedness (other than the Notes) of the Issuer or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of such other Indebtedness to be accelerated or payable prior to its Stated Maturity.

 

“Non-U.S. Person” means a Person who is not a U.S. Person.

 

“Note Guarantee” means the Guarantee by each Guarantor of the Issuer’s obligations under this Indenture and the Notes.

 

“Notes” has the meaning assigned to it in the preamble to this Indenture.  Any Initial Notes, any Additional Notes and PIK Notes (and any increases in Global Notes reflecting a PIK Payment) shall be treated as a single class for all purposes under this Indenture. Unless the context otherwise requires, all references to the Notes shall include the Initial Notes, any Additional Notes and any PIK Notes (and any increases in Global Notes reflecting a PIK Payment), and all references to “principal amount” of the Notes shall include any increase in the principal amount of the Notes (including PIK Notes) as a result of a PIK Payment.

 

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

 

“Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice-President of such Person.

 

“Officers’ Certificate” means a certificate signed on behalf of the Issuer by two Officers of the Issuer (or on behalf of a Guarantor by two Officers of such Guarantor, as the case may be).

 

“Opinion of Counsel” means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Issuer or a Guarantor, satisfactory to the Trustee.

 

“Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream).

 

“Permitted Business” means any business or business activity conducted by the Issuer or its Subsidiaries on the Issue Date and any business or business activities incidental or related thereto, or any business or activity that is reasonably similar thereto (including extraction, processing and marketing of any types of fuels or minerals or coal brokering, coal transportation and handling, power marketing, electricity generation, power/energy sales and trading), or a reasonable extension, development or expansion thereof or ancillary or complementary thereto.

 

“Permitted Encumbrance” shall mean, with respect to any Mortgaged Property, (i) such exceptions to title as are set forth in the Mortgage Policy delivered with respect thereto, all of which exceptions with respect to Mortgaged Properties located in the United States must be acceptable to the Collateral Agent in its reasonable discretion and (ii) Liens permitted by clauses (20), (24) and (27) of the definition of “Permitted Liens.”

 

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“Permitted Investments” means:

 

(1)                                 any Investment in the Issuer or in any Restricted Subsidiary of the Issuer;

 

(2)                                 any Investment in cash or Cash Equivalents;

 

(3)                                 any Investment by the Issuer or any Restricted Subsidiary of the Issuer in a Person, if as a result of such Investment:

 

(a)                                 such Person becomes a Restricted Subsidiary of the Issuer; or

 

(b)                                 such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Issuer or a Restricted Subsidiary of the Issuer;

 

(4)                                 any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof;

 

(5)                                 any acquisition of assets or Capital Stock solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Issuer;

 

(6)                                 any Investments received (a) in compromise, settlement or resolution of (i) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Issuer or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (ii) litigation, arbitration or other disputes; or (b) as a result of a foreclosure by the Issuer or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

 

(7)                                 Investments represented by Hedging Obligations entered into not for speculative purposes;

 

(8)                                 loans or advances to officers, directors and employees made in the ordinary course of business of the Issuer or any Restricted Subsidiary of the Issuer;

 

(9)                                 repurchases of the Notes;

 

(10)                          Investments in Permitted Businesses having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (10) that are at that time outstanding, not to exceed the greater of (x) $375 million and (y) 7.5% of Total Tangible Assets at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value); provided, however, that if any Investment pursuant to this clause (10) is made in a Person that is not a Restricted Subsidiary of the Issuer at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of the Issuer after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (10) for so long as such Person continues to be a Restricted Subsidiary;

 

(11)                          any Investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Financing, including Investments of funds held in accounts permitted or required by the arrangements governing such

 

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Qualified Receivables Financing or any related Indebtedness; provided, however, that any Investment in a Receivables Subsidiary is in the form of a Purchase Money Note, contribution of additional receivables or an equity interest;

 

(12)                          Investments in joint ventures or Unrestricted Subsidiaries, or entities that become joint ventures or Unrestricted Subsidiaries as a result of such Investments, having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (12) that are at that time outstanding, not to exceed the greater of (x) $500 million and (y) 10% of Total Tangible Assets at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value); provided, however, that if any Investment pursuant to this clause (12) is made in a Person that is not a Restricted Subsidiary of the Issuer at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of the Issuer after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (12) for so long as such Person continues to be a Restricted Subsidiary;

 

(13)                          any transaction to the extent it constitutes an Investment that is permitted by and made in accordance with Section 4.11(b) hereof (except for transactions described in Sections 4.11(b)(7), (9) and (12) hereof);

 

(14)                          Guarantees of Indebtedness of the Issuer or any of its Restricted Subsidiaries issued in accordance with Sections 4.09 and 4.16 hereof;

 

(15)                          any Investment existing on, or made pursuant to a binding commitment existing on, the 2020 Notes Issue Date and any Investment that extends, modifies, renews, replaces, refinances or refunds an existing Investment; provided that the new Investment is in an amount that does not exceed the amount extended, modified, renewed, replaced, refinanced or refunded, and is made in the same Person as the Investment so extended, modified, renewed, replaced, refinanced or refunded;

 

(16)                          Investments consisting of purchases and acquisitions of inventory, supplies, materials and equipment or purchases of contract rights or licenses or leases of intellectual property, in each case in the ordinary course of business;

 

(17)                          additional Investments by the Issuer or any Restricted Subsidiary, taken together with all other Investments made pursuant to this clause (17) that are at the time outstanding (measured at the time made and without giving effect to subsequent changes in value), not to exceed the greater of (x) $500 million and (y) 10% of Total Tangible Assets as of the end of the Issuer’s most recently ended fiscal quarter for which financial statements are available; provided, however, that if any Investment pursuant to this clause (17) is made in a Person that is not a Restricted Subsidiary of the Issuer at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of the Issuer after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (17) for so long as such Person continues to be a Restricted Subsidiary;

 

(18)                          Investments of any Restricted Subsidiary acquired after the Issue Date or of a corporation merged into or consolidated with the Issuer or any Restricted Subsidiary in accordance with Section 5.01 hereof, to the extent such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;

 

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(19)                          accounts receivable, advances and prepayments and other trade credits made in the ordinary course of business;

 

(20)                          Investments resulting from pledges and deposits made in the ordinary course of business; and

 

(21)                          Investments in the Equity Interests of the Issuer in connection with the purchase or redemption of Equity Interests held by then present or former directors, consultants, officers or employees of the Issuer or any of the Subsidiaries or by any employee pension benefit plan;

 

provided, however, that with respect to any Investment, the Issuer may, in its sole discretion, allocate all or any portion of any Investment to one or more of the above clauses (1) through (21) so that the entire Investment would be a Permitted Investment.

 

“Permitted Liens” means:

 

(1)                                 Liens securing Indebtedness and other Obligations under Credit Facilities incurred pursuant to Section 4.09(b)(1) hereof and/or securing Hedging Obligations related thereto; provided that, if such Liens are on the Collateral securing the Notes or any Note Guarantee, the Authorized Representative of any such Indebtedness or Obligations has become a party to the Intercreditor Agreement; provided further that, the aggregate principal amount of Indebtedness under Credit Facilities constituting First-Lien Obligations secured by Liens on the Collateral shall not exceed $1.58 billion;

 

(2)                                 Liens securing (i) the Initial Notes, (ii) any PIK Notes issued from time to time to pay PIK Interest in accordance with the terms of this Indenture and (iii) the Obligations (other than arising under any Additional Notes) of the Issuer and the Guarantors arising under this Indenture and the Second-Lien Notes Collateral Documents;

 

(3)                                 Liens in favor of the Issuer or any of its Restricted Subsidiaries;

 

(4)                                 (i) Liens on property or assets of a Person existing at the time such Person is merged with or into, or consolidated with or acquired by the Issuer or any Subsidiary of the Issuer and (ii) Liens securing Indebtedness permitted under Section 4.09(b)(11) hereof, plus renewals and extensions of such Liens; provided that such Liens were not incurred in contemplation of such merger or consolidation and do not apply to any assets of the Issuer or its Restricted Subsidiaries other than (a) assets securing such Indebtedness at the date of the acquisition of such assets, (b) assets whose acquisition is financed or refinanced by such Indebtedness or (c) after-acquired assets subjected to such Liens;

 

(5)                                 Liens on property or assets (including Capital Stock) existing at the time of acquisition of such property or assets by the Issuer or any Restricted Subsidiary of the Issuer; provided that such Liens were in existence prior to such acquisition and not incurred in contemplation of, such acquisition;

 

(6)                                 Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other assets relating to such letters of credit and products and proceeds thereof;

 

(7)                                 Liens to secure Indebtedness (including Capital Lease Obligations) permitted to be incurred pursuant to Section 4.09(b)(4) hereof covering only the assets acquired, constructed

 

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or improved with or financed by such Indebtedness, and additions, accessions, improvements and replacements and customary deposits in connection therewith; provided that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender;

 

(8)                                 Liens existing on the First-Lien Notes Initial Issue Date (other than Liens securing Indebtedness and other Obligations under Credit Facilities incurred pursuant to Section 4.09(b)(1) hereof and/or securing Hedging Obligations related thereto), plus renewals and extensions of such Liens;

 

(9)                                 Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under this Indenture; provided, however, that:

 

(a)                                 the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Indebtedness (plus improvements and accessions to, such property or proceeds or distributions thereof); and

 

(b)                                 the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount, or, if greater, committed amount, of the Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;

 

(10)                          Liens securing Indebtedness in an aggregate principal amount outstanding not to exceed, at the time of the incurrence of such Indebtedness or if later, at the time of the incurrence of the Lien, the greater of (x) $75 million and (y) 1% of Total Tangible Assets as of the end of the Issuer’s most recently ended fiscal quarter for which financial statements are available;

 

(11)                          Liens on Capital Stock of an Unrestricted Subsidiary that secure Indebtedness or other obligations of such Unrestricted Subsidiary;

 

(12)                          Liens on accounts receivable and related assets of the type specified in the definition of “Receivables Financing” incurred in connection with a Qualified Receivables Financing;

 

(13)                          Liens to secure a defeasance or satisfaction and discharge trust;

 

(14)                          Liens securing Indebtedness supported by a letter of credit issued under a Credit Facility;

 

(15)                          Liens securing insurance premium financing arrangements otherwise permitted to be incurred under this Indenture;

 

(16)                          Liens securing Capital Lease Obligations incurred by the Issuer or any Restricted Subsidiary in respect of any sale leaseback transaction otherwise permitted under this Indenture;

 

(17)                          Liens on the assets of any Foreign Subsidiary securing Indebtedness of Foreign Subsidiaries;

 

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(18)                          Liens securing Guarantees incurred under Section 4.09(b)(10) hereof to the extent the Indebtedness subject to such Guarantee is secured; provided that, if such Liens are on the Collateral securing the Notes or any Note Guarantee, the Authorized Representative of any such Indebtedness has become a party to the Intercreditor Agreement;

 

(19)                          Liens securing the aggregate amount of Indebtedness (including Acquired Debt) incurred in connection with (or at any time following the consummation of) an Asset Acquisition made in accordance with this Indenture equal to, at the time of incurrence, the net increase in inventory, accounts receivable and net property, reserves, plant and equipment attributable to such Asset Acquisition from the amounts reflected on the Issuer’s historical consolidated balance sheet as of the end of the full fiscal quarter ending on or prior to the date of such Asset Acquisition, calculated after giving effect on a pro forma basis to such Asset Acquisition (which amount may, but need not, be incurred in whole or in part under the Credit Agreement) less the amount of Indebtedness incurred in connection with such Asset Acquisition secured by Liens pursuant to clauses (5) or (7) above;

 

(20)                          Liens for taxes, assessments or governmental charges or levies on the property of the Issuer or any Restricted Subsidiary if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision that shall be required in conformity with GAAP shall have been made therefor;

 

(21)                          Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens and other similar Liens, on the property of the Issuer or any Restricted Subsidiary arising in the ordinary course of business and securing payment of obligations that are not more than 60 days past due or are being contested in good faith and by appropriate proceedings;

 

(22)                          Liens on the property of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business to secure performance of obligations with respect to statutory or regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature and incurred in a manner consistent with industry practice, in each case which are not incurred in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property and which do not in the aggregate impair in any material respect the use of property in the operation of the business of the Issuer and the Restricted Subsidiaries taken as a whole;

 

(23)                          pledges or deposits by the Issuer or any Restricted Subsidiary under workers’ compensation laws, unemployment-insurance laws, old-age pensions or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which the Issuer or any Restricted Subsidiary is party, or deposits to secure public or statutory obligations of the Issuer, or deposits for the payment of rent, in each case incurred in the ordinary course of business;

 

(24)                          utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character;

 

(25)                          judgment Liens not giving rise to an Event of Default, that are being contested in good faith by appropriate legal proceedings and for which adequate reserves have been made;

 

(26)                          rights of banks to set off deposits against debts owed to said bank;

 

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(27)                          contract mining agreements and leases or subleases granted to others that do not materially interfere with the ordinary conduct of business of the Issuer or any of its Restricted Subsidiaries; and

 

(28)                          Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods.

 

“Permitted Refinancing Indebtedness” means any Indebtedness of the Issuer or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, renew, refund, refinance, replace, defease or discharge other Indebtedness (or previous refinancing thereof constituting Permitted Refinancing Indebtedness) of the Issuer or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:

 

(1)                                 the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, renewed, refunded, refinanced, replaced, defeased or discharged (plus any unpaid accrued interest and premium required to be paid on the Indebtedness being so extended, renewed, refunded, replaced, defeased or discharged, plus the amount of all fees and expenses incurred in connection therewith);

 

(2)                                 such Permitted Refinancing Indebtedness has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the remaining Weighted Average Life to Maturity of, the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged; provided that this clause (2) shall not apply to debt under a Credit Facility;

 

(3)                                 if the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged; and

 

(4)                                 Permitted Refinancing Indebtedness shall not include Indebtedness of the Issuer or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary.

 

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

 

“Private Placement Legend” means the legend set forth in Section 2.06(f)(1) hereof to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.

 

“Purchase Money Note” means a promissory note of a Receivables Subsidiary evidencing a line of credit, which may be irrevocable, from the Issuer or any Subsidiary of the Issuer to a Receivables Subsidiary in connection with a Qualified Receivables Financing, which note is intended to finance that portion of the purchase price that is not paid by cash or a contribution of equity.

 

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

 

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“Qualified Receivables Financing” means any Receivables Financing of a Receivables Subsidiary that meets the following conditions:

 

(1)                                 the Board of Directors of the Issuer will have determined in good faith that such Qualified Receivables Financing (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Issuer and the Receivables Subsidiary,

 

(2)                                 all sales of accounts receivable and related assets to the Receivables Subsidiary are made at Fair Market Value (as determined in good faith by the Issuer), and

 

(3)                                 the financing terms, covenants, termination events and other provisions thereof will be market terms (as determined in good faith by the Issuer) and may include Standard Securitization Undertakings.

 

The grant of a security interest in any accounts receivable of the Issuer or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) to secure First-Lien Obligations or Second-Lien Obligations will not be deemed a Qualified Receivables Financing.

 

“Ratings Event” means the Notes are assigned a credit rating of at least BBB- (stable) from S&P and of at least Baa3 (stable) from Moody’s.

 

“Real Property” of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures, including Leaseholds.

 

“Receivables Financing” means any transaction or series of transactions that may be entered into by the Issuer or any of its Subsidiaries pursuant to which the Issuer or any of its Subsidiaries may sell, convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a transfer by the Issuer or any of its Subsidiaries), and (b) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Issuer or any of its Subsidiaries, or any interest therein, and any assets related thereto, including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable and any Hedging Obligations entered into by the Issuer or any such Subsidiary in connection with such accounts receivable.

 

“Receivables Repurchase Obligation” means any obligation of a seller of receivables in a Qualified Receivables Financing to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.

 

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“Receivables Subsidiary” means a Subsidiary of the Issuer (or another Person formed for the purposes of engaging in a Qualified Receivables Financing with the Issuer in which the Issuer or any Subsidiary of the Issuer makes an Investment and to which the Issuer or any Subsidiary of the Issuer transfers accounts receivable and related assets) which engages in no activities other than in connection with the financing of accounts receivable, and in business related or ancillary thereto, of the Issuer and its Subsidiaries, all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and which is designated by the Board of Directors of the Issuer (as provided below) as a Receivables Subsidiary and:

 

(1)                                 no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Issuer or any other Subsidiary of the Issuer (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Issuer or any other Subsidiary of the Issuer in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of the Issuer or any other Subsidiary of the Issuer, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings;

 

(2)                                 with which neither the Issuer nor any other Subsidiary of the Issuer has any material contract, agreement, arrangement or understanding other than on terms which the Issuer reasonably believes to be no less favorable to the Issuer or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Issuer; and

 

(3)                                 to which neither the Issuer nor any other Subsidiary of the Issuer has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.

 

Any such designation by the Board of Directors of the Issuer shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Issuer giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing conditions.

 

“Regulation S” means Regulation S promulgated under the Securities Act.

 

“Regulation S Global Note” means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 903 of Regulation S.

 

“Responsible Officer,” when used with respect to the Trustee, means any officer within the Corporate Trust department of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers, in each case, having direct responsibility for the administration of this Indenture, and also means, with respect to a particular corporate trust matter relating to this Indenture, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

 

“Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.

 

“Restricted Global Note” means a Global Note bearing the Private Placement Legend.

 

“Restricted Investment” means an Investment other than a Permitted Investment.

 

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“Restricted Period” means the 40-day distribution compliance period as defined in Regulation S.

 

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

 

“Rule 144” means Rule 144 promulgated under the Securities Act.

 

“Rule 144A” means Rule 144A promulgated under the Securities Act.

 

“Rule 903” means Rule 903 promulgated under the Securities Act.

 

“Rule 904” means Rule 904 promulgated under the Securities Act.

 

“S&P” means Standard & Poor’s Ratings Services and its successors and assigns.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Second-Lien Notes Collateral Documents” means the Intercreditor Agreement and the security agreements, collateral agreements, pledge agreements, Mortgages, collateral assignments, control agreements and related agreements (including, without limitation, financing statements under the UCC of the relevant states), each as amended, supplemented, restated, renewed, replaced or otherwise modified from time to time, that secure any Obligations under this Indenture, the Notes, the Note Guarantees and the Second-Lien Notes Collateral Documents or under which rights or remedies with respect to any such Lien are governed.

 

“Second-Lien Notes Obligations” means Obligations in respect of the Notes, the Note Guarantees, this Indenture or the Second-Lien Notes Collateral Documents.

 

“Second-Lien Obligations” means, collectively, the Second-Lien Notes Obligations and each Series of Additional Second-Lien Obligations.

 

“Second-Lien Security Documents” means the Second-Lien Notes Collateral Documents and each other agreement entered into in favor of the applicable Authorized Representative for the purpose of securing any Series of Additional Second-Lien Obligations.

 

“Secured Obligations” means, collectively, (i) the First-Lien Obligations and (ii) the Second-Lien Obligations.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Security Agreement” means the Second-Lien Notes Collateral Agreement among the Issuer, the Guarantors and the Collateral Agent, dated as of March 27, 2014, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Series” means (a) with respect to the First-Lien Secured Parties, each of (i) the Credit Agreement Secured Parties (in their capacities as such), (ii) the holders of the First-Lien Notes and the trustee under the First-Lien Notes Indenture (each in their capacities as such), and (iii) any other Additional First-Lien Secured Parties that become subject to the Intercreditor Agreement after the date of the First-Lien Notes Indenture that are represented by a common Authorized First-Lien Representative (in its capacity as such for such other Additional First-Lien Secured Parties), (b) with respect to any First-Lien Obligations, each of (i) the Credit Agreement Obligations, (ii) the First-Lien Notes Obligations, and

 

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(iii) the other Additional First-Lien Obligations incurred pursuant to any applicable agreement which, pursuant to any joinder agreement, are to be represented under the Intercreditor Agreement by a common Authorized First-Lien Representative (in its capacity as such for such other Additional First-Lien Obligations), (c) with respect to the Second-Lien Secured Parties, each of (i) the Holders of the Notes and the Trustee (each in their capacities as such), and (ii) any other Second-Lien Secured Parties that become subject to the Intercreditor Agreement after the date of this Indenture that are represented by a common Authorized Second-Lien Representative (in its capacity as such for such other Additional Second-Lien Secured Parties) and (d) with respect to any Second-Lien Obligations, each of (i) the Second-Lien Notes Obligations, and (ii) the other Additional Second-Lien Obligations incurred pursuant to any applicable agreement which, pursuant to any joinder agreement, are to be represented under the Intercreditor Agreement by a common Authorized Second-Lien Representative (in its capacity as such for such other Additional Second-Lien Obligations).

 

“Shared Collateral” means, at any time, Collateral in which the holders of two or more Series of  Secured Obligations (or their respective Authorized Representatives or the collateral agent on behalf of such holders) hold a valid and perfected security interest at such time. If more than two Series of Secured Obligations are outstanding at any time and the holders of less than all Series of Secured Obligations hold a valid and perfected security interest in any Collateral at such time, then such Collateral shall constitute Shared Collateral for those Series of Secured Obligations that hold a valid and perfected security interest in such Collateral at such time and shall not constitute Shared Collateral for any Series which does not have a valid and perfected security interest in such Collateral at such time.

 

“Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1.02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date.

 

“Standard Securitization Undertakings” means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Issuer or any Subsidiary of the Issuer which the Issuer has determined in good faith to be customary in a Receivables Financing including, without limitation, those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.

 

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the Issue Date, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

 

“Subsidiary” means, with respect to any specified Person (herein referred to as the “parent”), any corporation, partnership, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, directly or indirectly, owned, controlled or held by the parent, or (b) whose accounts are consolidated with the accounts of the parent or one or more subsidiaries of the parent in such parent’s or subsidiaries’ SEC filings.  Unless the context otherwise requires, Subsidiary shall mean a Subsidiary of the Issuer.  In addition the JV Subsidiary shall be treated as a Subsidiary for purposes of this Indenture.

 

“Total Tangible Assets” means the total consolidated tangible assets of the Issuer and its Restricted Subsidiaries as of the end of the most recently ended fiscal quarter of the Issuer for which internal financial statements are available.

 

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“Treasury Rate” means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to April 1, 2017; provided that, if the period from the redemption date to April 1, 2017, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

 

“Trustee” means Wilmington Trust, National Association in its capacity as trustee under this Indenture, until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

 

“UCC” means the Uniform Commercial Code as in effect from time to time (except as otherwise specified) in any applicable state or jurisdiction.

 

“Unrestricted Definitive Note” means a Definitive Note that does not bear and is not required to bear the Private Placement Legend.

 

“Unrestricted Global Note” means a Global Note that does not bear and is not required to bear the Private Placement Legend.

 

“Unrestricted Subsidiary” means (a) any Subsidiary of the Issuer that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors, (b) any Subsidiary of an Unrestricted Subsidiary, or (c) any Receivables Subsidiary; provided that any such Receivables Subsidiary of the Issuer that is an Unrestricted Subsidiary shall, upon the termination of any such Qualified Receivables Financing (other than as a result of an event of default thereunder unless and until the obligations thereunder are repaid in full), cease to be an Unrestricted Subsidiary; and provided that such Subsidiary:

 

(1)                                 has no Indebtedness other than Non-Recourse Debt;

 

(2)                                 is a Person with respect to which neither the Issuer nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

 

(3)                                 has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Issuer or any of its Restricted Subsidiaries.

 

As of the Issue Date, Black Warrior Methane Corp. and Black Warrior Transmission Corp. will be Unrestricted Subsidiaries.

 

“U.S. Guarantee and Collateral Agreement” means the U.S. Guarantee and Collateral Agreement, among the Issuer and various other parties thereto, dated as of April 1, 2011, as in effect on the date of this Indenture.

 

“U.S. Person” means a U.S. Person as defined in Rule 902(k) promulgated under the Securities Act.

 

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“Voting Equity Interests” of any Person shall mean all classes of Equity Interests of such Person entitled to vote.

 

“Voting Stock” of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

 

(1)                                 the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

 

(2)                                 the then outstanding principal amount of such Indebtedness.

 

“Wholly Owned Domestic Subsidiary” of any specified Person means a Domestic Subsidiary that is a Wholly Owned Subsidiary and whose shares are not held, directly or indirectly, by any Foreign Subsidiary.

 

“Wholly Owned Subsidiary” of any specified Person means a Subsidiary of such Person, all of the Capital Stock or other ownership interests of which (other than directors’ qualifying shares or nominee or other similar shares required pursuant to applicable law) are owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.

 

Section 1.02                             Other Definitions.

 

	
Term
    	
 
    	
Defined in
    Section
    
	
“Affiliate Transaction”
    	
 
    	
4.11
    
	
“AHYDO Redemption Date”
    	
 
    	
3.08
    
	
“Asset Sale Offer”
    	
 
    	
3.09
    
	
“Authentication Order”
    	
 
    	
2.02
    
	
“Calculation Date”
    	
 
    	
1.01 under “Fixed
   Charge Coverage
   Ratio”
    
	
“Cash Interest”
    	
 
    	
Exhibit A
    
	
“Change of Control Offer”
    	
 
    	
4.14
    
	
“Change of Control   Payment”
    	
 
    	
4.14
    
	
“Change of Control   Payment Date”
    	
 
    	
4.14
    
	
“Covenant Defeasance”
    	
 
    	
8.03
    
	
“DTC”
    	
 
    	
2.03
    
	
“Event of Default”
    	
 
    	
6.01
    
	
“Excess Proceeds”
    	
 
    	
4.10
    
	
“incur”
    	
 
    	
4.09
    
	
“Legal Defeasance”
    	
 
    	
8.02
    
	
“Mandatory Principal Redemption”
    	
 
    	
3.08
    
	
“Offer Amount”
    	
 
    	
3.09
    
	
“Offer Period”
    	
 
    	
3.09
    
	
“Paying Agent”
    	
 
    	
2.03
    


 

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Term
    	
 
    	
Defined in
    Section
    
	
“Payment Default”
    	
 
    	
6.01
    
	
“Permitted Debt”
    	
 
    	
4.09
    
	
“PIK Interest”
    	
 
    	
Exhibit A
    
	
“PIK Notes”
    	
 
    	
2.01
    
	
“PIK Payment”
    	
 
    	
Exhibit A
    
	
“Purchase Date”
    	
 
    	
3.09
    
	
“Registrar”
    	
 
    	
2.03
    
	
“Restricted Payments”
    	
 
    	
4.07
    


 

Section 1.03                             Rules of Construction.

 

Unless the context otherwise requires:

 

(1)                                 a term has the meaning assigned to it;

 

(2)                                 an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(3)                                 “or” is not exclusive;

 

(4)                                 words in the singular include the plural, and in the plural include the singular;

 

(5)                                 “will” shall be interpreted to express a command;

 

(6)                                 provisions apply to successive events and transactions; and

 

(7)                                 references to sections of or rules under the Securities Act will be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time.

 

ARTICLE 2
 THE NOTES

 

Section 2.01                             Form and Dating.

 

(a)                                 General.  The Notes and the Trustee’s certificate of authentication will be substantially in the form of Exhibit A hereto.  The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage.  Each Note will be dated the date of its authentication.  The Notes shall be in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000; provided that after a PIK Payment, the Notes shall be in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof.

 

The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this Indenture and the Issuer, the Guarantors, the Trustee and the Collateral Agent, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.  However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

 

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(b)                                 PIK Notes. In connection with the payment of PIK Interest in respect of the Notes, the Issuer is entitled to, without the consent of the Holders (and without regard to any restrictions or limitations set forth under Sections 4.09 and 4.12 hereof), increase the outstanding principal amount of the Notes or issue additional Notes (the “PIK Notes”) under this Indenture on the same terms and conditions as the Notes (in each case, a “PIK Payment”).

 

(c)                                  Global Notes.  Notes issued in global form will be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto).  Notes issued in definitive form will be substantially in the form of Exhibit A hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto).  Each Global Note will represent such of the outstanding Notes as will be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, redemptions and the payment of PIK Interest.  Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby will be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof or by the Issuer in connection with a PIK Payment.

 

Section 2.02                             Execution and Authentication.

 

At least one Officer must sign the Notes for the Issuer by manual or facsimile signature.

 

If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note will nevertheless be valid.

 

A Note will not be valid until authenticated by the manual signature of the Trustee.  The signature will be conclusive evidence that the Note has been authenticated under this Indenture.

 

The Trustee will, upon receipt of a written order of the Issuer signed by at least one Officer (an “Authentication Order”), authenticate (i) Notes for original issue that may be validly issued under this Indenture, including any Additional Notes, and (ii) PIK Notes issued pursuant to Section 2.13 hereof.  The aggregate principal amount of Notes outstanding at any time may not exceed the aggregate principal amount of Notes authorized for issuance by the Issuer pursuant to one or more Authentication Orders, except as provided in Section 2.07 hereof.

 

The Trustee may appoint an authenticating agent acceptable to the Issuer to authenticate Notes.  An authenticating agent may authenticate Notes whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Issuer.

 

Section 2.03                             Registrar and Paying Agent.

 

The Issuer will maintain an office or agency where Notes may be presented for registration of transfer or for exchange (“Registrar”) and an office or agency where Notes may be presented for payment (“Paying Agent”).  The Registrar will keep a register of the Notes and of their transfer and exchange.  The Issuer may appoint one or more co-registrars and one or more additional paying agents.  The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent.  The Issuer may change any Paying Agent or Registrar without notice to any Holder.  The Issuer will notify the Trustee in writing of the name and address of any Agent not a party to this Indenture.  If the 

 

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Issuer fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such.  The Issuer or any of its Subsidiaries may act as Paying Agent or Registrar.

 

The Issuer initially appoints The Depository Trust Company (“DTC”) to act as Depositary with respect to the Global Notes.

 

The Issuer initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes.

 

The immunities, protections and exculpations available to the Trustee under this Indenture shall also be available to each Agent, and the Issuer’s obligations under Section 7.06 hereof to compensate and indemnify the Trustee shall extend likewise to each Agent.

 

The Issuer shall be responsible for making all calculations called for under the Notes, including but not limited to determination of redemption price, premium, if any, Applicable Premium, if any, interest, determination of how much interest shall be payable as PIK Interest or Cash Interest and any additional amounts or other amounts payable on the Notes.  The Issuer will make the calculations in good faith and, absent manifest error, its calculations will be final and binding on the Holders.  The Issuer will provide a schedule of its calculations to the Trustee when requested by the Trustee, and the Trustee is entitled to rely conclusively on the accuracy of the Issuer’s calculations without independent verification.  The Trustee shall forward the Issuer’s calculations to any Holder of the Notes upon the written request of such Holder.

 

Section 2.04                             Paying Agent to Hold Money in Trust.

 

The Issuer will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Issuer in making any such payment.  While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee.  The Issuer at any time may require a Paying Agent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the Paying Agent (if other than the Issuer or a Subsidiary) will have no further liability for the money.  If the Issuer or a Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent.  Upon any bankruptcy or reorganization proceedings relating to the Issuer, the Trustee will serve as Paying Agent for the Notes.

 

Section 2.05                             Holder Lists.

 

The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders.  If the Trustee is not the Registrar, the Issuer will furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes.

 

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Section 2.06                             Transfer and Exchange.

 

(a)                                 Transfer and Exchange of Global Notes.  A Global Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.  All Global Notes will be exchanged by the Issuer for Definitive Notes if:

 

(1)                                 the Issuer delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Issuer within 120 days after the date of such notice from the Depositary;

 

(2)                                 the Issuer in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; or

 

(3)                                 there has occurred and is continuing a Default or Event of Default with respect to the Notes and the Depositary has so requested.

 

Upon the occurrence of any of the preceding events in (1), (2) or (3) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee.  Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.  Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note.  A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) hereof.

 

(b)                                 Transfer and Exchange of Beneficial Interests in the Global Notes.  The transfer and exchange of beneficial interests in the Global Notes will be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures.  Beneficial interests in the Restricted Global Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act.  Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

 

(1)                                 Transfer of Beneficial Interests in the Same Global Note.  Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser).  Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note.  No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(1).

 

(2)                                 All Other Transfers and Exchanges of Beneficial Interests in Global Notes.  In connection with all transfers and exchanges of beneficial interests that are not subject to 

 

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Section 2.06(b)(1) above, the transferor of such beneficial interest must deliver to the Registrar either:

 

(A)                               both:

 

(i)                                     a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged; and

 

(ii)                                  instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or

 

(B)                               both:

 

(i)                                     a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged; and

 

(ii)                                  instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (B)(i) above.

 

Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g) hereof.

 

(3)                                 Transfer of Beneficial Interests to Another Restricted Global Note.  A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar receives the following:

 

(A)                               if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

 

(B)                               if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

 

(C)                               if the transferee will take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.

 

(4)                                 Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note.  A beneficial interest in any Restricted 

 

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Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(2) above and:

 

(A)                               the Registrar receives the following:

 

(i)                                     if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

 

(ii)                                  if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

 

and, in each such case set forth in this paragraph (4), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

 

If any such transfer is effected pursuant to paragraph (4) above at a time when an Unrestricted Global Note has not yet been issued, the Issuer shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to paragraph (4) above.

 

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

 

(c)                                  Transfer or Exchange of Beneficial Interests for Definitive Notes.

 

(1)                                 Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes.  If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:

 

(A)                               if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

 

(B)                               if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

 

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(C)                               if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

 

(D)                               if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

 

(E)                                if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; or

 

(F)                                 if such beneficial interest is being transferred to the Issuer or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof,

 

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Issuer shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount.  Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant.  The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered.  Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(1) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

 

(2)                                 Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes.  A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if:

 

(A)                               the Registrar receives the following:

 

(i)                                     if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or

 

(ii)                                  if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

 

and, in each such case set forth in this paragraph (2), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the 

 

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Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

 

(3)                                 Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes.  If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Issuer will execute and the Trustee will authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount.  Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant.  The Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so registered.  Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will not bear the Private Placement Legend.

 

(d)                                 Transfer and Exchange of Definitive Notes for Beneficial Interests.

 

(1)                                 Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes.  If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

 

(A)                               if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

 

(B)                               if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

 

(C)                               if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

 

(D)                               if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

 

(E)                                if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; or

 

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(F)                                 if such Restricted Definitive Note is being transferred to the Issuer or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof,

 

the Trustee will cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the IAI Global Note.

 

(2)                                 Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes.  A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if:

 

(A)                               the Registrar receives the following:

 

(i)                                     if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

 

(ii)                                  if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

 

and, in each such case set forth in this paragraph (2), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

 

Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(2), the Trustee will cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

 

(3)                                 Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes.  A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time.  Upon receipt of a request for such an exchange or transfer, the Trustee will cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

 

If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (2) or (3) above at a time when an Unrestricted Global Note has not yet been issued, the Issuer will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.

 

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(e)                                  Transfer and Exchange of Definitive Notes for Definitive Notes.  Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar will register the transfer or exchange of Definitive Notes.  Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing.  In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e).

 

(1)                                 Restricted Definitive Notes to Restricted Definitive Notes.  Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

 

(A)                               if the transfer will be made pursuant to Rule 144A, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

 

(B)                               if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

 

(C)                               if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.

 

(2)                                 Restricted Definitive Notes to Unrestricted Definitive Notes.  Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:

 

(A)                               if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

 

(B)                               if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

 

and, in each such case set forth in this paragraph (2), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

 

(3)                                 Unrestricted Definitive Notes to Unrestricted Definitive Notes.  A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note.  Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.

 

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(f)                                   Legends.  The following legends will appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.

 

(1)                                 Private Placement Legend.

 

(A)                               Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:

 

“THIS NOTE AND THE RELATED GUARANTEES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.  BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR (C) IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN “INSTITUTIONAL ACCREDITED INVESTOR”), (2) AGREES THAT IT WILL NOT, WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE OF THESE NOTES, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO WALTER ENERGY, INC. OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND BASED UPON AN OPINION OF COUNSEL IF REQUESTED BY WALTER ENERGY, INC., (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO WALTER ENERGY, INC.) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.  IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE OF THESE NOTES, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE.  IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND WALTER ENERGY, INC.  SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.  THE INDENTURE CONTAINS A 

 

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PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.”

 

(B)                               Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(4), (c)(2), (c)(3), (d)(2), (d)(3), (e)(2) or (e)(3) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) will not bear the Private Placement Legend.

 

(2)                                 Global Note Legend.  Each Global Note will bear a legend in substantially the following form:

 

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

 

(g)                                  Cancellation and/or Adjustment of Global Notes.  At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof.  At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note will be increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

 

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(h)                                 General Provisions Relating to Transfers and Exchanges.

 

(1)                                 To permit registrations of transfers and exchanges, the Issuer will execute and the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 hereof or at the Registrar’s request.

 

(2)                                 No service charge will be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.14 and 9.04 hereof).

 

(3)                                 The Registrar will not be required to register the transfer of or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

 

(4)                                 All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes will be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

 

(5)                                 Neither the Registrar nor the Issuer will be required:

 

(A)                               to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection;

 

(B)                               to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or

 

(C)                               to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date.

 

(6)                                 Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent, the Issuer and the Guarantors may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of, premium, if any, and interest on such Notes and for all other purposes, and none of the Trustee, any Agent, or the Issuer and the Guarantors shall be affected by notice to the contrary.

 

(7)                                 The Trustee will authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof.

 

(8)                                 All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.

 

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Section 2.07                             Replacement Notes.

 

If any mutilated Note is surrendered to the Trustee or the Issuer and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuer will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Note if the Trustee’s requirements are met.  If required by the Trustee or the Issuer, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee to protect the Trustee and any Agent and in the judgment of the Issuer to protect the Issuer, the Guarantors, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced.  The Issuer may charge for its expenses in replacing a Note.

 

Every replacement Note is an additional obligation of the Issuer and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.

 

Section 2.08                             Outstanding Notes.

 

The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interests in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding.  Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Note.

 

If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

 

If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

 

If the Paying Agent (other than the Issuer or a Subsidiary thereof) holds, by 11:00 a.m. Eastern Time on a redemption date or other maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest.

 

Section 2.09                             Treasury Notes.

 

In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer or any Guarantor, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any Guarantor, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee knows are so owned will be so disregarded.

 

Section 2.10                             Temporary Notes.

 

Until certificates representing Notes are ready for delivery, the Issuer may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Notes.  Temporary Notes will be substantially in the form of certificated Notes but may have variations that the Issuer considers appropriate for temporary Notes and as may be reasonably acceptable to the Trustee.  Without unreasonable delay, the Issuer will prepare and the Trustee will authenticate definitive Notes in exchange for temporary Notes.

 

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Holders of temporary Notes will be entitled to all of the benefits of this Indenture.

 

Section 2.11                             Cancellation.

 

The Issuer at any time may deliver Notes to the Trustee for cancellation.  The Registrar and Paying Agent will forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment.  The Trustee and no one else will cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and will destroy canceled Notes (subject to the record retention requirement of the Exchange Act).  Certification of the destruction of all canceled Notes will be delivered to the Issuer upon written request.  The Issuer may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.

 

Section 2.12                             Defaulted Interest.

 

If the Issuer defaults in a payment of interest on the Notes, it will pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01(c) hereof.  The Issuer will notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment.  The Issuer will fix or cause to be fixed each such special record date and payment date; provided that no such special record date may be less than 10 days prior to the related payment date for such defaulted interest.  At least 15 days before the special record date, the Issuer (or, upon the written request of the Issuer, the Trustee in the name and at the expense of the Issuer) will mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid.

 

ARTICLE 3
 REDEMPTION AND PREPAYMENT

 

Section 3.01                             Notices to Trustee.

 

If the Issuer redeems Notes pursuant to the redemption provisions of Sections 3.07 or Section 3.08(a) hereof, it must furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers’ Certificate setting forth:

 

(1)                                 the Section and paragraph hereof pursuant to which the redemption shall occur;

 

(2)                                 the redemption date;

 

(3)                                 the principal amount of Notes to be redeemed; and

 

(4)                                 the redemption price (if then determined and otherwise the basis for its determination).

 

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Section 3.02                             Selection of Notes to Be Redeemed or Purchased.

 

If less than all of the Notes are to be redeemed at any time, the Trustee will select Notes for redemption as follows:

 

(1)                                 if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or

 

(2)                                 if the Notes are not listed on any national securities exchange, on a pro rata basis (except that any Notes represented by a Global Note will be redeemed by such method as DTC may require), subject to adjustments so no Note in an unauthorized denomination remains outstanding after such redemption.

 

In the event of partial redemption or purchase by lot, the particular Notes to be redeemed or purchased will be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption.

 

The Trustee will promptly notify the Issuer in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed.  Notes and portions of Notes selected will be in amounts of $2,000 or an integral multiple of $1,000 in excess of $2,000 (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof); provided that no Notes of $2,000 (or if a PIK Payment has been made, $1.00) or less shall be redeemed in part.  Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.

 

Section 3.03                             Notice of Redemption.

 

Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Issuer will mail or cause to be mailed, by first class mail, or in the case of Global Notes, deliver or cause to be delivered electronically in accordance with the procedures of the Depositary, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed or delivered electronically more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Articles 8 or 11 hereof.

 

The notice will identify the Notes to be redeemed and will state:

 

(1)                                 the redemption date;

 

(2)                                 the redemption price (if then determined and otherwise the basis for its determination);

 

(3)                                 if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note;

 

(4)                                 the name and address of the Paying Agent;

 

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(5)                                 that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

 

(6)                                 that, unless the Issuer defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;

 

(7)                                 the Section and paragraph of this Indenture pursuant to which the Notes called for redemption are being redeemed; and

 

(8)                                 that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.

 

At the Issuer’s request, the Trustee will give the notice of redemption in the Issuer’s name and at its expense; provided, however, that the Issuer has delivered to the Trustee, at least five Business Days prior to the giving of such notice of redemption, an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.

 

Section 3.04                             Effect of Notice of Redemption.

 

Once notice of redemption is mailed or delivered electronically in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price.  A notice of redemption may not be conditional.

 

Section 3.05                             Deposit of Redemption or Purchase Price.

 

By 11:00 a.m. Eastern Time on the redemption or purchase date, the Issuer will deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued interest on all Notes to be redeemed or purchased on that date.  The Trustee or the Paying Agent will promptly return to the Issuer any money deposited with the Trustee or the Paying Agent by the Issuer in excess of the amounts necessary to pay the redemption or purchase price of, and accrued interest on, all Notes to be redeemed or purchased.

 

If the Issuer complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Notes or the portions of the Notes called for redemption or tendered for purchase.  If a Note is redeemed or purchased on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date.  If any Note called for redemption or tendered for purchase is not so paid upon surrender for redemption or purchase because of the failure of the Issuer to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or tendered for purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01(c) hereof.

 

Section 3.06                             Notes Redeemed or Purchased in Part.

 

Upon surrender of a Note that is redeemed or purchased in part, the Issuer will issue and, upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the expense of the Issuer a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered, subject to adjustments so no Note in an unauthorized denomination remains outstanding after such redemption.

 

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Section 3.07                             Optional Redemption.

 

(a)                                 At any time, prior to April 1, 2017, the Issuer may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under this Indenture at a redemption price of 111.000% of the principal amount, plus accrued and unpaid interest to, but not including, the redemption date, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds of one or more Equity Offerings; provided that:

 

(1)                                 at least 65% of the aggregate principal amount of Notes originally issued under this Indenture (excluding Notes held by the Issuer and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and

 

(2)                                 the redemption occurs within 180 days of the date of the closing of such Equity Offering.

 

(b)                                 At any time prior to April 1, 2017, the Issuer may also redeem all or a part of the Notes, upon not less than 30 nor more than 60 days’ prior notice (provided that notices of redemption in connection with defeasance or discharge of the Indenture may be given more than 60 days in advance) mailed by first-class mail, or in the case of Global Notes held by the Depositary, electronically or in accordance with the Depositary’s procedures, to each Holder’s registered address, at a redemption price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest to, but not including, the applicable redemption date, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date.

 

(c)                                  Except pursuant to paragraphs (a) and (b) above, the Notes will not be redeemable at the Issuer’s option prior to April 1, 2017.  The Issuer is not, however, prohibited from acquiring the Notes by means other than a redemption, whether pursuant to a tender offer, open market purchase or otherwise, so long as the acquisition does not violate the terms of this Indenture.

 

(d)                                 On or after April 1, 2017, the Issuer may redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ notice (provided that notices of redemption in connection with defeasance or discharge of the Indenture may be given more than 60 days in advance), at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest on the Notes redeemed, to, but not including, the applicable redemption date, if redeemed during the twelve-month period beginning on April 1 of the years indicated below, subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant interest payment date:

 

	
Year
    	
 
    	
Percentage
    	
 
    
	
2017 
    	
 
    	
105.500
    	
%
    
	
2018 
    	
 
    	
102.750
    	
%
    
	
2019 and thereafter   
    	
 
    	
100.000
    	
%
    


 

(e)                                  Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

 

Section 3.08                             Mandatory Redemption.

 

(a)                                 If the Notes would otherwise constitute “applicable high yield discount obligations” within the meaning of Section 163(i)(1) of the Code, at the end of each “accrual period” (as defined in Section 1272(a)(5) of the Code) ending after the fifth anniversary of the Initial Notes’ issuance (each, an “AHYDO Redemption Date”), the Issuer will be required to redeem for cash a portion of each Note then 

 

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outstanding equal to the Mandatory Principal Redemption Amount (each such redemption, a “Mandatory Principal Redemption”).  The redemption price for the portion of each Note redeemed pursuant to any Mandatory Principal Redemption will be 100% of the principal amount of such portion plus any accrued interest thereon on the date of redemption. No partial redemption or repurchase of the Notes prior to any AHYDO Redemption Date pursuant to any other provision of this Indenture will alter the Issuer’s obligation to make any Mandatory Principal Redemption with respect to any Notes that remain outstanding on such AHYDO Redemption Date. The Issuer shall deliver an Officers’ Certificate to the Trustee certifying that the conditions set forth in this Section 3.08 have been satisfied and a Mandatory Principal Redemption is required.

 

(b)                                 Any redemption pursuant to Section 3.08(a) hereof shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

 

(c)                                  Except pursuant to paragraph (a) above, the Issuer is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

 

Section 3.09                             Offer to Purchase by Application of Excess Proceeds.

 

In the event that, pursuant to Section 4.10 hereof, the Issuer is required to commence an offer to all Holders to purchase Notes (an “Asset Sale Offer”), it will follow the procedures specified below.

 

The Asset Sale Offer shall be made to all Holders of Notes.  The Asset Sale Offer will remain open for a period of at least 20 Business Days following its commencement and not more than 30 Business Days, except to the extent that a longer period is required by applicable law (the “Offer Period”).  No later than three Business Days after the termination of the Offer Period (the “Purchase Date”), the Issuer will apply all Excess Proceeds (the “Offer Amount”) to the purchase of Notes (on a pro rata basis or in accordance with the applicable procedures of the Depositary, subject to adjustments so no Note in an unauthorized denomination remains outstanding after such purchase, if applicable) or, if the Excess Proceeds exceed the purchase price of the Notes, all Notes tendered in response to the Asset Sale Offer.  Payment for any Notes so purchased will be made in the same manner as Cash Interest payments are made.

 

If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to the Asset Sale Offer.

 

Upon the commencement of an Asset Sale Offer, the Issuer will send, by first class mail, or deliver electronically, a notice to the Trustee and each of the Holders, with a copy to the Trustee.  The notice will contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer.  The notice, which will govern the terms of the Asset Sale Offer, will state:

 

(1)                                 that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer will remain open;

 

(2)                                 the Offer Amount, the purchase price and the Purchase Date;

 

(3)                                 that any Note not tendered or accepted for payment will continue to accrue interest;

 

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(4)                                 that, unless the Issuer defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer will cease to accrue interest after the Purchase Date;

 

(5)                                 that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in the principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000 (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof);

 

(6)                                 that Holders electing to have Notes purchased pursuant to any Asset Sale Offer will be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the Issuer, a depositary, if appointed by the Issuer, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date;

 

(7)                                 that Holders will be entitled to withdraw their election if the Issuer, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;

 

(8)                                 that, if the aggregate purchase price of Notes surrendered by Holders exceeds the Excess Proceeds, the Trustee will select the Notes to be purchased on a pro rata basis or in accordance with the applicable procedures of the Depositary, subject to adjustments so no Note in an unauthorized denomination remains outstanding after such purchase, based on the principal amount of Notes surrendered (with such adjustments as may be deemed appropriate by the Issuer so that only Notes in denominations of $2,000, or integral multiples of $1,000 in excess of $2,000 (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof), will be purchased); and

 

(9)                                 that Holders whose Notes were purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).

 

On or before the Purchase Date, the Issuer will, to the extent lawful, accept for payment, on a pro rata basis or in accordance with the applicable procedures of the Depositary, subject to adjustments so no Note in an unauthorized denomination remains outstanding after such purchase, to the extent necessary, the Notes or portions thereof tendered pursuant to the Asset Sale Offer, and will deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating that such Notes or portions thereof were accepted for payment by the Issuer in accordance with the terms of this Section 3.09.  The Issuer, the Depositary or the Paying Agent, as the case may be, will promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Issuer for purchase, and the Issuer will promptly issue a new Note, and the Trustee, upon written request from the Issuer, will authenticate and mail or deliver (or cause to be transferred by book entry) such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered.  Any Note not so accepted shall be promptly mailed or delivered by the Issuer to the Holder thereof.  The Issuer will publicly announce the results of the Asset Sale Offer on the Purchase Date.

 

Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the applicable provisions of Sections 3.01 through 3.06 hereof.

 

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ARTICLE 4
 COVENANTS

 

Section 4.01                             Payment of Notes.

 

(a)                                 The Issuer will pay or cause to be paid the principal of, premium, if any, and interest on, the Notes, whether Cash Interest or PIK Interest or a combination of both, on the dates and in the manner provided in the Notes.  Principal, premium, if any, and interest (other than PIK Interest) will be considered paid on the date due if the Paying Agent, if other than the Issuer or a Subsidiary thereof, holds as of 11:00 a.m.  Eastern Time on the due date money deposited by the Issuer in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.

 

(b)                                 PIK Interest will be considered paid on the date due if on such date (1) if PIK Notes have been issued therefor, such PIK Notes have been issued and authenticated in accordance with the terms of this Indenture and (2) if the PIK Payment is made by increasing the principal amount of Global Notes then authenticated, the Trustee has increased the principal amount of Global Notes then authenticated by the required amount.

 

(c)                                  The Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful.

 

Section 4.02                             Maintenance of Office or Agency.

 

The Issuer will maintain in the continental United States, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee or Registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served.  The Issuer will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Issuer fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

 

The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Issuer will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

 

The Issuer hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Issuer in accordance with Section 2.03 hereof.  In case the Issuer shall fail to maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, such surrenders, presentations and demands may be made and notices may be served at the designated Corporate Trust Office of the Trustee, and the Issuer hereby appoints the Trustee its agent to receive at the aforesaid office all such surrenders, presentations, notices and demands.

 

Section 4.03                             Reports.

 

(a)                                 So long as any Notes are outstanding, the Issuer will file with the SEC for public availability, within 30 days of the time periods specified in the SEC’s rules and regulations (unless the

 

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SEC will not accept such a filing, in which case the Issuer will furnish to the Holders of Notes, within the time periods specified in the SEC’s rules and regulations):

 

(1)                                 all quarterly and annual reports that would be required to be filed with the SEC on Forms 10-Q and 10-K if the Issuer were required to file such reports; and

 

(2)                                 all current reports that would be required to be filed with the SEC on Form 8-K if the Issuer were required to file such reports.

 

All such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports.  Each annual report on Form 10-K will include an audit report on the Issuer’s consolidated financial statements by a nationally recognized firm of independent accountants.

 

If, at any time, the Issuer is no longer subject to the periodic reporting requirements of the Exchange Act for any reason, the Issuer will nevertheless continue filing the reports specified in the preceding paragraphs of this Section 4.03(a) with the SEC within the time periods specified above unless the SEC will not accept such a filing.  The Issuer will not take any action for the purpose of causing the SEC not to accept any such filings.  If, notwithstanding the foregoing, the SEC will not accept the Issuer’s filings for any reason, the Issuer will post the reports referred to in the preceding paragraphs of this Section 4.03(a) on its website within 30 days of the time periods that would apply if the Issuer were required to file those reports with the SEC.

 

(b)                                 If the Issuer has designated any of its Subsidiaries as Unrestricted Subsidiaries, then, to the extent material as determined by the Board of Directors of the Issuer in good faith, the quarterly and annual financial information required by paragraph (a) of this Section 4.03 will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of the Issuer and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Issuer.

 

(c)                                  For so long as any Notes remain outstanding, if at any time they are not required to file the reports required by paragraph (a) of this Section 4.03 with the SEC, the Issuer and the Guarantors will furnish to the Holders of Notes and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

Section 4.04                             Compliance Certificate.

 

(a)                                 The Issuer shall deliver to the Trustee, within 90 days after the end of each fiscal year beginning with the fiscal year ending on December 31, 2014, an Officers’ Certificate stating that a review of the activities of the Issuer and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Issuer has kept, observed, performed and fulfilled its obligations under this Indenture and the Second-Lien Notes Collateral Documents, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Issuer has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and the Second-Lien Notes Collateral Documents and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture and the Second-Lien Notes Collateral Documents (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Issuer is taking or proposes to take with respect thereto) and that to his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on

 

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the Notes is prohibited or if such event has occurred, a description of the event and what action the Issuer is taking or proposes to take with respect thereto.

 

(b)                                 So long as any of the Notes are outstanding, the Issuer will deliver to the Trustee, within 30 days of any Officer becoming aware of any Default or Event of Default that has not been cured, an Officers’ Certificate specifying such Default or Event of Default and what action the Issuer is taking or proposes to take with respect thereto.

 

Section 4.05                             Taxes.

 

The Issuer will pay, and will cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes.

 

Section 4.06                             Stay, Extension and Usury Laws.

 

The Issuer and each Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer and each Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.

 

Section 4.07                             Restricted Payments.

 

(a)                                 The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

 

(1)                                 declare or pay any dividend or make any other payment or distribution on account of the Issuer’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Issuer or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Issuer’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests, other than Disqualified Stock, of the Issuer and other than dividends or distributions payable to the Issuer or a Restricted Subsidiary of the Issuer);

 

(2)                                 purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Issuer) any Equity Interests of the Issuer;

 

(3)                                 make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness of the Issuer or any Guarantor that is contractually subordinated to the Notes or to any Note Guarantee (excluding any intercompany Indebtedness between or among the Issuer and any of its Restricted Subsidiaries), except (x) the purchase, repurchase or other acquisition of Indebtedness that is contractually subordinated to the Notes or to any Note Guarantee, as the case may be, purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year

 

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of the date of purchase, repurchase or acquisition or (y) a payment of interest or principal at the Stated Maturity thereof; or

 

(4)                                 make any Restricted Investment;

 

(all such payments and other actions set forth in these clauses (1) through (4) above being collectively referred to as “Restricted Payments”), unless, at the time of and after giving effect to such Restricted Payment:

 

(A)                               no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;

 

(B)                               the Issuer would, after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof; and

 

(C)                               such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Issuer and its Restricted Subsidiaries since the Issue Date (excluding Restricted Payments permitted by clauses (2) through (18) of Section 4.07(b) hereof), is less than the sum, without duplication, of:

 

(i)                                     50% of the Consolidated Net Income of the Issuer for the period (taken as one accounting period) from April 1, 2014 to the end of the Issuer’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus

 

(ii)                                  100% of the aggregate net proceeds, including cash and the Fair Market Value of property other than cash received by the Issuer since the Issue Date from the issue or sale of Equity Interests of the Issuer (other than Disqualified Stock, Designated Preferred Stock or Excluded Contributions) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Issuer); plus

 

(iii)                               to the extent that any Restricted Investment that was made after the Issue Date is sold for cash or otherwise liquidated or repaid for cash, 100% of the aggregate amount received in cash and the Fair Market Value of property other than cash received; plus

 

(iv)                              to the extent that any Unrestricted Subsidiary of the Issuer designated as such after the Issue Date is redesignated as a Restricted Subsidiary after the Issue Date or has been merged into, consolidated or amalgamated with or into, or transfers or conveys its assets to, the Issuer or a Restricted Subsidiary of the Issuer, 100% of the Fair Market Value of the Issuer’s Investment in such Subsidiary as of the date of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable) after deducting any Indebtedness associated with the Unrestricted Subsidiary so designated or combined or any Indebtedness associated with the assets so transferred or conveyed; plus

 

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(v)                                 100% of any dividends or distributions received by the Issuer or a Restricted Subsidiary of the Issuer after the Issue Date from an Unrestricted Subsidiary of the Issuer, to the extent that such dividends or distributions were not otherwise included in the Consolidated Net Income of the Issuer for such period.

 

(b)                                 The provisions of Section 4.07(a) hereof will not prohibit:

 

(1)                                 the payment of any dividend or distribution, or the consummation of any redemption, within 60 days after the date of declaration of the dividend or distribution or giving of the redemption notice, as the case may be, if, at the date of declaration or notice, the dividend, distribution or redemption payment would have complied with the provisions of this Indenture;

 

(2)                                 the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Issuer) of, Equity Interests of the Issuer (other than Disqualified Stock) or from the substantially concurrent contribution of common equity capital to the Issuer; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded from clause (a)(C)(ii) of Section 4.07(a) hereof;

 

(3)                                 the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of the Issuer or any Restricted Subsidiary that is contractually subordinated to the Notes or to any Note Guarantee with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness;

 

(4)                                 any Restricted Payment made by a Restricted Subsidiary of the Issuer to the holders of its Equity Interests on a pro rata basis;

 

(5)                                 the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Issuer or any Restricted Subsidiary of the Issuer held by any current or former officer, director, consultant or employee of the Issuer or any of its Restricted Subsidiaries pursuant to the requirements of any equity subscription agreement, stock option agreement, employment agreement, shareholders’ or members’ agreement or similar agreement, plan or arrangement or otherwise in the ordinary course of business;

 

(6)                                 the repurchase of Equity Interests deemed to occur upon the exercise of stock options or warrants to the extent such Equity Interests represent a portion of the exercise price of those stock options or warrants;

 

(7)                                 the declaration and payment of regularly scheduled or accrued dividends or distributions to holders of any class or series of Disqualified Stock of the Issuer or any Restricted Subsidiary of the Issuer issued on or after the Issue Date in accordance with the Fixed Charge Coverage Ratio test described in Section 4.09(a) hereof;

 

(8)                                 Restricted Payments arising as a result of Qualified Receivables Financing;

 

(9)                                 the declaration and payment of dividends or other distributions to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued after the Issue Date; provided, however, that for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated Preferred Stock, after giving effect to such issuance (and the payment of dividends or

 

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distributions) on a pro forma basis, the Issuer could incur an additional $1.00 of Indebtedness pursuant to the Fixed Charge Coverage Ratio;

 

(10)                          Investments that are made with Excluded Contributions;

 

(11)                          the satisfaction of change of control obligations once the Issuer has fulfilled its obligations under this Indenture with respect to a Change of Control;

 

(12)                          the repayment of intercompany Indebtedness that was permitted to be incurred under this Indenture;

 

(13)                          the payment of dividends, distributions on or the repurchase of, the Issuer’s common equity of up to $50 million per calendar year (with unused amounts in any calendar year being permitted to be carried over for the next succeeding calendar year up to a maximum of $100 million in any calendar year); provided, however, that at the time of, and after giving effect to, such Restricted Payment, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

 

(14)                          the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of the Issuer or any Restricted Subsidiary that is contractually subordinated to the Notes or to any Note Guarantee with any Excess Proceeds that remain after consummation of an Asset Sale Offer;

 

(15)                          cash payments in lieu of fractional shares issuable as dividends on preferred stock, upon the exercise of any warrants or options or upon the conversion of any convertible debt securities of the Issuer or any of its Restricted Subsidiaries;

 

(16)                          the repurchase, redemption or other acquisition or retirement for value of Disqualified Stock of the Issuer or any Restricted Subsidiary of the Issuer made by exchange for, or out of the proceeds of, the substantially concurrent sale of Disqualified Stock that is permitted to be incurred pursuant to Section 4.09 hereof;

 

(17)                          the distribution, as a dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to the Issuer or a Restricted Subsidiary of the Issuer by, Unrestricted Subsidiaries; and

 

(18)                          other Restricted Payments in an aggregate amount not to exceed $200 million since the First-Lien Notes Initial Issue Date; provided, however, that at the time of, and after giving effect to, such Restricted Payment, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof.

 

(c)                                  The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.

 

(d)                                 For purposes of determining compliance with the provisions set forth above, in the event that a Restricted Payment meets the criteria of more than one of the types of Restricted Payments described in the above clauses, the Issuer, in its sole discretion, may order and classify, and from time to time may reorder and reclassify, such Restricted Payment if it would have been permitted at the time such Restricted Payment was made and at the time of any such reclassification.

 

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Section 4.08                             Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.

 

(a)                                 The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

 

(1)                                 pay dividends or make any other distributions on its Capital Stock to the Issuer or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Issuer or any of its Restricted Subsidiaries; or

 

(2)                                 make loans or advances to the Issuer or any of its Restricted Subsidiaries.

 

(b)                                 The restrictions in Section 4.08(a) hereof will not apply to encumbrances or restrictions existing under or by reason of:

 

(1)                                 applicable law, rule, regulation, order, approval, license, permit or similar restriction;

 

(2)                                 restrictions contained in any documents or agreements evidencing, relating to or otherwise governing a Receivables Financing with respect to any Receivables Subsidiary;

 

(3)                                 contractual encumbrances or restrictions in effect under (a) any Indebtedness represented by the Initial Notes, (b) any Indebtedness outstanding on the First-Lien Notes Initial Issue Date and (c) under any Indebtedness otherwise permitted pursuant to this Indenture; provided that with respect to clause (c) the restrictions contained in the agreements or instruments governing such Indebtedness are not materially less favorable to Holders of the Notes than is customary for comparable financings (as determined in good faith by the Issuer);

 

(4)                                 any restrictions imposed by any agreement relating to secured Indebtedness permitted by this Indenture to the extent that such restrictions apply only to the assets securing such Indebtedness;

 

(5)                                 any agreement in effect at the time such Restricted Subsidiary becomes a Restricted Subsidiary, so long as such agreement was not entered into in contemplation of or in connection with such person becoming a Restricted Subsidiary;

 

(6)                                 customary restrictions contained in any agreement relating to the sale of any asset permitted under Section 4.10 hereof pending the consummation of such sale;

 

(7)                                 customary provisions in joint venture agreements, partnership agreements, limited liability company documents and other similar agreements, in each case, applicable to joint ventures entered into in the ordinary course of business;

 

(8)                                 customary provisions contained in leases or licenses and other similar agreements entered into in the ordinary course of business;

 

(9)                                 customary restrictions in connection with deposits or net worth in the ordinary course of business;

 

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(10)                          customary provisions restricting assignment of any agreement entered into in the ordinary course of business;

 

(11)                          encumbrances on property that exist at the time the property was acquired by the Issuer or a Restricted Subsidiary;

 

(12)                          restrictions described in clauses (1) and (2) of Section 4.08(a) hereof, but only to the extent that such restrictions do not materially adversely affect the consolidated cash position of the Issuer and its Restricted Subsidiaries; and

 

(13)                          any amendment, restatement, renewal, replacement or refinancing of an agreement referred to above; provided such restrictions are not materially more restrictive, taken as a whole, than those under the agreement being amended, restated, renewed, refinanced or replaced.

 

Section 4.09                             Incurrence of Indebtedness and Issuance of Preferred Equity.

 

(a)                                 The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Issuer will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred equity; provided, however, that the Issuer may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Issuer or any Restricted Subsidiary may incur Indebtedness (including Acquired Debt) or issue preferred equity, if the Fixed Charge Coverage Ratio for the Issuer’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred equity is issued, as the case may be, would have been at least 2.0 to 1.0 determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred equity had been issued, as the case may be, at the beginning of such four-quarter period.

 

(b)                                 The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

 

(1)                                 the incurrence by the Issuer or any of its Restricted Subsidiaries of additional Indebtedness and letters of credit and bankers’ acceptances thereunder under Credit Facilities in an aggregate principal amount at any time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer and its Restricted Subsidiaries thereunder) not to exceed the greater of (x) $1.80 billion or (y) an amount equal to 3.5 times Consolidated Cash Flow of the Issuer for the most recently ended four full fiscal quarters of the Issuer for which internal financial statements are available;

 

(2)                                 the incurrence by the Issuer and its Restricted Subsidiaries of Indebtedness to the extent outstanding on the First-Lien Notes Initial Issue Date (including the First-Lien Notes issued on the First-Lien Notes Initial Issue Date);

 

(3)                                 the incurrence by the Issuer and the Guarantors of Indebtedness represented by the Notes issued on the Issue Date and the Guarantees of such Notes;

 

(4)                                 the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings, industrial revenue bonds,

 

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purchase money obligations or other Indebtedness or preferred stock, or synthetic lease obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, development, construction, lease, installation or improvement of property (real or personal and including Capital Stock), plant or equipment used or useful in the business of the Issuer or any of its Restricted Subsidiaries (in each case, whether through the direct purchase of such assets or the Equity Interests of any Person owning such assets), in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness outstanding pursuant to this clause (4), not to exceed at any time outstanding the greater of (x) $375 million or (y) 7.5% of Total Tangible Assets;

 

(5)                                 Capital Lease Obligations incurred by the Issuer or any Restricted Subsidiary in respect of any sale leaseback transaction;

 

(6)                                 the incurrence by the Issuer or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge, any Indebtedness (other than intercompany Indebtedness) or any Disqualified Stock or preferred stock that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (6) or (11) of this Section 4.09(b);

 

(7)                                 the incurrence by the Issuer or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Issuer and any of its Restricted Subsidiaries; provided, however, that:

 

(A)                               if the Issuer or any Guarantor is the obligor on such Indebtedness and the payee is not the Issuer or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Issuer, or the Note Guarantee, in the case of a Guarantor; and

 

(B)                               (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Issuer or a Restricted Subsidiary of the Issuer and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Issuer or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (7);

 

(8)                                 the issuance by any of the Issuer’s Restricted Subsidiaries to the Issuer or to any of its Restricted Subsidiaries of shares of preferred equity; provided, however, that:

 

(A)                               any subsequent issuance or transfer of Equity Interests that results in any such preferred equity being held by a Person other than the Issuer or a Restricted Subsidiary of the Issuer, and

 

(B)                               any sale or other transfer of any such preferred equity to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer,

 

will be deemed, in each case, to constitute an issuance of such preferred equity by such Restricted Subsidiary that was not permitted by this clause (8);

 

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(9)                                 the incurrence by the Issuer or any of its Restricted Subsidiaries of Hedging Obligations other than for speculative purposes;

 

(10)                          the guarantee by the Issuer or any of its Restricted Subsidiaries of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer that was permitted to be incurred by another provision of this Section 4.09 (including Section 4.09(a) hereof); provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;

 

(11)                          (x) Indebtedness, Disqualified Stock or preferred equity of Persons that are acquired by the Issuer or any of its Restricted Subsidiaries or merged into a Restricted Subsidiary in accordance with the terms of this Indenture, (y) Indebtedness incurred to finance the acquisition of a Restricted Subsidiary after the Issue Date or a corporation merged into or consolidated with the Issuer or any Restricted Subsidiary after the Issue Date and (z) Indebtedness incurred in connection with the acquisition of assets, where such acquisition, merger or consolidation is permitted under the terms of this Indenture; provided that if at the time of any such acquisition, merger, consolidation or incurrence, the aggregate principal amount of Indebtedness outstanding pursuant to this clause (11) (after giving effect to such acquisition, merger, consolidation or incurrence and including any Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness outstanding pursuant to this clause (11)) exceeds the greater of (x) $375 million and (y) 7.5% of Total Tangible Assets (after giving effect to any such acquisition, merger or consolidation), such Indebtedness may only be incurred pursuant to this clause (11) to the extent either:

 

(A)                               the Issuer would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof; or

 

(B)                               the Fixed Charge Coverage Ratio would not be less than immediately prior to such incurrence and such acquisition, merger or consolidation;

 

(12)                          Indebtedness incurred by a Receivables Subsidiary in a Qualified Receivables Financing that is not recourse to the Issuer or any Restricted Subsidiary of the Issuer other than a Receivables Subsidiary (except for Standard Securitization Undertakings);

 

(13)                          the incurrence by the Issuer or any of its Restricted Subsidiaries of additional Indebtedness or the issuance of Disqualified Stock or preferred equity in an aggregate principal amount (or accreted value, as applicable) or having an aggregate liquidation preference at any time outstanding not to exceed the greater of (x) $350 million and (y) 7% of Total Tangible Assets;

 

(14)                          standby letters of credit, performance bonds, bid bonds, appeal bonds, bankers acceptances, insurance obligations, surety bonds, completion guarantees or bank guarantees (other than letters of credit issued under Credit Facilities permitted by clause (1) of this Section 4.09(b)) in the ordinary course of business or pursuant to self-insurance obligations and not in connection with the borrowing of money or the obtaining of advances;

 

(15)                          Guarantees of Indebtedness of contractors and suppliers of the Issuer or any of its Restricted Subsidiaries or of persons who are not Affiliates of the Issuer and with whom the Issuer or any of its Restricted Subsidiaries has an existing business relationship in support of 

 

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financing or bonding arrangements for such contractors or suppliers or such other person in connection with such business relationship, including self-bonding arrangements; provided that the obligations of the Issuer or any of the Subsidiaries pursuant to this clause (15) shall not exceed $25 million at any time outstanding;

 

(16)                          Indebtedness relating to the financing of insurance policy premiums; provided that (x) such insurance is for the benefit of the Issuer or any of its Wholly Owned Domestic Subsidiaries and (y) the aggregate principal amount outstanding of Indebtedness permitted by this clause (16) shall not exceed $50 million at any time outstanding;

 

(17)                          Indebtedness consisting of installment payment obligations owed to any governmental agency in connection with the acquisition of coal leases or oil, gas or other real property interests in the ordinary course of business;

 

(18)                          Indebtedness arising from agreements providing for indemnification, adjustment of purchase price of similar obligations, or guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Issuer or any of its Restricted Subsidiaries pursuant to such agreements, in any case incurred in connection with the disposition of any business, assets or Capital Stock of a Restricted Subsidiary (other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock of a Restricted Subsidiary for the purpose of financing such acquisition), so long as the amount does not exceed the gross proceeds actually received by the Issuer or any Restricted Subsidiary thereof in connection with such disposition; and

 

(19)                          Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within five business days of its incurrence.

 

The Issuer will not incur, and will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Issuer or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Issuer solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis.

 

For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness, Disqualified Stock or preferred equity meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (19) above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Issuer will be permitted to classify such item of Indebtedness, Disqualified Stock or preferred equity on the date of its incurrence and will only be required to include the amount and type of such Indebtedness, Disqualified Stock or preferred equity in one of the above clauses, although the Issuer may divide and classify an item of Indebtedness, Disqualified Stock or preferred equity in one or more of the types of Indebtedness, Disqualified Stock or preferred equity and may later reclassify all or a portion of such item of Indebtedness, Disqualified Stock or preferred equity, in any manner that complies with this Section 4.09.  The accrual of interest or dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms (including any PIK Payment), the reclassification of preferred equity as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock or preferred equity in the form of additional shares of the same class of 

 

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Disqualified Stock or preferred equity will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred equity for purposes of this Section 4.09; provided, in each such case (other than preferred stock that is not Disqualified Stock), that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Issuer as accrued (other than the reclassification of preferred equity as Indebtedness due to a change in accounting principles).  Notwithstanding any other provision of this Section 4.09 the maximum amount of Indebtedness that the Issuer or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.  For purposes of this Indenture, on any date of determination, the principal amount of any Indebtedness incurred by the JV Subsidiary shall be deemed to be (a) the principal amount of such Indebtedness on such date, determined in accordance with this Indenture, multiplied by (b) the percentage of any dividends or distributions that, if paid on such date by the JV Subsidiary, would be paid to the Issuer or any of its other Restricted Subsidiaries.

 

For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced, plus the amount of any reasonable premium (including reasonable tender premiums), defeasance costs and any reasonable fees and expenses incurred in connection with the issuance of such new Indebtedness.  The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing.

 

(c)                                  The amount of any Indebtedness outstanding as of any date will be:

 

(1)                                 the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

 

(2)                                 the principal amount of the Indebtedness, in the case of any other Indebtedness; and

 

(3)                                 in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

 

(A)                               the Fair Market Value of such assets at the date of determination; and

 

(B)                               the amount of the Indebtedness of the other Person.

 

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Section 4.10                             Asset Sales.

 

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

 

(1)                                 the Issuer (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and

 

(2)                                 at least 75% of the consideration received in the Asset Sale by the Issuer or such Restricted Subsidiary is in the form of cash, Cash Equivalents or a combination thereof.  For purposes of this provision, each of the following will be deemed to be cash:

 

(A)                               any liabilities of the Issuer or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Note Guarantee) that are assumed by the transferee of any such assets and as a result of which the Issuer or such Restricted Subsidiary is released from further liability;

 

(B)                               any securities, notes, other obligations or assets received by the Issuer or any such Restricted Subsidiary from such transferee that are converted by the Issuer or such Restricted Subsidiary into cash or Cash Equivalents within 270 days of the receipt thereof, to the extent of the cash or Cash Equivalents received in that conversion;

 

(C)                               any Designated Non-cash Consideration received by the Issuer or any of its Restricted Subsidiaries in such Asset Sale; provided that at the time of receipt of such Designated Non-cash Consideration, the aggregate Fair Market Value of such Designated Non-cash Consideration, taken together with all previously received Designated Non-cash Consideration (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value) less the amount of Net Proceeds previously realized in cash from the sale of previously received Designated Non-cash Consideration is less than the greater of (x) $375 million and (y) 7.5% of Total Tangible Assets; and

 

(D)                               any Capital Stock or assets of the kind referred to in clause (A)(iii) or (A)(v) of the next paragraph of this Section 4.10.

 

Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Issuer (or the applicable Restricted Subsidiary, as the case may be) may apply such Net Proceeds, at its option:

 

(A)                               to (i) repay any Indebtedness of the Issuer or any Guarantor constituting First-Lien Obligations, other than Indebtedness owed to the Issuer or an Affiliate of the Issuer, (ii) repay any Indebtedness of the Issuer or any Guarantor constituting Second-Lien Obligations (provided that if the Issuer or any Restricted Subsidiary shall so repay Second-Lien Obligations, the Issuer will equally and ratably reduce Indebtedness under the Notes through open market purchases (provided that such purchases are at or above 100% of the principal amount thereof) or by making an offer, in accordance with the procedures set forth below, to all Holders to purchase the pro rata principal amount of Notes, in each case at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date)), (iii) acquire all or substantially all of the assets of, or any Capital Stock of, another 

 

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Permitted Business; provided that the Collateral Agent has or is immediately granted a perfected second priority security interest in such assets or Capital Stock, (iv) make a capital expenditure with respect to Collateral or (v) acquire other assets that are not classified as current assets under GAAP and that are used or useful in a Permitted Business; or

 

(B)                               enter into a binding commitment to apply the Net Proceeds pursuant to clauses (A)(iii) or (A)(v) above, provided that such acquisition or expenditure is consummated within 180 days following the expiration of the aforementioned 365 day period.

 

Pending the final application of any Net Proceeds, the Issuer or the applicable Restricted Subsidiary that consummated the Asset Sale may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by this Indenture.

 

Any Net Proceeds from Asset Sales that are not applied or invested as provided in the second paragraph of this Section 4.10 will constitute “Excess Proceeds.” Within ten Business Days after the aggregate amount of Excess Proceeds exceeds $250.0 million, the Issuer will make an Asset Sale Offer to all Holders of Notes to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds.  The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest to, but excluding, the date of purchase and will be payable in cash.  If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuer may use those Excess Proceeds for any purpose not otherwise prohibited by this Indenture.  If the purchase price for the Notes tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee will select the Notes to be purchased on a pro rata basis or in accordance with the applicable procedures of the Depositary, subject to adjustments so no Note in an unauthorized denomination remains outstanding after such purchase.  Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.

 

The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer.  To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of this Indenture, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of this Indenture by virtue of such compliance.

 

Section 4.11                             Transactions with Affiliates.

 

(a)                                 The Issuer will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Issuer (each, an “Affiliate Transaction”), involving aggregate consideration in excess of $20.0 million, unless:

 

(1)                                 the Affiliate Transaction is on terms that are not materially less favorable to the Issuer or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Issuer or such Restricted Subsidiary with an unrelated Person; and

 

(2)                                 the Issuer delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $50.0 million, (x) a resolution of the Board of Directors of the Issuer certifying that such Affiliate Transaction complies with this covenant and that such Affiliate 

 

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Transaction has been approved by a majority of the disinterested members, if any, of the Board of Directors of the Issuer or (y) an opinion as to the fairness to the Issuer or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.

 

(b)                                 The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 4.11(a) hereof:

 

(1)                                 any employment agreement, consulting service or termination agreement, employee benefit plan, officer or director indemnification agreement or any similar arrangement entered into by the Issuer or any of its Restricted Subsidiaries in the ordinary course of business or consistent with past practice and payments pursuant thereto;

 

(2)                                 transactions (including a merger) between or among the Issuer and/or any of its Restricted Subsidiaries;

 

(3)                                 transactions with a Person (other than an Unrestricted Subsidiary of the Issuer) that is an Affiliate of the Issuer solely because the Issuer owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;

 

(4)                                 payment of fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Issuer or any of its Restricted Subsidiaries;

 

(5)                                 any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to employment arrangements, equity incentive awards or equity incentive plans and the granting and performance of registration rights that have been approved by, or pursuant to authority delegated by, the Board of Directors of the Issuer or its Restricted Subsidiaries;

 

(6)                                 Restricted Payments permitted under this Indenture and Permitted Investments;

 

(7)                                 loans or advances (or cancellation of loans or advances) to employees or consultants in the ordinary course of business or consistent with past practice;

 

(8)                                 any transaction effected as part of a Qualified Receivables Financing;

 

(9)                                 transactions with customers, clients, suppliers, contractors, joint venture partners or purchasers or sellers of goods or services, or lessors or lessees of property, in each case in the ordinary course of business (including, without limitation, pursuant to joint venture agreements) and otherwise in compliance with the terms of this Indenture which are, in the aggregate (taking into account all the costs and benefits associated with such transactions), not materially less favorable to the Issuer or its Restricted Subsidiaries than those that would have been obtained in a comparable transaction by the Issuer or such Restricted Subsidiary with an unrelated Person, as determined in good faith by the Issuer;

 

(10)                          (x) guarantees of performance by the Issuer and its Restricted Subsidiaries of Unrestricted Subsidiaries in the ordinary course of business, except for guarantees of Indebtedness in respect of borrowed money, and (y) pledges of Equity Interests of Unrestricted Subsidiaries for the benefit of lenders of Unrestricted Subsidiaries;

 

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(11)                          any obligations or transactions effected pursuant to agreements in effect on the 2020 Notes Issue Date and any amendment, modification or replacement of such agreement (so long as such amendment or replacement is not materially more disadvantageous to the Holders of the Notes, taken as a whole); and

 

(12)                          any transaction in which the Issuer or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee an opinion as to the fairness to the Issuer or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.

 

Section 4.12                             Liens.

 

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, securing Indebtedness of the Issuer or the Guarantors.

 

Section 4.13                             Corporate Existence.

 

Subject to Article 5 hereof, so long as any of the Notes shall remain outstanding, the Issuer will at all times do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence.

 

Section 4.14                             Offer to Repurchase Upon Change of Control.

 

(a)                                 Upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Issuer to repurchase (a “Change of Control Offer”) all or any part (equal to $2,000 or an integral multiple of $1,000 in excess of $2,000 (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof)) of that Holder’s Notes at a purchase price in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest, if any, on the Notes repurchased to, but not including, the date of purchase, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date (the “Change of Control Payment”).  Within 30 days following any Change of Control, the Issuer will mail, or deliver electronically, a notice to the Trustee and to each Holder describing the transaction or transactions that constitute the Change of Control and stating:

 

(1)                                 that the Change of Control Offer is being made pursuant to this Section 4.14 and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment;

 

(2)                                 the purchase price and the purchase date, which shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”);

 

(3)                                 that any Note not tendered will continue to accrue interest;

 

(4)                                 that, unless the Issuer defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control Payment Date;

 

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(5)                                 that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

 

(6)                                 that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and

 

(7)                                 that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $2,000 or an integral multiple of $1,000 in excess of $2,000 (or if a PIK Payment has been made, the unpurchased portion must be equal to $1.00 or an integral multiple of $1.00 in excess thereof).

 

(b)                                 The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control.  To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.14, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.14 by virtue of such compliance.

 

(c)                                  On the Change of Control Payment Date, the Issuer will, to the extent lawful:

 

(1)                                 accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;

 

(2)                                 deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

 

(3)                                 deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuer.

 

The Paying Agent will promptly mail, or deliver electronically, to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000 (or if a PIK Payment has been made, in a principal amount of $1.00 and any integral multiple of $1.00 in excess thereof).  The Issuer will publicly announce the results of the Change of Control Offer on or as soon as reasonably practicable after the Change of Control Payment Date.

 

(d)                                 Notwithstanding anything to the contrary in this Section 4.14, a Change of Control Offer may be made in advance of a Change of Control, conditioned upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of Control Offer is made, and such Change of Control Offer is otherwise made in compliance with this Section 4.14.

 

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(e)                                  The Issuer will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.14 and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption with respect to all outstanding Notes has been given pursuant to Section 3.07 hereof, unless and until there is a default in payment of the applicable redemption price.

 

(f)                                   The provisions described above that require the Issuer to make a Change of Control Offer following a Change of Control will be applicable regardless of whether or not any other provisions of this Indenture are applicable.

 

Section 4.15                             Payments for Consent.

 

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture, the Notes or the Second-Lien Notes Collateral Documents unless such consideration is offered to be paid and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

 

Section 4.16                             Additional Note Guarantees.

 

The Issuer shall cause each Wholly Owned Domestic Subsidiary that guarantees the Credit Agreement or any other Indebtedness of the Issuer or any Restricted Subsidiary (unless such Subsidiary is a Receivables Subsidiary or an Unrestricted Subsidiary) to (i) become a Guarantor and execute a supplemental indenture to guarantee the payment and performance of the Notes, (ii) execute and deliver an amendment, supplement or other instrument in respect of the Second-Lien Notes Collateral Documents necessary to cause such Subsidiary to become a grantor thereunder and take all action required thereunder to perfect the Liens created thereunder, as well as to execute and deliver to the Trustee joinders to the Intercreditor Agreement, and (iii) deliver an Officers’ Certificate and Opinion of Counsel satisfactory to the Trustee with respect to the supplemental indenture and other documents required to be delivered pursuant to clause (ii) of this Section 4.16, each stating (in addition to the requirements of Sections 13.02 and 13.03 hereof) that such supplemental indenture and other documents have been duly authorized, executed and delivered by such Guarantor and are the valid, binding and enforceable obligation of such Guarantor,  in each case within 30 days of becoming a guarantor of such Indebtedness.

 

Section 4.17                             Designation of Restricted and Unrestricted Subsidiaries.

 

The Board of Directors of the Issuer may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default.  If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the Fair Market Value of all outstanding Investments owned by the Issuer and its Restricted Subsidiaries in the Subsidiary designated as Unrestricted will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 4.07 hereof or under one or more clauses of the definition of Permitted Investments, as determined by the Issuer.  That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.  Any designation of a Subsidiary of the Issuer as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions of this Section 4.17 and was permitted by Section 4.07 hereof.

 

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If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements of this Section 4.17 as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Issuer as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 hereof, the Issuer will be in default of such covenant.

 

The Board of Directors of the Issuer may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the Issuer; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Issuer of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if (1) (x) the Issuer could incur such Indebtedness pursuant to the Fixed Charge Coverage Ratio test described in Section 4.09(a) hereof, or (y) the Fixed Charge Coverage Ratio for the Issuer and its Restricted Subsidiaries would be greater than such ratio for the Issuer and its Restricted Subsidiaries immediately prior to such designation, in each case on a pro forma basis taking into account such designation; and (2) no Default or Event of Default would be in existence following such designation. Any future designation of an Unrestricted Subsidiary as a Restricted Subsidiary after the date of this Indenture will be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the conditions of this Section 4.17.

 

Section 4.18                             Covenant Termination.

 

If on any date following the Issue Date, the Issuer certifies in a notice to the Trustee that:

 

(1)                                 a Ratings Event has occurred; and

 

(2)                                 at the time of the giving of such notice, no Default or Event of Default shall have occurred and be continuing,

 

then, beginning on the day such notice is given, the Issuer and its Restricted Subsidiaries will cease to be subject to the provisions of Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.17 and clause (4) of Section 5.01 hereof.

 

Section 4.19                             After-Acquired Collateral.

 

From and after the Issue Date, if the Issuer or any Guarantor creates any security interest upon any property or asset to secure any First-Lien Obligations or Second-Lien Obligations, it must concurrently grant a second-priority perfected security interest (subject to Permitted Liens) upon such property or asset as security for the Notes and the Note Guarantees.

 

Section 4.20                             Additional Security; Further Assurances; etc.

 

(a)                                 The Issuer will, and will cause each of the Guarantors to, grant to the Collateral Agent for the benefit of the Holders of the Notes valid, enforceable and perfected second-priority security interests and Mortgages (subject to any Permitted Encumbrances) in all assets and Real Property of the Issuer and such other Guarantors (other than Excluded Assets) that are not covered by the Second-Lien Notes Collateral Documents in effect on the Issue Date.  All such security interests and Mortgages shall be granted pursuant to documentation reasonably satisfactory to provide to the Collateral Agent such valid, enforceable and perfected second-priority interest.

 

(b)                                 The Issuer will, and will cause each of the Guarantors to, at the joint and several expense of the Issuer and the Guarantors, make, execute, endorse, acknowledge, file and/or deliver to the 

 

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Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, Real Property surveys, reports, landlord waivers, bailee agreements, control agreements and other assurances or instruments and take such further steps relating to the Collateral covered by any of the Second-Lien Notes Collateral Documents as may be necessary to secure and perfect the Collateral Agent’s Lien in the Collateral or as the Collateral Agent may reasonably require.  Furthermore, the Issuer will, and will cause the Guarantors to, deliver to the Collateral Agent such Officers’ Certificates, Opinions of Counsel, title insurance and other related documents as may be reasonably requested by the Collateral Agent to assure itself that this Section 4.20 has been complied with.

 

(c)                                  To the extent the Collateral Agent has not received any of the following on or prior to the Issue Date, then the Issuer shall cause the following actions to be taken as promptly as practicable after the Issue Date, provided that in any event such actions shall be required to be completed within 90 days after the Issue Date, as such date may be extended from time to time (with respect to a given action or actions) at the reasonable discretion of the Collateral Agent, provided that the Issuer is taking commercially reasonable steps to comply:

 

(1)                                 delivery to the Collateral Agent of fully executed counterparts of Mortgages and corresponding UCC fixture filings and as-extracted collateral filings (or, if UCC fixture filings and as-extracted collateral filings are not available in the applicable jurisdiction, equivalent filings as available in such jurisdiction), and any similar filings as shall be required by local law, in form and substance substantially equivalent to the Mortgages and filings delivered or to be delivered to the administrative agent under the Credit Agreement or to the Collateral Agent under the First-Lien Notes Indenture, which Mortgages, UCC fixture filings and as-extracted collateral filings (or, in the case of UCC fixture filings and as-extracted collateral filings, any other equivalent filings, as available in each applicable jurisdiction) shall cover each Real Property owned or leased by the Issuer or any of its Subsidiaries and designated as Closing Date Mortgaged Property, together with evidence that such Mortgages, UCC fixture filings and as-extracted collateral filings (or, in the case of UCC fixture filings and as-extracted collateral filings, any other equivalent filings, as available in each applicable jurisdiction) have been delivered for recording or filing, as applicable, to the title insurance company or such other Persons responsible for recording or filing, as applicable, of such Mortgages, UCC fixture filings and as-extracted collateral filings, or equivalent filings, as the case may be;

 

(2)                                 if, and only if, previously delivered to the administrative agent under the Credit Agreement or the collateral agent under the First-Lien Notes Indenture, delivery to the Collateral Agent of a Mortgage Policy relating to the Mortgage covering clause (i) of the definition of Closing Date Mortgaged Property, issued by a title insurer reasonably satisfactory to the Collateral Agent, in an insured amount as provided to the administrative agent under the Credit Agreement not to exceed 110% of the fair market value of the Mortgaged Property and insuring that the Mortgage on such Mortgaged Property is a valid and enforceable second-priority mortgage lien on such Mortgaged Property, free and clear of all defects and encumbrances except Permitted Encumbrances, with such Mortgage Policy (A) to be in form and substance substantially equivalent to the Mortgage Policy delivered to the administrative agent under the Credit Agreement, (B) to include, to the extent available and issued at ordinary rates, customary endorsements in the applicable jurisdiction, (C) not to include the “standard” title exceptions, other than a survey exception and (D) to provide for affirmative insurance and such reinsurance or coinsurance if, and only if, in each case, previously obtained by the administrative agent under the Credit Agreement or the collateral agent under the First-Lien Notes Indenture;

 

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(3)                                 such affidavits, certificates, information and instruments of indemnification (including, without limitation, a so-called “gap” indemnification) as are customarily required by the title company to issue any Mortgage Policy delivered pursuant to (c)(2) hereof, together with payment by the Issuer and the Guarantors of all Mortgage Policy premiums, search and examination charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of such Mortgage and issuance of such Mortgage Policy;

 

(4)                                 if, and only if, previously delivered to the administrative agent under the Credit Agreement or the collateral agent under the First-Lien Notes Indenture, copies of the Mortgaged Coal Property Support Documents; and

 

(5)                                 legal opinions addressed to the representative of the Initial Purchasers, the Collateral Agent and the Trustee from (1) local counsel, covering, without limitation, the enforceability of each Mortgage under the laws of the jurisdiction in which the Closing Date Mortgaged Property subject to such Mortgage is located, and (2) outside counsel to the Issuer of national standing, covering, without limitation, the due authorization, execution and delivery of the Mortgages with respect to New York and Delaware laws, in each case in form and substance substantially equivalent to the opinions previously delivered to the administrative agent under the Credit Agreement or to the collateral agent under the First-Lien Notes Indenture.

 

(d)                                 The Issuer agrees generally that all actions and deliverables required under the Credit Agreement in connection with the Closing Date Mortgaged Property and all other Mortgaged Property subsequently in existence shall also be taken under this Indenture as required by clauses (a), (b) and (c) of this Section 4.20, as applicable, or even if not specifically required by such clauses (provided such actions and deliverables are required under the Credit Agreement). For the avoidance of doubt, the Collateral Agent shall not be obtaining any additional deliverables not already obtained or required to be obtained under the Credit Agreement.

 

(e)                                  The Issuer agrees that each action required by clauses (a) or (b) of this Section 4.20 shall be completed as soon as possible, but in no event later than the earlier of (i) the taking of any such action for the benefit of any Authorized Representative and (ii) 60 days after such action is requested to be taken by the Collateral Agent or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding (as such date may be extended at the sole discretion of the Collateral Agent); provided that, in no event will the Issuer or any of the Guarantors be required to take any action, other than using its commercially reasonable efforts, to obtain consents from third parties with respect to its compliance with this covenant.

 

ARTICLE 5
 SUCCESSORS

 

Section 5.01                             Merger, Consolidation, or Sale of Assets.

 

(a)                                 The Issuer will not, directly or indirectly:  (i) consolidate or merge with or into another Person; or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the Issuer’s properties or assets (determined on a consolidated basis for the Issuer and its Restricted Subsidiaries) in one or more related transactions to another Person, unless:

 

(1)                                 either:

 

(A)                               the Issuer is the surviving entity; or

 

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(B)                               the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation, partnership or limited liability company organized or existing under the laws of the United States, any state of the United States or the District of Columbia; provided that at any time such Person is a partnership or a limited liability company, there shall be a co-issuer of the Notes that is a corporation that also satisfies the requirements of this Section 5.01;

 

(2)                                 the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Issuer, as the case may be, under the Notes, this Indenture and the Second-Lien Notes Collateral Documents pursuant to agreements reasonably satisfactory to the Trustee and delivers to the Trustee an Officers’ Certificate and Opinion of Counsel each stating (in addition to the requirements of Sections 13.02 and 13.03 hereof) that such agreements have been duly authorized, executed and delivered by such successor Person and constitute the valid, binding, enforceable obligation of such successor Person;

 

(3)                                 immediately after such transaction, no Default or Event of Default exists; and

 

(4)                                 (A)                               the Issuer or the Person formed by or surviving any such consolidation or merger (if other than the Issuer), or to which such sale, assignment, transfer, conveyance or other disposition has been made would, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof; or

 

(B)                               the Fixed Charge Coverage Ratio for the Issuer or successor entity, as applicable, and its Restricted Subsidiaries would not be less than such ratio for the Issuer and its Restricted Subsidiaries immediately prior to such transaction.

 

In addition, the Issuer will not, directly or indirectly, lease all or substantially all of the properties and assets of it and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to any other Person.

 

(b)                                 This Section 5.01 will not apply to:

 

(1)                                 a merger of the Issuer with an Affiliate solely for the purpose of reincorporating the Issuer in another jurisdiction; or

 

(2)                                 any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among the Issuer and its Restricted Subsidiaries (other than the JV Subsidiary).

 

Section 5.02                             Successor Substituted.

 

Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the properties or assets of the Issuer in a transaction that is subject to, and that complies with the provisions of, Section 5.01 hereof, the successor Person formed by such consolidation or into or with which the Issuer is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the 

 

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date of such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, the provisions of this Indenture referring to the “Issuer” shall refer instead to the successor Person and not to the Issuer), and may exercise every right and power of the Issuer, under this Indenture with the same effect as if such successor Person had been named as the Issuer herein; provided, however, that the predecessor shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all or substantially all of the Issuer’s properties or assets in a transaction that is subject to, and that complies with the provisions of, Section 5.01 hereof.

 

ARTICLE 6
 DEFAULTS AND REMEDIES

 

Section 6.01                             Events of Default.

 

Each of the following is an “Event of Default”:

 

(1)                                 default for 30 days in the payment when due of interest on the Notes;

 

(2)                                 default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes;

 

(3)                                 failure by the Issuer or any of its Restricted Subsidiaries to comply with the provisions of Section 5.01 hereof;

 

(4)                                 failure by the Issuer or any of its Restricted Subsidiaries for 60 days (or, in the case of Section 4.03 hereof, 120 days) after notice to the Issuer by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class to comply with any of the other agreements in this Indenture or the Second-Lien Notes Collateral Documents;

 

(5)                                 default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Issuer or any of its Significant Subsidiaries or group of Restricted Subsidiaries that taken as a whole would constitute a Significant Subsidiary (or the payment of which is guaranteed by the Issuer or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the Issue Date (but excluding Indebtedness owing to the Issuer or a Restricted Subsidiary), if that default:

 

(A)                               is caused by a failure to pay principal, interest or premium on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness following the Stated Maturity of such Indebtedness (a “Payment Default”); or

 

(B)                               results in the acceleration of such Indebtedness prior to its Stated Maturity,

 

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $100 million or more;

 

(6)                                 failure by the Issuer or any of its Significant Subsidiaries or group of Restricted Subsidiaries that taken as a whole would constitute a Significant Subsidiary to pay final and 

 

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nonappealable judgments entered by a court or courts of competent jurisdiction aggregating in excess of $100 million (net of any amounts which are covered by insurance or bonded), which judgments are not paid, waived, satisfied, discharged or stayed for a period of 60 days;

 

(7)                                 except as expressly permitted by this Indenture and the Second-Lien Notes Collateral Documents, any of the Second-Lien Notes Collateral Documents shall for any reason cease to be in full force and effect in all material respects, or the Issuer or a Guarantor shall so assert, or any security interest created, or purported to be created, by any of the Second-Lien Notes Collateral Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby, except solely as a result of the Collateral Agent failing to maintain control over possessory Collateral actually received by it; provided that the failure to have a perfected and enforceable Lien on Collateral in favor of the Collateral Agent shall not give rise to an Event of Default, unless the fair market value of all Collateral over which the Collateral Agent fails to have a perfected and enforceable Lien (individually or in the aggregate) equals or exceeds 2.0% of Total Tangible Assets;

 

(8)                                 the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law:

 

(A)                               commences a voluntary case,

 

(B)                               consents to the entry of an order for relief against it in an involuntary case,

 

(C)                               consents to the appointment of a custodian of it or for all or substantially all of its property,

 

(D)                               makes a general assignment for the benefit of its creditors, or

 

(E)                                generally is not paying its debts as they become due;

 

(9)                                 a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(A)                               is for relief against the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary in an involuntary case;

 

(B)                               appoints a custodian of the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary; or

 

(C)                               orders the liquidation of the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary;

 

and the order or decree remains unstayed and in effect for 60 consecutive days; and

 

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(10)                          any Note Guarantee of any Significant Subsidiary or group of Restricted Subsidiaries that taken as a whole would constitute a Significant Subsidiary is held in any final and nonappealable judgment or decree to be unenforceable or invalid or ceases for any reason to be in full force and effect (other than in accordance with the terms of such Note Guarantee and this Indenture), or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee and such Default continues for 10 days after receipt of the notice pursuant to Section 4.04 hereof.

 

In the event of any Event of Default specified in clause (5) of Section 6.01 hereof, such Event of Default and all consequences thereof (excluding, however, any resulting payment default) will be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders of the Notes, if within 20 days after such Event of Default arose the Issuer delivers an Officers’ Certificate to the Trustee stating that (x) the Indebtedness or Guarantee that is the basis for such Event of Default has been discharged or (y) the holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default or (z) the default that is the basis for such Event of Default has been cured, it being understood that in no event shall an acceleration of the principal amount of the Notes as described in Section 6.02 hereof be annulled, waived or rescinded upon the happening of any such events.

 

Section 6.02                             Acceleration.

 

In the case of an Event of Default specified in clauses (8) or (9) of Section 6.01 hereof, with respect to the Issuer or any Restricted Subsidiary of the Issuer that is a Significant Subsidiary or group of Restricted Subsidiaries of the Issuer that taken as a whole would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice.  If any other Event of Default occurs and is continuing, the Trustee by written notice to the Issuer or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes by written notice to the Issuer and the Trustee may declare all the Notes to be due and payable immediately.

 

Upon any such declaration, the Notes shall become due and payable immediately.

 

The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of all of the Holders, rescind an acceleration and its consequences, if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium or that has become due solely because of the acceleration) have been cured or waived.

 

Section 6.03                             Other Remedies.

 

If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes, this Indenture or the Second-Lien Notes Collateral Documents.

 

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  All remedies are cumulative to the extent permitted by law.

 

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Section 6.04                             Waiver of Past Defaults.

 

Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Notes (including in connection with an offer to purchase).  Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

 

Section 6.05                             Control by Majority.

 

Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it.  However, the Trustee may refuse to follow any direction that conflicts with law, this Indenture or the Second-Lien Notes Collateral Documents that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability.

 

Section 6.06                             Limitation on Suits.

 

Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Notes unless:

 

(1)                                 such Holder gives to the Trustee written notice that an Event of Default is continuing;

 

(2)                                 Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy;

 

(3)                                 such Holder or Holders offer and, if requested, provide to the Trustee security or indemnity satisfactory to the Trustee against any loss, liability or expense;

 

(4)                                 the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and

 

(5)                                 during such 60-day period, Holders of a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with such request.

 

A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note.

 

Section 6.07                             Rights of Holders of Notes to Receive Payment.

 

Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder; provided that a Holder shall not have the right to institute any such suit for the enforcement of payment if and to the extent that the institution or prosecution thereof or the 

 

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entry of judgment therein would, under applicable law, result in the surrender, impairment, waiver or loss of the Lien of this Indenture upon any property subject to such Lien.

 

Section 6.08                             Collection Suit by Trustee.

 

If an Event of Default specified in Section 6.01(1) or (2) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuer for the whole amount of principal of, premium, if any, and interest remaining unpaid on, the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

 

Section 6.09                             Trustee May File Proofs of Claim.

 

The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Issuer (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.06 hereof.  To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.06 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.  Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

 

Section 6.10                             Priorities.

 

If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:

 

First:                                          to the Trustee, its agents (including, without limitation, the Agents) and attorneys for amounts due under Section 7.06 hereof, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

 

Second:                                                    to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and

 

Third:                                      to the Issuer or to such party as a court of competent jurisdiction shall direct.

 

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The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10.

 

Section 6.11                             Undertaking for Costs.

 

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.

 

ARTICLE 7
 TRUSTEE

 

Section 7.01                             Duties of Trustee.

 

(a)                                 If an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

 

(b)                                 Except during the continuance of an Event of Default:

 

(1)                                 the duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture or the Second-Lien Notes Collateral Documents against the Trustee; and

 

(2)                                 in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture or the Second-Lien Notes Collateral Documents.  However, the Trustee will examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture or the Second-Lien Notes Collateral Documents.

 

(c)                                  The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

 

(1)                                 this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

 

(2)                                 the Trustee will not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

 

(3)                                 the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.

 

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(d)                                 Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to this Section 7.01.

 

(e)                                  No provision of this Indenture will require the Trustee to expend or risk its own funds or incur any liability.  The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holders have offered to the Trustee security and indemnity satisfactory to the Trustee against any loss, liability or expense.

 

(f)                                   The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer.  Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

 

(g)                                  The Trustee shall not be deemed to have notice, nor shall it be charged with knowledge, of any Default or Event of Default unless a Responsible Officer has actual knowledge thereof or unless written notice of such Default or Event of Default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.

 

(h)                                 The rights, privileges, protections, immunities and benefits given to the Trustee, including its rights to be indemnified, are extended to, and shall be enforceable by, each Agent and the Trustee in each of its capacities and roles hereunder and in its capacity as Trustee or Agent under any other agreement executed in connection with this Indenture to which the Trustee or an Agent is a party.

 

Section 7.02                             Rights of Trustee.

 

(a)                                 The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person.  The Trustee need not investigate any fact or matter stated in the document.

 

(b)                                 Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both.  The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel.  The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

(c)                                  The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care.

 

(d)                                 The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.

 

(e)                                  Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer will be sufficient if signed by an Officer of the Issuer.

 

(f)                                   The Trustee will be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to it against the losses, liabilities or expenses that might be incurred by it in compliance with such request or direction.

 

(g)                                  The permissive rights of the Trustee to act hereunder shall not be construed as a duty.

 

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(h)                                 In no event shall the Trustee or any Agent be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee or any Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

(i)                                     Neither the Trustee nor any Agent shall incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of the Trustee or such Agent, as applicable, that prevents the Trustee or such Agent from performing such act or fulfilling such duty, obligation or responsibility hereunder (including but not limited to any act or provision of any present or future applicable law or regulation or Governmental Authority, any act of God or war, civil unrest, local or national disturbance or disaster, any act of terrorism, or the unavailability of the Federal Reserve Bank wire, facsimile or other wire or communication facility); it being understood and agreed that the Trustee or such Agent shall use commercially reasonable efforts consistent with practices in the banking industry to resume performance as soon as practicable.

 

(j)                                    The Trustee shall not be required to give any note, bond or surety in respect of the trusts and powers under this Indenture.

 

(k)                                 The Trustee may request that the Issuer deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person authorized to sign an Officers’ Certificate, including any person specified as so authorized in such certificate previously delivered and not superseded.

 

(l)                                     Delivery of reports, information and documents to the Trustee under this Indenture is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s (if any) compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely conclusively on Officers’ Certificates).  The Trustee is under no duty to examine such reports, information or documents to ensure compliance with the provision of this Indenture or to ascertain the correctness or otherwise of the information or the statements contained therein.

 

(m)                             Neither the Trustee nor the Registrar shall have any obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

 

Section 7.03                             Individual Rights of Trustee.

 

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights and duties. However, in the event that the Trustee acquires any conflicting interest it must (i) eliminate such conflict within 90 days or (ii) resign.  The Trustee is also subject to Section 7.09 hereof.

 

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Section 7.04                             Trustee’s Disclaimer.

 

The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Notes or the Second-Lien Notes Collateral Documents, it shall not be accountable for the Issuer’s use of the proceeds from the Notes or any money paid to the Issuer or upon the Issuer’s direction under any provision of this Indenture, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

 

Section 7.05                             Notice of Defaults.

 

If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee will mail or deliver electronically to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs.  Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on, any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes.

 

Section 7.06                             Compensation and Indemnity.

 

(a)                                 The Issuer will pay to the Trustee from time to time compensation for its acceptance of this Indenture and services hereunder.  The Trustee’s compensation will not be limited by any law on compensation of a trustee of an express trust.  The Issuer will reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services.  Such expenses will include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

 

(b)                                 The Issuer and the Guarantors will indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Issuer and the Guarantors (including this Section 7.06) and defending itself against any claim (whether asserted by the Issuer, the Guarantors, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense is determined to be attributable to its negligence, willful misconduct or bad faith, as determined by a final order of a court of competent jurisdiction that is not subject to appeal.  The Trustee will notify the Issuer promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the Issuer will not relieve the Issuer or any of the Guarantors of their obligations hereunder.  The Issuer or such Guarantor will defend the claim and the Trustee will cooperate in the defense.  The Trustee may have separate counsel and the Issuer will pay the reasonable fees and expenses of such counsel.  Neither the Issuer nor any Guarantor need pay for any settlement made without its consent, which consent will not be unreasonably withheld.

 

(c)                                  The obligations of the Issuer and the Guarantors under this Section 7.06 will survive the satisfaction and discharge of this Indenture and any resignation or removal of the Trustee.

 

(d)                                 To secure the Issuer’s and the Guarantors’ payment obligations in this Section 7.06, the Trustee will have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes.  Such Lien will survive the satisfaction and discharge of this Indenture and any resignation or removal of the Trustee.

 

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(e)                                  When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(8) or (9) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

 

Section 7.07                             Replacement of Trustee.

 

(a)                                 A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.07.

 

(b)                                 The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuer.  The Holders of a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuer in writing.  The Issuer may remove the Trustee if:

 

(1)                                 the Trustee fails to comply with Section 7.09 hereof;

 

(2)                                 the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

 

(3)                                 a custodian or public officer takes charge of the Trustee or its property; or

 

(4)                                 the Trustee becomes incapable of acting.

 

(c)                                  If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer will promptly appoint a successor Trustee.  Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.

 

(d)                                 If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuer, or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

 

(e)                                  If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.09 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

(f)                                   A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer.  Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee will mail or deliver electronically a notice of its succession to Holders.  The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the retiring Trustee hereunder have been paid and subject to the Lien provided for in Section 7.06 hereof.  Notwithstanding replacement of the Trustee pursuant to this Section 7.07, the Issuer’s obligations under Section 7.06 hereof will continue for the benefit of the retiring Trustee.

 

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Section 7.08                             Successor Trustee by Merger, etc.

 

If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act will be the successor Trustee.

 

Section 7.09                             Eligibility; Disqualification.

 

There will at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100.0 million as set forth in its most recent published annual report of condition.

 

ARTICLE 8
 LEGAL DEFEASANCE AND COVENANT DEFEASANCE

 

Section 8.01                             Option to Effect Legal Defeasance or Covenant Defeasance.

 

The Issuer may at any time elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8.

 

Section 8.02                             Legal Defeasance and Discharge.

 

Upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Issuer and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes (including the Note Guarantees) on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means that the Issuer and the Guarantors will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including the Note Guarantees), which will thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all their other obligations under such Notes, the Note Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Issuer, shall execute such instruments reasonably requested by the Issuer acknowledging the same), except for the following provisions which will survive until otherwise terminated or discharged hereunder:

 

(1)                                 the rights of Holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium, if any, on, such Notes when such payments are due from the trust referred to in Section 8.04 hereof;

 

(2)                                 the Issuer’s obligations with respect to such Notes under Article 2 and Section 4.02 hereof;

 

(3)                                 the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Issuer’s and the Guarantors’ obligations in connection therewith; and

 

(4)                                 this Article 8.

 

Subject to compliance with this Article 8, the Issuer may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.

 

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Section 8.03                             Covenant Defeasance.

 

Upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Issuer and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from each of their obligations under the covenants contained in Sections 4.03, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.19 and 4.20 hereof and clause (4) of Section 5.01 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are satisfied (hereinafter, “Covenant Defeasance”), and the Notes will thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes will not be deemed outstanding for accounting purposes).  For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and Note Guarantees, the Issuer and the Guarantors may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes and Note Guarantees will be unaffected thereby.  In addition, upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, clauses (4), (5), (6) and, with respect to Significant Subsidiaries, clauses (8) and (9) of Section 6.01hereof will not constitute Events of Default.

 

Section 8.04                             Conditions to Legal or Covenant Defeasance.

 

In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02 or 8.03 hereof:

 

(1)                                 the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, or interest and premium on, the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Issuer must specify whether the Notes are being defeased to such stated date for payment or to a particular redemption date;

 

(2)                                 in the case of an election under Section 8.02 hereof, the Issuer must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee (subject to customary exceptions and exclusions) confirming that:

 

(A)                               the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling; or

 

(B)                               since the Issue Date, there has been a change in the applicable federal income tax law,

 

in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the 

 

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same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

 

(3)                                 in the case of an election under Section 8.03 hereof, the Issuer must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee (subject to customary exceptions and exclusions) confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

 

(4)                                 no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing);

 

(5)                                 such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Issuer or any of its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is bound;

 

(6)                                 the Issuer must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Issuer with the intent of preferring the Holders of Notes over the other creditors of the Issuer with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer or others; and

 

(7)                                 the Issuer must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

 

Section 8.05                             Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.

 

Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04 hereof in respect of the outstanding Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest but such money need not be segregated from other funds except to the extent required by law.

 

The Issuer will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.

 

Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to the Issuer from time to time upon the request of the Issuer any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(1) hereof), are in excess 

 

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of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

 

Section 8.06                             Repayment to Issuer.

 

Subject to applicable abandoned property law, any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust for the payment of the principal of, premium, if any, or interest on, any Note and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Issuer on its request or (if then held by the Issuer) will be discharged from such trust; and the Holder of such Note will thereafter be permitted to look only to the Issuer for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof, will thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Issuer.

 

Section 8.07                             Reinstatement.

 

If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or Governmental Authority enjoining, restraining or otherwise prohibiting such application, then the Issuer’s and the Guarantors’ obligations under this Indenture and the Notes and the Note Guarantees will be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Issuer makes any payment of principal of, premium, if any, or interest on, any Note following the reinstatement of its obligations, the Issuer will be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

 

ARTICLE 9
 AMENDMENT, SUPPLEMENT AND WAIVER

 

Section 9.01                             Without Consent of Holders of Notes.

 

Notwithstanding Section 9.02 of this Indenture, the Issuer, the Guarantors, the Trustee and the Collateral Agent may amend or supplement this Indenture, the Notes, the Note Guarantees or the Second-Lien Notes Collateral Documents without the consent of any Holder of Notes:

 

(1)                                 to cure any ambiguity, defect or inconsistency;

 

(2)                                 to provide for uncertificated Notes in addition to or in place of certificated Notes;

 

(3)                                 to provide for the assumption of the Issuer’s or a Guarantor’s obligations to Holders of Notes and Note Guarantees in the case of a merger or consolidation or sale of all or substantially all of the Issuer’s or such Guarantor’s assets, as applicable, and the corresponding release of the Issuer’s obligations under this Indenture or such Guarantor’s obligations under the Note Guarantees;

 

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(4)                                 to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any such Holder;

 

(5)                                 to conform the text of this Indenture, the Note Guarantees, the Notes or the Second-Lien Notes Collateral Documents to any provision of the “Description of the Second-Lien Notes” section of the Issuer’s Offering Memorandum dated March 19, 2014, relating to the initial offering of the Notes, to the extent that such provision in that “Description of the Second-Lien Notes” was intended to be a verbatim recitation of a provision of this Indenture, the Note Guarantees, the Notes or the Second-Lien Notes Collateral Documents;

 

(6)                                 to provide for the issuance of Additional Notes and any PIK Notes in accordance with the limitations set forth in this Indenture as of the Issue Date;

 

(7)                                 to allow any Guarantor to execute a supplemental indenture with respect to the Notes and to release Guarantors from the Note Guarantees in accordance with the terms of this Indenture;

 

(8)                                 to evidence and provide for the acceptance under this Indenture of appointment of a successor trustee or collateral agent;

 

(9)                                 to grant any Lien in favor of the Trustee or the Collateral Agent for the benefit of Holders of the Notes; or

 

(10)                          to enter into additional or supplemental Second-Lien Notes Collateral Documents or to release Collateral from the Lien of this Indenture or the Second-Lien Notes Collateral Documents in accordance with the terms of this Indenture, the Security Agreement and the Second-Lien Notes Collateral Documents.

 

Upon the request of the Issuer, and upon receipt by the Trustee and the Collateral Agent (if applicable) of the documents described in Section 13.02 hereof, the Trustee and the Collateral Agent will join with the Issuer and the Guarantors in the execution of any amended or supplemental indenture or other document authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee and the Collateral Agent will not be obligated to enter into such amended or supplemental indenture or other document that affects their own rights, duties, liabilities or immunities under this Indenture or otherwise.

 

Section 9.02                             With Consent of Holders of Notes.

 

Except as provided below in this Section 9.02, the Issuer, the Guarantors, the Trustee and the Collateral Agent may amend or supplement this Indenture (including, without limitation, Sections 3.09, 4.10 and 4.14 hereof), the Notes, the Note Guarantees and the Second-Lien Notes Collateral Documents with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, Additional Notes, if any) voting as a single class (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Notes, the Note Guarantees or the Second-Lien Notes Collateral Documents may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, Additional Notes, if any) voting as a single 

 

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class (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes).  Section 2.08 hereof shall determine which Notes are considered to be “outstanding” for purposes of this Section 9.02.

 

Upon the request of the Issuer, and upon the filing with the Trustee and the Collateral Agent of evidence of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee and the Collateral Agent (if applicable) of the documents described in Section 13.02 hereof, the Trustee and the Collateral Agent will join with the Issuer and the Guarantors in the execution of such amended or supplemental indenture or other document unless such amended or supplemental indenture or other document affects the Trustee’s or the Collateral Agent’s own rights, duties, liabilities or immunities under this Indenture or otherwise, in which case the Trustee and the Collateral Agent may in their discretion, but will not be obligated to, enter into such amended or supplemental Indenture.

 

It is not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such consent approves the substance thereof.

 

After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Issuer will mail, or deliver electronically, to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver.  Any failure of the Issuer to mail or deliver electronically such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.  Without the consent of each Holder of Notes affected, an amendment, supplement or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):

 

(1)                                 reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

 

(2)                                 reduce the principal of or extend the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (other than the provisions of Sections 3.09, 4.10 and 4.14 hereof);

 

(3)                                 reduce the rate of or extend the time for payment of interest, including default interest, on any Note;

 

(4)                                 waive a Default or Event of Default in the payment of principal of, or interest or premium on, the Notes (except a rescission of acceleration of the Notes by the Holders of a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration);

 

(5)                                 make any Note payable in money other than that stated in the Notes;

 

(6)                                 make any change in the provisions of this Indenture relating to waivers of past Defaults or impair the rights of Holders of Notes to receive payments of principal of, or interest or premium, if any, on, the Notes;

 

(7)                                 waive a redemption payment with respect to any Note (other than a payment required by Sections 3.09, 4.10 or 4.14 hereof);

 

(8)                                 release any Guarantor from any of its obligations under its Note Guarantee or this Indenture, except in accordance with the terms of this Indenture; or

 

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(9)                                 make any change in the preceding amendment and waiver provisions.

 

Without the consent of the Holders of at least 66 2/3% in principal amount of the Notes then outstanding, no amendment, supplement or waiver may release all or substantially all of the Collateral other than in accordance with this Indenture and the Second-Lien Notes Collateral Documents.

 

Section 9.03                             Revocation and Effect of Consents.

 

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note.  However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective.  An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

 

Section 9.04                             Notation on or Exchange of Notes.

 

The Trustee or the Issuer may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter issued or authenticated.  The Issuer in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.

 

Failure to make the appropriate notation or issue a new Note will not affect the validity and effect of such amendment, supplement or waiver.

 

Section 9.05                             Trustee to Sign Amendments, etc.

 

The Trustee and the Collateral Agent will sign any amended or supplemental indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee or the Collateral Agent.  The Issuer may not sign an amended or supplemental indenture until the Board of Directors of the Issuer approves it.  In executing any amended or supplemental indenture, the Trustee and the Collateral Agent will receive and (subject to Section 7.01 hereof) will be fully protected in relying upon an Officers’ Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.

 

ARTICLE 10
 COLLATERAL AND SECURITY

 

Section 10.01                      Second-Lien Notes Collateral Documents.

 

The due and punctual payment of the principal of and interest, if any, on the Notes when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of and interest (to the extent permitted by law), if any, on the Notes and performance of all other obligations of the Issuer to the Holders of Notes or the Trustee under this Indenture and the Notes, according to the terms hereunder or thereunder, are secured as provided in the Second-Lien Notes Collateral Documents which the Issuer has entered into simultaneously with the execution of this Indenture or pursuant to the terms hereof.  Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of the Second-Lien Notes Collateral Documents (including, without limitation, the provisions providing for release of Collateral) as 

 

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the same may be in effect or may be amended from time to time in accordance with their terms and authorizes and directs the Collateral Agent to enter into the Second-Lien Notes Collateral Documents and to perform its obligations and exercise its rights thereunder in accordance with the terms hereof and thereof.  The Issuer shall deliver to the Trustee copies of all documents delivered to the Collateral Agent pursuant to the Second-Lien Notes Collateral Documents, and will do or cause to be done all such acts and things as may be necessary or proper, or as may be required by the provisions of the Second-Lien Notes Collateral Documents, to assure and confirm to the Trustee and the Collateral Agent the security interest in the Collateral contemplated hereby, by the Second-Lien Notes Collateral Documents or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein expressed.  The Issuer will take, and will cause its Subsidiaries to take any and all actions, including those requested by the Trustee or the Collateral Agent reasonably required to cause the Second-Lien Notes Collateral Documents to create and maintain, as security for the Obligations of the Issuer hereunder, a valid and enforceable perfected second-priority Lien in and on all the Collateral, in favor of the Collateral Agent for the benefit of the Holders of Notes, sharing equally and ratably with all other existing and future Second-Lien Obligations of the Issuer and the Guarantors, subject to Permitted Liens.

 

Section 10.02                      Collateral Agent.

 

(a)                                 Wilmington Trust, National Association is hereby appointed Collateral Agent.  Subject to the applicable provisions of the Second-Lien Notes Collateral Documents, each Holder, by acceptance of its Note(s) agrees that (1) the Collateral Agent shall execute and deliver the Second-Lien Notes Collateral Documents and act in accordance with the terms thereof, (2) the Collateral Agent may, upon the instruction, or with the consent, of the Trustee or the Holders, take all actions it deems necessary or appropriate in order to (i) enforce any of the terms of the Second-Lien Notes Collateral Documents and (ii) collect and receive any and all amounts payable in respect of the Obligations of the Issuer and the Guarantors hereunder and under the Notes, the Note Guarantees and the Second-Lien Notes Collateral Documents and (3) to the extent permitted by this Indenture, the Collateral Agent shall have power to institute and to maintain such suits and proceedings upon the instruction of the Trustee to prevent any impairment of the Collateral by any act that may be unlawful or in violation of the Second-Lien Notes Collateral Documents or this Indenture, and suits and proceedings upon the instruction of the Trustee to preserve or protect its interests and the interests of the Trustee and the Holders in the Collateral (including the power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest thereunder or be prejudicial to the interests of the Collateral Agent, the Holders or the Trustee).  Notwithstanding the foregoing, the Collateral Agent shall not be obligated to take any such action without the direction of the Holders and may, at the expense of the Issuer, request the direction of the Holders with respect to any such actions and upon receipt of the written consent of the Holders of a majority in aggregate principal amount of the outstanding Notes along with indemnity or security satisfactory to the Trustee and the Collateral Agent, shall take such actions; provided that all actions so taken shall, at all times, be in conformity with the requirements of the Intercreditor Agreement.

 

(b)                                 Subject to the Second-Lien Notes Collateral Documents, the Trustee shall direct the Collateral Agent from time to time.  Subject to the Second-Lien Notes Collateral Documents, except as directed by the Trustee as required or permitted by this Indenture, the Holders acknowledge that the Collateral Agent shall not be obligated:

 

(1)                                 to act upon directions purported to be delivered to it by any other Person;

 

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(2)                                 to foreclose upon or otherwise enforce the Liens securing any Second-Lien Obligations; or

 

(3)                                 to take any other action whatsoever with regard to any or all of the Second-Lien Obligations, the Second-Lien Notes Collateral Documents or the Collateral.

 

(c)                                  The rights, privileges, protections, immunities and benefits given to the Trustee under this Indenture, including, without limitation, its right to be indemnified and compensated and all other rights, privileges, protections, immunities and benefits set forth in Sections 7.01, 7.02, 7.04 and 7.06, are extended to the Collateral Agent, and its agents and attorneys, and shall be enforceable by, the Collateral Agent, as if fully set forth in this Section 10.02 with respect to the Collateral Agent.  Notwithstanding anything in this Indenture or the Second-Lien Notes Collateral Documents to the contrary, the Collateral Agent will not be required to advance or expend any funds or otherwise incur any financial liability in the performance of its duties or the exercise of its powers or rights hereunder unless it has been provided with security or indemnity satisfactory to it against any and all loss, liability or expense which may be incurred in connection with taking or continuing to take such action.

 

(d)                                 Beyond the exercise of reasonable care in the custody of Collateral in its possession, the Collateral Agent will have no duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto and the Collateral Agent will not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any Liens on the Collateral.  The Collateral Agent will be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords property held by it as a collateral agent or any similar arrangement, and the Collateral Agent will not be liable or responsible for any loss or diminution in the value of any of the Collateral by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Collateral Agent in good faith

 

(e)                                  The Collateral Agent will not be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability of the Liens on any of the Collateral, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes gross negligence, bad faith or willful misconduct (as determined  by a final order of a court of competent jurisdiction that is not subject to appeal) on the part of the Collateral Agent, for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, for the validity of the title, for insuring the Collateral or for the payment of taxes, charges, assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral.  The Collateral Agent hereby disclaims any representation or warranty to any party, including the present and future Holders concerning the perfection of the Liens granted hereunder or in the value of any of the Collateral.

 

(f)                                   The Collateral Agent shall not be required to acquire title to an asset for any reason and shall not be required to carry out any fiduciary or trust obligation for the benefit of another. The Collateral Agent is not a fiduciary and shall not be deemed to have assumed any fiduciary obligation.  If  the Collateral Agent in its sole discretion believes that any obligation to take or omit to take any action may cause the Collateral Agent to be considered an “owner or operator” under any environmental laws or otherwise cause the Collateral Agent to incur, or be exposed to, any environmental liability or any liability under any other federal, state or local law, the Collateral Agent reserves the right, instead of taking such action, either to resign as Collateral Agent or to arrange for the transfer of the title or control of the asset to a court appointed receiver.  The Collateral Agent will not be liable to any Person for any environmental liability or any environmental claims or contribution actions under any federal, state or 

 

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local law, rule or regulation by reason of the Collateral Agent’s actions and conduct as authorized, empowered and directed hereunder or relating to any kind of discharge or release or threatened discharge or release of any hazardous materials into the environment.

 

(g)                                  The Collateral Agent may resign or be replaced in accordance with the procedures set forth in Section 7.07, except that references to the Trustee in such section shall be deemed to be references to the Collateral Agent.  If the Collateral Agent consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act will be the successor Collateral Agent.

 

Section 10.03                      Authorization of Actions to Be Taken.

 

(a)                                 Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of the Second-Lien Notes Collateral Documents, as originally in effect and as amended, supplemented or replaced from time to time in accordance with their terms or the terms of this Indenture, authorizes and empowers the Collateral Agent to act as the collateral agent under the Second-Lien Notes Collateral Documents, authorizes and directs the Trustee and the Collateral Agent to enter into and perform the Second-Lien Notes Collateral Documents to which each is a party, authorizes and empowers the Trustee to direct the Collateral Agent to enter into, and the Collateral Agent to execute, deliver and perform, the Intercreditor Agreement and authorizes and empowers the Trustee and the Collateral Agent to bind the Holders of Notes and other holders of Second-Lien Obligations as set forth in the Second-Lien Notes Collateral Documents to which each is a party and to perform their respective obligations and exercise their respective rights and powers thereunder.

 

(b)                                 Subject to the terms of the Intercreditor Agreement, the Trustee is authorized and empowered to receive for the benefit of the Holders of Notes any funds collected or distributed to the Trustee under the Second-Lien Notes Collateral Documents to which the Trustee is a party and, subject to the terms of the Second-Lien Notes Collateral Documents, to make further distributions of such funds to itself and the Holders of Notes according to the provisions of this Indenture.

 

(c)                                  Subject to the Second-Lien Notes Collateral Documents, the Trustee, at the direction of the Holders of a majority in aggregate principal amount of the outstanding Notes accompanied by indemnity or security satisfactory to the Trustee, shall direct, on behalf of the Holders, the Collateral Agent to take all actions necessary or appropriate in order to:

 

(1)                                 foreclose upon or otherwise enforce any or all of the Liens securing the Second-Lien Obligations;

 

(2)                                 enforce any of the terms of the Second-Lien Notes Collateral Documents to which the Collateral Agent or Trustee is a party; or

 

(3)                                 collect and receive payment of any and all Second-Lien Notes Obligations.

 

Subject to the Intercreditor Agreement and at the Issuer’s sole cost and expense and subject to the Trustee and the Collateral Agent having been indemnified by the Holders and/or the Issuer, the Trustee is authorized and empowered (but is not obligated) to institute and maintain, or direct the Collateral Agent to institute and maintain, such suits and proceedings as may be reasonably expedient to preserve or protect its interests and the interests of the Holders of Notes in the Collateral, including the power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise 

 

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invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of Holders or the Trustee.

 

Section 10.04                      Release of Collateral.

 

(a)                                 Collateral may be released from the Lien and security interest created by the Second-Lien Notes Collateral Documents at any time or from time to time in accordance with the provisions of the Second-Lien Notes Collateral Documents or the Intercreditor Agreement.  In addition, subject to the Intercreditor Agreement and Section 4.19 hereof, assets included in the Collateral will be released from the Liens securing the Notes and the Note Guarantees, and the Collateral Agent and the Trustee (if the Trustee is not then the Collateral Agent) shall, upon the request of the Issuer and the Guarantors pursuant to an Officers’ Certificate and Opinion of Counsel certifying that all conditions precedent hereunder have been met, take such actions requested by the Issuer and the Guarantors to evidence such release from such Liens at the Issuer’s sole cost and expense, under any one or more of the following circumstances:

 

(1)                                 to enable the Issuer or a Guarantor to consummate the sale, transfer, exchange or other disposition of such property or assets to a person that is not the Issuer or a Guarantor to the extent not prohibited under Section 4.10 or Section 5.01;

 

(2)                                 in respect of the property and assets of a Guarantor, upon the designation of such Guarantor to be an Unrestricted Subsidiary in accordance with Section 4.17 and the definition of “Unrestricted Subsidiary”;

 

(3)                                 in respect of the property and assets of a Guarantor, upon the release or discharge of the pledge granted by such Guarantor to secure the obligations under the Credit Agreement or any other Indebtedness or the guarantee of any other Indebtedness which resulted in the obligation to become a Guarantor with respect to the Notes other than in connection with a release or discharge by or as a result of payment in full in respect of the Credit Agreement;

 

(4)                                 in accordance with the Intercreditor Agreement; and

 

(5)                                 as described under Section 9.02.

 

(b)                                 The Liens on the Collateral created by the Second-Lien Notes Collateral Documents securing the Second-Lien Notes Obligations shall automatically be released and discharged under the circumstances set forth in, and subject to, Section 2.07 of the Intercreditor Agreement.

 

(c)                                  The Liens on the Collateral securing the Notes and the Note Guarantees also will be released upon (i) payment in full of the principal of, together with accrued and unpaid interest on, the Notes and all other Obligations under this Indenture, the Note Guarantees and the Second-Lien Notes Collateral Documents that are due and payable at or prior to the time such principal, together with accrued and unpaid interest, is paid or (ii) a Legal Defeasance, Covenant Defeasance or a discharge of this Indenture under Article 12 hereof.

 

Section 10.05                      Powers Exercisable by Receiver or Trustee.

 

In case the Collateral shall be in the possession of a receiver or trustee, lawfully appointed, the powers conferred in this Article 10 upon the Issuer or a Guarantor with respect to the release, sale or other disposition of such property may be exercised by such receiver or trustee, and an instrument signed by such receiver or trustee shall be deemed the equivalent of any similar instrument of the Issuer or a Guarantor or of any officer or officers thereof required by the provisions of this Article 10; and if the 

 

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Trustee or the Collateral Agent shall be in the possession of the Collateral under any provision of this Indenture, then such powers may be exercised by the Trustee or the Collateral Agent, as the case may be.

 

Section 10.06                      Release upon Termination of the Issuer’s Obligations.

 

In the event (i) that the Issuer delivers to the Trustee, in form and substance acceptable to it, an Officers’ Certificate and Opinion of Counsel certifying that all the Obligations under this Indenture, the Notes and the Second-Lien Notes Collateral Documents have been satisfied and discharged by the payment in full of the Issuer’s Obligations under the Notes, this Indenture and the Second-Lien Notes Collateral Documents, and all such Obligations have been so satisfied, or (ii) of Legal Defeasance or Covenant Defeasance pursuant to the terms of this Indenture, all rights the Trustee, on behalf of the Holders, has in or to the Collateral, and any rights the Trustee, on behalf of the Holders, has under the Second-Lien Notes Collateral Documents shall terminate, the Collateral Agent shall be deemed not to hold a Lien in the Collateral on behalf of the Trustee, and the Trustee, at the Issuer’s request, shall (and shall direct the Collateral Agent to) do or cause to be done, at the Issuer’s sole cost and expense, all acts as the Issuer shall have determined to be reasonably necessary to release such Lien as soon as is reasonably practicable and as shall have been set forth in such request.

 

Section 10.07                      Intercreditor Agreement Controls.

 

In the event of any conflict or inconsistency between the provisions of this Indenture and the provisions of the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control.

 

ARTICLE 11
 NOTE GUARANTEES

 

Section 11.01                      Guarantee.

 

(a)                                 Subject to this Article 11, each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Issuer hereunder or thereunder, that:

 

(1)                                 the principal of, premium, if any, and interest on, the Notes will be promptly paid in full when due, whether at Stated Maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and

 

(2)                                 in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration, redemption or otherwise.

 

Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately.  Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.

 

(b)                                 The Guarantors hereby agree that their obligations hereunder are unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any 

 

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provisions hereof or thereof, the recovery of any judgment against the Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor.  Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever and covenants that this Note Guarantee will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture.

 

(c)                                  If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantors, any amount paid to either the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, will be reinstated in full force and effect.

 

(d)                                 Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby.  Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) will forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee.  The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Note Guarantee.

 

Section 11.02                      Limitation on Guarantor Liability.

 

Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Note Guarantee.  To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 11, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance.

 

Section 11.03                      Execution and Delivery of Note Guarantee.

 

To evidence its Note Guarantee set forth in Section 11.01 hereof, each initial Guarantor hereby agrees that this Indenture has been executed on behalf of such Guarantor by one of its Officers.

 

Each Guarantor hereby agrees that its Note Guarantee set forth in Section 11.01 hereof will remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Note Guarantee.

 

If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates the Note, the Note Guarantee will be valid nevertheless.

 

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Upon execution of a supplemental indenture to this Indenture by a new Guarantor substantially in the form attached as Exhibit E hereto, the Note Guarantee of such Guarantor set forth in this Indenture shall be deemed duly delivered, without any further action by any Person, on behalf of such Guarantor.

 

Following the Issue Date, the delivery of any Note by the Trustee, after the authentication thereof hereunder, will constitute due delivery of the Note Guarantee set forth in this Indenture or any supplemental indenture on behalf of the Guarantors who are signatories thereto.

 

In the event that the Issuer or any of its Restricted Subsidiaries creates or acquires any Wholly Owned Domestic Subsidiary after the Issue Date, if required by Section 4.16 hereof, the Issuer will cause such Wholly Owned Domestic Subsidiary to comply with the provisions of Section 4.16 hereof and this Article 11, to the extent applicable.

 

Section 11.04                      Guarantors May Consolidate, etc., on Certain Terms.

 

Except as otherwise provided in Section 11.05 hereof, no Guarantor may sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person, other than the Issuer or another Guarantor, unless:

 

(1)                                 immediately after giving effect to such transaction, no Default or Event of Default exists; and

 

(2)                                 either:

 

(a)                                 subject to Section 11.05 hereof, the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all the obligations of that Guarantor under this Indenture, its Note Guarantee and the Second-Lien Notes Collateral Documents pursuant to a supplemental indenture and other agreements reasonably satisfactory to the Trustee; or

 

(b)                                 the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture.

 

In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture or other agreements, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Note Guarantee and the Second-Lien Notes Collateral Documents and the due and punctual performance of all of the covenants and conditions of this Indenture and the Second-Lien Notes Collateral Documents to be performed by the Guarantor, such successor Person will succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor.  All the Note Guarantees so issued will in all respects have the same legal rank and benefit under this Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof.

 

Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses 2(a) and (b) above, nothing contained in this Indenture or in any of the Notes will prevent any consolidation or merger of a Guarantor with or into the Issuer or another Guarantor, or will prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor.

 

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Section 11.05                      Releases.

 

A Note Guarantee of a Guarantor will be released:

 

(a)                                 in connection with any sale, disposition or transfer of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Issuer or a Guarantor, if the sale, disposition or transfer does not violate the provisions of Section 4.10 hereof;

 

(b)                                 in connection with any sale, disposition or transfer of all of the Capital Stock of that Guarantor to a Person that is not (either before or after giving effect to such transaction) the Issuer or a Guarantor, if the sale, disposition or transfer does not violate the provisions of Section 4.10 hereof;

 

(c)                                  if the Issuer designates any Restricted Subsidiary that is a Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture;

 

(d)                                 upon the release or discharge of such Guarantors’ Guarantee of the Credit Agreement or under the Indebtedness that triggered such Guarantor’s Note Guarantee, except a discharge or release by or as a result of payment under such other Guarantee;

 

(e)                                  upon the liquidation or dissolution of such Guarantor; provided that no Default or Event of Default shall occur as a result thereof or has occurred and is continuing; or

 

(f)                                   upon Legal Defeasance as provided in Section 8.02 hereof or satisfaction and discharge of this Indenture as provided in Section 12.01 hereof.

 

Any Guarantor not released from its obligations under its Note Guarantee as provided in this Section 11.05 will remain liable for the full amount of principal of and interest and premium, if any, on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 11.

 

ARTICLE 12
 SATISFACTION AND DISCHARGE

 

Section 12.01                      Satisfaction and Discharge.

 

This Indenture will be discharged and will cease to be of further effect as to all Notes issued hereunder, when:

 

(1)                                 either:

 

(a)                                 all Notes that have been authenticated and, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer, have been delivered to the Trustee for cancellation; or

 

(b)                                 all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee and the Issuer or any Guarantor has irrevocably 

 

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deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness (including all principal, premium and accrued interest) on the Notes not delivered to the Trustee for cancellation;

 

(2)                                 the Issuer or any Guarantor has paid or caused to be paid all other sums payable by it under this Indenture and the Second-Lien Notes Collateral Documents; and

 

(3)                                 the Issuer has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be.

 

In addition, the Issuer must deliver an Officers’ Certificate to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

 

The Collateral will be released from the Lien securing the Notes as provided under Section 10.04 hereof upon a satisfaction and discharge of the Notes in accordance with the provisions of this Section 12.01.

 

Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section 12.01, the provisions of Sections 12.02 and 8.06 hereof will survive.  In addition, nothing in this Section 12.01 will be deemed to discharge those provisions of Section 7.06 hereof, that, by their terms, survive the satisfaction and discharge of this Indenture or to relieve the Issuer from its obligations with respect to the Notes under Article 2 and Section 4.02 hereof.

 

Section 12.02                      Application of Trust Money.

 

Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee pursuant to Section 12.01 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

 

If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 12.01 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or Governmental Authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s and any Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.01 hereof; provided that if the Issuer has made any payment of principal of, premium, if any, or interest on, any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

 

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ARTICLE 13
 MISCELLANEOUS

 

Section 13.01                      Notices.

 

Any notice or communication by the Issuer, any Guarantor, the Trustee or the Collateral Agent to the others is duly given if in writing in the English language and delivered in Person or by first class mail (registered or certified, return receipt requested), facsimile transmission or overnight air courier guaranteeing next day delivery, to the others’ address:

 

If to the Issuer and/or any Guarantor:

 

Walter Energy, Inc.

3000 Riverchase Galleria

Suite 1700

Birmingham, AL 35244 

Facsimile No.:  205-776-7859

Attention:  General Counsel

 

With a copy to:

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

Facsimile No.:  212-455-2502

Attention:  Risë B. Norman

 

If to the Trustee:

 

Wilmington Trust, National Association

Corporate Capital Markets

50 South Sixth Street, Suite 1290

Minneapolis, MN 55402

Attention:  Walter Energy Administrator

 

If to the Collateral Agent:

 

Wilmington Trust, National Association

Corporate Capital Markets

50 South Sixth Street, Suite 1290

Minneapolis, MN 55402

Attention:  Walter Energy Administrator

 

The Issuer, any Guarantor, the Trustee or the Collateral Agent, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

 

All notices and communications (other than those sent to Holders) will be deemed to have been duly given:  at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by facsimile; 

 

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and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

 

Any notice or communication to a Holder will be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar.  Failure to mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders. Notice to a Holder of a Global Note shall be sufficiently given if given to the Depositary (or its designee) pursuant to the standing instructions from the Depositary or its designee, including by electronic mail in accordance with Applicable Procedures.

 

If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.

 

If the Issuer mails a notice or communication to Holders, it will mail a copy to the Trustee and each Agent at the same time.

 

Section 13.02                      Certificate and Opinion as to Conditions Precedent.

 

Upon any request or application by the Issuer or any Guarantor to the Trustee or the Collateral Agent, as the case may be, to take any action under this Indenture, the Notes, the Guarantees or the Second-Lien Notes Collateral Documents, the Issuer shall furnish to the Trustee or the Collateral Agent, as the case may be:

 

(1)                                 an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee or the Collateral Agent, as the case may be (which must include the statements set forth in Section 13.03 hereof), stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture, the Notes, the Guarantees or the Second-Lien Notes Collateral Documents relating to the proposed action have been satisfied; and

 

(2)                                 an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 13.03 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.

 

Section 13.03                      Statements Required in Certificate or Opinion.

 

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture must include:

 

(1)                                 a statement that the Person making such certificate or opinion has read such covenant or condition;

 

(2)                                 a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

(3)                                 a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and

 

(4)                                 a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.

 

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Section 13.04                      Rules by Trustee and Agents.

 

The Trustee may make reasonable rules for action by or at a meeting of Holders.  The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

 

Section 13.05                      No Personal Liability of Directors, Officers, Employees, Stockholders and Members.

 

No director, manager, officer, employee, incorporator, stockholder or member of the Issuer, or any Subsidiary, as such, will have any liability for any obligations of the Issuer or the Guarantors under the Notes, this Indenture, the Note Guarantees, the Second-Lien Notes Collateral Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder of Notes by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.  The waiver may not be effective to waive liabilities under the federal securities laws.

 

Section 13.06                      Governing Law.

 

THE LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE AND ENFORCE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES.

 

Section 13.07                      No Adverse Interpretation of Other Agreements.

 

This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuer or its Subsidiaries or of any other Person.  Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

 

Section 13.08                      Successors.

 

All agreements of the Issuer in this Indenture and the Notes will bind its successors.  All agreements of the Trustee in this Indenture will bind its successors.  All agreements of each Guarantor in this Indenture will bind its successors, except as otherwise provided in Section 11.05 hereof.

 

Section 13.09                      Severability.

 

In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.

 

Section 13.10                      Counterpart Originals.

 

The parties may sign any number of copies of this Indenture.  Each signed copy will be an original, but all of them together represent the same agreement.  The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this instrument as to the parties hereto and may be used in lieu of the original instrument for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

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Section 13.11                      Table of Contents, Headings, etc.

 

The Table of Contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof.

 

[Signatures on following page]

 

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WALTER   ENERGY, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Earl H. Doppelt
    
	
 
    	
 
    	
Name:   Earl H. Doppelt
    
	
 
    	
 
    	
Title:   Executive Vice President, General Counsel and Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ON BEHALF OF THE GUARANTORS LISTED
    
	
 
    	
ON SCHEDULE I HERETO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: :
    	
/s/ Earl H. Doppelt
    
	
 
    	
 
    	
Name:   Earl H. Doppelt
    
	
 
    	
 
    	
Title:   Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
WILMINGTON TRUST, NATIONAL ASSOCIATION,
    
	
 
    	
as Trustee and Collateral Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Timothy P. Mowdy
    
	
 
    	
 
    	
Name:   Timothy P. Mowdy
    
	
 
    	
 
    	
Title:   Administrative Vice President
    


 











 

SCHEDULE I

 

Name of Guarantor

 

J.W. Walter, Inc.

 

Walter Black Warrior Basin LLC

 

Walter Coke, Inc.

 

Walter Energy Holdings, LLC

 

Walter Exploration & Production LLC

 

Walter Land Company

 

Walter Minerals, Inc.

 

Walter Natural Gas, LLC

 

Blue Creek Coal Sales, Inc.

 

Jim Walter Resources, Inc.

 

Taft Coal Sales & Associates, Inc.

 

Tuscaloosa Resources, Inc.

 











 

EXHIBIT A

 

	
 
    	
[Face of Note]
    	
[PIK](1)
    


 

THIS NOTE HAS BEEN ISSUED WITH “ORIGINAL ISSUE DISCOUNT” (WITHIN THE MEANING OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED). UPON WRITTEN REQUEST, THE ISSUER WILL PROMPTLY MAKE AVAILABLE TO ANY HOLDER OF THIS NOTE THE FOLLOWING INFORMATION: (1) THE ISSUE PRICE AND DATE OF THE NOTE, (2) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THE NOTE AND (3) THE YIELD TO MATURITY OF THE NOTE. HOLDERS SHOULD CONTACT THE CHIEF FINANCIAL OFFICER AT 205-745-2000.

 

CUSIP:  [           ]
 ISIN:  [           ]

 

11.0%/12.0% Senior Secured Second Lien PIK Toggle Notes due 2020

 

	
No. [      ]
    	
$[                        ]
    


 

WALTER ENERGY, INC.

 

promises to pay to [                          ] or registered assigns,

 

the principal sum of                                                                                                             DOLLARS [(as may be increased or decreased by the attached Schedule of Exchanges of Interests in the Global Note)](2) on April 1, 2020.

 

Interest Payment Dates:  April 1 and October 1

 

Record Dates:  March 15 and September 15

 

Dated:  [                    ], 20[    ]

 

[Signature pages to follow]

 




(1)  Insert on any certificated PIK Notes.

(2)  Include only if the Note is issued in global form.

 

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IN WITNESS HEREOF, the Issuer has caused this instrument to be duly executed.

 

	
 
    	
WALTER ENERGY, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    


 

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This is one of the 11.0%/12.0% Senior Secured Second Lien PIK Toggle Notes due 2020 referred to in the within-mentioned Indenture:

 

 

	
 
    	
WILMINGTON TRUST, NATIONAL ASSOCIATION, as   Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized Signatory
    


 

Dated:

 

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[Back of Note]

11.0%/12.0% Senior Secured Second Lien PIK Toggle Notes due 2020

 

[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. [Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]]

 

[THIS NOTE AND THE RELATED GUARANTEES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.  BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR (C) IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN “INSTITUTIONAL ACCREDITED INVESTOR”), (2) AGREES THAT IT WILL NOT, WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE OF THESE NOTES, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO WALTER ENERGY, INC. OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS

 

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AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND BASED UPON AN OPINION OF COUNSEL IF REQUESTED BY WALTER ENERGY, INC., (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO WALTER ENERGY, INC.) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.  IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE OF THESE NOTES, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE.  IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND WALTER ENERGY, INC. SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.  THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS. [Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]]

 

Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

 

(1)           INTEREST.  (a) Walter Energy, Inc., a Delaware corporation (the “Issuer”), promises to pay interest on the principal amount of this Note at 11.0%/12.0% per annum from [March 27, 2014](3) until maturity.  The Issuer will pay interest semi-annually in arrears on April 1 and October 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”).  Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be [October 1, 2014](4).  The Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

(b)           Interest will be payable, at the election of the Issuer (made by delivering a notice to the Trustee five Business Days prior to the beginning of each Interest Period), (x) entirely in cash (“Cash Interest”) or (y) with a combination of (i) 50% Cash Interest and 50% by increasing the principal amount of the outstanding Notes or issuing additional PIK Notes (“PIK Interest”) or 

 




(3) For Additional Notes or PIK Notes, insert the appropriate date for such Additional Notes or PIK Notes.

(4) For Additional Notes or PIK Notes, insert the appropriate Interest Payment Date for such Additional Notes or PIK Notes.

 

A-5











 

(ii) 75% Cash Interest and 25% PIK Interest.  The first and final interest payments will be paid entirely in Cash Interest.

 

(c)           In the absence of an interest payment election made by the Issuer as set in Paragraph (1)(b) above, interest on the Notes shall be payable entirely in Cash Interest.  Notwithstanding anything to the contrary, the payment of accrued interest in connection with any redemption or repurchase of Notes, as described under Sections 3.07, 3.08(b), 4.10 or 4.14 of the Indenture and on the first and final interest payment dates, shall be made solely in Cash Interest.

 

(d)           For interest payments on the Notes that the Issuer elects to pay as Cash Interest, Cash Interest will accrue at a rate equal to 11.0% per annum.  For interest payments on the Notes that the Issuer elects to pay as PIK Interest, PIK Interest will accrue at a rate equal to 12% per annum. Following an increase in the principal amount of any outstanding Global Notes as a result of a PIK Payment, such Global Note will bear interest on such increased principal amount from and after the date of such PIK Payment.  Any PIK Notes issued in certificated form will be dated as of the applicable interest payment date and will bear interest from and after such date.  All Notes issued pursuant to a PIK Payment will be governed by, and subject to the terms, provisions and conditions of, the Indenture and the Second-Lien Notes Collateral Documents and shall have the same rights and benefits as the Notes issued on the Issue Date.

 

(2)           METHOD OF PAYMENT.  The Issuer will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the March 15 or September 15 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest.  The Notes will be payable as to principal, premium, if any, and interest (other than PIK Interest) at the office or agency of the Issuer maintained for such purpose or, at the option of the Issuer, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal, interest (other than PIK Interest), premium, if any, on, all Global Notes and all other Notes the Holders of which will have provided wire transfer instructions to the Issuer or the Paying Agent.  Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

 

At all times, PIK Interest on the Notes will be payable (x) with respect to Notes represented by one or more Global Notes registered in the name of, or held by, DTC or its nominee on the relevant record date, by increasing the principal amount of the outstanding Global Note by an amount equal to the amount of PIK Interest for the applicable Interest Period (rounded down to the nearest whole dollar) as provided in writing by the Issuer to the Trustee, and the Trustee, at the written request of the Issuer, will record such increase in such Global Note and (y) with respect to Notes represented by Definitive Notes, by issuing PIK Notes in certificated form in an aggregate principal amount equal to the amount of PIK Interest for the applicable Interest Period (rounded down to the nearest whole dollar), and the Trustee will, at the written request of the Issuer, authenticate and deliver such PIK Notes in certificated form for original issuance to the holders on the relevant record date, as shown by the records of the register of Holders.

 

(3)           PAYING AGENT AND REGISTRAR.  Initially, Wilmington Trust, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar.  The Issuer may change any Paying Agent or Registrar without notice to any Holder.  The Issuer or any of its Subsidiaries may act in any such capacity.

 

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(4)                                 INDENTURE.  The Issuer issued the Notes under an Indenture dated as of March 27, 2014 (the “Indenture”), among the Issuer, the Guarantors, the Trustee and the Collateral Agent.  The terms of the Notes include those stated in the Indenture.  The Notes are subject to all such terms, and Holders are referred to the Indenture for a statement of such terms.  To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.  The Notes are secured obligations of the Issuer.  The Notes are secured by substantially all of the property and assets of the Issuer and the Guarantors, subject to Excluded Assets.  The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder.

 

(5)                                 OPTIONAL REDEMPTION.

 

(a)                                 Except as set forth in subparagraphs (b) and (c) of this Paragraph 5, the Issuer will not have the option to redeem the Notes prior to April 1, 2017.  On or after April 1, 2017, the Issuer may redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ notice (provided that notices of redemption in connection with defeasance or discharge of the Indenture may be given more than 60 days in advance), at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest on the Notes redeemed to the applicable redemption date, if redeemed during the twelve-month period beginning on April 1 of the years indicated below, subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant interest payment date:

 

	
Year
    	
 
    	
Percentage
    	
 
    
	
2017 
    	
 
    	
105.500
    	
%
    
	
2018 
    	
 
    	
102.750
    	
%
    
	
2019 and thereafter   
    	
 
    	
100.000
    	
%
    


 

Unless the Issuer defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

 

(b)                                 Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time prior to April 1, 2017, the Issuer may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture at a redemption price equal to 111.000% of the principal amount, plus accrued and unpaid interest to, but not including, the redemption date, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the aggregate principal amount of the Notes originally issued under the Indenture (excluding Notes held by the Issuer and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption and that the redemption occurs within 180 days of the date of the closing of such Equity Offering.

 

(c)                                  At any time prior to April 1, 2017, the Issuer may also redeem all or a part of the Notes, upon not less than 30 nor more than 60 days’ prior notice (provided that notices of redemption in connection with defeasance or discharge of the Indenture may be given more than 60 days in advance) mailed by first-class mail, or in the case of Global Notes held by the Depositary, electronically or in accordance with the Depositary’s procedures, to each Holder’s registered address, at a redemption price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest to, but not including, the applicable redemption date, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date.

 

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(6)                                 MANDATORY REDEMPTION.

 

(a)                                 If the Notes would otherwise constitute “applicable high yield discount obligations” within the meaning of Section 163(i)(1) of the Code, at the end of each “accrual period” (as defined in Section 1272(a)(5) of the Code) ending after the fifth anniversary of the Initial Notes’ issuance (each, an “AHYDO Redemption Date”), the Issuer will be required to redeem for cash a portion of each Note then outstanding equal to the Mandatory Principal Redemption Amount (each such redemption, a “Mandatory Principal Redemption”).  The redemption price for the portion of each Note redeemed pursuant to any Mandatory Principal Redemption will be 100% of the principal amount of such portion plus any accrued interest thereon on the date of redemption. No partial redemption or repurchase of the Notes prior to any AHYDO Redemption Date pursuant to any other provision of the Indenture will alter the Issuer’s obligation to make any Mandatory Principal Redemption with respect to any Notes that remain outstanding on such AHYDO Redemption Date.

 

(b)                                 Except pursuant to Paragraph 6(a) above, the Issuer is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

 

(7)                                 REPURCHASE AT THE OPTION OF HOLDER.

 

(a)                                 Upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Issuer to make an offer (a “Change of Control Offer”) to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess of $2,000 (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof)) of that Holder’s Notes at a purchase price in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest, if any on the Notes repurchased to, but not including, the date of purchase, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date (the “Change of Control Payment”).  Within 30 days following any Change of Control, the Issuer will mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture.

 

(b)                                 If the Issuer or a Restricted Subsidiary of the Issuer consummates any Asset Sales, within ten Business Days after the aggregate amount of Excess Proceeds exceeds $250.0 million, the Issuer will make an offer to all Holders of Notes (an “Asset Sale Offer”) to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon to, but not including, the date of purchase.  If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuer may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture.  If the purchase price for the Notes tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee will select the Notes to be purchased on a pro rata basis or in accordance with the applicable procedures of the Depositary, subject to adjustments so no Note in an unauthorized denomination remains outstanding after such purchase.  Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.  Any Asset Sale Offer will be conducted in accordance with the procedures specified in Section 3.09 of the Indenture.

 

(c)                                  Holders that are the subject of a Change of Control Offer or an Asset Sale Offer (each, an “Offer to Purchase”), will receive notice of an Offer to Purchase from the Issuer prior to

 

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any related purchase date and may elect to have such Notes purchased by completing the form titled “Option of Holder to Elect Purchase” appearing below.

 

(8)                                 NOTICE OF REDEMPTION.  Notice of redemption will be mailed by first class mail, or in the case of Global Notes, delivered electronically in accordance with the procedures of the Depositary, at least 30 days but not more than 60 days before a redemption date to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed or delivered electronically more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction or discharge of the Indenture.  No Notes of $2,000 principal amount (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof) or less will be redeemed in part.

 

(9)                                 DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000 (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof).  The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture.  The Issuer need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part.  Also, the Issuer need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date.

 

(10)                          PERSONS DEEMED OWNERS.  The registered Holder of a Note may be treated as its owner for all purposes.

 

(11)                          AMENDMENT, SUPPLEMENT AND WAIVER.  Subject to certain exceptions, the Indenture, the Notes, the Note Guarantees or the Second-Lien Notes Collateral Documents may be amended or supplemented with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting as a single class, and any existing Default or Event or Default or compliance with any provision of the Indenture, the Notes, the Note Guarantees or the Second-Lien Notes Collateral Documents may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting as a single class.  Without the consent of any Holder of a Note, the Indenture, the Notes, the Note Guarantees or the Second-Lien Notes Collateral Documents may be amended or supplemented:  to cure any ambiguity, defect or inconsistency; to provide for uncertificated Notes in addition to or in place of certificated Notes; to provide for the assumption of the Issuer’s or a Guarantor’s obligations to Holders of Notes and Note Guarantees in the case of a merger or consolidation or sale of all or substantially all of the Issuer’s or such Guarantor’s assets, as applicable, and the corresponding release of the Issuer’s obligations under the Indenture or such Guarantor’s obligations under the Note Guarantees; to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any such Holder; to conform the text of the Indenture, the Notes, the Note Guarantees or the Second-Lien Notes Collateral Documents to any provision of the “Description of the Second Lien Notes” section of the Issuer’s Offering Memorandum dated March 19, 2014, relating to the initial offering of the Notes, to the extent that such provision in that “Description of the Second Lien Notes” was intended to be a verbatim recitation of a provision of the Indenture, the Notes, the Note Guarantees or the Second-Lien Notes Collateral Documents; to provide for the issuance of Additional Notes and PIK Notes in accordance with the limitations set forth in the Indenture as of the Issue Date; to allow any Guarantor to execute a supplemental indenture and/or a Note Guarantee with respect to the Notes and to release Guarantors from the Note Guarantees in accordance with the terms of

 

A-9











 

the Indenture; to evidence and provide for the acceptance under the Indenture of appointment of a successor trustee or collateral agent; to grant any Lien in favor of the Trustee or the Collateral Agent for the benefit of Holders of the Notes; or to enter into additional or supplemental Second-Lien Notes Collateral Documents or to release Collateral from the Lien of the Indenture or the Second-Lien Notes Collateral Documents in accordance with the terms of the Indenture and the Second-Lien Notes Collateral Documents.

 

(12)                          DEFAULTS AND REMEDIES.  Events of Default include:  (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes, (iii) failure by the Issuer or any of its Restricted Subsidiaries to comply with the provisions of Section 5.01 of the Indenture; (iv) failure by the Issuer or any of its Restricted Subsidiaries for 60 days (or, in the case of the provisions of Section 4.03 of the Indenture, 120 days) after notice to the Issuer by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class to comply with any of the other agreements in the Indenture or the Second-Lien Notes Collateral Documents; (v) default under certain other agreements relating to Indebtedness for money borrowed of the Issuer or any of its Significant Subsidiaries or group of Restricted Subsidiaries that taken as a whole would constitute a Significant Subsidiary, if such default is caused by a failure to pay principal, interest or premium on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness following the Stated Maturity of such Indebtedness, or results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, aggregates $100 million or more; (vi) certain final judgments for the payment of money in excess of $100 million that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary; (viii) except as expressly permitted by the Indenture and the Second-Lien Notes Collateral Documents, any of the Second-Lien Notes Collateral Documents shall for any reason cease to be in full force and effect in all material respects, or the Issuer or a Guarantor shall so assert, or any security interest created, or purported to be created, by any of the Second-Lien Notes Collateral Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby, except solely as a result of the Collateral Agent failing to maintain control over possessory Collateral actually received by it; provided that the failure to have a perfected and enforceable Lien on Collateral in favor of the Collateral Agent shall not give rise to an Event of Default, unless the fair market value of all Collateral over which the Collateral Agent fails to have a perfected and enforceable Lien (individually or in the aggregate) equals or exceeds 2.0% of Total Tangible Assets; and (ix) any Note Guarantee of any Significant Subsidiary or group of Restricted Subsidiaries that taken as a whole would constitute a Significant Subsidiary is held in any final and nonappealable judgment or decree to be unenforceable or invalid or ceases for any reason to be in full force and effect (other than in accordance with the terms of such Note Guarantee and the Indenture), or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee and such Default continues for 10 days after receipt of the notice pursuant to Section 4.04 of the Indenture.  If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.  Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable immediately without further action or notice.  Holders may not enforce the Indenture or the Notes except as provided in the Indenture.  Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default in payment of principal of, premium, if any, or interest on, any Note) if it determines that withholding notice is in their interest.  The Holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may, on behalf of the Holders of all of the

 

A-10











 

Notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Notes.  The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuer is required, within 30 days of becoming aware of any Default or Event of Default that has not been cured, to deliver to the Trustee a statement specifying such Default or Event of Default.

 

(13)                          TRUSTEE DEALINGS WITH ISSUER.  The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuer or its Affiliates, and may otherwise deal with the Issuer or its Affiliates, as if it were not the Trustee.

 

(14)                          NO RECOURSE AGAINST OTHERS.  No director, manager, officer, employee, incorporator, stockholder or member of the Issuer, or any Subsidiary, as such, will have any liability for any obligations of the Issuer or the Guarantors under the Notes, the Indenture, the Note Guarantees, the Second-Lien Notes Collateral Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder of Notes by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.  The waiver may not be effective to waive liabilities under the federal securities laws.

 

(15)                          AUTHENTICATION.  This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

 

(16)                          ABBREVIATIONS.  Customary abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

(17)                          CUSIP NUMBERS.  Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption, and reliance may be placed only on the other identification numbers placed thereon.

 

(18)                          GOVERNING LAW.  THE LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE AND ENFORCE THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES.

 

The Issuer will furnish to any Holder upon written request and without charge a copy of the Indenture and the Second-Lien Notes Collateral Documents.  Requests may be made to:

 

Walter Energy, Inc.
 3000 Riverchase Galleria
 Suite 1700
 Birmingham, AL 35244
 Facsimile No.:  205-776-7859
 Attention:  General Counsel

 

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ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

	
(I) or (we) assign and transfer this   Note to:
    	
 
    
	
 
    	
(Insert assignee’s legal   name)
    


 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

(Print or type assignee’s name, address and zip code)

 

and irrevocably appoint                                                                                                                   to transfer this Note on the books of the Issuer.  The agent may substitute another to act for him.

 

	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Your Signature:
    	
 
    
	
 
    	
 
    	
(Sign exactly as your   name appears on the face of this Note)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature Guarantee*:
    	
 
    	
 
    	
 
    
						


 




*                                         Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

A-12











 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.10 or 4.14 of the Indenture, check the appropriate box below:

 

	
oSection 4.10
    	
oSection 4.14
    


 

If you want to elect to have only part of the Note purchased by the Issuer pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased:

 

$         

 

	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Your Signature:
    	
 
    
	
 
    	
 
    	
(Sign exactly as   your name appears on the face of this Note)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Tax Identification No.:
    	
 
    
	
 
    	
 
    	
 
    
	
Signature Guarantee*:
    	
 
    	
 
    	
 
    
							


 




*                                         Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

A-13











 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE *

 

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

 

	
Date of Exchange
    	
 
    	
Amount of decrease in
   Principal Amount
   of
    this Global Note
    	
 
    	
Amount of increase in
   Principal Amount
   of
    this Global Note
    	
 
    	
Principal Amount
   of this Global Note
   following such
   decrease
    (or increase)
    	
 
    	
Signature of
   authorized officer of
   Trustee or
   Custodian
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    


 




*                                         This schedule should be included only if the Note is issued in global form.

 

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EXHIBIT B

 

FORM OF CERTIFICATE OF TRANSFER

 

Walter Energy, Inc.
 3000 Riverchase Galleria
 Suite 1700
 Birmingham, AL 35244

 

Wilmington Trust, National Association
 Corporate Capital Markets

50 South Sixth Street, Suite 1290

Minneapolis, MN 55402

Attention:  Walter Energy Administrator

 

Re:  $350,000,000 11.0%/12.0% Senior Secured Second Lien PIK Toggle Notes due 2020

 

Reference is hereby made to the Indenture, dated as of March 27, 2014 (the “Indenture”), among Walter Energy, Inc., as issuer (the “Issuer”), the Guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

, (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $                       in such Note[s] or interests (the “Transfer”), to                                                        (the “Transferee”), as further specified in Annex A hereto.  In connection with the Transfer, the Transferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1.               o  Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Restricted Definitive Note pursuant to Rule 144A.  The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.

 

2.               o  Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Note or a Restricted Definitive Note pursuant to Regulation S.  The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling

 

B-1











 

efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.

 

3.               o  Check and complete if Transferee will take delivery of a beneficial interest in the IAI Global Note or a Restricted Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S.  The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

 

(a)           o such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;

 

or

 

(b)           o such Transfer is being effected to the Issuer or a subsidiary thereof;

 

or

 

(c)           o such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;

 

or

 

(d)           o such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) based upon an Opinion of Counsel if requested by Walter Energy, Inc. (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act.  Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Restricted Definitive Notes and in the Indenture and the Securities Act.

 

4.             o  Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.

 

(a)           o  Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer

 

B-2











 

restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

 

(b)           o Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

 

(c)           o Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

 

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
[Insert Name of   Transferor]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
Dated:
    	
 
    	
 
    	
 
    
					


 

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ANNEX A TO CERTIFICATE OF TRANSFER

 

1.                                      The Transferor owns and proposes to transfer the following:

 

[CHECK ONE OF (a) OR (b)]

 

(a)                                 o a beneficial interest in the:

 

(i)                                     o 144A Global Note (CUSIP 93317Q AJ4), or

 

(ii)                                  o Regulation S Global Note (CUSIP U9312C AD6), or

 

(iii)                               o IAI Global Note (CUSIP                   ); or

 

(b)                                 o a Restricted Definitive Note.

 

2.                                      After the Transfer the Transferee will hold:

 

[CHECK ONE]

 

(a)                                 o a beneficial interest in the:

 

(i)                                     o 144A Global Note (CUSIP 93317Q AJ4), or

 

(ii)                                  o Regulation S Global Note (CUSIP U9312C AD6), or

 

(iii)                               o IAI Global Note (CUSIP                   ); or

 

(iv)          o Unrestricted Global Note (CUSIP                   ); or

 

(b)                                 o a Restricted Definitive Note; or

 

(c)                                  o an Unrestricted Definitive Note,

 

in accordance with the terms of the Indenture.

 

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EXHIBIT C

 

FORM OF CERTIFICATE OF EXCHANGE

 

Walter Energy, Inc.
 3000 Riverchase Galleria
 Suite 1700
 Birmingham, AL 35244

 

Wilmington Trust, National Association
 Corporate Capital Markets

50 South Sixth Street, Suite 1290

Minneapolis, MN 55402

Attention:  Walter Energy Administrator

 

Re:  $350,000,000 11.0%/12.0% Senior Secured Second Lien PIK Toggle Notes due 2020

 

(CUSIP                         )

 

Reference is hereby made to the Indenture, dated as of March 27, 2014 (the “Indenture”), among Walter Energy, Inc., as issuer (the “Issuer”), the Guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

, (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $                         in such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Owner hereby certifies that:

 

1.             Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note

 

(a)           o Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note.  In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

(b)           o Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note.  In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

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(c)           o Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note.  In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

(d)           o Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note.  In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

2.             Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes

 

(a)           o Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note.  In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer.  Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

 

(b)           o Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note.  In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] o 144A Global Note, o Regulation S Global Note, o IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

 

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This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
[Insert Name of   Transferor]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
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Dated:
    	
 
    	
 
    	
 
    
					


 

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EXHIBIT D

 

FORM OF CERTIFICATE FROM
 ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

 

Walter Energy, Inc.
 3000 Riverchase Galleria
 Suite 1700
 Birmingham, AL 35244

 

Wilmington Trust, National Association
 Corporate Capital Markets

50 South Sixth Street, Suite 1290

Minneapolis, MN 55402

Attention:  Walter Energy Administrator

 

Re:  11.0%/12.0% Senior Secured Second Lien PIK Toggle Notes due 2020

 

Reference is hereby made to the Indenture, dated as of March 27, 2014 (the “Indenture”), among Walter Energy, Inc., as issuer (the “Issuer”), the guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

In connection with our proposed purchase of $                         aggregate principal amount of:

 

(a)           o a beneficial interest in a Global Note, or

 

(b)           o a Definitive Note,

 

we confirm that:

 

1.             We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the “Securities Act”).

 

2.             We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence.  We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Issuer or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C) to an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Issuer a signed letter substantially in the form of this letter and based upon an Opinion of Counsel if requested by the Issuer, (D) in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.

 

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3.             We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Issuer such certifications, legal opinions and other information as you and the Issuer may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect.

 

4.             We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.

 

5.             We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.

 

You and the Issuer are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
[Insert Name of   Accredited Investor]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
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Dated:
    	
 
    	
 
    	
 
    
					


 

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EXHIBIT E

 

[FORM OF SUPPLEMENTAL INDENTURE
 TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

 

SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of                                 , 20    , among                                      (the “Guaranteeing Subsidiary”), a subsidiary of                                          (or its permitted successor), a [Delaware] corporation (the “Issuer”), the Issuer, the other Guarantors (as defined in the Indenture referred to herein) and                                         , as trustee under the Indenture referred to below (the “Trustee”) and as collateral agent under the Indenture referred to below (the “Collateral Agent”).

 

W I T N E S S E T H

 

WHEREAS, the Issuer has heretofore executed and delivered to [the Trustee]/[Wilmington Trust, National Association] and [the Collateral Agent]/[Wilmington Trust, National Association] an indenture (the “Indenture”), dated as of March 27, 2014, providing for the issuance of 11.0%/12.0% Senior Secured Second Lien PIK Toggle Notes due 2020 (the “Notes”);

 

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee and the Collateral Agent a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “Note Guarantee”); and

 

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture without the consent of the Holders of the Notes.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Trustee and the Collateral Agent covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

 

1.             CAPITALIZED TERMS.  Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

 

2.             AGREEMENT TO GUARANTEE.  The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture including but not limited to Article 11 thereof.

 

4.             NO RECOURSE AGAINST OTHERS.  No director, manager, officer, employee, incorporator, stockholder or member of the Guaranteeing Subsidiary, as such, will have any liability for any obligations of the Issuer or any Guaranteeing Subsidiary under the Notes, the Indenture, any Note Guarantees, the Second-Lien Notes Collateral Documents or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder of Notes by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.  Such waiver may not be effective to waive liabilities under the federal securities laws.

 

5.             NEW YORK LAW TO GOVERN.  THE LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE AND ENFORCE THIS SUPPLEMENTAL INDENTURE.

 

6.             COUNTERPARTS.  The parties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement. 

 

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The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this instrument as to the parties hereto and may be used in lieu of the original instrument for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

7.             EFFECT OF HEADINGS.  The Section headings herein are for convenience only and shall not affect the construction hereof.

 

8.             THE TRUSTEE.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Issuer.

 

9.             RATIFICATION.  Except as expressly supplemented hereby, the Indenture shall remain in full force and effect.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.

 

	
Dated:                                 ,   20  
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[GUARANTEEING SUBSIDIARY]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
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[EXISTING GUARANTORS]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
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[TRUSTEE AND COLLATERAL AGENT],
    
	
 
    	
 
    	
as Trustee and Collateral Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Authorized Signatory
    


 

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