exv10w1





Exhibit 10.1



Execution Version




Published CUSIP Number 04232DAA1




$50,000,000 REVOLVING CREDIT FACILITY

$100,000,000 TERM LOAN




CREDIT AGREEMENT




by and among



ARMSTRONG COAL COMPANY, INC.,

ARMSTRONG LAND COMPANY, LLC,

WESTERN MINERAL DEVELOPMENT, LLC

WESTERN DIAMOND LLC

WESTERN LAND COMPANY, LLC

ELK CREEK L.P., as Borrowers



and



THE LENDERS PARTY HERETO



and



THE HUNTINGTON NATIONAL BANK, as Syndication Agent



and



UNION BANK, N.A., as Documentation Agent



and



PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent



Dated as of February 9, 2011













 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	1. CERTAIN DEFINITIONS
	 	 	1	 
	1.1 Certain Definitions
	 	 	1	 
	1.2 Construction
	 	 	23	 
	1.3 Accounting Principles
	 	 	23	 
	 
	 	 	 	 
	2. REVOLVING CREDIT AND SWING LOAN FACILITIES
	 	 	24	 
	2.1 Revolving Credit Commitments
	 	 	24	 
	2.1.1 Revolving Credit Loans
	 	 	24	 
	2.1.2 Swing Loan Commitment
	 	 	24	 
	2.2 Nature of Revolver Lenders’ Obligations with Respect to Revolving
Credit Loans
	 	 	24	 
	2.3 Commitment Fees
	 	 	24	 
	2.4 [Intentionally Omitted]
	 	 	25	 
	2.5 Revolving Credit Loan Requests; Swing Loan Requests
	 	 	25	 
	2.5.1 Revolving Credit Loan Requests
	 	 	25	 
	2.5.2 Swing Loan Requests
	 	 	25	 
	2.6 Making Revolving Credit Loans and Swing Loans; Presumptions by the
Administrative Agent; Repayment of       
             Revolving
Credit Loans; Borrowings to Repay Swing Loans
	 	 	26	 
	2.6.1 Making Revolving Credit Loans
	 	 	26	 
	2.6.2 Presumptions by the Administrative Agent
	 	 	26	 
	2.6.3 Making Swing Loans
	 	 	27	 
	2.6.4 Repayment of Revolving Credit Loans
	 	 	27	 
	2.6.5 Borrowings to Repay Swing Loans
	 	 	27	 
	2.6.6 Swing Loans Under Cash Management Agreements
	 	 	27	 
	2.7 Notes
	 	 	28	 
	2.8 Use of Proceeds
	 	 	28	 
	2.9 Letter of Credit Subfacility
	 	 	28	 
	2.9.1 Issuance of Letters of Credit
	 	 	28	 
	2.9.2 Letter of Credit Fees
	 	 	29	 
	2.9.3 Disbursements, Reimbursement
	 	 	29	 
	2.9.4 Repayment of Participation Advances
	 	 	30	 
	2.9.5 Documentation
	 	 	31	 
	2.9.6 Determinations to Honor Drawing Requests
	 	 	31	 
	2.9.7 Nature of Participation and Reimbursement Obligations
	 	 	31	 
	2.9.8 Indemnity
	 	 	33	 
	2.9.9 Liability for Acts and Omissions
	 	 	33	 
	2.9.10 Issuing Lender Reporting Requirements
	 	 	35	 
	 
	 	 	 	 
	3. TERM LOANS
	 	 	35	 
	3.1 Term Loan Commitments
	 	 	35	 
	3.2 Nature of Term Lenders’ Obligations with Respect to Term Loans;
Repayment Terms
	 	 	35	 
	3.3 Notes
	 	 	35	 






i









 






	 	 	 	 	 
	 	 	Page	 
	4. INTEREST RATES
	 	 	35	 
	4.1 Interest Rate Options
	 	 	35	 
	4.1.1 Revolving Credit Interest Rate Options;
Swing Line Interest Rate
	 	 	36	 
	4.1.2 Term Loan Interest Rate Options
	 	 	36	 
	4.1.3 Rate Quotations
	 	 	36	 
	4.2 Interest Periods
	 	 	37	 
	4.2.1 Amount of Borrowing Tranche
	 	 	37	 
	4.2.2 Renewals
	 	 	37	 
	4.3 Interest After Default
	 	 	37	 
	4.3.1 Letter of Credit Fees, Interest Rate
	 	 	37	 
	4.3.2 Other Obligations
	 	 	37	 
	4.3.3 Acknowledgment
	 	 	37	 
	4.4 LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits
Not Available
	 	 	37	 
	4.4.1 Unascertainable
	 	 	37	 
	4.4.2 Illegality; Increased Costs;
Deposits Not Available
	 	 	38	 
	4.4.3 Administrative Agent’s and Lender’s Rights
	 	 	38	 
	4.5 Selection of Interest Rate Options
	 	 	39	 
	 
	 	 	 	 
	5. PAYMENTS
	 	 	39	 
	5.1 Payments
	 	 	39	 
	5.2 Pro Rata Treatment of Lenders
	 	 	39	 
	5.3 Sharing of Payments by Lenders
	 	 	39	 
	5.4 Presumptions by Administrative Agent
	 	 	40	 
	5.5 Interest Payment Dates
	 	 	41	 
	5.6 Voluntary Prepayments
	 	 	41	 
	5.6.1 Right to Prepay
	 	 	41	 
	5.6.2 Replacement of a Lender
	 	 	42	 
	5.6.3 Reduction of Revolving Credit Commitments
	 	 	43	 
	5.7 Mandatory Prepayments
	 	 	43	 
	5.7.1 Sale of Assets
	 	 	43	 
	5.7.2 Excess Cash Flow
	 	 	43	 
	5.7.3 Issuance of Indebtedness
	 	 	43	 
	5.7.4 Issuance of Equity
	 	 	44	 
	5.7.5 Insurance Proceeds
	 	 	44	 
	5.7.6 Application Among Interest Rate Options
	 	 	44	 
	5.8 Increased Costs
	 	 	45	 
	5.8.1 Increased Costs Generally
	 	 	45	 
	5.8.2 Capital Requirements
	 	 	45	 
	5.8.3 Certificates for Reimbursement; Repayment of Outstanding
Loans; Borrowing of New Loans
	 	 	46	 
	5.8.4 Delay in Requests
	 	 	46	 
	5.9 Taxes
	 	 	46	 
	5.9.1 Payments Free of Taxes
	 	 	46	 
	5.9.2 Payment of Other Taxes by the Borrowers
	 	 	46	 
	5.9.3 Indemnification by the Borrowers
	 	 	46	 
	5.9.4 Evidence of Payments
	 	 	47	 
	5.9.5 Status of Lenders
	 	 	47	 






ii









 






	 	 	 	 	 
	 	 	Page	 
	5.10 Indemnity
	 	 	48	 
	5.11 Settlement Date Procedures
	 	 	48	 
	 
	 	 	 	 
	6. REPRESENTATIONS AND WARRANTIES
	 	 	49	 
	6.1 Representations and Warranties
	 	 	49	 
	6.1.1 Organization and Qualification; Power and Authority;
Compliance With Laws; Title to Properties; Event of Default
	 	 	49	 
	6.1.2 Subsidiaries and Owners; Investment Companies
	 	 	50	 
	6.1.3 Validity and Binding Effect
	 	 	50	 
	6.1.4 No Conflict; Material Agreements; Consents
	 	 	50	 
	6.1.5 Litigation
	 	 	50	 
	6.1.6 Financial Statements
	 	 	51	 
	6.1.7 Margin Stock
	 	 	51	 
	6.1.8 Full Disclosure
	 	 	51	 
	6.1.9 Taxes
	 	 	52	 
	6.1.10 Patents, Trademarks, Copyrights, Licenses, Etc.
	 	 	52	 
	6.1.11 Liens in the Collateral
	 	 	52	 
	6.1.12 Insurance
	 	 	52	 
	6.1.13 ERISA Compliance
	 	 	52	 
	6.1.14 Environmental Matters
	 	 	53	 
	6.1.15 Solvency
	 	 	53	 
	6.1.16 Coal Act; Black Lung Act
	 	 	53	 
	6.1.17 Bonding Capacity
	 	 	54	 
	6.1.18 Permit Blockage
	 	 	54	 
	6.1.19 Armstrong Land Company and Elk Creek, L.P
	 	 	54	 
	6.1.20 Vendor Liens. No default exists with respect to any of
the Vendor Liens
	 	 	54	 
	6.2 Updates to Schedules
	 	 	54	 
	 
	 	 	 	 
	7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
	 	 	55	 
	7.1 First Loans and Letters of Credit
	 	 	55	 
	7.1.1 Deliveries
	 	 	55	 
	7.1.2 Payment of Fees
	 	 	57	 
	7.2 Each Loan or Letter of Credit
	 	 	57	 
	 
	 	 	 	 
	8. COVENANTS
	 	 	57	 
	8.1 Affirmative Covenants
	 	 	57	 
	8.1.1 Preservation of Existence, Etc.
	 	 	57	 
	8.1.2 Payment of Liabilities, Including Taxes, Etc.
	 	 	57	 
	8.1.3 Maintenance of Insurance
	 	 	57	 
	8.1.4 Maintenance of Properties and Leases
	 	 	58	 
	8.1.5 Visitation Rights
	 	 	58	 
	8.1.6 Keeping of Records and Books of Account
	 	 	58	 
	8.1.7 Compliance with Laws; Use of Proceeds
	 	 	58	 
	8.1.8 Further Assurances
	 	 	59	 
	8.1.9 Anti-Terrorism Laws
	 	 	59	 
	8.1.10 Maintenance of Patents, Trademarks, Etc.
	 	 	59	 






iii









 






	 	 	 	 	 
	 	 	Page	 
	8.1.11 Collateral and Additional Collateral (Including
As-Extracted Collateral); Execution and Delivery of Additional and
Ancillary Security Documents
	 	 	59	 
	8.1.12 Maintenance of Material Contracts
	 	 	60	 
	8.1.13 Maintenance of Licenses, Etc.
	 	 	60	 
	8.1.14 Maintenance of Permits
	 	 	60	 
	8.2 Negative Covenants
	 	 	60	 
	8.2.1 Indebtedness
	 	 	60	 
	8.2.2 Liens; Lien Covenants
	 	 	61	 
	8.2.3 Guaranties
	 	 	61	 
	8.2.4 Loans and Investments
	 	 	61	 
	8.2.5 Dividends and Related Distributions
	 	 	62	 
	8.2.6 Liquidations, Mergers, Consolidations, Acquisitions
	 	 	63	 
	8.2.7 Dispositions of Assets or Subsidiaries
	 	 	64	 
	8.2.8 Affiliate Transactions
	 	 	65	 
	8.2.9 Subsidiaries, Partnerships and Joint Ventures
	 	 	65	 
	8.2.10 Continuation of or Change in Business
	 	 	65	 
	8.2.11 Fiscal Year
	 	 	65	 
	8.2.12 Issuance of Stock
	 	 	65	 
	8.2.13 Changes in Organizational Documents
	 	 	66	 
	8.2.14 Minimum Fixed Charge Coverage Ratio
	 	 	66	 
	8.2.15 Maximum Leverage Ratio
	 	 	66	 
	8.2.16 Minimum Consolidated EBITDA
	 	 	67	 
	8.2.17 Capital Expenditures and Leases
	 	 	67	 
	8.3 Reporting Requirements
	 	 	67	 
	8.3.1 Monthly Financial Statements
	 	 	67	 
	8.3.2 Annual Financial Statements
	 	 	67	 
	8.3.3 Certificate of the Borrower
	 	 	68	 
	8.3.4 Notices
	 	 	68	 
	 
	 	 	 	 
	9. DEFAULT
	 	 	69	 
	9.1 Events of Default
	 	 	69	 
	9.1.1 Payments Under Loan Documents
	 	 	69	 
	9.1.2 Breach of Warranty
	 	 	69	 
	9.1.3 Breach of Negative Covenants or Visitation Rights
	 	 	69	 
	9.1.4 Breach of Other Covenants
	 	 	69	 
	9.1.5 Defaults in Other Agreements or Indebtedness
	 	 	69	 
	9.1.6 Final Judgments or Orders
	 	 	70	 
	9.1.7 Loan Document Unenforceable
	 	 	70	 
	9.1.8 Uninsured Losses; Proceedings Against Assets
	 	 	70	 
	9.1.9 Events Relating to Plans and Benefit Arrangements
	 	 	70	 
	9.1.10 Change of Control
	 	 	70	 
	9.1.11 Cross Default
	 	 	70	 
	9.1.12 Relief Proceedings
	 	 	71	 
	9.2 Consequences of Event of Default
	 	 	71	 
	9.2.1 Events of Default Other Than Bankruptcy,
Insolvency or Reorganization Proceedings
	 	 	71	 
	9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings
	 	 	71	 
	9.2.3 Set-off
	 	 	71	 






iv









 






	 	 	 	 	 
	 	 	Page	 
	9.2.4 Application of Proceeds
	 	 	72	 
	 
	 	 	 	 
	10. THE ADMINISTRATIVE AGENT
	 	 	73	 
	10.1 Appointment and Authority
	 	 	73	 
	10.2 Rights as a Lender
	 	 	73	 
	10.3 Exculpatory Provisions
	 	 	73	 
	10.4 Reliance by Administrative Agent
	 	 	74	 
	10.5 Delegation of Duties
	 	 	75	 
	10.6 Resignation of Administrative Agent
	 	 	75	 
	10.7 Non-Reliance on Administrative Agent and Other Lenders
	 	 	76	 
	10.8 No Other Duties, etc.
	 	 	76	 
	10.9 Administrative Agent’s Fee
	 	 	76	 
	10.10 Authorization to Release Collateral and Guarantors
	 	 	76	 
	10.11 No Reliance on Administrative Agent’s Customer Identification Program
	 	 	77	 
	 
	 	 	 	 
	11. MISCELLANEOUS
	 	 	77	 
	11.1 Modifications, Amendments or Waivers
	 	 	77	 
	11.1.1 Increase of Commitment
	 	 	77	 
	11.1.2 Extension of Payment; Reduction of Principal Interest or
Fees; Modification of Terms of Payment
	 	 	77	 
	11.1.3 Release of Collateral or Guarantor
	 	 	77	 
	11.1.4 Miscellaneous
	 	 	77	 
	11.2 No Implied Waivers; Cumulative Remedies
	 	 	78	 
	11.3 Expenses; Indemnity; Damage Waiver
	 	 	78	 
	11.3.1 Costs and Expenses
	 	 	78	 
	11.3.2 Indemnification by the Borrowers
	 	 	78	 
	11.3.3 Reimbursement by Lenders
	 	 	79	 
	11.3.4 Waiver of Consequential Damages, etc.
	 	 	79	 
	11.3.5 Payments
	 	 	80	 
	11.4 Holidays
	 	 	80	 
	11.5 Notices; Effectiveness; Electronic Communication
	 	 	80	 
	11.5.1 Notices Generally
	 	 	80	 
	11.5.2 Electronic Communications
	 	 	80	 
	11.5.3 Change of Address, etc.
	 	 	81	 
	11.6 Severability
	 	 	81	 
	11.7 Duration; Survival
	 	 	81	 
	11.8 Successors and Assigns
	 	 	81	 
	11.8.1 Successors and Assigns Generally
	 	 	81	 
	11.8.2 Assignments by Lenders
	 	 	82	 
	11.8.3 Register
	 	 	83	 
	11.8.4 Participations
	 	 	83	 
	11.8.5 Limitations upon Participant Rights Successors and Assigns Generally
	 	 	84	 
	11.8.6 Certain Pledges; Successors and Assigns Generally
	 	 	84	 
	11.9 Obligations Absolute
	 	 	84	 
	11.10 Joinder
	 	 	86	 
	11.11 Waivers, etc.
	 	 	86	 
	11.12 Joint and Several Liability; Guaranty and Surety Matters
	 	 	87	 
	11.13 Confidentiality
	 	 	88	 






v









 





	 	 	 	 	 
	 	 	Page	 
	11.13.1 General
	 	 	88	 
	11.13.2 Sharing Information With Affiliates of the Lenders
	 	 	88	 
	11.14 Counterparts; Integration; Effectiveness
	 	 	88	 
	11.14.1 Counterparts; Integration; Effectiveness
	 	 	88	 
	11.15 CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE;
SERVICE OF PROCESS; WAIVER OF JURY TRIAL
	 	 	89	 
	11.15.1 Governing Law
	 	 	89	 
	11.15.2 SUBMISSION TO JURISDICTION
	 	 	89	 
	11.15.3 WAIVER OF VENUE
	 	 	89	 
	11.15.4 SERVICE OF PROCESS
	 	 	90	 
	11.15.5 WAIVER OF JURY TRIAL
	 	 	90	 
	11.16 Borrowing Agent
	 	 	90	 
	11.17 USA Patriot Act Notice
	 	 	90	 






vi









 






LIST OF SCHEDULES AND EXHIBITS




	 	 	 	 	 

	SCHEDULES
	 	 	 	 
	 
	SCHEDULE 1.1(A)

	 	-
	 	PRICING GRID
	SCHEDULE 1.1(B)

	 	-
	 	COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
	SCHEDULE 1.1(P)

	 	-
	 	PERMITTED LIENS
	SCHEDULE 1.1(R)

	 	-
	 	REAL PROPERTY
	SCHEDULE 1.1(V)

	 	-
	 	VENDOR LIENS
	SCHEDULE 6.1.1

	 	-
	 	QUALIFICATIONS TO DO BUSINESS
	SCHEDULE 6.1.2

	 	-
	 	SUBSIDIARIES
	SCHEDULE 6.1.12

	 	-
	 	INSURANCE
	SCHEDULE 6.1.13

	 	-
	 	ERISA DISCLOSURES
	SCHEDULE 6.1.14

	 	-
	 	ENVIRONMENTAL DISCLOSURES
	SCHEDULE 7.1

	 	-
	 	EXISTING INDEBTEDNESS
	SCHEDULE 7.1.1

	 	-
	 	OPINION OF COUNSEL
	SCHEDULE 8.1.3

	 	-
	 	INSURANCE REQUIREMENTS RELATING TO COLLATERAL
	SCHEDULE 8.2.1

	 	-
	 	PERMITTED INDEBTEDNESS
	SCHEDULE 8.2.4

	 	-
	 	PERMITTED LOANS AND INVESTMENTS
	 
	 	 	 	 
	EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT 1.1(A)

	 	-
	 	ASSIGNMENT AND ASSUMPTION AGREEMENT
	EXHIBIT 1.1(C)

	 	-
	 	COLLATERAL ASSIGNMENT
	EXHIBIT 1.1(G)(1)

	 	-
	 	GUARANTOR JOINDER
	EXHIBIT 1.1(G)(2)(a)

	 	-
	 	GUARANTY AGREEMENT (REVOLVER)
	EXHIBIT 1.1(G)(2)(b)

	 	-
	 	GUARANTY AGREEMENT (TERM)
	EXHIBIT 1.1(I)(1)(a)

	 	-
	 	INDEMNITY (REVOLVER)
	EXHIBIT 1.1(I)(1)(b)

	 	-
	 	INDEMNITY (TERM)
	EXHIBIT 1.1(I)(2)

	 	-
	 	INTERCOMPANY SUBORDINATION AGREEMENT
	EXHIBIT 1.1(M)(1)

	 	-
	 	MORTGAGE (REVOLVER)
	EXHIBIT 1.1(M)(2)

	 	-
	 	MORTGAGE (TERM)
	EXHIBIT 1.1(N)(1)

	 	-
	 	REVOLVING CREDIT NOTE
	EXHIBIT 1.1(N)(2)

	 	-
	 	SWING LOAN NOTE
	EXHIBIT 1.1(N)(3)

	 	-
	 	TERM NOTE
	EXHIBIT 1.1(P)(1)(a)

	 	-
	 	PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT (REVOLVER)
	EXHIBIT 1.1(P)(1)(b)

	 	-
	 	PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT (TERM)
	EXHIBIT 1.1(P)(2)(a)

	 	-
	 	PLEDGE AGREEMENT (REVOLVER)
	EXHIBIT 1.1(P)(2)(b)

	 	-
	 	PLEDGE AGREEMENT (TERM)
	EXHIBIT 1.1(S)(1)

	 	-
	 	SECURITY AGREEMENT (REVOLVER)
	EXHIBIT 1.1(S)(2)

	 	-
	 	SECURITY AGREEMENT (TERM)






vii









 






	 	 	 	 	 

	EXHIBIT 2.5.1

	 	-
	 	LOAN REQUEST
	EXHIBIT 2.5.2

	 	-
	 	SWING LOAN REQUEST
	EXHIBIT 8.3.3

	 	-
	 	QUARTERLY COMPLIANCE CERTIFICATE







viii











 





CREDIT AGREEMENT




     THIS CREDIT AGREEMENT (as hereafter amended, the “Agreement”) is dated as of February 9, 2011
and is made by and among ARMSTRONG COAL COMPANY, INC., a Delaware corporation, ARMSTRONG LAND
COMPANY, LLC, a Delaware limited liability company, WESTERN MINERAL DEVELOPMENT, LLC, a Delaware
limited liability company, WESTERN DIAMOND LLC, a Nevada limited liability company, WESTERN LAND
COMPANY, LLC, a Kentucky limited liability company, and ELK CREEK, L.P., a Delaware limited
partnership (each a “Borrower” and collectively, the “Borrowers”), each of the GUARANTORS (as
hereinafter defined), the LENDERS (as hereinafter defined), THE HUNTINGTON NATIONAL BANK, in its
capacity as syndication agent for the Lenders under this Agreement, UNION BANK, N.A., in its
capacity as documentation agent for the Lenders under this Agreement, and PNC BANK, NATIONAL
ASSOCIATION, in its capacity as administrative agent for the Lenders under this Agreement
(hereinafter referred to in such capacity as the “Administrative Agent”).



     The Borrowers have requested the Lenders to provide (i) a revolving credit facility to the
Revolver Borrowers in an aggregate principal amount not to exceed $50,000,000 and (ii) a term loan
facility to the Term Borrowers in the amount of $100,000,000. In consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound hereby, the
parties hereto covenant and agree as follows:



1. CERTAIN DEFINITIONS



     1.1 Certain Definitions. In addition to words and terms defined elsewhere in this
Agreement, the following words and terms shall have the following meanings, respectively, unless
the context hereof clearly requires otherwise:



          Administrative Agent shall mean PNC Bank, National Association, and its successors and
assigns.




          Administrative Agent’s Fee shall have the meaning specified in Section 10.9
[Administrative Agent’s Fee].




          Administrative
Agent’s Letter shall have the meaning specified in Section 10.9
[Administrative Agent’s Fee].




          Affiliate as to any Person shall mean any other Person (i) which directly or
indirectly controls, is controlled by, or is under common control with such Person, (ii) which
beneficially owns or holds 5% or more of any class of the voting or other equity interests of such
Person, or (iii) 5% or more of any class of voting interests or other equity interests of which is
beneficially owned or held, directly or indirectly, by such Person.




          Ancillary Security Documents shall mean all documents, instruments, environmental
reports, agreements, endorsements, policies and certificates requested by the
Administrative Agent and customarily delivered by any property owner in connection with a





 









 







mortgage financing. Without limiting the generality of the foregoing, examples of Ancillary
Security Documents would include insurance policies (other than title insurance) or certificates
regarding any collateral, lien searches, estoppel letters, flood insurance certifications,
environmental audits which shall meet the Administrative Agent’s minimum requirements for phase I
environmental assessments or phase II environmental assessments, as applicable, opinions of counsel
and the like.




          Anti-Terrorism Laws shall mean any Laws relating to terrorism or money laundering,
including Executive Order No. 13224, the USA Patriot Act, the Laws comprising or implementing the
Bank Secrecy Act, and the Laws administered by the United States Treasury Department’s Office of
Foreign Asset Control (as any of the foregoing Laws may from time to time be amended, renewed,
extended, or replaced).




          Applicable Commitment Fee Rate shall mean 0.375% per annum.




          Applicable Letter of Credit Fee Rate shall mean the percentage rate per annum based on
the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below
the heading “Letter of Credit Fee.”




          Applicable Margin shall mean, as applicable:




          (A) the percentage spread to be added to the Base Rate applicable to Loans under the Base Rate
Option based on the Leverage Ratio then in effect according to the pricing grid on Schedule
1.1(A) below the heading “Base Rate Spread”, or




          (B) the percentage spread to be added to the LIBOR Rate applicable to Loans under the LIBOR
Rate Option based on the Leverage Ratio then in effect according to the pricing grid on
Schedule 1.1(A) below the heading “LIBOR Rate Spread”.




          Approved Fund shall mean any fund that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course of business and
that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or
an Affiliate of an entity that administers or manages a Lender.




          Assignment and Assumption Agreement shall mean an assignment and assumption agreement
entered into by a Lender and an assignee permitted under Section 11.8 [Successors and Assigns], in
substantially the form of Exhibit 1.1(A).




          Authorized Officer shall mean, with respect to any Loan Party other than limited
partnerships, the Chief Executive Officer, President, Chief Financial Officer, Manager or
Controller of such Loan Party, or with respect to any Loan Party that is a limited partnership, the
General Partner of such Loan Party (acting through its Authorized Officer if such General Partner
is a Loan Party), or such other individuals, designated by written notice to the Administrative
Agent from any Loan Party, authorized to execute notices, reports and other documents on behalf of
the Loan Parties required hereunder. Any Loan Party may amend such list of individuals from time
to time by giving written notice of such amendment to the Administrative Agent.







- 2 -









 








          Base Rate shall mean, for any day, a fluctuating per annum rate of interest equal to
the highest of (a) the Federal Funds Open Rate, plus 0.5%, and (b) the Prime Rate, and (c)
the Daily LIBOR Rate, plus 100 basis points (1.0%). Any change in the Base Rate (or any
component thereof) shall take effect at the opening of business on the day such change occurs.




          Base Rate Option shall mean the option of the Borrowers to have Loans bear interest at
the rate and under the terms set forth in either Section 4.1.1(i) [Revolving Credit Base Rate
Option] or Section 4.1.2(i) [Term Loan Base Rate Option], as applicable.




          Black Lung Act shall mean, collectively, the Black Lung Benefits Revenue Act of 1977,
as amended and the Black Lung Benefits Reform Act of 1977, as amended.




          Borrower shall mean any of the Revolver Borrowers or Term Borrowers and “Borrowers”
shall mean each of the Revolver Borrowers and Term Borrowers.




          Borrowing Agent shall mean Armstrong Coal Company, Inc.




          Borrowing Date shall mean, with respect to any Loan, the date for the making thereof
or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which
shall be a Business Day.




          Borrowing Tranche shall mean specified portions of Loans outstanding as follows: (i)
any Loans to which a LIBOR Rate Option applies which become subject to the same Interest Rate
Option under the same Loan Request by any Borrower and which have the same Interest Period shall
constitute one Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies shall
constitute one Borrowing Tranche.




          Business Day shall mean any day other than a Saturday or Sunday or a legal holiday on
which commercial banks are authorized or required to be closed for business in Pittsburgh,
Pennsylvania and if the applicable Business Day relates to any Loan to which the LIBOR Rate Option
applies, such day must also be a day on which dealings are carried on in the London interbank
market.




          Casualty Event means an event that gives rise to the receipt by the Borrowers or any
of the Loan Parties of any insurance proceeds or condemnation awards in respect of any personal or
real property.




          Coal Act shall mean the Coal Industry Retiree Health Benefits Act of 1992, as amended.




          Change in Law shall mean the occurrence, after the date of this Agreement, of any of
the following: (a) the adoption or taking effect of any Law, (b) any change in any Law or in the
administration, interpretation or application thereof by any Official Body or (c) the making or
issuance of any request, guideline or directive (whether or not having the force of Law) by any
Official Body.




          Closing Date shall mean the Business Day on which the first Loan shall be made, which
shall be February 9, 2011.







- 3 -









 








          Code shall mean the Internal Revenue Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.




          Collateral shall mean collectively the Collateral (Revolver) and the Collateral
(Term).




          Collateral (Revolver) shall mean the collateral that is owned or leased by any
Revolver Borrower (including, but not limited to Armstrong Coal Company, Inc.), Armstrong Resources
Holdings, LLC, Armstrong Energy, Inc., and their Subsidiaries (other than Excluded Subsidiaries or
any Term Borrowers or such Term Borrower’s Subsidiaries) in which Liens are granted in favor of the
Administrative Agent for the benefit of the Lenders pursuant to the (i) Security Agreement
(Revolver) (ii) Pledge Agreement (Revolver), (iii) Collateral Assignment, (iv) Patent, Trademark
and Copyright Security Agreement (Revolver), or (v) Mortgages (Revolver). The Revolver Lenders
shall have a first lien on the Collateral (Revolver) and the Term Lenders shall have a second lien
on the Collateral (Revolver).




          Collateral (Term) shall mean the collateral that is owned or leased by any Term
Borrower (other than Armstrong Coal Company, Inc.), Elk Creek GP, LLC, Western Diamond LLC, Western
Land Company, LLC and their Subsidiaries (other than Excluded Subsidiaries, any Revolver Borrowers,
Armstrong Resources Holdings, LLC, Armstrong Energy, Inc., Armstrong Coal Company, Inc. and their
Subsidiaries) in which Liens are granted in favor of the Administrative Agent for the benefit of
the Lenders pursuant to (i) Security Agreement (Term) (ii) Pledge Agreement (Term), (iii)
Collateral Assignment, (iv) Patent, Trademark and Copyright Security Agreement (Term), or (v)
Mortgages (Term). The Term Lenders shall have a first lien on the Collateral (Term) and the
Revolver Lenders shall have a second lien on the Collateral (Term).




          Collateral Assignment shall mean the Collateral Assignment in the form of Exhibit
1.1(C) delivered to the Administrative Agent for the benefit of the Revolver Lenders and Term
Lenders.




          Commitment shall mean as to any Lender the aggregate of its Revolving Credit
Commitment and Term Loan Commitment and, in the case of PNC, its Swing Loan Commitment, and
Commitments shall mean the aggregate of the Revolving Credit Commitments, Term Loan
Commitments and Swing Loan Commitment of all of the Lenders.




          Commitment Fee shall have the meaning specified in Section 2.3 [Commitment Fees].




          Commodity Hedge shall mean a price protection agreement related to crude oil, diesel
fuel, heating oil, coal, SO2 allowances, natural gas, explosives or other commodities used in the
ordinary course of business of the Loan Parties.




          Compliance Certificate shall have the meaning specified in Section 8.3.3 [Certificate
of the Borrower].







- 4 -









 








          Consolidated EBITDA for any period of determination shall mean (i) the sum of net
income, depreciation, depletion, amortization, minority interest, other non-recurring, non-cash
charges to net income, interest expense, non-cash loss on derivative items (SFAS No. 133 and its
successors) and income tax expense minus (ii) non-cash gains on derivative items (SFAS No.
133 and its successors) and non-recurring, non-cash credits to net income, in each case of the Loan
Parties and their Subsidiaries for such period determined and consolidated in accordance with
GAAP plus (iii) transaction fees and expenses paid in connection with the closing of the
transactions contemplated by this Agreement and Permitted Acquisitions, in an aggregate amount not
to exceed $5,000,000; provided, however, that for the purposes of this definition,
with respect to a business acquired by the Loan Parties pursuant to a Permitted Acquisition,
Consolidated EBITDA shall be calculated on a pro forma basis, using historical numbers, in
accordance with GAAP as if the Permitted Acquisition had been consummated at the beginning of such
period, and provided, further, that for the purposes of this definition, with
respect to a business or assets conveyed or disposed of by the Loan Parties pursuant to Section
8.2.7 [Dispositions of Assets or Subsidiaries] or pursuant to a Permitted Joint Venture,
Consolidated EBITDA shall be calculated as if such disposition or conveyance had been consummated
at the beginning of such period. For purposes of determining Consolidated EBITDA, items related to
Permitted Joint Ventures shall be excluded, except that cash dividends paid by any Permitted Joint
Venture to the Borrowers or a wholly-owned Subsidiary of the Borrowers shall be included in
Consolidated EBITDA.




          Consolidated Funded Debt shall mean, as of any date of determination and without
duplication, the sum of all Indebtedness representing borrowed money, including both the current
and long-term portion thereof, capitalized lease obligations, and contingent and guaranty
obligations with respect to the foregoing, in each case of the Loan Parties and their Subsidiaries
for such period determined and consolidated in accordance with GAAP. Notwithstanding the
foregoing, Consolidated Funded Debt shall not include any liabilities to reimburse the issuer of
letters of credit or other surety instruments, which letters of credit or other sureties are not
drawn.




          Daily LIBOR Rate shall mean, for any day, the rate per annum determined by the
Administrative Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the
LIBOR Reserve Percentage on such day.




          Defaulting Lender shall mean any Lender that (a) has failed to fund any portion of the
Loans, participations with respect to Letters of Credit, or participations in Swing Line Loans
required to be funded by it hereunder within one Business Day of the date required to be funded by
it hereunder unless such failure has been cured and all interest accruing as a result of such
failure has been fully paid in accordance with the terms hereof, (b) has otherwise failed to pay
over to the Administrative Agent or any other Lender any other amount required to be paid by it
hereunder within one Business Day of the date when due, unless the subject of a good faith dispute
or unless such failure has been cured and all interest accruing as a result of such failure has
been fully paid in accordance with the terms hereof, (c) has failed at any time to comply with the
provisions of Section 5.3 [Sharing of Payments by Lenders] with respect to purchasing
participations from the other Lenders, whereby such Lender’s share of any payment received, whether
by setoff or otherwise, is in excess of its Ratable Share of such payments due and payable to all
of the Lenders, or (d) has since the date of this Agreement been deemed insolvent






- 5 -









 







by an Official Body or become the subject of a bankruptcy, receivership, conservatorship or
insolvency proceeding, or has a parent company that since the date of this Agreement been deemed
insolvent by an Official Body or become the subject of a bankruptcy, receivership, conservatorship
or insolvency proceeding.




          Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of the
United States of America.




          Drawing Date shall have the meaning specified in Section 2.9.3 [Disbursements,
Reimbursement].




          Environmental Laws shall mean all applicable federal, state, local, tribal,
territorial and foreign Laws (including common law), constitutions, statutes, treaties,
regulations, rules, ordinances and codes and any consent decrees, settlement agreements, judgments,
orders, directives, policies or programs issued by or entered into with an Official Body pertaining
or relating to: (i) pollution or pollution control; (ii) protection of human health from exposure
to regulated substances; (iii) protection of the environment and/or natural resources; (iv)
employee safety in the workplace; (v) the presence, use, management, generation, manufacture,
processing, extraction, treatment, recycling, refining, reclamation, labeling, packaging, sale,
transport, storage, collection, distribution, disposal or release or threat of release of regulated
substances; (vi) the presence of contamination; (vii) the protection of endangered or threatened
species; and (viii) the protection of environmentally sensitive areas.




          ERISA shall mean the Employee Retirement Income Security Act of 1974, as the same may
be amended or supplemented from time to time, and any successor statute of similar import, and the
rules and regulations thereunder, as from time to time in effect.




          ERISA Affiliate shall mean, at any time, any trade or business (whether or not
incorporated) under common control with any Borrower and treated as a single employer under Section
414 of the Code.




          ERISA Event shall mean (a) a reportable event (under Section 4043 of ERISA and
regulations thereunder) with respect to a Pension Plan; (b) a withdrawal by any Borrower or any
ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations
that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization within the meaning of Section 4241 of ERISA; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a termination under
Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower
or any ERISA Affiliate.





- 6 -












 





          ERISA Group shall mean, at any time, the Borrowers and all members of a
controlled group of corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with the Borrowers, are treated as a single
employer under Section 414 (b) or (c) of the Code.




          Event of Default shall mean any of the events described in Section 9.1 [Events of
Default] and referred to therein as an “Event of Default.”




          Excess Cash Flow shall be computed as of the close of the fiscal year ending December
31, 2011, by taking the difference between (i) Consolidated EBITDA, less (ii) the sum of capital
expenditures of the Loan Parties and their Subsidiaries for such fiscal year, less (iii) the sum of
Fixed Charges for such fiscal year, (iv) less the sum of transaction fees and expenses paid in
connection with the closing of the transactions contemplated by this Agreement and Permitted
Acquisitions, in an aggregate amount not to exceed $5,000,000. All determinations of Excess Cash
Flow shall be based on the immediately preceding fiscal year and shall be made following the
delivery by the Loan Parties to the Administrative Agent of the Loan Parties’ audited financial
statements for such preceding fiscal year.




          Excluded Subsidiary shall mean each of Armstrong Logistics Services, LLC, Armstrong
Fabricators, Inc., Armstrong Technology Services, LLC, Armstrong Resources, LLC, Armstrong Coal
Reserves, Inc., Armstrong Mining, Inc., and Ceralvo Resources, LLC.




          Excluded Taxes shall mean, with respect to the Administrative Agent, any Lender, the
Issuing Lender or any other recipient of any payment to be made by or on account of any obligation
of the Borrowers hereunder, (a) taxes imposed on or measured by its overall net income (however
denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction
(or any political subdivision thereof) under the Laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which its applicable
lending office is located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which any Borrower is located and (c) in the
case of a Foreign Lender, any withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office)
or is attributable to such Foreign Lender’s failure or inability (other than as a result of a
Change in Law) to comply with Section 5.9.5 [Status of Lenders], except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from any Borrower with respect to such
withholding tax pursuant to Section 5.9.1 [Payments Free of Taxes].




          Executive Order No. 13224 shall mean the Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.




          Expiration Date shall mean, with respect to the Revolving Credit Commitments, February
9, 2016.




          Federal Funds Effective Rate for any day shall mean the rate per annum (based on a
year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%)




- 7 -









 







announced by the Federal Reserve Bank of New York (or any successor) on such day as being the
weighted average of the rates on overnight federal funds transactions arranged by federal funds
brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank computes and announces the
weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this
Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such
rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced.




          Federal Funds Open Rate for any day shall mean the rate per annum (based on a year of
360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP
North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day
opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate),
or as set forth on such other recognized electronic source used for the purpose of displaying such
rate as selected by the Administrative Agent (for purposes of this definition, an “Alternate
Source”) (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any
substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no
longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a
comparable replacement rate determined by the Administrative Agent at such time (which
determination shall be conclusive absent manifest error); provided however, that if such day is not
a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the
immediately preceding Business Day. If and when the Federal Funds Open Rate changes, the rate of
interest hereunder will change automatically without notice to the Borrower, effective on the date
of any such change.




          Fixed Charge Coverage Ratio shall mean the ratio of (a) Consolidated EBITDA less the
sum of capital expenditures of the Loan Parties and their Subsidiaries to (b) Fixed Charges.




          Fixed Charges shall mean for any period of determination the sum of cash interest
expense, cash income taxes, dividends and distributions (including Permitted Tax Distributions),
scheduled principal installments on Indebtedness (as adjusted for prepayments), and payments under
capitalized leases, in each case of the Borrowers and their Subsidiaries for such period determined
and consolidated in accordance with GAAP.




          Flood Laws shall mean all applicable Laws relating to policies and procedures that
address requirements placed on federally regulated lenders under the National Flood Insurance
Reform Act of 1994 and other Laws related thereto.




          Foreign Lender shall mean any Lender that is organized under the Laws of a
jurisdiction other than that in which any Borrower is resident for tax purposes. For purposes of
this definition, the United States of America, each State thereof and the District of Columbia
shall be deemed to constitute a single jurisdiction.




          GAAP shall mean generally accepted accounting principles as are in effect from time to
time, subject to the provisions of Section 1.3 [Accounting Principles], and applied on a consistent
basis both as to classification of items and amounts.







- 8 -









 








          Guarantors shall mean the Revolver Guarantors and Term Guarantors.




          Guarantor Joinder shall mean a joinder by a Person as a Guarantor under the Loan
Documents in the form of Exhibit 1.1(G)(1).




          Guaranty of any Person shall mean any obligation of such Person guaranteeing or in
effect guaranteeing any liability or obligation of any other Person in any manner, whether directly
or indirectly, including any agreement to indemnify or hold harmless any other Person, any
performance bond or other suretyship arrangement and any other form of assurance against loss,
except endorsement of negotiable or other instruments for deposit or collection in the ordinary
course of business.




          Guaranty Agreements shall mean the Continuing Agreement of Guaranty and Suretyship
(Revolver) in substantially the form of Exhibit 1.1(G)(2)(a) (the “Guaranty Agreement
(Revolver)”) executed and delivered by each of the Revolving Guarantors to the Administrative Agent
for the benefit of the Revolver Lenders and the Continuing Agreement of Guaranty and Suretyship in
substantially the form of Exhibit 1.1(G)(2)(b) (the “Guaranty Agreement (Term)”) executed
and delivered by each of the Term Guarantors to the Administrative Agent for the benefit of the
Term Lenders. The Revolver Guarantors, Term Borrowers (other than Armstrong Coal Company, Inc.)
and Term Guarantors shall guaranty the Obligations of the Revolver Borrowers. The Term Guarantors,
Revolver Borrowers (other than Armstrong Coal Company, Inc.) and Revolver Guarantors shall guaranty
the Obligations of the Term Borrowers.




          Indebtedness shall mean, as to any Person at any time, any and all indebtedness,
obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or
indirect, absolute or contingent, or joint or several) of such Person for or in respect of: (i)
borrowed money, (ii) amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations (contingent or otherwise) under any
letter of credit agreement, (iv) obligations under any currency swap agreement, interest rate swap,
cap, collar or floor agreement or other interest rate management device calculated on a net basis,
(v) any other transaction (including forward sale or purchase agreements, capitalized leases and
conditional sales agreements) having the commercial effect of a borrowing of money entered into by
such Person to finance its operations or capital requirements (but not including trade payables and
accrued expenses incurred in the ordinary course of business which are not represented by a
promissory note or other evidence of indebtedness and which are not more than forty-five (45) days
past due), or (vi) any Guaranty of Indebtedness for borrowed money.




          Indemnified Taxes shall mean Taxes other than Excluded Taxes.




          Indemnitee shall have the meaning specified in Section 11.3.2 [Indemnification by the
Borrowers].




          Indemnity shall mean the Indemnity Agreements in the form of Exhibit
1.1(I)(1)(a) and Exhibit 1.1(I)(1)(b) relating to possible environmental liabilities
associated with any of the owned or leased real property of the Loan Parties or their Subsidiaries.







- 9 -









 








          Information shall mean all information received from the Loan Parties or any of their
Subsidiaries relating to the Loan Parties or any of such Subsidiaries or any of their respective
businesses, other than any such information that is available to the Administrative Agent, any
Lender or the Issuing Lender on a non-confidential basis prior to disclosure by the Loan Parties or
any of their Subsidiaries, provided that, in the case of information received from the Loan
Parties or any of their Subsidiaries after the date of this Agreement, such information is clearly
identified at the time of delivery as confidential.




          Insolvency Proceeding shall mean, with respect to any Person, (a) a case, action or
proceeding with respect to such Person (i) before any court or any other Official Body under any
bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for
the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of any Loan Party or otherwise relating to the liquidation, dissolution,
winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar arrangement in respect of such
Person’s creditors generally or any substantial portion of its creditors; undertaken under any Law.




          Intercompany Subordination Agreement shall mean a Subordination Agreement among the
Loan Parties in the form attached hereto as Exhibit 1.1(I)(2).




          Interest Period shall mean the period of time selected by the Borrowing Agent in
connection with (and to apply to) any election permitted hereunder by the Borrowers to have
Revolving Credit Loans or Term Loans, as applicable, bear interest under the LIBOR Rate Option.
Subject to the last sentence of this definition, such period shall be one, two, three, six or[, so
long as available from each of the Lenders, nine] Months. Such Interest Period shall commence on
the effective date of such Interest Rate Option, which shall be (i) the Borrowing Date if any
Borrower is requesting new Loans, or (ii) the date of renewal of or conversion to the LIBOR Rate
Option if the Borrowing Agent is renewing or converting to the LIBOR Rate Option applicable to
outstanding Loans. Notwithstanding the second sentence hereof: (A) any Interest Period which would
otherwise end on a date which is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (B) the Borrowing Agent shall not select,
convert to or renew an Interest Period for any portion of the Loans that would end after the
Expiration Date.




          Interest Rate Hedge shall mean an interest rate exchange, collar, cap, swap,
adjustable strike cap, adjustable strike corridor or similar agreements entered into by the Loan
Parties or their Subsidiaries in order to provide protection to, or minimize the impact upon, the
Borrower, the Guarantor and/or their Subsidiaries of increasing floating rates of interest
applicable to Indebtedness.




          Interest Rate Option shall mean any LIBOR Rate Option or Base Rate Option.




          IRS shall mean the Internal Revenue Service.







- 10 -









 








          Issuing Lender shall mean PNC, in its individual capacity as issuer of Letters of
Credit hereunder, and any other Lender that the Revolver Borrowers, Administrative Agent and such
other Lender may agree may from time to time to issue Letters of Credit hereunder.




          Joint Venture shall mean a corporation, partnership, limited liability company or
other entity in which a Loan Party owns an equity interest and a Person other than the Loan Parties
and their Subsidiaries also holds, directly or indirectly, an equity interest in such entity,
provided that an entity shall not be considered a Joint Venture if the equity interest owned by the
Person other than a Loan Party and their Subsidiaries is less than 2%.




          Law shall mean any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ, decree, bond,
judgment, authorization or approval, lien or award by or settlement agreement with any Official
Body.




          Lender Provided Interest Rate Hedge shall mean an Interest Rate Hedge which is
provided by any Lender or its Affiliate and with respect to which the Administrative Agent
confirms: (i) is documented in a standard International Swaps and Derivatives Association
agreement, and (ii) provides for the method of calculating the reimbursable amount of the
provider’s credit exposure in a reasonable and customary manner.




          Lenders shall mean the financial institutions named on Schedule 1.1(B) and
their respective successors and assigns as permitted hereunder, each of which is referred to herein
as a Lender. For the purpose of any Loan Document which provides for the granting of a security
interest or other Lien to the Lenders or to the Administrative Agent for the benefit of the Lenders
as security for the Obligations, “Lenders” shall include any Affiliate of a Lender to which such
Obligation is owed.




          Letter of Credit shall have the meaning specified in Section 2.9.1 [Issuance of
Letters of Credit].




          Letter of Credit Borrowing shall have the meaning specified in Section 2.9.3
[Disbursements, Reimbursement].




          Letter of Credit Fee shall have the meaning specified in Section 2.9.2 [Letter of
Credit Fees].




          Letter of Credit Obligation shall mean, as of any date of determination, the aggregate
amount available to be drawn under all outstanding Letters of Credit on such date (if any Letter of
Credit shall increase in amount automatically in the future, such aggregate amount available to be
drawn shall currently give effect to any such future increase) plus the aggregate
Reimbursement Obligations and Letter of Credit Borrowings on such date.




          Letter of Credit Sublimit shall have the meaning specified in Section 2.9.1 [Issuance
of Letters of Credit].




          Leverage Ratio shall mean, as of the end of any date of determination, the ratio of
(A) Consolidated Funded Debt on such date to (B) Consolidated EBITDA (i) for the four fiscal






- 11 -









 







quarters then ending if such date is a fiscal quarter end or (ii) for the four fiscal quarters
most recently ended if such date is not a fiscal quarter end.




          LIBOR Rate shall mean, with respect to the Loans comprising any Borrowing Tranche to
which the LIBOR Rate Option applies for any Interest Period, the interest rate per annum determined
by the Administrative Agent by dividing (the resulting quotient rounded upwards, if necessary, to
the nearest 1/100th of 1% per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on
such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by
leading banks in the London interbank deposit market), or the rate which is quoted by another
source selected by the Administrative Agent which has been approved by the British Bankers’
Association as an authorized information vendor for the purpose of displaying rates at which US
dollar deposits are offered by leading banks in the London interbank deposit market (for purposes
of this definition, an “Alternate Source”), at approximately 11:00 a.m., London time, two (2)
Business Days prior to the commencement of such Interest Period as the London interbank offered
rate for U.S. Dollars for an amount comparable to such Borrowing Tranche and having a borrowing
date and a maturity comparable to such Interest Period (or if there shall at any time, for any
reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a
comparable replacement rate determined by the Administrative Agent at such time (which
determination shall be conclusive absent manifest error)), by (ii) a number equal to 1.00 minus the
LIBOR Reserve Percentage. LIBOR may also be expressed by the following formula:




	 	 	 	 	 	 	 

	LIBOR Rate

	 	=
	 	London interbank offered rates quoted by Bloomberg

or appropriate successor as shown on Bloomberg Page BBAM1

 

1.00 - LIBOR Reserve Percentage
	 	 





          The LIBOR Rate shall be adjusted with respect to any Loan to which the LIBOR Rate Option
applies that is outstanding on the effective date of any change in the LIBOR Reserve Percentage as
of such effective date. The Administrative Agent shall give prompt notice to the Borrowers of the
LIBOR Rate as determined or adjusted in accordance herewith, which determination shall be
conclusive absent manifest error. Notwithstanding the foregoing, the LIBOR Rate shall at no time
be lower than 1.00%.




          LIBOR Rate Option shall mean the option of the Borrowers to have Loans bear interest
at the rate and under the terms set forth in Section 4.1.1(ii) [Revolving Credit LIBOR Rate Option]
or Section 4.1.2(ii) [Term Loan LIBOR Rate Option], as applicable.




          LIBOR Reserve Percentage shall mean as of any day the maximum percentage in effect on
such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor)
for determining the reserve requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”).




          Lien shall mean any mortgage, deed of trust, pledge, lien, security interest, charge
or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or
involuntarily given, including any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the effect of, security and any






- 12 -









 







filed financing statement or other notice of any of the foregoing (whether or not a lien or
other encumbrance is created or exists at the time of the filing).




          Loan Documents shall mean this Agreement, the Administrative Agent’s Letter, the
Collateral Assignments, the Guaranty Agreements, the Indemnity, the Intercompany Subordination
Agreement, the Mortgages, the Notes, the Patent, Trademark and Copyright Security Agreements, the
Pledge Agreements, the Security Agreements and any other instruments, certificates or documents
delivered in connection herewith or therewith.




          Loan Parties shall mean the Borrowers and the Guarantors. No Excluded Subsidiary
shall be a Loan Party.




          Loan Request shall have the meaning specified in Section 2.5 [Revolving Credit Loan
Requests; Swing Loan Requests].




          Loans shall mean collectively and Loan shall mean separately all Revolving
Credit Loans, Swing Loans and the Term Loans or any Revolving Credit Loan, Swing Loan or the Term
Loan.




          Maturity Date shall mean, with respect to the Term Loans, February 9, 2016.




          Material Adverse Change shall mean any set of circumstances or events which (a) has or
could reasonably be expected to have any material adverse effect whatsoever upon the validity or
enforceability of this Agreement or any other Loan Document, (b) is or could reasonably be expected
to be material and adverse to the business, properties, assets, financial condition, results of
operations or prospects of the Loan Parties taken as a whole, (c) impairs materially or could
reasonably be expected to impair materially the ability of the Loan Parties taken as a whole to
duly and punctually pay or perform any of the Obligations, or (d) impairs materially or could
reasonably be expected to impair materially the ability of the Administrative Agent or any of the
Lenders, to the extent permitted, to enforce their legal remedies pursuant to this Agreement or any
other Loan Document.




          Month, with respect to an Interest Period under the LIBOR Rate Option, shall mean the
interval between the days in consecutive calendar months numerically corresponding to the first day
of such Interest Period. If any LIBOR Rate Interest Period begins on a day of a calendar month for
which there is no numerically corresponding day in the month in which such Interest Period is to
end, the final month of such Interest Period shall be deemed to end on the last Business Day of
such final month.




          Mortgages shall mean: (i) the Mortgages (Revolver) in substantially the form of
Exhibit 1.1(M) (1) (the “Mortgages (Revolver)”) executed and delivered by each Loan Party
that owns or leases Real Property (other than the leased mine office located in Madisonville,
Kentucky and the leased corporate headquarters located in St. Louis, Missouri) to the
Administrative Agent for the benefit of the Revolver Lenders with respect to the Real Property and
(ii) the Mortgages (Term) in substantially the form of Exhibit 1.1(M) (2) (the “Mortgages
(Term)”) executed and delivered by each Loan Party that owns or leases Real Property (other than
the leased mine office located in Madisonville, Kentucky and the leased corporate headquarters
located in St. Louis, Missouri) to the Administrative Agent for the benefit of the






- 13 -









 







Revolver Lenders with respect to the Term Lenders. The Loan Parties that own such Real
Property shall grant a first lien on such Real Property that consists of Collateral (Revolver) to
the Revolver Lenders and a second lien on such Real Property that consists of Collateral (Revolver)
to the Term Lenders. The Loan Parties that own such Real Property shall grant a first lien on such
Real Property that consists of Collateral (Term) to the Term Lenders and a second lien on such Real
Property that consists of Collateral (Term) to the Revolver Lenders.




          Multiemployer Plan shall mean any employee benefit plan which is a “multiemployer
plan” within the meaning of Section 4001(a)(3) of ERISA and to which any Borrower or any member of
the ERISA Group is then making or accruing an obligation to make contributions or, within the
preceding five Plan years, has made or had an obligation to make such contributions.




          Net Cash Proceeds shall mean, in connection with the disposition of any assets, a
Casualty Event or the issuance of any Indebtedness or equity, the after-tax proceeds of such event
(as estimated in good faith by the Borrowers) received by the applicable Loan Party, net of
transactions costs including legal fees, accounting and appraisal fees, investment banking fees,
underwriting discounts and commissions and other customary fees and expenses in connection
therewith actually incurred and satisfactorily documented.




          Non-Consenting Lender shall have the meaning specified in Section 11.1 [Modifications,
Amendments or Waivers].




          Notes shall mean, collectively, the promissory notes in the form of Exhibit
1.1(N)(1) evidencing the Revolving Credit Loans, in the form of Exhibit 1.1(N)(2) evidencing
the Swing Loan, and in the form of Exhibit 1.1(N)(3) evidencing the Term Loans.




          Obligation shall mean any obligation or liability of any of the Loan Parties,
howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, under or in connection with (i) this Agreement, the
Notes, the Letters of Credit, the Administrative Agent’s Letter or any other Loan Document whether
to the Administrative Agent, any of the Lenders or their Affiliates or other persons provided for
under such Loan Documents, (ii) any Lender Provided Interest Rate Hedge and (iii) any Other Lender
Provided Financial Services Product.




          Official Body shall mean the government of the United States of America or any other
nation, or of any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or the European Central
Bank).




          Other Lender Provided Financial Services Product shall mean agreements or other
arrangements under which any Lender or Affiliate of a Lender provides any of the following products
or services to any of the Loan Parties: (a) credit cards, (b) credit card processing services, (c)
debit cards, (d) purchase cards, (e) ACH transactions, (f) cash management, including controlled
disbursement, accounts or services, or (g) foreign currency exchange.







- 14 -









 








          Other Taxes shall mean all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or
under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.




          Participant shall have the meaning specified in Section 11.8.4 [Participations].




          Participation Advance shall have the meaning specified in Section 2.9.3
[Disbursements, Reimbursement].




          Patent, Trademark and Copyright Security Agreements shall mean: (i) the Patent,
Trademark and Copyright Security Agreement (Revolver) in substantially the form of Exhibit
1.1(P)(1)(a) (the “Patent, Trademark and Copyright Security Agreement (Revolver)”) executed and
delivered by each of the Loan Parties to the Administrative Agent for the benefit of the Revolver
Lenders and (ii) the Patent, Trademark and Copyright Security Agreement (Term) in substantially the
form of Exhibit 1.1(P)(1)(b) (the “Patent, Trademark and Copyright Security Agreement
(Term)”) executed and delivered by each of the Loan Parties to the Administrative Agent for the
benefit of the Term Lenders. The Loan Parties shall grant a first lien on such collateral that
consists of Collateral (Revolver) to the Revolver Lenders and a second lien on such collateral that
consists of Collateral (Revolver) to the Term Lenders. The Loan Parties shall grant a first lien
on such collateral that consists of Collateral (Term) to the Term Lenders and a second lien on such
collateral that consists of Collateral (Term) to the Revolver Lenders.




          Payment Date shall mean the first day of each calendar quarter after the date hereof
and on the Expiration Date and Maturity Date, or upon acceleration of the Notes.




          Payment In Full shall mean the indefeasible payment in full in cash of the Loans and
other Obligations hereunder, termination of the Commitments and expiration or termination of all
Letters of Credit.




          PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor.




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




          Permitted Acquisitions shall have the meaning specified in Section 8.2.6
[Liquidations, Mergers, Consolidations, Acquisitions].




          Permitted Investments shall mean:




          (i) direct obligations of the United States of America or any agency or instrumentality
thereof or obligations backed by the full faith and credit of the United States of America maturing
in twelve (12) months or less from the date of acquisition;







- 15 -









 








          (ii) commercial paper maturing in 180 days or less rated not lower than A-1, by Standard &
Poor’s or P-1 by Moody’s Investors Service, Inc. on the date of acquisition;




          (iii) demand deposits, time deposits or certificates of deposit maturing within one year in
commercial banks whose obligations are rated A-1, A or the equivalent or better by Standard &
Poor’s on the date of acquisition; and




          (iv) money market or mutual funds whose investments are limited to those types of investments
described in clauses (i)-(iii) above.




          Permitted Joint Venture shall mean a Joint Venture between one or more of the Loan
Parties pursuant to which the applicable Loan Parties will contribute assets in exchange for
ownership interests in a joint venture entity so long as the aggregate amount invested in such
Joint Ventures does not cause the Loan Parties to violate Section 8.2.4 (vii) or 8.2.4 (viii) of
this Agreement.




          Permitted Liens shall mean:




          (i) Liens for taxes, assessments, or similar charges, incurred in the ordinary course of
business and which are not yet due and payable;




          (ii) Pledges or deposits made in the ordinary course of business to secure payment of
workmen’s compensation, or to participate in any fund in connection with workmen’s compensation,
unemployment insurance, old-age pensions or other social security programs;




          (iii) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing
obligations incurred in the ordinary course of business that are not yet due and payable and Liens
of landlords securing obligations to pay lease payments that are not yet due and payable or in
default;




          (iv) Good-faith pledges or deposits made in the ordinary course of business to secure
performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases,
not in excess of the aggregate amount due thereunder, or to secure statutory obligations, or
surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of
business;




          (v) Encumbrances consisting of (1) zoning restrictions, none of which materially impairs the
use of such property or the value thereof, and none of which is violated in any material respect by
existing or proposed structures or land use, or (2) easements covenants or restrictions on the use
of real property, none of which materially impairs the use or value of such property, and (3)
out-conveyances or other non-monetary matters affecting real property (a) arising prior to the
Closing Date or (b) entered into in the ordinary course of business;




          (vi) Liens, security interests and mortgages in favor of the Administrative Agent for the
benefit of the Lenders and their Affiliates securing the Obligations (including Lender Provided
Interest Rate Hedges and Other Lender Provided Financial Services Obligations);



- 16 -









 







          (vii) Liens on property leased by any Loan Party or Subsidiary of a Loan Party under
capitalized leases not prohibited by Section 8.2.17 [Capital Expenditures and Leases] and operating
leases securing obligations of such Loan Party or Subsidiary to the lessor under such leases;




          (viii) Any Lien, easement, restriction or other matter existing on the date of this Agreement
and described on Schedule 1.1(P), provided that the principal amount of any Lien
secured thereby is not hereafter increased, and no additional assets become subject to such Lien;




          (ix) Purchase Money Security Interests and capitalized leases; provided that the
aggregate amount of loans and deferred payments secured by such Purchase Money Security Interests
and capitalized leases shall not exceed $35,000,000 in the aggregate at any one time outstanding
(excluding for the purpose of this computation any loans or deferred payments secured by Liens
described on Schedule 1.1(P));




          (x) Royalty Agreements that encumber real property and that are in existence as of the Closing
Date;




          (xi) The following, (A) if the validity or amount thereof is being contested in good faith by
appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have
been stayed and continue to be stayed or (B) if a final judgment is entered and such judgment is
discharged within thirty (30) days of entry, and in either case they do not affect the Collateral
or, in the aggregate, materially impair the ability of any Loan Party to perform its Obligations
hereunder or under the other Loan Documents:




          (1) Claims or Liens for taxes, assessments or charges due and payable and subject to interest
or penalty; provided that the applicable Loan Party maintains such reserves or other
appropriate provisions as shall be required by GAAP and pays all such taxes, assessments or charges
forthwith upon the commencement of proceedings to foreclose any such Lien;




          (2) Claims, Liens or encumbrances upon, and defects of title to, real or personal property
other than the Collateral, including any attachment of personal or real property or other legal
process prior to adjudication of a dispute on the merits;




          (3) Claims or Liens of mechanics, materialmen, warehousemen, carriers, or other statutory
nonconsensual Liens; or




          (4) Liens resulting from final judgments or orders described in Section 9.1.6 [Final Judgments
or Orders]; and




          (xii) Vendor Liens.




          Permitted Tax Distribution shall mean dividends or other distributions paid by the
Loan Parties at the highest applicable individual or corporate, as the case may be, tax rate to
each of its shareholders at the time and in the amounts necessary to enable all shareholders,
members, partners, or equity holders to pay their anticipated income tax liabilities arising from
their ownership interest in the Loan Parties, respectively.







- 17 -









 








          Person shall mean any individual, corporation, partnership, limited liability company,
association, joint-stock company, trust, unincorporated organization, joint venture, government or
political subdivision or agency thereof, or any other entity.




          Plan shall mean at any time an employee pension benefit plan (including a Multiple
Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to
the minimum funding standards under Section 412 of the Code and either (i) is maintained by any
member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time
within the preceding five years been maintained by any entity which was at such time a member of
the ERISA Group for employees of any entity which was at such time a member of the ERISA Group.




          Pledge Agreements shall mean: (i) the Pledge Agreement (Revolver) in substantially
the form of Exhibit 1.1(P)(2)(a) (the “Pledge Agreement (Revolver)”) executed and delivered
by each of the Loan Parties to the Administrative Agent for the benefit of the Revolver Lenders and
(ii) the Pledge Agreement (Term) in substantially the form of Exhibit 1.1(P)(2)(b) (the
“Pledge Agreement (Term)”) executed and delivered by each of the Loan Parties to the Administrative
Agent for the benefit of the Term Lenders. Each Pledge Agreement shall pledge all of the equity
interests in such Loan Parties and their Subsidiaries, except for the equity interests (1) in
Armstrong Resources, LLC, Armstrong Coal Reserves, Inc., Armstrong Mining, Inc., and Ceralvo
Resources, LLC; (2) those equity interests owned as of the Closing Date by individuals and
comprising less than two percent (2.0%) of the equity interests in Armstrong Resource Holdings,
LLC, and Armstrong Energy, Inc. and (3) those equity interests in Armstrong Land Company, LLC. and
Elk Creek, L.P. The Loan Parties shall grant a first lien on such collateral that consists of
Collateral (Revolver) to the Revolver Lenders and a second lien on such collateral that consists of
Collateral (Revolver) to the Term Lenders. The Loan Parties shall grant a first lien on such
collateral that consists of Collateral (Term) to the Term Lenders and a second lien on such
collateral that consists of Collateral (Term) to the Revolver Lenders




          PNC shall mean PNC Bank, National Association, its successors and assigns.




          Potential Default shall mean any event or condition which with notice or passage of
time, or both, would constitute an Event of Default.




          Prime Rate shall mean the interest rate per annum announced from time to time by the
Administrative Agent at its Principal Office as its then prime rate, which rate may not be the
lowest or most favorable rate then being charged commercial borrowers or others by the
Administrative Agent. Any change in the Prime Rate shall take effect at the opening of business on
the day such change is announced.




          Principal Office shall mean the main banking office of the Administrative Agent in
Pittsburgh, Pennsylvania.




          Prior Security Interest shall mean a valid and enforceable perfected first-priority
security interest under the Uniform Commercial Code in the Collateral which is subject only to
statutory Liens for taxes not yet due and payable, Purchase Money Security Interests or Liens set
forth on Schedule 1.1(P) of this Agreement.







- 18 -









 








          Published Rate shall mean the rate of interest published each Business Day in The Wall
Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for
a one month period (or, if no such rate is published therein for any reason, then the Published
Rate shall be the rate at which U.S. dollar deposits are offered by leading banks in the London
interbank deposit market for a one month period as published in another publication selected by the
Administrative Agent).




          Purchase Money Security Interest shall mean Liens upon tangible personal property
securing loans to any Loan Party or Subsidiary of a Loan Party or deferred payments by such Loan
Party or Subsidiary for the purchase of such tangible personal property.




          Ratable Share shall mean the proportion that a Lender’s Commitment (excluding the
Swing Loan Commitment) bears to the Commitments (excluding the Swing Loan Commitment) of all of the
Lenders. If the Commitments have terminated or expired, the Ratable Shares shall be determined
based upon the Commitments (excluding the Swing Loan Commitment) most recently in effect, giving
effect to any assignments. Each Lender shall be required to maintain its percentage of Revolving
Credit Commitment (as it bears to all Revolving Credit Commitments equal to its percentage Term
Loan Commitment (as it bears to all Term Loan Commitments).




          Real Property shall mean the real property, both owned and leased, and the surface,
coal, and mineral rights, interests and coal leases of each Loan Party associated with the
properties described on Schedule 1.1(R), which shall be encumbered by a Mortgage, as
described on Schedule 1.1(R).




          Reimbursement Obligation shall have the meaning specified in Section 2.9.3
[Disbursements, Reimbursement].




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




          Relief Proceeding shall mean any proceeding seeking a decree or order for relief in
respect of any Loan Party or Subsidiary of a Loan Party in a voluntary or involuntary case under
any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or similar official) of any Loan Party or Subsidiary of a Loan Party for
any substantial part of its property, or for the winding-up or liquidation of its affairs, or an
assignment for the benefit of its creditors.




          Required Lenders shall mean




          (A) If there exists fewer than three (3) Lenders, all Lenders (other than any Defaulting
Lender), and




          (B) If there exist three (3) or more Lenders, Lenders (other than any Defaulting Lender)
having more than 50% of the sum of (a) the aggregate amount of the Revolving Credit Commitments of
the Lenders (excluding any Defaulting Lender) or, after the






- 19 -









 







termination of the Revolving Credit Commitments, the outstanding Revolving Credit Loans and
Ratable Share of Letter of Credit Obligations of the Lenders (excluding any Defaulting Lender), and
(b) the aggregate outstanding amount of any Term Loans.




          Required Mining Permits shall mean all permits, licenses, authorizations, plans,
approvals and bonds necessary under the Environmental Laws for the Loan Parties to continue to
conduct coal mining and related operations on, in or under such parties real property, and any and
all other mining properties owned or leased by any Borrower or any such Loan Party (collectively
“Mining Property”) substantially in the manner as such operations had been authorized immediately
prior to such Loan Party’s acquisition of its interests in such real property and as may be
necessary for such Loan Party to conduct, in all material respects, coal mining and related
operations on, in or under the Mining Property as described in any plan of operation.




          Required Share shall have the meaning assigned to such term in Section 5.11
[Settlement Date Procedures].




          Revolver Borrowers shall mean Armstrong Coal Company, Inc., a Delaware corporation and
Armstrong Land Company, LLC, a Delaware limited liability company.




          Revolver Guarantor shall mean each of the parties to this Agreement which is
designated as a “Revolver Guarantor” on the signature page hereof and each other Person which joins
the Agreement as a Revolver Guarantor after the date hereof.




          Revolver Lender shall mean each Lender that extends Revolving Credit Loans under this
Agreement.




          Revolving Credit Commitment shall mean, as to any Lender at any time, the amount
initially set forth opposite its name on Schedule 1.1(B) in the column labeled “Amount of
Commitment for Revolving Credit Loans,” as such Commitment is thereafter assigned or modified and
Revolving Credit Commitments shall mean the aggregate Revolving Credit Commitments of all
of the Lenders.




          Revolving Credit Loans shall mean collectively and Revolving Credit Loan shall
mean separately all Revolving Credit Loans or any Revolving Credit Loan made by the Lenders or one
of the Lenders to the Revolver Borrowers pursuant to Section 2.1 [Revolving Credit Commitments] or
2.9.3 [Disbursements, Reimbursement].




          Revolving Facility Usage shall mean at any time the sum of the outstanding Revolving
Credit Loans, the outstanding Swing Loans, and the Letter of Credit Obligations.




          Royalty Agreements shall mean all written agreements, however denominated, pursuant to
which any Loan Party is obligated to pay royalties or fees for coal mined or transported from, over
or through specified tracts of real property, whether in the nature of percentage royalties,
tonnage royalties or similar per-ton fees or obligations, owed to any Person, whether such
agreements are part of a coal lease, coal deed, easement, overriding royalty agreement, haulage
agreement or similar instrument, together with any obligation for lump-sum advance royalties
arising under the foregoing.





- 20 -











 





          Security Agreements shall mean (i) the Security Agreement (Revolver) in
substantially the form of Exhibit 1.1(S)(1) (the “Security Agreement (Revolver)”) executed
and delivered by each of the Loan Parties to the Administrative Agent the benefit of the Revolver
Lenders and (ii) the Security Agreement (Term) in substantially the form of Exhibit
1.1(S)(2) (the “Security Agreement (Term)”) executed and delivered by each of the Loan Parties
to the Administrative Agent the benefit of the Term Lenders. The Loan Parties shall grant a first
lien on such collateral that consists of Collateral (Revolver) to the Revolver Lenders and a second
lien on such collateral that consists of Collateral (Revolver) to the Term Lenders. The Loan
Parties shall grant a first lien on such collateral that consists of Collateral (Term) to the Term
Lenders and a second lien on such collateral that consists of Collateral (Term) to the Revolver
Lenders.



          Settlement Date shall mean the Business Day on which the Administrative Agent elects
to effect settlement pursuant Section 5.11 [Settlement Date Procedures].



          Solvent shall mean, with respect to any Person on any date of determination, taking
into account such right of reimbursement, contribution or similar right available to such Person
from other Persons, that on such date (i) the fair value of the property of such Person is greater
than the total amount of liabilities, including, without limitation, contingent liabilities, of
such Person, (ii) the present fair saleable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its debts as they
become absolute and matured, (iii) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they mature in the normal
course of business, (iv) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, and
(v) such Person is not engaged in business or a transaction, and is not about to engage in business
or a transaction, for which such Person’s property would constitute unreasonably small capital
after giving due consideration to the prevailing practice in the industry in which such Person is
engaged. In computing the amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to become an actual or
matured liability.



          Standard & Poor’s shall mean Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc.



          Statements shall have the meaning specified in Section 6.1.6(i) [Historical
Statements].



          Subsidiary of any Person at any time shall mean any corporation, trust, partnership,
any limited liability company or other business entity (i) of which more than 50% of the
outstanding voting securities or other interests normally entitled to vote for the election of one
or more directors or trustees (regardless of any contingency which does or may suspend or dilute
the voting rights) is at such time owned directly or indirectly by such Person or one or more of
such Person’s Subsidiaries, or (ii) which is controlled or capable of being controlled by such
Person or one or more of such Person’s Subsidiaries.



- 21 -









 





          Subsidiary Equity Interests shall have the meaning specified in Section 6.1.2
[Subsidiaries and Owners; Investment Companies].



          Survant Joint Venture shall mean that certain joint venture between Armstrong Coal
Company, Inc. and Cyprus Creek Land Resources, LLC or its Affiliates, whereby such entities shall
agree to create Survant Mining Company, LLC and contribute certain assets and investments thereto.



          Swing Loan Commitment shall mean PNC’s commitment to make Swing Loans to the Revolver
Borrowers pursuant to Section 2.1.2 [Swing Loan Commitment] hereof in an aggregate principal amount
up to $5,000,000.



          Swing Loan Note shall mean the Swing Loan Note of the Revolver Borrowers in the form
of Exhibit 1.1(N)(2) evidencing the Swing Loans, together with all amendments, extensions,
renewals, replacements, refinancings or refundings thereof in whole or in part.



          Swing Loan Request shall mean a request for Swing Loans made in accordance with
Section 2.5.2 [Swing Loan Requests] hereof.



          Swing Loans shall mean collectively and Swing Loan shall mean separately all
Swing Loans or any Swing Loan made by PNC to the Revolver Borrowers pursuant to Section 2.1.2
[Swing Loan Commitment] hereof.



          Taxes shall mean all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Official Body, including any
interest, additions to tax or penalties applicable thereto.



          Term Borrowers shall mean Armstrong Coal Company, Inc., a Delaware corporation,
Western Mineral Development, LLC, a Delaware limited liability company, Western Diamond LLC, a
Nevada limited liability company, Western Land Company, LLC, a Kentucky limited liability company,
and Elk Creek, L.P., a Delaware limited partnership.



          Term Guarantors shall mean each of the parties to this Agreement which are designated
as “Term Guarantors” on the Signature Page hereof and each other Person which joins this Agreement
as a Term Guarantor after the date hereof.



          Term Lender shall mean each Lender that extends Term Loans under this Agreement.



          Term Loan shall have the meaning specified in Section 3.1 [Term Loan Commitments];
Term Loans shall mean collectively all of the Term Loans.



          Term Loan Commitment shall mean, as to any Lender at any time, the amount initially
set forth opposite its name on Schedule 1.1(B) in the column labeled “Amount of Commitment
for Term Loans,” as such Commitment is thereafter assigned or modified and Term Loan
Commitments shall mean the aggregate Term Loan Commitments of all of the Lenders.



- 22 -









 





          USA Patriot Act shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as
the same has been, or shall hereafter be, renewed, extended, amended or replaced.



          Vendor Liens shall mean those certain existing Liens identified on Schedule
1.1(V) hereto which encumber certain real property interests acquired by the Loan Parties
prior to the Closing Date for the purpose of securing a portion of the purchase price for such
property.



          Yorktown Parties shall mean Yorktown Energy Partners VI, L.P., Yorktown Energy
Partners VII, L.P., Yorktown Energy Partners VIII, L.P. and their Affiliates.



     1.2 Construction. Unless the context of this Agreement otherwise clearly requires,
the following rules of construction shall apply to this Agreement and each of the other Loan
Documents: (i) references to the plural include the singular, the plural, the part and the whole
and the words “include,” “includes” and “including” shall be deemed to be followed by the phrase
“without limitation”; (ii) the words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in
this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a
whole; (iii) article, section, subsection, clause, schedule and exhibit references are to this
Agreement or other Loan Document, as the case may be, unless otherwise specified; (iv) reference to
any Person includes such Person’s successors and assigns; (v) reference to any agreement, including
this Agreement and any other Loan Document together with the schedules and exhibits hereto or
thereto, document or instrument means such agreement, document or instrument as amended, modified,
replaced, substituted for, superseded or restated; (vi) relative to the determination of any period
of time, “from” means “from and including,” “to” means “to but excluding,” and “through” means
“through and including”; (vii) the words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights, (viii) section headings herein and in
each other Loan Document are included for convenience and shall not affect the interpretation of
this Agreement or such Loan Document, and (ix) unless otherwise specified, all references herein to
times of day shall be references to Eastern Time.



     1.3 Accounting Principles. Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters and all financial statements
to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP
(including principles of consolidation where appropriate), and all accounting or financial terms
shall have the meanings ascribed to such terms by GAAP; provided, however, that all
financial data (including financial ratios and other financial calculations), definitions,
representations, covenants and accounting terms used herein shall have the meaning given to such
terms (and defined terms) under GAAP as in effect on the date hereof applied on a basis consistent
with those used in preparing Statements referred to in Section 6.1.6(i) [Historical Statements].
In the event of any change after the date hereof in GAAP, and if such change would affect the
definitions, representations and covenants contained herein or computation of any of the provisions
or financial covenants or calculations contained herein, then the parties hereto agree to endeavor,
in good faith, to agree upon an amendment to this Agreement that would adjust such provisions or
financial covenants in a manner that would preserve the original intent thereof, but would allow
compliance therewith to be determined in accordance with the



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Borrowers’ financial statements at that time,provided that, until so amended
such financial covenants shall continue to be computed in accordance with GAAP prior to such change
therein.




          2. REVOLVING CREDIT AND SWING LOAN FACILITIES




     2.1 Revolving Credit Commitments.



                    2.1.1 Revolving Credit Loans. Subject to the terms and conditions hereof and relying
upon the representations and warranties herein set forth, each Revolver Lender severally agrees to
make Revolving Credit Loans to the Revolver Borrowers at any time or from time to time on or after
the date hereof to the Expiration Date; provided that after giving effect to each such Loan
(i) the aggregate amount of Revolving Credit Loans from such Revolver Lender shall not exceed such
Revolver Lender’s Revolving Credit Commitment minus such Revolver Lender’s Ratable Share of the
Letter of Credit Obligations and (ii) the Revolving Facility Usage shall not exceed the Revolving
Credit Commitments. Within such limits of time and amount and subject to the other provisions of
this Agreement, the Revolver Borrowers may borrow, repay and reborrow pursuant to this Section 2.1.



                    2.1.2 Swing Loan Commitment. Subject to the terms and conditions hereof and relying
upon the representations and warranties herein set forth, and in order to facilitate loans and
repayments between Settlement Dates, PNC may, at its option, cancelable at any time upon notice to
the Borrowing Agent for any reason whatsoever, make swing loans (the “Swing Loans”) to the Revolver
Borrowers at any time or from time to time after the date hereof to, but not including, the
Expiration Date, in an aggregate principal amount up to but not in excess of $5,000,000, provided
that after giving effect to such Loan, the Revolving Facility Usage shall not exceed the Revolving
Credit Commitments. Within such limits of time and amount and subject to the other provisions of
this Agreement, the Revolver Borrowers may borrow, repay and reborrow pursuant to this Section
2.1.2.



     2.2 Nature of Revolver Lenders’ Obligations with Respect to Revolving Credit Loans.
Each Revolver Lender shall be obligated to participate in each request for Revolving Credit Loans
pursuant to Section 2.5 [Revolving Credit Loan Requests; Swing Loan Requests] in accordance with
its Ratable Share. The aggregate of each Revolver Lender’s Revolving Credit Loans outstanding
hereunder to the Revolver Borrowers at any time shall never exceed its Revolving Credit Commitment
minus its Ratable Share of the outstanding Swing Loans and Letter of Credit Obligations. The
obligations of each Revolver Lender hereunder are several. The failure of any Revolver Lender to
perform its obligations hereunder shall not affect the Obligations of the Revolver Borrowers to any
other party nor shall any other party be liable for the failure of such Revolver Lender to perform
its obligations hereunder. The Revolver Lenders shall have no obligation to make Revolving Credit
Loans hereunder on or after the Expiration Date.



     2.3 Commitment Fees. Accruing from the date hereof until the Expiration Date, the
Revolver Borrowers agree to pay to the Administrative Agent for the account of each Revolver Lender
according to its Ratable Share, a nonrefundable commitment fee (the “Commitment Fee”) equal to the
Applicable Commitment Fee Rate (computed on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed) multiplied by the average daily difference



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between the amount of (i) the Revolving Credit Commitments (for purposes of this computation,
PNC’s Swing Loans shall be deemed to be borrowed amounts under its Revolving Credit Commitment) and
(ii) the Revolving Facility Usage; provided, however, that any Commitment Fee
accrued with respect to the Revolving Credit Commitment of a Defaulting Lender during the period
prior to the time such Revolver Lender became a Defaulting Lender and unpaid at such time shall not
be payable by the Revolver Borrowers so long as such Revolver Lender shall be a Defaulting Lender
except to the extent that such Commitment Fee shall otherwise have been due and payable by the
Revolver Borrowers prior to such time; and provided further that no Commitment Fee
shall accrue with respect to the Revolving Commitment of a Defaulting Lender so long as such
Revolver Lender shall be a Defaulting Lender. Subject to the proviso in the directly preceding
sentence, all Commitment Fees shall be payable in arrears on each Payment Date.




     2.4 [Intentionally Omitted].



     2.5 Revolving Credit Loan Requests; Swing Loan Requests.



                    2.5.1 Revolving Credit Loan Requests. Except as otherwise provided herein, the
Borrowing Agent may from time to time prior to the Expiration Date request the Revolver Lenders to
make Revolving Credit Loans for the account of the Revolving Borrowers, or, for the account of the
Revolver Borrowers or Term Borrowers, as applicable, renew or convert the Interest Rate Option
applicable to existing Revolving Credit Loans or Term Loans, as applicable, pursuant to Section 4.2
[Interest Periods], by delivering to the Administrative Agent, not later than 11:00 a.m., (i) three
(3) Business Days prior to the proposed Borrowing Date with respect to the making of Revolving
Credit Loans to which the LIBOR Rate Option applies or the conversion to or the renewal of the
LIBOR Rate Option for any Loans; and (ii) the same Business Day of the proposed Borrowing Date with
respect to the making of a Revolving Credit Loan to which the Base Rate Option applies or the last
day of the preceding Interest Period with respect to the conversion to the Base Rate Option for any
Loan, of a duly completed request therefor substantially in the form of Exhibit 2.5.1 or a
request by telephone immediately confirmed in writing by letter, facsimile or telex in such form
(each, a “Loan Request”), it being understood that the Administrative Agent may rely on the
authority of any individual making such a telephonic request without the necessity of receipt of
such written confirmation. Each Loan Request shall be irrevocable and shall specify the aggregate
amount of the proposed Loans comprising each Borrowing Tranche, and, if applicable, the Interest
Period, which amounts shall be (x) in integral multiples of $500,000 and not less than $1,000,000
for each Borrowing Tranche under the LIBOR Rate Option, and (y) not less than the lesser of
$100,000 or the maximum amount available for each Borrowing Tranche under the Base Rate Option.



                    2.5.2 Swing Loan Requests. Except as otherwise provided herein, the Borrowing Agent
may, for the account of the Revolver Borrowers, from time to time prior to the Expiration Date
request PNC to make Swing Loans by delivery to PNC not later than 12:00 noon on the proposed
Borrowing Date of a duly completed request therefor substantially in the form of Exhibit
2.5.2 hereto or a request by telephone immediately confirmed in writing by letter, facsimile or
telex (each, a “Swing Loan Request”), it being understood that the Administrative Agent may rely on
the authority of any individual making such a telephonic



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request without the necessity of receipt of such written confirmation. Each Swing Loan
Request shall be irrevocable and shall specify the proposed Borrowing Date and the principal amount
of such Swing Loan, which shall be not less than $100,000 or the maximum amount available.




     2.6 Making Revolving Credit Loans and Swing Loans; Presumptions by the Administrative
Agent; Repayment of Revolving Credit Loans; Borrowings to Repay Swing Loans.



                    2.6.1 Making Revolving Credit Loans. The Administrative Agent shall, promptly after
receipt by it of a Loan Request pursuant to Section 2.5 [Revolving Credit Loan Requests; Swing Loan
Requests], notify the Revolver Lenders of its receipt of such Loan Request specifying the
information provided by the Revolver Borrowers and the apportionment among the Revolver Lenders of
the requested Revolving Credit Loans as determined by the Administrative Agent in accordance with
Section 2.2 [Nature of Revolver Lenders’ Obligations with Respect to Revolving Credit Loans]. Each
Revolver Lender shall remit the principal amount of each Revolving Credit Loan to the
Administrative Agent such that the Administrative Agent is able to, and the Administrative Agent
shall, to the extent the Revolver Lenders have made funds available to it for such purpose and
subject to Section 7.2 [Each Loan or Letter of Credit], fund such Revolving Credit Loans to the
Revolver Borrowers in U.S. Dollars and immediately available funds at the Principal Office prior to
2:00 p.m., on the applicable Borrowing Date; provided that if any Revolver Lender fails to
remit such funds to the Administrative Agent in a timely manner, the Administrative Agent may elect
in its sole discretion to fund with its own funds the Revolving Credit Loans of such Revolver
Lender on such Borrowing Date, and such Revolver Lender shall be subject to the repayment
obligation in Section 2.6.2 [Presumptions by the Administrative Agent].



                    2.6.2 Presumptions by the Administrative Agent. Unless the Administrative Agent shall
have received notice from a Revolver Lender prior to the proposed date of any Loan that such
Revolver Lender will not make available to the Administrative Agent such Revolver Lender’s share of
such Loan, the Administrative Agent may assume that such Revolver Lender has made such share
available on such date in accordance with Section 2.6.1 [Making Revolving Credit Loans] and may, in
reliance upon such assumption, make available to the Revolver Borrowers a corresponding amount. In
such event, if a Revolver Lender has not in fact made its share of the applicable Loan available to
the Administrative Agent, then the applicable Revolver Lender and the Revolver Borrowers severally
agree to pay to the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made available to the
Revolver Borrowers to but excluding the date of payment to the Administrative Agent, at (i) in the
case of a payment to be made by such Revolver Lender, the greater of the Federal Funds Effective
Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation and (ii) in the case of a payment to be made by the Revolver Borrowers, the
interest rate applicable to Loans under the Base Rate Option. If such Revolver Lender pays its
share of the applicable Loan to the Administrative Agent, then the amount so paid shall constitute
such Revolver Lender’s Loan. Any payment by the Revolver Borrowers shall be without prejudice to
any claim the Revolver Borrowers may have against a Revolver Lender that shall have failed to make
such payment to the Administrative Agent.



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                    2.6.3 Making Swing Loans. So long as PNC elects to make Swing Loans, PNC shall, after
receipt by it of a Swing Loan Request pursuant to Section 2.5.2, [Swing Loan Requests] fund such
Swing Loan to the Revolver Borrowers in U.S. Dollars and immediately available funds at the
Principal Office prior to 4:00 p.m. on the Borrowing Date.



                    2.6.4 Repayment of Revolving Credit Loans. The Revolver Borrowers shall repay the
Revolving Credit Loans together with all outstanding interest thereon on the Expiration Date.



                    2.6.5 Borrowings to Repay Swing Loans. PNC may, at its option, exercisable at any time
for any reason whatsoever, demand repayment of the Swing Loans, and each Revolver Lender shall make
a Revolving Credit Loan in an amount equal to such Revolver Lender’s Ratable Share of the aggregate
principal amount of the outstanding Swing Loans, plus, if PNC so requests, accrued interest
thereon, provided that no Revolver Lender shall be obligated in any event to make Revolving
Credit Loans in excess of its Revolving Credit Commitment minus its Ratable Share of Letter of
Credit Obligations. Revolving Credit Loans made pursuant to the preceding sentence shall bear
interest at the Base Rate Option and shall be deemed to have been properly requested in accordance
with Section 2.5.1 [Revolving Credit Loan Requests] without regard to any of the requirements of
that provision. PNC shall provide notice to the Revolver Lenders (which may be telephonic or
written notice by letter, facsimile or telex) that such Revolving Credit Loans are to be made under
this Section 2.6.5 and of the apportionment among the Revolver Lenders, and the Revolver Lenders
shall be unconditionally obligated to fund such Revolving Credit Loans (whether or not the
conditions specified in Section 2.5.1 [Revolving Credit Loan Requests] are then satisfied) by the
time PNC so requests, which shall not be earlier than 3:00 p.m. on the Business Day next after the
date the Revolver Lenders receive such notice from PNC.



                    2.6.6 Swing Loans Under Cash Management Agreements. In addition to making Swing Loans
pursuant to the foregoing provisions of Section 2.6.3 [Making Swing Loans], without the requirement
for a specific request from the Borrowers pursuant to Section 2.5.2 [Swing Loan Requests], PNC as a
Swing Loan Lender may make Swing Loans to the Borrowers in accordance with the provisions of the
agreements between the Borrowers and Swing Loan Lender relating to the Borrowers’ deposit, sweep
and other accounts at PNC Bank and related arrangements and agreements regarding the management and
investment of the Borrowers’ cash assets as in effect from time to time (the “Cash Management
Agreements”) to the extent of the daily aggregate net negative balance in the Borrowers’ accounts
which are subject to the provisions of the Cash Management Agreements. Swing Loans made pursuant
to this Section 2.6.6 in accordance with the provisions of the Cash Management Agreements shall (i)
be subject to the limitations as to aggregate amount set forth in Section 2.1.2 [Swing Loan
Commitment], (ii) not be subject to the limitations as to individual amount set forth in Section
2.5.2 [Swing Loan Requests], (iii) be payable by the Borrowers, both as to principal and interest,
at the rates and times set forth in the Cash Management Agreements (but in no event later than the
Expiration Date), (iv) not be made at any time after such Swing Loan Lender has received written
notice of the occurrence of an Event of Default and so long as such shall continue to exist, or,
unless consented to by the Required Lenders, a Potential Default and so long as such shall continue
to exist, (v) if not repaid by the Borrowers in accordance with the provisions of the Cash
Management Agreements, be subject to each Lender’s obligation pursuant



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to Section 2.6.5
[Borrowings to Repay Swing Loans], and (vi) except as provided in the foregoing subsections
(i) through (v), be subject to all of the terms and conditions of this Section 2. The Borrowers
acknowledge and agree that each Borrower materially benefits from the arrangements made pursuant
to
Section 2.6 and the Cash Management Agreements, and each Borrower shall be jointly and severally
liable for all Obligations, including without limitation, those arising from the operation of this
Section.




     2.7 Notes. The Obligation of the Revolver Borrowers to repay the aggregate unpaid
principal amount of the Revolving Credit Loans and Swing Loans made to it by each Revolver Lender,
together with interest thereon, shall be evidenced by a revolving credit Note and a Swing Note,
dated the Closing Date payable to the order of such Revolver Lender in a face amount equal to the
Revolving Credit Commitment or Swing Loan Commitment, as applicable, of such Revolver Lender. The
Revolver Borrowers and the Term Borrowers shall be jointly and severally obligated to pay such
Obligations.



     2.8 Use of Proceeds. The proceeds of the Loans shall be used to refinance a portion
of existing Indebtedness (including payment in full of all outstanding amounts in connection with
(i) certain notes in favor of Central States Coal Reserves of Kentucky, LLC and Beaver Dam Coal
Company, affiliates of Patriot Coal Corporation and (ii) Indebtedness owed to Cyprus Creek
Land Resources, LLC) and for general corporate purposes.



     2.9 Letter of Credit Subfacility.



                    2.9.1 Issuance of Letters of Credit. Any Revolver Borrower may at any time prior to
the Expiration Date request the issuance of a standby or trade letter of credit (each a “Letter of
Credit”) on behalf of itself or another Loan Party, or the amendment or extension of an existing
Letter of Credit, by delivering or having such other Loan Party deliver to the Issuing Lender (with
a copy to the Administrative Agent) a completed application and agreement for letters of credit, or
request for such amendment or extension, as applicable, in such form as the Issuing Lender may
specify from time to time by no later than 11:00 a.m. at least five (5) Business Days, or such
shorter period as may be agreed to by the Issuing Lender, in advance of the proposed date of
issuance. Promptly after receipt of any letter of credit application, the Issuing Lender shall
confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent
has received a copy of such Letter of Credit application and if not, such Issuing Lender will
provide Administrative Agent with a copy thereof. Unless the Issuing Lender has received notice
from any Revolver Lender, Administrative Agent or any Loan Party, at least one day prior to the
requested date of issuance, amendment or extension of the applicable Letter of Credit, that one or
more applicable conditions in Section 7 [Conditions of Lending and Issuance of Letters of Credit]
is not satisfied, then, subject to the terms and conditions hereof and in reliance on the
agreements of the other Revolver Lenders set forth in this Section 2.9, the Issuing Lender or any
of the Issuing Lender’s Affiliates will issue a Letter of Credit or agree to such amendment or
extension, provided that each Letter of Credit shall (A) have a maximum maturity of twelve (12)
months from the date of issuance, and (B) in no event expire later than the Expiration Date and
provided further that in no event shall (i) the Letter of Credit Obligations exceed, at any one
time, $10,000,000 (the “Letter of Credit Sublimit”) or (ii) the Revolving Facility Usage exceed, at
any one time, the Revolving Credit Commitments. Each request by any Revolver Borrower for the
issuance, amendment or extension of a Letter of Credit shall be



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deemed to be a representation by the Revolver Borrowers that they shall be in compliance with
the preceding sentence and with Section 7 [Conditions of Lending and Issuance of Letters of Credit]
after giving effect to the requested issuance, amendment or extension of such Letter of Credit.
Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to the
beneficiary thereof, the applicable Issuing Lender will also deliver such Revolver Borrower and
Administrative Agent a true and complete copy of such Letter of Credit or amendment.




     Notwithstanding any other provision hereof, no Issuing Lender shall be required to issue any
Letter of Credit, if any Revolver Lender is at such time a Defaulting Lender hereunder, unless such
Issuing Lender has entered into satisfactory arrangements with the Revolver Borrowers or such
Defaulting Lender to eliminate the Issuing Lender’s risk with respect to such Defaulting Lender (it
being understood that the Issuing Lender would consider the Revolver Borrowers or the Defaulting
Lender providing cash collateral to the Administrative Agent, for the benefit of the Issuing
Lender, to secure the Defaulting Lender’s Ratable Share of the Letter of Credit, a satisfactory
arrangement).



                    2.9.2 Letter of Credit Fees. The Revolver Borrowers shall pay (i) to the
Administrative Agent for the ratable account of the Revolver Lenders a fee (the “Letter of Credit
Fee”) equal to the Applicable Letter of Credit Fee Rate, and (ii) to the Issuing Lender for its own
account a fronting fee equal to 0.25% per annum (in each case computed on the basis of a year of
360 days and actual days elapsed), which fees shall be computed on the daily average Letter of
Credit Obligations and shall be payable quarterly in arrears on each Payment Date following
issuance of each Letter of Credit. The Revolver Borrowers shall also pay to the Issuing Lender for
the Issuing Lender’s sole account the Issuing Lender’s then in effect customary fees and
administrative expenses payable with respect to the Letters of Credit as the Issuing Lender may
generally charge or incur from time to time in connection with the issuance, maintenance, amendment
(if any), assignment or transfer (if any), negotiation, and administration of Letters of Credit.



                    2.9.3 Disbursements, Reimbursement. Immediately upon the issuance of each Letter of
Credit, each Revolver Lender shall be deemed to, and hereby irrevocably and unconditionally agrees
to, purchase from the Issuing Lender a participation in such Letter of Credit and each drawing
thereunder in an amount equal to such Revolver Lender’s Ratable Share of the maximum amount
available to be drawn under such Letter of Credit and the amount of such drawing, respectively.



               2.9.3.1 In the event of any request for a drawing under a Letter of Credit by the beneficiary
or transferee thereof, the Issuing Lender will promptly notify the Revolver Borrowers and the
Administrative Agent thereof. Provided that it shall have received such notice, the Revolver
Borrowers shall reimburse (such obligation to reimburse the Issuing Lender shall sometimes be
referred to as a “Reimbursement Obligation”) the Issuing Lender prior to 12:00 noon on each date
that an amount is paid by the Issuing Lender under any Letter of Credit (each such date, a “Drawing
Date”) by paying to the Administrative Agent for the account of the Issuing Lender an amount equal
to the amount so paid by the Issuing Lender. In the event the Revolver Borrowers fail to reimburse
the Issuing Lender (through the Administrative Agent) for the full amount of any drawing under any
Letter of Credit by 12:00



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noon on the Drawing Date, the Administrative Agent will promptly notify each Revolver Lender
thereof, and the Revolver Borrowers shall be deemed to have requested that Revolving Credit Loans
be made by the Revolver Lenders under the Base Rate Option to be disbursed on the Drawing Date
under such Letter of Credit, subject to the amount of the unutilized portion of the Revolving
Credit Commitment and subject to the conditions set forth in Section 7.2 [Each Loan or Letter of
Credit] other than any notice requirements. Any notice given by the Administrative Agent or
Issuing Lender pursuant to this Section 2.9.3.1 may be oral if immediately confirmed in writing;
provided that the lack of such an immediate confirmation shall not affect the conclusiveness or
binding effect of such notice.




               2.9.3.2 Each Revolver Lender shall upon any notice pursuant to Section 2.9.3.1 make available
to the Administrative Agent for the account of the Issuing Lender an amount in immediately
available funds equal to its Ratable Share of the amount of the drawing, whereupon the
participating Revolver Lenders shall (subject to Section 2.9.3 [Disbursements, Reimbursement]) each
be deemed to have made a Revolving Credit Loan under the Base Rate Option to the Revolver Borrowers
in that amount. If any Revolver Lender so notified fails to make available to the Administrative
Agent for the account of the Issuing Lender the amount of such Revolver Lender’s Ratable Share of
such amount by no later than 2:00 p.m. on the Drawing Date, then interest shall accrue on such
Revolver Lender’s obligation to make such payment, from the Drawing Date to the date on which such
Revolver Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective
Rate during the first three (3) days following the Drawing Date and (ii) at a rate per annum equal
to the rate applicable to Loans under the Base Rate Option on and after the fourth day following
the Drawing Date. The Administrative Agent and the Issuing Lender will promptly give notice (as
described in Section 2.9.3.1 above) of the occurrence of the Drawing Date, but failure of the
Administrative Agent or the Issuing Lender to give any such notice on the Drawing Date or in
sufficient time to enable any Revolver Lender to effect such payment on such date shall not relieve
such Revolver Lender from its obligation under this Section 2.9.3.2.



               2.9.3.3 With respect to any unreimbursed drawing that is not converted into Revolving Credit
Loans under the Base Rate Option to the Revolver Borrowers in whole or in part as contemplated by
Section 2.9.3.1, because of any Revolver Borrower’s failure to satisfy the conditions set forth in
Section 7.2 [Each Loan or Letter of Credit] other than any notice requirements, or for any other
reason, the Revolver Borrowers shall be deemed to have incurred from the Issuing Lender a borrowing
(each a “Letter of Credit Borrowing”) in the amount of such drawing. Such Letter of Credit
Borrowing shall be due and payable on demand (together with interest) and shall bear interest at
the rate per annum applicable to the Revolving Credit Loans under the Base Rate Option. Each
Revolver Lender’s payment to the Administrative Agent for the account of the Issuing Lender
pursuant to Section 2.9.3 [Disbursements, Reimbursement] shall be deemed to be a payment in respect
of its participation in such Letter of Credit Borrowing (each a “Participation Advance”) from such
Revolver Lender in satisfaction of its participation obligation under this Section 2.9.3.



                    2.9.4 Repayment of Participation Advances.



               2.9.4.1 Upon (and only upon) receipt by the Administrative Agent for the account of the
Issuing Lender of immediately available funds from the Revolver Borrowers



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(i) in reimbursement of any payment made by the Issuing Lender under the Letter of Credit with
respect to which any Revolver Lender has made a Participation Advance to the Administrative Agent,
or (ii) in payment of interest on such a payment made by the Issuing Lender under such a Letter of
Credit, the Administrative Agent on behalf of the Issuing Lender will pay to each Revolver Lender,
in the same funds as those received by the Administrative Agent, the amount of such Revolver
Lender’s Ratable Share of such funds, except the Administrative Agent shall retain for the account
of the Issuing Lender the amount of the Ratable Share of such funds of any Revolver Lender that did
not make a Participation Advance in respect of such payment by the Issuing Lender.




               2.9.4.2 If the Administrative Agent is required at any time to return to any Loan Party, or to
a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any
portion of any payment made by any Loan Party to the Administrative Agent for the account of the
Issuing Lender pursuant to this Section in reimbursement of a payment made under the Letter of
Credit or interest or fee thereon, each Revolver Lender shall, on demand of the Administrative
Agent, forthwith return to the Administrative Agent for the account of the Issuing Lender the
amount of its Ratable Share of any amounts so returned by the Administrative Agent plus interest
thereon from the date such demand is made to the date such amounts are returned by such Revolver
Lender to the Administrative Agent, at a rate per annum equal to the Federal Funds Effective Rate
in effect from time to time.



                    2.9.5 Documentation. Each Loan Party agrees to be bound by the terms of the Issuing
Lender’s application and agreement for letters of credit and the Issuing Lender’s written
regulations and customary practices relating to letters of credit, though such interpretation may
be different from such Loan Party’s own. In the event of a conflict between such application or
agreement and this Agreement, this Agreement shall govern. It is understood and agreed that,
except in the case of gross negligence or willful misconduct, the Issuing Lender shall not be
liable for any error, negligence and/or mistakes, whether of omission or commission, in following
any Loan Party’s instructions or those contained in the Letters of Credit or any modifications,
amendments or supplements thereto.



                    2.9.6 Determinations to Honor Drawing Requests. In determining whether to honor any
request for drawing under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall
be responsible only to determine that the documents and certificates required to be delivered under
such Letter of Credit have been delivered and that they comply on their face with the requirements
of such Letter of Credit.



                    2.9.7 Nature of Participation and Reimbursement Obligations. Each Revolver Lender’s
obligation in accordance with this Agreement to make the Revolving Credit Loans or Participation
Advances, as contemplated by Section 2.9.3 [Disbursements, Reimbursement], as a result of a drawing
under a Letter of Credit, and the Obligations of the Revolver Borrowers to reimburse the Issuing
Lender upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Section 2.9 under all
circumstances, including the following circumstances:



          (i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have
against the Issuing Lender or any of its Affiliates, the Revolver Borrowers or



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any other Person for any reason whatsoever, or which any Loan Party may have against the
Issuing Lender or any of its Affiliates, any Lender or any other Person for any reason whatsoever;




          (ii) the failure of any Loan Party or any other Person to comply, in connection with a Letter
of Credit Borrowing, with the conditions set forth in Sections 2.1 [Revolving Credit Commitments],
2.5 [Revolving Credit Loan Requests; Swing Loan Requests], 2.6 [Making Revolving Credit Loans and
Swing Loans; Etc.] or 7.2 [Each Loan or Letter of Credit] or as otherwise set forth in this
Agreement for the making of a Revolving Credit Loan, it being acknowledged that such conditions are
not required for the making of a Letter of Credit Borrowing and the obligation of the Lenders to
make Participation Advances under Section 2.9.3 [Disbursements, Reimbursement];



          (iii) any lack of validity or enforceability of any Letter of Credit;



          (iv) any claim of breach of warranty that might be made by any Loan Party or any Lender
against any beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment,
counterclaim, crossclaim, defense or other right which any Loan Party or any Lender may have at any
time against a beneficiary, successor beneficiary any transferee or assignee of any Letter of
Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), the
Issuing Lender or its Affiliates or any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction (including any
underlying transaction between any Loan Party or Subsidiaries of a Loan Party and the beneficiary
for which any Letter of Credit was procured);



          (v) the lack of power or authority of any signer of (or any defect in or forgery of any
signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy,
enforceability or genuineness of any draft, demand, instrument, certificate or other document
presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or provision of services
relating to a Letter of Credit, in each case even if the Issuing Lender or any of its Affiliates
has been notified thereof;



          (vi) payment by the Issuing Lender or any of its Affiliates under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not comply with the
terms of such Letter of Credit;



          (vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit,
or any other Person having a role in any transaction or obligation relating to a Letter of Credit,
or the existence, nature, quality, quantity, condition, value or other characteristic of any
property or services relating to a Letter of Credit;



          (viii) any failure by the Issuing Lender or any of its Affiliates to issue any Letter of
Credit in the form requested by any Loan Party, unless the Issuing Lender has received written
notice from such Loan Party of such failure within three Business Days after the Issuing Lender
shall have furnished such Loan Party and the Administrative Agent a copy of such Letter of



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Credit and such error is material and no drawing has been made thereon prior to receipt of
such notice;




          (ix) any adverse change in the business, operations, properties, assets, condition (financial
or otherwise) or prospects of any Loan Party or Subsidiaries of a Loan Party;



          (x) any breach of this Agreement or any other Loan Document by any party thereto;



          (xi) the occurrence or continuance of an Insolvency Proceeding with respect to any Loan Party;



          (xii) the fact that an Event of Default or a Potential Default shall have occurred and be
continuing;



          (xiii) the fact that the Expiration Date shall have passed or this Agreement or the
Commitments hereunder shall have been terminated; and



          (xiv) any other circumstance or happening whatsoever, whether or not similar to any of the
foregoing.



                    2.9.8 Indemnity. The Revolver Borrowers hereby agree to protect, indemnify, pay and
save harmless the Issuing Lender and any of its Affiliates that has issued a Letter of Credit from
and against any and all claims, demands, liabilities, damages, taxes (other than Excluded Taxes),
penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees,
expenses and disbursements of counsel and allocated costs of internal counsel) which the Issuing
Lender or any of its Affiliates may incur or be subject to as a consequence, direct or indirect, of
the issuance of any Letter of Credit, other than as a result of (A) the gross negligence or willful
misconduct of the Issuing Lender as determined by a final non-appealable judgment of a court of
competent jurisdiction or (B) the wrongful dishonor by the Issuing Lender or any of Issuing
Lender’s Affiliates of a proper demand for payment made under any Letter of Credit, except if such
dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future
de jure or de facto government or Official Body.



                    2.9.9 Liability for Acts and Omissions. As between any Loan Party and the Issuing
Lender, or the Issuing Lender’s Affiliates, such Loan Party assumes all risks of the acts and
omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters
of Credit. In furtherance and not in limitation of the foregoing, the Issuing Lender shall not be
responsible for any of the following, including any losses or damages to any Loan Party or other
Person or property relating therefrom: (i) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with the application for an
issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged (even if the Issuing Lender or its
Affiliates shall have been notified thereof); (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of
Credit, or any other party to which such Letter of Credit may be transferred, to



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comply fully with any conditions required in order to draw upon such Letter of Credit or any
other claim of any Loan Party against any beneficiary of such Letter of Credit, or any such
transferee, or any dispute between or among any Loan Party and any beneficiary of any Letter of
Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in
cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission
or otherwise of any document required in order to make a drawing under any such Letter of Credit or
of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit
of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from
causes beyond the control of the Issuing Lender or its Affiliates, as applicable, including any act
or omission of any Official Body, and none of the above shall affect or impair, or prevent the
vesting of, any of the Issuing Lender’s or its Affiliates rights or powers hereunder. Nothing in
the preceding sentence shall relieve the Issuing Lender from liability for the Issuing Lender’s
gross negligence or willful misconduct in connection with actions or omissions described in such
clauses (i) through (viii) of such sentence. In no event shall the Issuing Lender or its
Affiliates be liable to any Loan Party for any indirect, consequential, incidental, punitive,
exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any
damages resulting from any change in the value of any property relating to a Letter of Credit.




          Without limiting the generality of the foregoing, the Issuing Lender and each of its
Affiliates (i) may rely on any oral or other communication believed in good faith by the Issuing
Lender or such Affiliate to have been authorized or given by or on behalf of the applicant for a
Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face
substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may
honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was
pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise,
and shall be entitled to reimbursement to the same extent as if such presentation had initially
been honored, together with any interest paid by the Issuing Lender or its Affiliate; (iv) may
honor any drawing that is payable upon presentation of a statement advising negotiation or payment,
upon receipt of such statement (even if such statement indicates that a draft or other document is
being delivered separately), and shall not be liable for any failure of any such draft or other
document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any
paying or negotiating bank claiming that it rightfully honored under the laws or practices of the
place where such bank is located; and (vi) may settle or adjust any claim or demand made on the
Issuing Lender or its Affiliate in any way related to any order issued at the applicant’s request
to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar
document (each an “Order”) and honor any drawing in connection with any Letter of Credit that is
the subject of such Order, notwithstanding that any drafts or other documents presented in
connection with such Letter of Credit fail to conform in any way with such Letter of Credit.



          In furtherance and extension and not in limitation of the specific provisions set forth above,
any action taken or omitted by the Issuing Lender or its Affiliates under or in connection with the
Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or
omitted in good faith, shall not put the Issuing Lender or its Affiliates under any resulting
liability to any Revolver Borrower or any Lender.




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                    2.9.10 Issuing Lender Reporting Requirements. Each Issuing Lender shall, on the
first Business Day of each month, provide to Administrative Agent and the Revolver Borrowers a
schedule of the Letters of Credit issued by it, in form and substance satisfactory to
Administrative Agent, showing the date of issuance of each Letter of Credit, the account party, the
original face amount (if any), and the expiration date of any Letter of Credit outstanding at any
time during the preceding month, and any other information relating to such Letter of Credit that
the Administrative Agent may request.



3. TERM LOANS




     3.1 Term Loan Commitments. Subject to the terms and conditions hereof, and relying
upon the representations and warranties herein set forth, each Term Lender severally agrees to make
a term loan (the “Term Loan”) to the Term Borrowers on the Closing Date in such principal amount as
the Term Borrowers shall request up to, but not exceeding such Term Lender’s Term Loan Commitment.



     3.2 Nature of Term Lenders’ Obligations with Respect to Term Loans; Repayment Terms.
The obligations of each Term Lender to make Term Loans to the Term Borrowers shall be in the
proportion that such Term Lender’s Term Loan Commitment bears to the Term Loan Commitments of all
Term Lenders to the Term Borrowers, but each Term Lender’s Term Loan to the Term Borrowers shall
never exceed its Term Loan Commitment. The failure of any Term Lender to make a Term Loan shall
not relieve any other Term Lender of its obligations to make a Term Loan nor shall it impose any
additional liability on any other Term Lender hereunder. The Term Lenders shall have no obligation
to make Term Loans hereunder after the Closing Date. The Term Loan Commitments are not revolving
credit commitments, and the Term Borrowers shall not have the right to borrow, repay and reborrow
under Section 3.1 [Term Loan Commitments]. Principal on the Term Loans shall be payable in
quarterly principal amounts of $5,000,000 commencing on January 1, 2012 and on each Payment Date
thereafter, with the entire remaining principal balance and any outstanding interest payable on the
Maturity Date, unless otherwise accelerated pursuant to the terms of this Agreement.



     3.3 Notes. The Obligation of the Term Borrowers to repay the aggregate unpaid
principal amount of the Term Loans made to it by each Term Lender, together with interest thereon,
shall be evidenced by a term Note, dated the Closing Date payable to the order of such Term Lender
in a face amount equal to the Term Loan Commitment of such Term Lender. The Revolver Borrowers and
the Term Borrowers shall be jointly and severally obligated to pay such Obligations.



4. INTEREST RATES




     4.1 Interest Rate Options. The Borrowers shall pay interest in respect of the
outstanding unpaid principal amount of the Loans as selected by it from the Base Rate Option or
LIBOR Rate Option set forth below applicable to the Loans, it being understood that, subject to the
provisions of this Agreement, the Borrowers may select different Interest Rate Options and
different Interest Periods to apply simultaneously to the Loans comprising different Borrowing
Tranches and may convert to or renew one or more Interest Rate Options with respect to all or any
portion of the Loans comprising any Borrowing Tranche; provided that there shall not be at



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any one time outstanding more than six (6) Borrowing Tranches in the aggregate among all of
the Revolving Credit Loans and four (4) Borrowing Tranches in the aggregate among all of the Term
Loans and provided further that if an Event of Default or Potential Default exists and is
continuing, the Borrowers may not request, convert to, or renew the LIBOR Rate Option for any Loans
and the Required Lenders may demand that all existing Borrowing Tranches bearing interest under the
LIBOR Rate Option shall be converted immediately to the Base Rate Option, subject to the obligation
of the Borrowers to pay any indemnity under Section 5.10 [Indemnity] in connection with such
conversion. If at any time the designated rate applicable to any Loan made by any Lender exceeds
such Lender’s highest lawful rate, the rate of interest on such Lender’s Loan shall be limited to
such Lender’s highest lawful rate.




                    4.1.1 Revolving Credit Interest Rate Options; Swing Line Interest Rate. The Borrowing
Agent, for the account of the Revolver Borrowers, shall have the right to select from the following
Interest Rate Options applicable to the Revolving Credit Loans:



          (i) Revolving Credit Base Rate Option: A fluctuating rate per annum (computed on the
basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) equal to the Base
Rate plus the Applicable Margin, such interest rate to change automatically from time to time
effective as of the effective date of each change in the Base Rate; or




          (ii) Revolving Credit LIBOR Rate Option: A rate per annum (computed on the basis of a
year of 360 days and actual days elapsed) equal to the LIBOR Rate plus the Applicable Margin.



Subject to Section 4.3 [Interest After Default], only the Base Rate Option applicable to Revolving
Credit Loans shall apply to the Swing Loans.




                    4.1.2 Term Loan Interest Rate Options. The Borrowing Agent, for the account of the
Term Borrowers, shall have the right to select from the following Interest Rate Options applicable
to the Term Loans:



          (i) Term Loan Base Rate Option: A fluctuating rate per annum (computed on the basis
of a year of 365 or 366 days, as the case may be, and actual days elapsed) equal to the Base Rate
plus the Applicable Margin, such interest rate to change automatically from time to time effective
as of the effective date of each change in the Base Rate; or




          (ii) Term Loan LIBOR Rate Option: A rate per annum (computed on the basis of a year
of 360 days and actual days elapsed) equal to the LIBOR Rate plus the Applicable Margin.




                    4.1.3 Rate Quotations. The Borrowing Agent may call the Administrative Agent on or
before the date on which a Loan Request is to be delivered to receive an indication of the rates
then in effect, but it is acknowledged that such projection shall not be binding on the
Administrative Agent or the Lenders nor affect the rate of interest which thereafter is actually in
effect when the election is made.



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     4.2 Interest Periods. At any time when the Borrowing Agent shall select, convert to
or renew a LIBOR Rate Option, the Borrowing Agent shall notify the Administrative Agent thereof at
least three (3) Business Days prior to the effective date of such LIBOR Rate Option by delivering a
Loan Request. The notice shall specify an Interest Period during which such Interest Rate Option
shall apply. Notwithstanding the preceding sentence, the following provisions shall apply to any
selection of, renewal of, or conversion to a LIBOR Rate Option:



                    4.2.1 Amount of Borrowing Tranche. Each Borrowing Tranche of Loans under the LIBOR
Rate Option shall be in integral multiples of $500,000 and not less than $1,000,000; and



                    4.2.2 Renewals. In the case of the renewal of a LIBOR Rate Option at the end of an
Interest Period, the first day of the new Interest Period shall be the last day of the preceding
Interest Period, without duplication in payment of interest for such day.



     4.3 Interest After Default. To the extent permitted by Law, upon the occurrence of an
Event of Default and until such time such Event of Default shall have been cured or waived, and at
the discretion of the Administrative Agent or upon written demand by the Required Lenders to the
Administrative Agent:



                    4.3.1 Letter of Credit Fees, Interest Rate. The Letter of Credit Fees and the rate of
interest for each Loan otherwise applicable pursuant to Section 2.9.2 [Letter of Credit Fees] or
Section 4.1 [Interest Rate Options], respectively, shall be increased by 2.0% per annum;



                    4.3.2 Other Obligations. Each other Obligation hereunder if not paid when due shall
bear interest at a rate per annum equal to the sum of the rate of interest applicable under the
Base Rate Option plus an additional 2.0% per annum from the time such Obligation becomes due and
payable and until it is paid in full; and



                    4.3.3 Acknowledgment. The Borrowers acknowledge that the increase in rates referred
to in this Section 4.3 reflects, among other things, the fact that such Loans or other amounts have
become a substantially greater risk given their default status and that the Lenders are entitled to
additional compensation for such risk; and all such interest shall be payable by Borrowers upon
demand by Administrative Agent.



     4.4 LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.



                    4.4.1 Unascertainable. If on any date on which a LIBOR Rate would otherwise be
determined, the Administrative Agent shall have determined that:



          (i) adequate and reasonable means do not exist for ascertaining such LIBOR Rate, or




          (ii) a contingency has occurred which materially and adversely affects the London interbank
eurodollar market relating to the LIBOR Rate, the Administrative Agent shall have the rights
specified in Section 4.4.3 [Administrative Agent’s and Lender’s Rights].




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                    4.4.2 Illegality; Increased Costs; Deposits Not Available. If at any time any Lender
shall have determined that:



          (i) the making, maintenance or funding of any Loan to which a LIBOR Rate Option applies has
been made impracticable or unlawful by compliance by such Lender in good faith with any Law or any
interpretation or application thereof by any Official Body or with any request or directive of any
such Official Body (whether or not having the force of Law), or




          (ii) such LIBOR Rate Option will not adequately and fairly reflect the cost to such Lender of
the establishment or maintenance of any such Loan, or




          (iii) after making all reasonable efforts, deposits of the relevant amount in Dollars for the
relevant Interest Period for a Loan, or to banks generally, to which a LIBOR Rate Option applies,
respectively, are not available to such Lender with respect to such Loan, or to banks generally, in
the interbank eurodollar market,



then the Administrative Agent shall have the rights specified in Section 4.4.3 [Administrative
Agent’s and Lender’s Rights].




                    4.4.3 Administrative Agent’s and Lender’s Rights. In the case of any event specified
in Section 4.4.1 [Unascertainable] above, the Administrative Agent shall promptly so notify the
Lenders and the Borrowers thereof, and in the case of an event specified in Section 4.4.2
[Illegality; Increased Costs; Deposits Not Available] above, such Lender shall promptly so notify
the Administrative Agent and endorse a certificate to such notice as to the specific circumstances
of such notice, and the Administrative Agent shall promptly send copies of such notice and
certificate to the other Lenders and the Borrowers. Upon such date as shall be specified in such
notice (which shall not be earlier than the date such notice is given), the obligation of (A) the
Lenders, in the case of such notice given by the Administrative Agent, or (B) such Lender, in the
case of such notice given by such Lender, to allow the Borrowers to select, convert to or renew a
LIBOR Rate Option shall be suspended until the Administrative Agent shall have later notified the
Borrowers, or such Lender shall have later notified the Administrative Agent, of the Administrative
Agent’s or such Lender’s, as the case may be, determination that the circumstances giving rise to
such previous determination no longer exist. If at any time the Administrative Agent makes a
determination under Section 4.4.1 [Unascertainable] and the Borrowers have previously notified the
Administrative Agent of their selection of, conversion to or renewal of a LIBOR Rate Option and
such Interest Rate Option has not yet gone into effect, such notification shall be deemed to
provide for selection of, conversion to or renewal of the Base Rate Option otherwise available with
respect to such Loans. If any Lender notifies the Administrative Agent of a determination under
Section 4.4.2 [Illegality; Increased Costs; Deposits Not Available], the Borrowers shall, subject
to the Borrowers’ indemnification Obligations under Section 5.10 [Indemnity], as to any Loan of the
Lender to which a LIBOR Rate Option applies, on the date specified in such notice either convert
such Loan to the Base Rate Option otherwise available with respect to such Loan or prepay such Loan
in accordance with Section 5.6 [Voluntary Prepayments]. Absent due notice from the Borrowers of
conversion or prepayment, such Loan shall automatically be converted to the Base Rate Option
otherwise available with respect to such Loan upon such specified date.



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     4.5 Selection of Interest Rate Options. If the Borrowers fail to select a new
Interest Period to apply to any Borrowing Tranche of Loans under the LIBOR Rate Option at the
expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with
the provisions of Section 4.2 [Interest Periods], the Borrowers shall be deemed to have converted
such Borrowing Tranche to the Base Rate Option commencing upon the last day of the existing
Interest Period.



5. PAYMENTS




     5.1 Payments. All payments and prepayments to be made in respect of principal,
interest, Commitment Fees, Letter of Credit Fees, Administrative Agent’s Fee or other fees or
amounts due from any Borrower hereunder shall be payable prior to 11:00 a.m. on the date when due
without presentment, demand, protest or notice of any kind, all of which are hereby expressly
waived by the Borrowers, and without set-off, counterclaim or other deduction of any nature, and an
action therefor shall immediately accrue. Such payments shall be made to the Administrative Agent
at the Principal Office for the account of PNC with respect to the Swing Loans and for the ratable
accounts of the Lenders with respect to the Revolving Credit Loans or Term Loans in U.S. Dollars
and in immediately available funds, and the Administrative Agent shall promptly distribute such
amounts to the Lenders in immediately available funds; provided that in the event payments
are received by 11:00 a.m. by the Administrative Agent with respect to the Loans and such payments
are not distributed to the Lenders on the same day received by the Administrative Agent, the
Administrative Agent shall pay the Lenders the Federal Funds Effective Rate with respect to the
amount of such payments for each day held by the Administrative Agent and not distributed to the
Lenders. The Administrative Agent’s and each Lender’s statement of account, ledger or other
relevant record shall, in the absence of manifest error, be conclusive as the statement of the
amount of principal of and interest on the Loans and other amounts owing under this Agreement and
shall be deemed an “account stated.”



     5.2 Pro Rata Treatment of Lenders. Each borrowing of Revolving Credit Loans shall be
allocated to each Lender according to its Ratable Share, and each selection of, conversion to or
renewal of any Interest Rate Option and each payment or prepayment by the Borrowers with respect to
principal, interest, Commitment Fees, Letter of Credit Fees, or other fees (except for the
Administrative Agent’s Fee and the Issuing Lender’s fronting fee) or amounts due from the Borrowers
hereunder to the Lenders with respect to the Commitments and Loans, shall (except as otherwise may
be provided with respect to a Defaulting Lender and except as provided in Section 4.4.3
[Administrative Agent’s and Lender’s Rights] in the case of an event specified in Section 4.4
[LIBOR Rate Unascertainable; Etc.], 5.6.2 [Replacement of a Lender] or 5.8 [Increased Costs]) be
payable ratably among the Lenders entitled to such payment in accordance with the amount of
principal, interest, Commitment Fees, Letter of Credit Fees, and other fees or amounts then due or
payable such Lenders as set forth in this Agreement. Notwithstanding any of the foregoing, each
borrowing or payment or prepayment by the Revolver Borrowers of principal, interest, fees or other
amounts from the Revolver Borrowers with respect to Swing Loans shall be made by or to PNC
according to Section 2.6.5 [Borrowings to Repay Swing Loans].



     5.3 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of
setoff, counterclaim or banker’s lien, by receipt of voluntary payment, by realization upon



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security, or by any other non-pro rata source, obtain payment in respect of any principal of
or interest on any of its Loans or other obligations hereunder resulting in such Lender’s receiving
payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other
such obligations greater than the pro-rata share of the amount such Lender is entitled thereto,
then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such
fact, and (b) purchase (for cash at face value) participations in the Loans and such other
obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans and other amounts
owing them, provided that:




          (i) if any such participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase price restored to the
extent of such recovery, together with interest or other amounts, if any, required by Law
(including court order) to be paid by the Lender or the holder making such purchase; and




          (ii) the provisions of this Section 5.3 shall not be construed to apply to (x) any payment
made by the Loan Parties pursuant to and in accordance with the express terms of the Loan Documents
or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or Participation Advances to any assignee or participant, other
than to the Borrowers or any Subsidiary thereof (as to which the provisions of this Section 5.3
shall apply).



Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under
applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements
may exercise against each Loan Party rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of each Loan Party in the amount of
such participation.



Any Lender that fails at any time to comply with the provisions of this Section 5.3 shall be deemed
a Defaulting Lender until such time as it performs its obligations hereunder and is not otherwise a
Defaulting Lender for any other reason. A Defaulting Lender shall be deemed to have assigned any
and all payments due to it from any Borrower, whether on account of or relating to outstanding
Loans, Letters of Credit, interest, fees or otherwise, to the remaining non-defaulting Lenders for
application to, and reduction of, their respective Ratable Share of all outstanding Loans and other
unpaid Obligations of any of the Loan Parties. The Defaulting Lender hereby authorizes the
Administrative Agent to distribute such payments to the non-defaulting Lenders in proportion to
their respective Ratable Share of all outstanding Loans and other unpaid Obligations of any of the
Loan Parties to which such Lenders are entitled. A Defaulting Lender shall be deemed to have
satisfied the provisions of this Section 5.3 when and if, as a result of application of the
assigned payments to all outstanding Loans and other unpaid Obligations of any of the Loan Parties
to the non-defaulting Lenders, the Lenders’ respective Ratable Share of all outstanding Loans and
unpaid Obligations have returned to those in effect immediately prior to such violation of this
Section 5.3.




     5.4 Presumptions by Administrative Agent. Unless the Administrative Agent shall have
received notice from the Borrowing Agent prior to the date on which any payment is due to



 - 40 - 









 




the Administrative Agent for the account of the Lenders or the Issuing Lender hereunder that
the Borrowers will not make such payment, the Administrative Agent may assume that the Borrowers
have made such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the Issuing Lender, as the case may be, the amount due.
In such event, if the Borrowers have not in fact made such payment, then each of the Lenders or the
Issuing Lender, as the case may be, severally agrees to repay to the Administrative Agent forthwith
on demand the amount so distributed to such Lender or the Issuing Lender, with interest thereon,
for each day from and including the date such amount is distributed to it to but excluding the date
of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation.




     5.5 Interest Payment Dates. Interest on Loans to which the Base Rate Option applies
shall be due and payable in arrears on each Payment Date. Interest on Loans to which the LIBOR
Rate Option applies shall be due and payable on the last day of each Interest Period for those
Loans and, if such Interest Period is longer than three (3) Months, also on the 90th day of such
Interest Period. Interest on mandatory prepayments of principal under Section 5.7 [Mandatory
Prepayments] shall be due on the date such mandatory prepayment is due. Interest on the principal
amount of each Loan or other monetary Obligation shall be due and payable on demand after such
principal amount or other monetary Obligation becomes due and payable (whether on the stated
Expiration Date, upon acceleration or otherwise).



     5.6 Voluntary Prepayments.



                    5.6.1 Right to Prepay. The Borrowers shall have the right at their option from time
to time to prepay the Loans in whole or part without premium or penalty (except as provided in
Section 5.6.2 [Replacement of a Lender] below, in Section 5.8 [Increased Costs] and Section 5.10
[Indemnity]). Whenever the Borrowers desire to prepay any part of the Loans, they shall provide a
prepayment notice to the Administrative Agent by 1:00 p.m. at least one (1) Business Day prior to
the date of prepayment of the Revolving Credit Loans or Term Loans or no later than 1:00 p.m. on
the date of prepayment of Swing Loans, setting forth the following information:




     (w) the date, which shall be a Business Day, on which the proposed prepayment
is to be made;




     (x) a statement indicating the application of the prepayment between the
Revolving Credit Loans, Term Loans and Swing Loans;




     (y) a statement indicating the application of the prepayment between Loans to
which the Base Rate Option applies and Loans to which the LIBOR Rate Option applies;
and




     (z) the total principal amount of such prepayment, which shall not be less than
the lesser of (i) the Revolving Facility Usage or (ii) $100,000 for any Swing Loan
or $500,000 for any Revolving Credit Loan or Term Loan.



              All prepayment notices shall be irrevocable. The principal amount of the Loans for which a
prepayment notice is given, together with interest on such principal amount



 - 41 - 









 




except with respect to Loans to which the Base Rate Option applies, shall be due and payable
on the date specified in such prepayment notice as the date on which the proposed prepayment is to
be made. All Term Loan prepayments permitted pursuant to this Section 5.6.1 [Right to Prepay]
shall be applied to the unpaid installments of principal of the Term Loans in the inverse order of
scheduled maturities. Except as provided in Section 4.4.3 [Administrative Agent’s and Lender’s
Rights], if the Borrowers prepay a Loan but fail to specify the applicable Borrowing Tranche which
the Borrowers are prepaying, the prepayment shall be applied (i) first to Revolving Credit Loans
and then to Term Loans; and (ii) after giving effect to the allocations in clause (i) above and in
the preceding sentence, first to Loans to which the Base Rate Option applies, then to Loans to
which the LIBOR Rate Option applies. Any prepayment hereunder shall be subject to the Borrowers’
Obligation to indemnify the Lenders under Section 5.10 [Indemnity].




                    5.6.2 Replacement of a Lender. In the event any Lender (i) gives notice under Section
4.4 [LIBOR Rate Unascertainable, Etc.], (ii) requests compensation under Section 5.8 [Increased
Costs], or requires the Borrowers to pay any additional amount to any Lender or any Official Body
for the account of any Lender pursuant to Section 5.9 [Taxes], (iii) is a Defaulting Lender, (iv)
becomes subject to the control of an Official Body (other than normal and customary supervision),
or (v) is a Non-Consenting Lender referred to in Section 11.1 [Modifications, Amendments or
Waivers], then in any such event the Borrowers may, at their sole expense, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained in, and consents required by, Section
11.8 [Successors and Assigns]), all of its interests, rights and obligations under this Agreement
and the related Loan Documents to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment), provided that:



          (i) the Borrowers shall have paid to the Administrative Agent the assignment fee specified in
Section 11.8 [Successors and Assigns];




          (ii) such Lender shall have received payment of an amount equal to the outstanding principal
of its Loans and Participation Advances, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder and under the other Loan Documents (including any amounts under
Section 5.10 [Indemnity]) from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrowers (in the case of all other amounts);




          (iii) in the case of any such assignment resulting from a claim for compensation under Section
5.8.1 [Increased Costs Generally] or payments required to be made pursuant to Section 5.9 [Taxes],
such assignment will result in a reduction in such compensation or payments thereafter; and




          (iv) such assignment does not conflict with applicable Law.



A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to
require such assignment and delegation cease to apply.







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                    5.6.3 Reduction of Revolving Credit Commitments. The Borrowers shall have the right at any
time and from time to time upon five (5) Business Days’ prior written notice to Administrative
Agent to permanently and ratably reduce, in whole multiples of $1,000,000 of principal, or
terminate, the Revolving Credit Commitments without penalty or premium, except as hereinafter set
forth, provided that any such reduction or termination shall be accompanied by: (i) the payment in
full of any Commitment Fee and any other fees then accrued on the amount of such reduction or
termination, (ii) prepayment of the Revolving Credit Notes in accordance with Section 5.6.1 [Right
to Prepay] (together with cash collateralization, if necessary, of the Letters of Credit), together
with the full amount of interest accrued on the principal sum to be prepaid, to the extent that the
aggregate amount thereof then outstanding exceeds the Revolving Credit Commitments as so reduced or
terminated. From the effective date of any such reduction or termination, the obligations of
Borrowers to pay the Commitment Fee shall correspondingly be reduced or cease, as the case may be.



     5.7 Mandatory Prepayments.



                    5.7.1 Sale of Assets. Within 180 days of any sale of assets authorized by Section
8.2.7(v) [Dispositions of Assets or Subsidiaries], the Revolver Borrowers and/or Term Borrowers, as
applicable, shall make a mandatory prepayment of principal on the Revolving Credit Loans and/or
Term Loans, as applicable, equal to the Net Cash Proceeds, together with accrued interest on such
principal amount. All prepayments pursuant to this Section 5.7.1 made by Term Borrowers shall be
applied to payment of the principal amount of the Term Loans by application to the unpaid
installments of principal in the inverse order of scheduled maturities, and then to Revolving
Credit Loans. All prepayments pursuant to this Section 5.7.1 made by Revolver Borrowers shall be
applied to payment of the principal amount of the Revolving Credit Loans by application to the
unpaid installments of principal in the inverse order of scheduled maturities, and then to the Term
Loans.



                    5.7.2 Excess Cash Flow. Within five (5) Business Days of the latest date that the
Borrowers’ annual financial statements for the 2011 fiscal year are due to be delivered pursuant to
Section 8.3.2 [Annual Financial Statements] for such year, the Borrowers shall make a mandatory
prepayment of principal on the Term Loans equal to 50% of Excess Cash Flow for the 2011 fiscal
year. Such prepayment of Excess Cash Flow shall be accompanied by payment of accrued interest on
such principal amount. Such prepayment of Excess Cash Flow shall be applied to payment in full of
the principal amount of the Term Loans by application to the unpaid installments of principal in
the inverse order of scheduled maturities. Notwithstanding the foregoing, the Borrowers shall not
be required to make any such mandatory prepayment in connection with this Section 5.7.2 if the
Leverage Ratio for the 2011 fiscal year is less than 2.50 to 1.00.



                    5.7.3 Issuance of Indebtedness. Within five (5) Business Days of any issuance or
incurrence of Indebtedness (other than Indebtedness permitted under subsections (i) through (vi) of
Section 8.2.1 [Indebtedness], the Revolver Borrowers and/or Term Borrowers, as applicable, shall
make a mandatory prepayment of principal on the Revolving Credit Loans and/or Term Loans, as
applicable, equal to the Net Cash Proceeds, together with accrued interest on such principal
amount. All prepayments pursuant to this Section 5.7.3 made by Term Borrowers shall be applied to
payment of the principal amount of the Term Loans by application



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to the unpaid installments of principal in the inverse order of scheduled maturities, and then
to Revolving Credit Loans. All prepayments pursuant to this Section 5.7.3 made by Revolver
Borrowers shall be applied to payment of the principal amount of the Revolving Credit Loans by
application to the unpaid installments of principal in the inverse order of scheduled maturities,
and then to the Term Loans.




                    5.7.4 Issuance of Equity. Within five (5) Business Days of any issuance or sale of
equity by any Borrower (other than issuances pursuant to subsection (a), (b) and (c) of Section
8.2.12 [Issuance of Stock] of this Agreement), the Borrowers shall make a mandatory prepayment of
principal on the Term Loans equal to the Net Cash Proceeds, together with accrued interest on such
principal amount. All prepayments pursuant to this Section 5.7.4 shall be applied to payment in
full of the principal amount of the Term Loans by application to the unpaid installments of
principal in the inverse order of scheduled maturities.



                    5.7.5 Insurance Proceeds. In the event that the Net Cash Proceeds of any Casualty
Event affecting any property of any Loan Party or any of its Subsidiaries (herein, the “Current
Casualty Event”), and of all prior Casualty Events as to which a prepayment has not yet been made
under this paragraph, shall exceed $500,000 then, on or before the date 180 days after the receipt
by such Loan Party or Subsidiary of the proceeds of any insurance, condemnation award or other
compensation in respect of the Current Casualty Event (or upon such earlier date as such Loan Party
or such Subsidiary shall have determined not to repair or replace the property affected by the
Current Casualty Event), the Borrowers shall either, (x) so long as no Event of Default has
occurred and is continuing, reinvest such Net Cash Proceeds of such Casualty Event in operating
assets for or on behalf of any Loan Party within 180 days after the receipt of such Net Cash
Proceeds, or (y) prepay the Loans in an aggregate amount equal to 100% of such Net Cash Proceeds of
the Current Casualty Event and prior Casualty Events as to which such prepayment has not yet been
made under this paragraph, to the extent such Net Cash Proceeds of a prior Casualty Event have not
been reinvested under this Section; provided, however, that no such repayment shall be
required up to the amount the asset affected by such Current Casualty Event is subject to a Lien
permitted by 8.2.2 [Liens; Lien Covenants] and such Net Cash Proceeds are used to discharge such
lien. All prepayments pursuant to this Section 5.7.5 made by Term Borrowers as the result of the
loss of any of such Term Borrower’s property shall be applied to payment of the principal amount of
the Term Loans by application to the unpaid installments of principal in the inverse order of
scheduled maturities, and then to Revolving Credit Loans. All prepayments pursuant to this Section
5.7.5 made by Revolver Borrowers as the result of the loss of any of such Revolver Borrower’s
property shall be applied to payment of the principal amount of the Revolving Credit Loans by
application to the unpaid installments of principal in the inverse order of scheduled maturities,
and then to the Term Loans.



                    5.7.6 Application Among Interest Rate Options. All prepayments required pursuant to
this Section 5.7 shall first be applied among the Interest Rate Options to the principal amount of
the Loans subject to the Base Rate Option, then to Loans subject to a LIBOR Rate Option. In
accordance with Section 5.10 [Indemnity], the Revolver Borrowers and/or Term Borrowers, as
applicable, shall indemnify the Lenders for any loss or expense, including loss of margin, incurred
with respect to any such prepayments applied against Loans subject to a LIBOR Rate Option on any
day other than the last day of the applicable Interest Period.



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     5.8 Increased Costs.



                    5.8.1 Increased Costs Generally. If any Change in Law shall:



          (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance
charge or similar requirement against assets of, deposits with or for the account of, or credit
extended or participated in by, any Lender (except any reserve requirement reflected in the LIBOR
Rate) or the Issuing Lender;




          (ii) subject any Lender or the Issuing Lender to any tax of any kind whatsoever with respect
to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Loan under
the LIBOR Rate Option made by it, or change the basis of taxation of payments to such Lender or the
Issuing Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section
5.9 [Taxes] and the imposition of, or any change in the rate of, any Excluded Tax payable by such
Lender or the Issuing Lender); or




          (iii) impose on any Lender, the Issuing Lender or the London interbank market any other
condition, cost or expense affecting this Agreement or any Loan under the LIBOR Rate Option made by
such Lender or any Letter of Credit or participation therein;



and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Loan under the LIBOR Rate Option (or of maintaining its obligation to make any such
Loan), or to increase the cost to such Lender or the Issuing Lender of participating in, issuing or
maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue
any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or
the Issuing Lender hereunder (whether of principal, interest or any other amount) then, upon
request of such Lender or the Issuing Lender, the Revolver Borrowers and/or Term Borrowers, as
applicable, will pay to such Lender or the Issuing Lender, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Lender, as the case may be, for
such additional costs incurred or reduction suffered.




                    5.8.2 Capital Requirements. If any Lender or the Issuing Lender determines that any
Change in Law affecting such Lender or the Issuing Lender or any lending office of such Lender or
such Lender’s or the Issuing Lender’s holding company, if any, regarding capital requirements has
or would have the effect of reducing the rate of return on such Lender’s or the Issuing Lender’s
capital or on the capital of such Lender’s or the Issuing Lender’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the
Issuing Lender, to a level below that which such Lender or the Issuing Lender or such Lender’s or
the Issuing Lender’s holding company could have achieved but for such Change in Law (taking into
consideration such Lender’s or the Issuing Lender’s policies and the policies of such Lender’s or
the Issuing Lender’s holding company with respect to capital adequacy), then from time to time the
Revolver Borrowers and/or Term Borrowers, as applicable, will pay to such Lender or the Issuing
Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the
Issuing Lender or such Lender’s or the Issuing Lender’s holding company for any such reduction
suffered.



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                    5.8.3 Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New
Loans. A certificate of a Lender or the Issuing Lender setting forth the amount or amounts
necessary to compensate such Lender or the Issuing Lender or its holding company, as the case may
be, as specified in Sections 5.8.1 [Increased Costs Generally] or 5.8.2 [Capital Requirements] and
delivered to the Borrowing Agent shall be conclusive absent manifest error. The Revolver Borrowers
and/or Term Borrowers, as applicable, shall pay such Lender or the Issuing Lender, as the case may
be, the amount shown as due on any such certificate within ten (10) Business Days after receipt
thereof.



                    5.8.4 Delay in Requests. Failure or delay on the part of any Lender or the Issuing
Lender to demand compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or the Issuing Lender’s right to demand such compensation, provided that the
Borrowers shall not be required to compensate a Lender or the Issuing Lender pursuant to this
Section for any increased costs incurred or reductions suffered more than nine months prior to the
date that such Lender or the Issuing Lender, as the case may be, notifies the Borrowing Agent of
the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the
Issuing Lender’s intention to claim compensation therefor (except that, if the Change in Law giving
rise to such increased costs or reductions is retroactive, then the nine (9) month period referred
to above shall be extended to include the period of retroactive effect thereof).



     5.9 Taxes.



                    5.9.1 Payments Free of Taxes. Any and all payments by or on account of any obligation
of the Borrowers hereunder or under any other Loan Document shall be made free and clear of and
without reduction or withholding for any Indemnified Taxes or Other Taxes; provided that if
the Borrowers shall be required by applicable Law to deduct any Indemnified Taxes (including any
Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, Lender or Issuing Lender, as the case may be,
receives an amount equal to the sum it would have received had no such deductions been made, (ii)
the Borrowers shall make such deductions and (iii) the Borrowers shall timely pay the full amount
deducted to the relevant Official Body in accordance with applicable Law.



                    5.9.2 Payment of Other Taxes by the Borrowers. Without limiting the provisions of
Section 5.9.1 [Payments Free of Taxes] above, the Borrowers shall timely pay any Other Taxes to the
relevant Official Body in accordance with applicable Law.



                    5.9.3 Indemnification by the Borrowers. The Borrowers shall indemnify the
Administrative Agent, each Lender and the Issuing Lender, within ten (10) Business Days after
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section)
paid by the Administrative Agent, such Lender or the Issuing Lender, as the case may be, and any
penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Official Body. A certificate as to the



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amount of such payment or liability delivered to the Borrowers by a Lender or the Issuing
Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf
or on behalf of a Lender or the Issuing Lender, shall be conclusive absent manifest error.




                    5.9.4 Evidence of Payments. As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrowers to an Official Body, the Borrowers shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by such Official Body
evidencing such payment, a copy of the return reporting such payment or other evidence of such
payment reasonably satisfactory to the Administrative Agent.



                    5.9.5 Status of Lenders. Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the Law of the jurisdiction in which any Borrower is resident
for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments
hereunder or under any other Loan Document shall deliver to the Borrowers (with a copy to the
Administrative Agent), at the time or times prescribed by applicable Law or reasonably requested by
the Borrowing Agent or the Administrative Agent, such properly completed and executed documentation
prescribed by applicable Law as will permit such payments to be made without withholding or at a
reduced rate of withholding. Notwithstanding the submission of such documentation claiming a
reduced rate of or exemption from U.S. withholding tax, the Administrative Agent shall be entitled
to withhold United States federal income taxes at the full 30% withholding rate if in its
reasonable judgment it is required to do so under the due diligence requirements imposed upon a
withholding agent under § 1.1441-7(b) of the United States Income Tax Regulations. Further, the
Administrative Agent is indemnified under § 1.1461-1(e) of the United States Income Tax Regulations
against any claims and demands of any Lender or assignee or participant of a Lender for the amount
of any tax it deducts and withholds in accordance with regulations under § 1441 of the Internal
Revenue Code. In addition, any Lender, if requested by the Borrowing Agent or the Administrative
Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested
by the Borrowers or the Administrative Agent as will enable the Borrowers or the Administrative
Agent to determine whether or not such Lender is subject to backup withholding or information
reporting requirements.



          Without limiting the generality of the foregoing, in the event that any Borrower is resident
for tax purposes in the United States of America, any Foreign Lender shall deliver to the Borrowing
Agent and the Administrative Agent (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this
Agreement (and from time to time thereafter upon the request of the Borrowers or the Administrative
Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is
applicable:




          (i) two (2) duly completed valid originals of IRS Form W-8BEN claiming eligibility for
benefits of an income tax treaty to which the United States of America is a party,




          (ii) two (2) duly completed valid originals of IRS Form W-8ECI,




          (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio
interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign






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Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10
percent shareholder” of any Borrowers within the meaning of section 881(c)(3)(B) of the Code, or
(C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) two
duly completed valid originals of IRS Form W-8BEN,




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




          (v) To the extent that any Lender is not a Foreign Lender, such Lender shall submit to the
Administrative Agent two (2) originals of an IRS Form W-9 or any other form prescribed by
applicable Law demonstrating that such Lender is not a Foreign Lender.




     5.10 Indemnity. In addition to the compensation or payments required by Section 5.8
[Increased Costs]or Section 5.9 [Taxes], each Borrower shall indemnify each Lender against all
liabilities, losses or expenses (including loss of anticipated profits, any foreign exchange losses
and any loss or expense arising from the liquidation or reemployment of funds obtained by it to
maintain such Loan, from fees payable to terminate the deposits from which such funds were obtained
or from the performance of any foreign exchange contract) which such Lender sustains or incurs as a
consequence of any:



          (i) payment, prepayment, conversion or renewal of any Loan to which a LIBOR Rate Option
applies on a day other than the last day of the corresponding Interest Period (whether or not such
payment or prepayment is mandatory, voluntary or automatic and whether or not such payment or
prepayment is then due),




          (ii) attempt by the Borrowers to revoke (expressly, by later inconsistent notices or
otherwise) in whole or part any Loan Requests under Section 2.5 [Revolving Credit Loan Requests;
Swing Loan Requests] or Section 4.2 [Interest Periods] or notice relating to prepayments under
Section 5.6 [Voluntary Prepayments], or




          (iii) default by the Borrowers in the performance or observance of any covenant or condition
contained in this Agreement or any other Loan Document, including any failure of the Borrowers to
pay when due (by acceleration or otherwise) any principal, interest, Commitment Fee or any other
amount due hereunder.




          If any Lender sustains or incurs any such loss or expense, it shall from time to time notify
the Borrowers of the amount determined in good faith by such Lender (which determination may
include such assumptions, allocations of costs and expenses and averaging or attribution methods as
such Lender shall deem reasonable) to be necessary to indemnify such Lender for such loss or
expense. Such notice shall set forth in reasonable detail the basis for such determination. Such
amount shall be due and payable by the Borrowers to such Lender ten (10) Business Days after such
notice is given.




     5.11 Settlement Date Procedures. In order to minimize the transfer of funds between
the Lenders and the Administrative Agent, the Revolver Borrowers may borrow, repay and reborrow
Swing Loans and PNC may make Swing Loans as provided in Section 2.1.2 [Swing



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Loan Commitments] hereof during the period between Settlement Dates. The Administrative Agent
shall notify each Lender of its Ratable Share of the total of the Revolving Credit Loans and the
Swing Loans (each a “Required Share”). On such Settlement Date, each Lender shall pay to the
Administrative Agent the amount equal to the difference between its Required Share and its
Revolving Credit Loans, and the Administrative Agent shall pay to each Lender its Ratable Share of
all payments made by the Revolver Borrowers to the Administrative Agent with respect to the
Revolving Credit Loans. The Administrative Agent shall also effect settlement in accordance with
the foregoing sentence on the proposed Borrowing Dates for Revolving Credit Loans and on Mandatory
Prepayment Dates and may at its option effect settlement on any other Business Day. These
settlement procedures are established solely as a matter of administrative convenience, and nothing
contained in this Section 5.11 shall relieve the Lenders of their obligations to fund Revolving
Credit Loans on dates other than a Settlement Date pursuant to Section 2.1.2 [Swing Loan
Commitment]. The Administrative Agent may at any time at its option for any reason whatsoever
require each Lender to pay immediately to the Administrative Agent such Lender’s Ratable Share of
the outstanding Revolving Credit Loans and each Lender may at any time require the Administrative
Agent to pay immediately to such Lender its Ratable Share of all payments made by the Revolver
Borrowers to the Administrative Agent with respect to the Revolving Credit Loans.




6. REPRESENTATIONS AND WARRANTIES




     6.1 Representations and Warranties. The Loan Parties, jointly and severally,
represent and warrant to the Administrative Agent and each of the Lenders as follows:



                    6.1.1 Organization and Qualification; Power and Authority; Compliance With Laws; Title to
Properties; Event of Default. Each Loan Party and each Subsidiary of each Loan Party (i) is a
corporation, partnership, limited partnership or limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization, (ii) has the
lawful power to own or lease its properties and to engage in the business it presently conducts or
proposes to conduct, (iii) is duly licensed or qualified and in good standing in each jurisdiction
listed on Schedule 6.1.1 and in all other jurisdictions where the property owned or leased
by it or the nature of the business transacted by it or both makes such licensing or qualification
necessary except where the failure to do so would not constitute a Material Adverse Change, (iv)
has full power to enter into, execute, deliver and carry out this Agreement and the other Loan
Documents to which it is a party, to incur the Indebtedness contemplated by the Loan Documents and
to perform its Obligations under the Loan Documents to which it is a party, and all such actions
have been duly authorized by all necessary proceedings on its part, (v) is in compliance in all
material respects with all applicable Laws (other than Environmental Laws which are specifically
addressed in Section 6.1.14 [Environmental Matters]) in all jurisdictions in which any Loan Party
or Subsidiary of any Loan Party is presently or will be doing business except where the failure to
do so would not constitute a Material Adverse Change; and (vi) has good and marketable title to or
valid leasehold interest in all properties, assets and other rights which it purports to own or
lease to the extent reflected as owned or leased on its books and records, free and clear of all
Liens and encumbrances except Permitted Liens and Royalty Agreements, except where the failure to
do so would not constitute a Material Adverse Change. No Event of Default or Potential Default
exists or is continuing.



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                    6.1.2 Subsidiaries and Owners; Investment Companies. Schedule 6.1.2 states
(i) the name of each of the Borrowers’ Subsidiaries, their jurisdiction of organization and the
amount, percentage and type of equity interests in such Subsidiary (the “Subsidiary Equity
Interests”), (ii) the name of each holder of an equity interest in the Borrowers, the amount,
percentage and type of such equity interest (the “Borrower Equity Interests”), and (iii) any
options, warrants or other rights outstanding to purchase any such equity interests referred to in
clause (i) or (iii) (collectively the “Equity Interests”). The Borrowers and each Subsidiary of
the Borrowers have good and marketable title to all of the Subsidiary Equity Interests it purports
to own, free and clear in each case of any Lien and all such Subsidiary Equity Interests have been
validly issued, fully paid and nonassessable. None of the Loan Parties or Subsidiaries of any Loan
Party is an “investment company” registered or required to be registered under the Investment
Company Act of 1940 or under the “control” of an “investment company” as such terms are defined in
the Investment Company Act of 1940 and shall not become such an “investment company” or under such
“control.”



                    6.1.3 Validity and Binding Effect. This Agreement and each of the other Loan
Documents (i) has been duly and validly executed and delivered by each Loan Party, and (ii)
constitutes, or will constitute, legal, valid and binding obligations of each Loan Party which is
or will be a party thereto, enforceable against such Loan Party in accordance with its terms,
except (a) as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
general principle, or similar laws now or hereafter in effect relating to creditors’ rights; and
(b) that the remedy of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which any proceeding may
be brought.



                    6.1.4 No Conflict; Material Agreements; Consents. Neither the execution and delivery
of this Agreement or the other Loan Documents by any Loan Party nor the consummation of the
transactions herein or therein contemplated or compliance with the terms and provisions hereof or
thereof by any of them will conflict with, constitute a default under or result in any breach of
(i) the terms and conditions of the certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation, limited liability company agreement
or other organizational documents of any Loan Party or (ii) any Law or any material agreement or
instrument or order, writ, judgment, injunction or decree to which any Loan Party or any of its
Subsidiaries is a party or by which it or any of its Subsidiaries is bound or to which it is
subject, or result in the creation or enforcement of any Lien, charge or encumbrance whatsoever
upon any property (now or hereafter acquired) of any Loan Party or any of its Subsidiaries (other
than Liens granted under the Loan Documents). No consent, approval, exemption, order or
authorization of, or a registration or filing with, any Official Body or any other Person is
required by any Law or any agreement in connection with the execution, delivery and carrying out of
this Agreement and the other Loan Documents.



                    6.1.5 Litigation. There are no actions, suits, proceedings or investigations pending
or, to the knowledge of any Loan Party, threatened against such Loan Party or any Subsidiary of
such Loan Party at law or in equity before any Official Body which individually or in the aggregate
could reasonably be likely to result in any Material Adverse Change. None of the Loan Parties or
any Subsidiaries of any Loan Party is in violation of any



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order, writ, injunction or any decree of any Official Body which could reasonably be likely to
result in any Material Adverse Change.




                    6.1.6 Financial Statements.



          (i) Historical Statements. The Borrowers have delivered to the Administrative Agent
copies of their audited consolidated year-end financial statements for and as of the end of the two
fiscal years ended December 31, 2008, and December 31, 2009, respectively. In addition, the
Borrowers have delivered to the Administrative Agent copies of their unaudited consolidated interim
financial statements for the fiscal year to date and as of the end of the calendar month ended
November 30, 2010 (all such annual and interim statements being collectively referred to as the
“Statements”). The Statements were compiled from the books and records maintained by the
Borrowers’ management, are correct and complete in all material respects and fairly represent the
consolidated financial condition of the Borrowers and their Subsidiaries as of the respective dates
thereof and the results of operations for the fiscal periods then ended and have been prepared in
accordance with GAAP consistently applied, subject (in the case of the interim statements) to
normal year-end audit adjustments.




          (ii) Accuracy of Financial Statements. Neither the Borrowers nor any Subsidiary of
the Borrowers had any material liabilities, contingent or otherwise, or forward or long-term
commitments that were not disclosed in the Statements or in the notes thereto, and except as
disclosed therein there were no unrealized or anticipated losses from any commitments of the
Borrowers or any Subsidiary of the Borrowers which could reasonably be likely to cause a Material
Adverse Change. Since December 31, 2009, no Material Adverse Change has occurred.




                    6.1.7 Margin Stock. None of the Loan Parties or any Subsidiaries of any Loan Party
engages or intends to engage principally, or as one of its important activities, in the business of
extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or
carrying margin stock (within the meaning of Regulation U, T or X as promulgated by the Board of
Governors of the Federal Reserve System). No part of the proceeds of any Loan has been or will be
used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin stock or which is
inconsistent with the provisions of the regulations of the Board of Governors of the Federal
Reserve System. None of the Loan Parties or any Subsidiary of any Loan Party holds or intends to
hold margin stock in such amounts that more than 25% of the reasonable value of the assets of any
Loan Party or Subsidiary of any Loan Party are or will be represented by margin stock.



                    6.1.8 Full Disclosure. Neither this Agreement nor any other Loan Document, nor any
certificate, statement, agreement or other documents furnished by or behalf of any Loan Party to
the Administrative Agent or any Lender in connection herewith or therewith, when taken as a whole,
contains any untrue statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein, in light of the circumstances under
which they were made, not misleading. There is no fact known to any Loan Party which materially
adversely affects the business, property, assets, financial condition, results of operations or
prospects of any Loan Party or Subsidiary of any Loan Party which has not been set forth in this
Agreement or in the certificates, statements, agreements or



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other documents furnished in writing to the Administrative Agent and the Lenders prior to or
at the date hereof in connection with the transactions contemplated hereby which could reasonably
be likely to cause a Material Adverse Change.




                    6.1.9 Taxes. All federal, state, local and other tax returns required to have been
filed with respect to each Loan Party and each Subsidiary of each Loan Party have been filed, and
payment or adequate provision has been made for the payment of all taxes, fees, assessments and
other governmental charges which have or may become due pursuant to said returns or to assessments
received, except to the extent that (a) such taxes, fees, assessments and other charges are being
contested in good faith by appropriate proceedings diligently conducted and for which such reserves
or other appropriate provisions, if any, as shall be required by GAAP shall have been made, or (b)
the failure to do so could not reasonably be expected to cause a Material Adverse Change.



                    6.1.10 Patents, Trademarks, Copyrights, Licenses, Etc. Each Loan Party and each
Subsidiary of each Loan Party owns or possesses all the patents, trademarks, service marks, trade
names, copyrights, licenses, registrations, franchises, permits and rights necessary to own and
operate its properties and to carry on its business as presently conducted and planned to be
conducted by such Loan Party or Subsidiary, without known possible, alleged or actual conflict with
the rights of others, except where the failure to do so could not reasonably be expected to cause a
Material Adverse Change.



                    6.1.11 Liens in the Collateral. The Liens in the Collateral granted to the
Administrative Agent for the benefit of the Lenders pursuant to the Collateral Assignment, the
Patent, Trademark and Copyright Security Agreement, the Pledge Agreement, the Security Agreement
and the Mortgage (collectively, the “Collateral Documents”) constitute and will continue, subject
to periodic required filings, to constitute Prior Security Interests. All filing fees and other
expenses in connection with the perfection of such Liens have been or will be paid by the
Borrowers.



                    6.1.12 Insurance. Schedule 6.1.12 lists all material insurance policies to
which any Loan Party is a party, all of which are valid and in full force and effect. The
properties of each Loan Party and each of its Subsidiaries are insured pursuant to policies and
other bonds which are valid and in full force and effect and which provide adequate coverage from
reputable and financially sound insurers in amounts sufficient to insure the assets and risks of
each such Loan Party and Subsidiary in accordance with prudent business practice in the industry of
such Loan Parties and Subsidiaries. Each Loan Party has taken all actions required under the Flood
Laws and/or requested by the Administrative Agent to assist in ensuring that each Lender is in
compliance with the Flood Laws applicable to the Collateral, including, but not limited to,
providing the Administrative Agent with the address and/or GPS coordinates of each structure
located upon any real property that will be subject to a mortgage in favor of the Administrative
Agent, for the benefit of the Lenders, and, to the extent required, obtaining flood insurance for
such property, structures and contents prior to such property, structures and contents becoming
Collateral.



                    6.1.13 ERISA Compliance. Except as set forth in Schedule 6.1.13:




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               (i) Each Plan is in compliance in all material respects with the applicable provisions
of ERISA, the Code and other federal or state Laws. Each Plan that is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter from the IRS, or such Plan
is documented on a protype or volume submitter plan document which has been approved by the IRS, or
an application for such a letter is currently being processed by the IRS with respect thereto and,
to the best knowledge of each Borrower, nothing has occurred which would prevent, or cause the loss
of, such qualification. Each Borrower and each ERISA Affiliate have made all required
contributions to each Plan subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan.



               (ii) No ERISA Event has occurred or is reasonably expected to occur; (a) no Pension Plan has
any unfunded pension liability (i.e. excess of benefit liabilities over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension
Plan for the applicable plan year); (b) no Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (c) no Borrower nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (d) no
Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections
4069 or 4212(c) of ERISA.



                    6.1.14 Environmental Matters. Except for matters that, considered individually or in
the aggregate, are not reasonably likely to materially disrupt the projected mining operations of
the Loan Parties or otherwise result in a Material Adverse Change, each Loan Party is and, to the
knowledge of each respective Loan Party and each of its Subsidiaries is and has been in compliance
with applicable Environmental Laws except as disclosed on Schedule 6.1.14; provided
that such matters so disclosed in the aggregate could not reasonably expected to result in a
Material Adverse Change.



                    6.1.15 Solvency. Before and after giving effect to the initial Loans hereunder, each
of the Loan Parties is solvent.



                    6.1.16 Coal Act; Black Lung Act. To the extent applicable, each Borrower, each of the
other Loan Parties and its “related persons” (as defined in the Coal Act) are in compliance in all
material respects with the Coal Act and none of the Borrowers, the other Loan Parties or its
related persons has any liability under the Coal Act except with respect to premiums or other
payments required thereunder which have been paid when due and except to the extent that the
liability thereunder would not reasonably be expected to result in a Material Adverse Change. Each
Borrower and the other Loan Parties are in compliance in all material respects with the Black Lung
Act, and neither the Borrowers nor the other Loan Parties has any liability under the Black Lung
Act except with respect to premiums, contributions or other payments required thereunder which have
been paid when due and except to the extent that the liability thereunder would not reasonably be
expected to result in a Material Adverse Change.



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                    6.1.17 Bonding Capacity. After giving effect to the transactions contemplated by the
Loan Documents, each Borrower and the other Loan Parties have a sufficient mine bonding capacity
reasonably necessary to conduct their operations substantially as projected in accordance with the
financial projections of the Borrowers and the other Loan Parties provided to the Administrative
Agent.



                    6.1.18 Permit Blockage. Neither the Borrowers nor the other Loan Parties have been
barred for a period in excess of fourteen (14) consecutive days from receiving surface mining or
underground mining permits pursuant to the permit block provisions of the Surface Mining Control
and Reclamation Act, 30 U.S.C. §§ 1201 et seq., and the regulations promulgated
thereto, or any corresponding state laws or regulations.



                    6.1.19 Armstrong Land Company and Elk Creek, L.P. Neither Armstrong Land Company, LLC
(“Armstrong Land”) nor Elk Creek, L.P. has any business operations or material properties other
than (i) its equity interests in certain Guarantors, and (ii) Armstrong Land providing executive
management personnel and administrative and professional support for the Loan Parties, and owning
office equipment, supplies and materials;.



                    6.1.20 Vendor Liens. No default exists with respect to any of the Vendor Liens.



          6.2 Updates to Schedules. Should any of the information or disclosures provided on
any of the Schedules attached hereto become outdated or incorrect in any material respect, the
Borrowers shall promptly provide the Administrative Agent in writing with such revisions or updates
to such Schedule as may be necessary or appropriate to update or correct same. No Schedule shall
be deemed to have been amended, modified or superseded by any such correction or update, nor shall
any breach of warranty or representation resulting from the inaccuracy or incompleteness of any
such Schedule be deemed to have been cured thereby, unless and until the Required Lenders, in their
sole and absolute discretion, shall have accepted in writing such revisions or updates to such
Schedule; provided however, that the Borrowers may update Schedules 6.1.1, 6.1.2 and 6.1.12 without
any Lender approval in connection with any transaction permitted under Sections 8.2.6
[Liquidations, Mergers, Consolidations, Acquisitions], 8.2.7 [Dispositions of Assets or
Subsidiaries] and 8.2.9 [Subsidiaries, Partnerships and Joint Ventures], or, with respect to any
updates to Schedule 6.1.12, whenever such policies are renewed, replaced or otherwise updated.







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7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT




     The obligation of each Lender to make Loans and of the Issuing Lender to issue Letters of
Credit hereunder is subject to the performance by each of the Loan Parties of its Obligations to be
performed hereunder at or prior to the making of any such Loans or issuance of such Letters of
Credit and to the satisfaction of the following further conditions:



     7.1 First Loans and Letters of Credit.



                    7.1.1 Deliveries. On the Closing Date, the Administrative Agent shall have received
each of the following in form and substance reasonably satisfactory to the Administrative Agent:



          (i) A certificate of each of the Loan Parties signed by an Authorized Officer, dated the
Closing Date stating that (w) all representations and warranties of the Loan Parties set forth in
this Agreement are true and correct in all material respects, (x) the Loan Parties are in
compliance with each of the covenants and conditions hereunder, (y) no Event of Default or
Potential Default exists, and (z) no Material Adverse Change has occurred since the date of the
last audited financial statements of the Borrowers delivered to the Administrative Agent;



          (ii) A certificate dated the Closing Date and signed by the Secretary, an Assistant Secretary
or other Authorized Officer of each of the Loan Parties, certifying as appropriate as to: (a) all
action taken by each Loan Party in connection with this Agreement and the other Loan Documents; (b)
the names of the Authorized Officers authorized to sign the Loan Documents and their true
signatures; and (c) copies of its organizational documents as in effect on the Closing Date
certified by the appropriate state official where such documents are filed in a state office
together with certificates from the appropriate state officials as to the continued existence and
good standing of each Loan Party in each state where organized or qualified to do business;



          (iii) This Agreement and each of the other Loan Documents signed by an Authorized Officer and
all appropriate financing statements and appropriate stock powers and certificates evidencing the
pledged Collateral;



          (iv) A written opinion of counsel for the Loan Parties, dated the Closing Date and as to the
matters set forth in Schedule 7.1.1;



          (v) Evidence that adequate insurance, including flood insurance, if applicable, required to be
maintained under this Agreement is in full force and effect, with additional insured, mortgagee and
lender loss payable special endorsements attached thereto in form and substance satisfactory to the
Administrative Agent and its counsel naming the Administrative Agent as additional insured,
mortgagee and lender loss payee, and evidence that the Loan Parties have taken all actions required
under the Flood Laws and/or requested by the Administrative Agent to assist in ensuring that each
Lender is in compliance with the Flood Laws applicable to the Collateral, including, but not
limited to, providing the Administrative Agent with the address and/or GPS coordinates of each
structure on any real property that will be subject to a mortgage in favor of the Administrative
Agent, for the benefit of the Lenders, and, to the extent required,



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obtaining flood insurance for such property, structures and contents prior to such property,
structures and contents becoming Collateral;




          (vi) A duly completed Compliance Certificate as of the Closing Date, signed by an Authorized
Officer of Borrowers and demonstrating for the fiscal period ending November 30, 2010: (1) a
trailing twelve month Consolidated EBITDA of the Loan Parties and their Subsidiaries of greater
than or equal to $40,000,000 and (2) that the ratio of Consolidated Funded Debt of the Loan Parties
and their Subsidiaries to trailing twelve month Consolidated EBITDA of the Loan Parties and their
Subsidiaries is less than or equal to 3.25 to 1.00;



          (vii) All material consents required to effectuate the transactions contemplated hereby;



          (viii) Evidence that each existing financing arrangement with any of the Loan Parties as set
forth on Schedule 7.1 have been terminated, and all outstanding obligations thereunder have been
paid and all Liens securing such obligations have been released or have been agreed to be promptly
released.



          (ix) A review of the amount and nature of all tax, employee retirement benefit, labor
contracts and relations, environmental and all other contingent liabilities (including any
litigation) to which the Loan Parties may be subject;



          (x) Evidence that the Borrowers have sufficient mine bonding capacity to conduct their
operations as projected in accordance with the financial projections of the Borrowers and their
Subsidiaries provided to the Administrative Agent;



          (xi) Evidence that all of the Loan Parties’ coal reserves are owned by subsidiaries of Elk
Creek, L.P. (known as Western Mineral Development, LLC and Ceralvo Holdings, LLC), Western Diamond
LLC, Western Land Company, LLC and Armstrong Coal Company, Inc.;



          (xii) Evidence that a minimum cash equity infusion of $5,000,000 has been made into Elk Creek,
L.P. by its partners;



          (xiii) An engineering report certified by an independent engineer acceptable to the
Administrative Agent setting forth a review of matters satisfactory to the Administrative Agent,
including (i) the coal mines, coal reserves and business operations of the Loan Parties as related
to the financial projections of the Borrowers, (ii) the Loan Parties’ coal reserves, and/or (iii)
the value of the coal reserves, equipment and infrastructure of the Loan Parties;



          (xiv) The Authorized Officer of each Loan Party, acting in their capacities as such officers,
shall have delivered a certificate in form and substance satisfactory to the Administrative Agent
as to the solvency of each Loan Party after giving effect to the transactions contemplated hereby;



          (xv) A Lien search in acceptable scope and with acceptable results; and



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          (xvi) Such other documents in connection with such transactions as the Administrative Agent or
said counsel may reasonably request.



                    7.1.2 Payment of Fees. The Borrowers shall have paid all fees payable on or before
the Closing Date as required by this Agreement, the Administrative Agent’s Letter or any other Loan
Document.



     7.2 Each Loan or Letter of Credit. At the time of making any Loans or issuing,
extending or increasing any Letters of Credit and after giving effect to the proposed extensions of
credit: (i) the representations, warranties of the Loan Parties shall then be true and correct,
(ii) no Event of Default or Potential Default shall have occurred and be continuing, (iii) the
making of the Loans or issuance, extension or increase of such Letter of Credit shall not
contravene any Law applicable to any Loan Party or Subsidiary of any Loan Party or any of the
Lenders, and (iv) the applicable Borrowers shall have delivered to the Administrative Agent a duly
executed and completed Loan Request or to the Issuing Lender an application for a Letter of Credit,
as the case may be.



8. COVENANTS




     The Loan Parties, jointly and severally, covenant and agree that until Payment In Full, the
Loan Parties shall comply at all times with the following covenants:



     8.1 Affirmative Covenants.



                    8.1.1 Preservation of Existence, Etc. Each Loan Party shall, and shall cause each of
its Subsidiaries to, maintain its legal existence as a corporation, limited partnership or limited
liability company and its license or qualification and good standing in each jurisdiction in which
its ownership or lease of property or the nature of its business makes such license or
qualification necessary, except as otherwise expressly permitted in Section 8.2.6 [Liquidations,
Mergers, Etc.].



                    8.1.2 Payment of Liabilities, Including Taxes, Etc. Each Loan Party shall, and shall
cause each of its Subsidiaries to, duly pay and discharge all material liabilities to which it is
subject or which are asserted against it, promptly as and when the same shall become due and
payable, including all taxes, assessments and governmental charges upon it or any of its
properties, assets, income or profits, prior to the date on which penalties attach thereto, except
to the extent that such liabilities, including taxes, assessments or charges, are being contested
in good faith and by appropriate and lawful proceedings diligently conducted and for which such
reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made.



                    8.1.3 Maintenance of Insurance. Each Loan Party shall, and shall cause each of its
Subsidiaries to, insure its properties and assets against loss or damage by fire and such other
insurable hazards as such assets are commonly insured (including fire, extended coverage, property
damage, workers’ compensation, public liability and business interruption insurance) and against
other risks (including errors and omissions) in such amounts as similar properties and assets are
insured by prudent companies in similar circumstances carrying on similar businesses, and with
reputable and financially sound insurers, including self-insurance to



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the extent customary, all as reasonably determined by the Administrative Agent. The Loan
Parties shall comply with the covenants and provide the endorsement set forth on Schedule
8.1.3 relating to property and related insurance policies covering the Collateral. Each Loan
Party shall take all actions required under the Flood Laws and/or requested by the Administrative
Agent to assist in ensuring that each Lender is in compliance with the Flood Laws applicable to the
Collateral, including, but not limited to, providing the Administrative Agent with the address
and/or GPS coordinates of each structure on any real property that will be subject to a mortgage in
favor of the Administrative Agent, for the benefit of the Lenders, and, to the extent required,
obtaining flood insurance for such property, structures and contents prior to such property,
structures and contents becoming Collateral, and thereafter maintaining such flood insurance in
full force and effect for so long as required by the Flood Laws.




                    8.1.4 Maintenance of Properties and Leases. Each Loan Party shall, and shall cause
each of its Subsidiaries to, maintain in good repair, working order and condition (ordinary wear
and tear excepted) in accordance with the general practice of other businesses of similar character
and size, all of those properties useful or necessary to its business, and from time to time, such
Loan Party will make or cause to be made all appropriate repairs, renewals or replacements thereof.



                    8.1.5 Visitation Rights. Each Loan Party shall, and shall cause each of its
Subsidiaries to, permit any of the officers or authorized employees or representatives of the
Administrative Agent or any of the Lenders to visit and inspect any of its properties and to
examine and make excerpts from its books and records and discuss its business affairs, finances and
accounts with its officers, all in such detail and at such times and as often as any of the Lenders
may reasonably request, provided that each Lender shall provide the Borrowers and the
Administrative Agent with reasonable notice prior to any visit or inspection. In the event any
Lender desires to conduct an audit of any Loan Party, such Lender shall make a reasonable effort to
conduct such audit contemporaneously with any audit to be performed by the Administrative Agent.



                    8.1.6 Keeping of Records and Books of Account. The Borrowers shall, and shall cause
each their Subsidiaries to, maintain and keep proper books of record and account which enable the
Borrowers and their Subsidiaries to issue financial statements in accordance with GAAP and as
otherwise required by applicable Laws of any Official Body having jurisdiction over the Borrowers
or any Subsidiary of the Borrowers, and in which full, true and correct entries shall be made in
all material respects of all its dealings and business and financial affairs.



                    8.1.7 Compliance with Laws; Use of Proceeds. Each Loan Party shall, and shall cause
each of its Subsidiaries to, comply with all applicable Laws, including all Environmental Laws, in
all respects; provided that it shall not be deemed to be a violation of this Section 8.1.7
if any failure to comply with any Law would not result in fines, penalties, remediation costs,
other similar liabilities or injunctive relief which in the aggregate would constitute a Material
Adverse Change. The Loan Parties will use the Letters of Credit and the proceeds of the Loans only
in accordance with Section 2.8 [Use of Proceeds] and as permitted by applicable Law.



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                    8.1.8 Further Assurances. Each Loan Party shall, from time to time, at its expense,
faithfully preserve and protect the Administrative Agent’s Lien on and Prior Security Interest in
the Collateral and all other real and personal property of the Loan Parties whether now owned or
hereafter acquired as a continuing first priority perfected Lien, subject only to Permitted Liens,
and shall do such other acts and things as the Administrative Agent in its sole discretion may deem
necessary or advisable from time to time in order to preserve, perfect and protect the Liens
granted under the Loan Documents and to exercise and enforce its rights and remedies thereunder
with respect to the Collateral.



                    8.1.9 Anti-Terrorism Laws. None of the Loan Parties is or shall be (i) a Person with
whom any Lender is restricted from doing business under Executive Order No. 13224 or any other
Anti-Terrorism Law, (ii) engaged in any business involved in making or receiving any contribution
of funds, goods or services to or for the benefit of such a Person or in any transaction that
evades or avoids, or has the purpose of evading or avoiding, the prohibitions set forth in any
Anti-Terrorism Law, or (iii) otherwise in violation of any Anti-Terrorism Law. The Loan Parties
shall provide to the Lenders any certifications or information that a Lender requests to confirm
compliance by the Loan Parties with Anti-Terrorism Laws.



                    8.1.10 Maintenance of Patents, Trademarks, Etc. Each Loan Party shall, and shall
cause each of its Subsidiaries to, maintain in full force and effect all patents, trademarks,
service marks, trade names, copyrights, licenses and franchises necessary for the ownership and
operation of its properties and business if the failure so to maintain the same would constitute a
Material Adverse Change.




          8.1.11 Collateral and Additional Collateral (Including As-Extracted
Collateral); Execution and Delivery of Additional and Ancillary Security Documents.




          (i) Pursuant to the Loan Documents, the Loan Parties shall grant, or cause to be granted, to
the Administrative Agent, for the benefit of the Lenders, a first priority security interest in and
lien on, subject only to Permitted Liens (A) all Collateral, including (i) all capital stock and
equity interests owned by the Loan Parties (except for the equity interests (1) in Armstrong
Resources, LLC, Armstrong Coal Reserves, Inc., Armstrong Mining, Inc., and Ceralvo Resources, LLC;
(2) those equity interests owned as of the Closing Date by individuals and comprising less than two
percent (2.0%) of the equity interests in Armstrong Resource Holdings, LLC, and Armstrong Energy,
Inc. and (3) those equity interests in Armstrong Land Company, LLC. and Elk Creek, L.P.) and (ii)
all of the assets of the Loan Parties including all accounts, inventory, as-extracted collateral,
fixtures, equipment, investment property, instruments, chattel paper, general intangibles, coal
reserves, mineral rights, owned and leased Real Property, leasehold interests, patents and
trademarks of each such Loan Parties and (B) all other assets of the Loan Parties, whether owned on
the Closing Date or subsequently acquired;



          (ii) Without limiting the generality of the foregoing, each applicable Loan Party which owns
or leases any real property shall promptly execute and deliver any and all Mortgages substantially
in the form of Exhibit 1.1(M) hereof, other Mortgages, deeds of trust, assignments,
pledges, security interests, financing statements and additional documents and agreements relating
thereto and Ancillary Security Documents reasonably requested by the



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Agent to grant a first priority Lien (subject only to Permitted Liens), and with respect to
any leased Real Property, any lessor consents that the Administrative Agent reasonably requests, in
such Loan Party’s interest in such real property in favor of the Administrative Agent, for the
ratable benefit of the Lenders, as security for the Obligations. In furtherance of the foregoing,
the Loan Parties shall diligently cooperate with and assist, at their own expense, the
Administrative Agent in procuring any and all Mortgages, deeds of trust, assignments, pledges,
security interests, financing statements, lessor consents and additional documents and agreements
relating thereto. Upon the occurrence of an Event of Default that has not been waived, each Loan
Party hereby appoints any officer or agent of the Administrative Agent as its true and lawful
attorney, for it and in its name, place and stead, to make, execute, deliver, and cause to be
recorded or filed any or all such Mortgages, deeds of trust, assignments, pledges, security
interests, financing statements and additional documents and agreements relating thereto, granting
unto said attorney full power to do any and all things said attorney may consider reasonably
necessary or appropriate to be done with respect to the Mortgages as fully and effectively as such
Loan Party might or could do, and hereby ratifying and confirming all its said attorney shall
lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable for the terms of this Agreement and all transactions hereunder.
All reasonable out-of-pocket costs and expenses incurred by the Administrative Agent in connection
with the exercise of the rights under this Section shall be paid by the Loan Parties on demand of
the Administrative Agent. The Loan Parties, the Lenders and the Administrative Agent agree that
without any further action on the part of any of them, upon execution and/or delivery, the
Mortgages, and other deeds of trust, assignments, pledges, security interests, financing statements
and additional documents and agreements relating thereto, the Ancillary Security Documents and
lessor consents shall become Loan Documents and the assets that are subject to the Mortgages and
the other Loan Documents shall become collateral for the Obligations.




                                   8.1.12 Maintenance of Material Contracts. The Borrowers and their Subsidiaries shall
maintain and comply with the terms and conditions of all material contracts, except where the
failure to do so, either individually or in the aggregate, would not result in a Material Adverse
Change.



                                   8.1.13 Maintenance of Licenses, Etc. The Loan Parties shall maintain in full force
and effect all licenses, franchises, permits and other authorizations necessary for the ownership
and operation of its properties and business except where the failure to do so, either individually
or in the aggregate, would not result in a Material Adverse Change.



                                   8.1.14 Maintenance of Permits. The Loan Parties shall maintain all Required Mining
Permits in full force and effect in accordance with their terms except where the failure to do so,
either individually or in the aggregate, would not result in a Material Adverse Change.



               8.2 Negative Covenants.



                                   8.2.1 Indebtedness. Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, at any time create, incur, assume or suffer to exist any Indebtedness, except:



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          (i) Indebtedness under the Loan Documents;



          (ii) Existing Indebtedness as set forth on Schedule 8.2.1 (including any extensions or
renewals thereof; provided there is no increase in the amount thereof or other significant
change in the terms thereof unless otherwise specified on Schedule 8.2.1;



          (iii) Indebtedness incurred with respect to Purchase Money Security Interests as and to the
extent permitted under the definition on “Permitted Lien” and capitalized leases as and to the
extent permitted under Section 8.2.17 [Capital Expenditures and Leases];



          (iv) Indebtedness of a Loan Party to another Loan Party which is subordinated pursuant to the
Intercompany Subordination Agreement;



          (v) Any (i) Lender Provided Interest Rate Hedge, (ii) other Interest Rate Hedge approved by
the Administrative Agent, (iii) Commodity Hedge or (iii) Indebtedness under any Other Lender
Provided Financial Services Product; provided however, the Loan Parties and their Subsidiaries
shall enter into a Lender Provided Interest Rate Hedge, another Interest Rate Hedge or Commodity
Hedge only for hedging (rather than speculative) purposes, and



          (vi) Unsecured Indebtedness other than that described in (i) through (v) above, in an amount
not to exceed $10,000,000 in the aggregate at any one time.



                    8.2.2 Liens; Lien Covenants. Each of the Loan Parties shall not, and shall not permit
any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien on any of
its property or assets, tangible or intangible, now owned or hereafter acquired, or agree or become
liable to do so, except Permitted Liens.



                    8.2.3 Guaranties. Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time, directly or indirectly, become or be liable in respect of any
Guaranty, or assume, guarantee, become surety for, endorse or otherwise agree, become or remain
directly or contingently liable upon or with respect to any obligation or liability of any other
Person, except for Guaranties of Indebtedness of the Loan Parties permitted hereunder and
endorsements of checks, notes or other instruments in the ordinary course of business.



                    8.2.4 Loans and Investments. Each of the Loan Parties shall not, and shall not permit
any of its Subsidiaries to, at any time make or suffer to remain outstanding any loan or advance
to, or purchase, acquire or own any stock, bonds, notes or securities of, or any partnership
interest (whether general or limited) or limited liability company interest in, or any other
investment or interest in, or make any capital contribution to, any other Person, or agree, become
or remain liable to do any of the foregoing, except:



          (i) trade credit extended on usual and customary terms in the ordinary course of business;



          (ii) advances to employees to meet expenses incurred by such employees in the ordinary course
of business;



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          (iii) Lender Provided Interest Rate Hedges, Interest Rate Hedges and Commodity Hedges
permitted pursuant to Section 8.2.1(v) of this Agreement;



          (iv) loans to officers, shareholders and Affiliates in the amounts set forth on Schedule
8.2.4 hereof;



          (v) Permitted Investments;



          (vi) loans, advances and investments in other Loan Parties; and



          (vii) loans, investments, advances and contributions of assets to Survant Joint Venture (A) as
set forth on Schedule 8.2.4 hereof and (B) in addition to those set forth in clause (A)
hereto in an amount not to exceed $35,000,000 in the aggregate so long as the Revolver Borrowers
shall have the ability to borrow additional Revolving Credit Loans of not less than $15,000,000.



          (viii) each of the following so long as the aggregate amount of loans, advances and/or
investments does not exceed $10,000,000 at any one time: (a) purchases of Permitted Joint Ventures
(other than the Survant Joint Venture), assets or ownership interests not prohibited by Section
8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions, (b) investment in connection with a
Permitted Acquisition (other than the Survant Joint Venture), and (c) loans, advances and
investments not otherwise permitted in (i) through (vi) above.



                    8.2.5 Dividends and Related Distributions. Each of the Loan Parties shall not, and
shall not permit any of its Subsidiaries to, make or pay, or agree to become or remain liable to
make or pay, any dividend or other distribution of any nature (whether in cash, property,
securities or otherwise) on account of or in respect of its shares of capital stock, partnership
interests or limited liability company interests on account of the purchase, redemption, retirement
or acquisition of its shares of capital stock (or warrants, options or rights therefor),
partnership interests or limited liability company interests, except (i) dividends or other
distributions payable to another Loan Party, (ii) Permitted Tax Distributions; provided that the
Loan Parties provide the Administrative Agent with reasonable information setting forth the amount
of each such Permitted Tax Distribution, (iii) dividends and distributions payable pursuant to and
in accordance with stock option plans or other benefit plans for management or employees of the
Loan Parties, or (iv) other dividends and distributions in an amount not to exceed $5,000,000 per
fiscal year and $10,000,000 in the aggregate and payable by the Loan Parties to their shareholders
and members in excess of the Permitted Tax Distributions; provided, however, that:
(a) any such dividend or distribution cannot be made prior to the Permitted Tax Distributions, (b)
the Borrowers shall deliver to the Administrative Agent at least five (5) Business Days before such
proposed dividend or distribution a certificate of the Borrowers evidencing (x) pro forma
compliance with the Leverage Ratio set forth in Section 8.2.15 (measured as of the date of the
dividend or distribution immediately after giving effect to such dividend or distribution and based
upon Consolidated EBITDA for the four (4) fiscal quarters then ended) of less than 2.00 to 1.0, and
(y) after giving pro forma effect to any Loans made or Letters of Credit issued in connection with
such dividend, the Revolver Borrowers shall have the ability to borrow additional Revolving Credit
Loans of not less than $15,000,000, and (c) at the



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time of any such dividend or distribution, no Event of Default or Potential Default shall
exist or shall result after giving effect thereto.




                    8.2.6 Liquidations, Mergers, Consolidations, Acquisitions. Each of the Loan Parties
shall not, and shall not permit any of its Subsidiaries to, dissolve, liquidate or wind-up its
affairs, or become a party to any merger or consolidation, or acquire by purchase, lease or
otherwise all or substantially all of the assets or capital stock of any other Person; except



          (i) transactions permitted under Section 8.2.7 [Disposition of Assets];



          (ii) that a Loan Party (other than the Borrowers) may merge or consolidate with or into
another Loan Party;



          (iii) any Excluded Subsidiary may be liquidated, wound-up, dissolved or merged with and into
another Loan Party or Excluded Subsidiary;



          (iv) any Loan Party may acquire, whether by purchase or by merger, (1) all of the ownership
interests of another Person or (2) substantially all of the assets of another Person or of a
business or division of another Person (each an “Permitted Acquisition”), provided that
each of the following requirements is met:



               (A) Such acquisition shall occur after September 30, 2011;



               (B) if the Loan Parties are acquiring the ownership interests in such Person, such Person
shall execute a Guarantor Joinder and join this Agreement as a Guarantor on or before the date of
such Permitted Acquisition;



               (C) the Loan Parties, such Person and its owners, as applicable, shall grant Liens on or
before the date of such Permitted Acquisition in the assets of such Person that will constitute
Collateral;



               (D) the board of directors or other equivalent governing body of (1) the Loan Parties and (2)
the owner of the assets being acquired pursuant to such Permitted Acquisition shall have approved
such Permitted Acquisition and shall have delivered to the Administrative Agent written evidence of
the approval of such board of directors (or equivalent body);



               (E) no Potential Default or Event of Default shall exist immediately prior to and after giving
effect to such Permitted Acquisition;



               (F) if the Loan Parties are acquiring all or substantially all of the assets of another Person
or of a business or division of another Person or are acquiring all or substantially all of the
ownership interests of another Person, then the assets of such Person or the assets of such
division shall be substantially the same as, or shall support or be complementary to, the lines of
business conducted by the Loan Parties and shall comply with Section 8.2.10 [Continuation of or
Change in Business];



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               (G) the Borrowers shall demonstrate the Loan Parties shall have, after giving effect to such
Permitted Acquisition and any Loan associated therewith, (1) the ability to borrow additional
Revolving Credit Loans of not less than $15,000,000 and (2) a pro forma Leverage Ratio that is 0.50
less than the applicable Leverage Ratio required for such fiscal period pursuant to Section 8.2.15
[Maximum Leverage Ratio], after giving effect to such Permitted Acquisition (including in such
computation the Consolidated EBITDA of such Person and the Consolidated Funded Debt or other
liabilities assumed or incurred in connection with such Permitted Acquisition), calculated on the
financial statements most recently delivered to the Administrative Agent and as though such
acquisition had occurred at the beginning of the four quarter period covered thereby, as evidenced
by a certificate of an Authorized Officer of the Loan Parties delivered to the Administrative Agent
demonstrating such compliance; and



               (H) the Loan Parties shall deliver to the Administrative Agent at least five (5) Business Days
before such Permitted Acquisition copies of any agreements entered into or proposed to be entered
into by such Loan Parties in connection with such Permitted Acquisition and shall deliver to the
Administrative Agent such other information about such Person or its assets as any Lender may
reasonably require, including, but not limited to the financial statements of such Person and the
projected pro-forma financial projections calculated after giving effect to such Permitted
Acquisition.



                    8.2.7 Dispositions of Assets or Subsidiaries. Each of the Loan Parties shall not, and
shall not permit any of its Subsidiaries to, sell, convey, assign, lease, abandon or otherwise
transfer or dispose of, voluntarily or involuntarily, any of its properties or assets, tangible or
intangible (including sale, assignment, discount or other disposition of accounts, contract rights,
chattel paper, equipment or general intangibles with or without recourse or of capital stock,
shares of beneficial interest, partnership interests or limited liability company interests of a
Subsidiary of such Loan Party), except:



          (i) transactions involving the sale of inventory in the ordinary course of business;



          (ii) any sale, transfer, disposal, abandonment or lease of assets in the ordinary course of
business which are no longer necessary or required in the conduct of such Loan Party’s or such
Subsidiary’s business;



          (iii) any sale, transfer or lease of assets by any Loan Party or wholly owned Subsidiary of
such Loan Party to another Loan Party;



          (iv) any sale, transfer disposal, abandonment or lease of assets in the ordinary course of
business which are replaced by substitute assets acquired or leased within the parameters of
Section 8.2.17 [Capital Expenditures and Leases]; provided such substitute assets are
obtained within 180 days and are subject to the Lenders’ Prior Security Interest; or



          (v) any sale, transfer or lease of assets in connection with a Permitted Joint Venture to the
extent permitted pursuant to Section 8.2.4 (vii), 8.2.4 (viii) and/or 8.2.8 [Affiliate
Transactions] of this Agreement;



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          (vi) any sale, transfer, disposal, abandonment or lease of assets, other than those
specifically excepted pursuant to clauses (i) through (v) above, up to an amount of $500,000 per
fiscal year; or



          (vii) any sale, transfer or lease of assets, other than those specifically excepted pursuant
to clauses (i) through (vi) above, which is approved by the Required Lenders so long as the
after-tax proceeds (as reasonably estimated by the Borrowers) are applied as a mandatory prepayment
of the Term Loans in accordance with the provisions of Section 5.7.1 [Sale of Assets] above.



                    8.2.8 Affiliate Transactions. Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, enter into or carry out any transaction with any Affiliate of
any Loan Party (including purchasing property or services from or selling property or services to
any Affiliate of any Loan Party or other Person) unless such transaction is not otherwise
prohibited by this Agreement, is entered into in the ordinary course of business upon fair and
reasonable arm’s-length terms and conditions which are fully disclosed to the Administrative Agent
and is in accordance with all applicable Law. The foregoing shall not prohibit management,
consulting and similar fees entered into upon fair and reasonable arm’s-length terms and conditions
in the ordinary course of business; employment agreements and other incentive compensation with
full-time employees of Loan Parties in the ordinary course of business; or loans between Loan
Parties in the ordinary course of business and as otherwise permitted under this Agreement.



                    8.2.9 Subsidiaries, Partnerships and Joint Ventures. Each of the Loan Parties shall
not, and shall not permit any of its Subsidiaries to own or create directly or indirectly any
Subsidiaries other than (i) any Subsidiary which has joined this Agreement as Guarantor on the
Closing Date; (ii) any Excluded Subsidiary, and (iii) any Subsidiary formed after the Closing Date
which joins this Agreement as a Guarantor by delivering to the Administrative Agent (A) a signed
Guarantor Joinder; (B) documents in the forms described in Section 7.1 [First Loans] modified as
appropriate; and (C) documents necessary to grant and perfect Prior Security Interests to the
Administrative Agent for the benefit of the Lenders in the equity interests of, and Collateral held
by, such Subsidiary. Each of the Loan Parties shall not become or agree to become a party to a
Joint Venture other than a Permitted Joint Venture.



                    8.2.10 Continuation of or Change in Business. Each of the Loan Parties shall not, and
shall not permit any of its Subsidiaries to, engage in any business other than its current
business, substantially as conducted and operated by such Loan Party or Subsidiary during the
present fiscal year, and such Loan Party or Subsidiary shall not permit any material change in such
business.



                    8.2.11 Fiscal Year. The Borrowers shall not, and shall not permit any Subsidiary of
the Borrowers to, change its fiscal year from the twelve-month period beginning January 1 and
ending December 31.



                    8.2.12 Issuance of Stock. Each of the Loan Parties shall not, and shall not permit
any of its Subsidiaries to, issue any additional shares of its capital stock, membership interests,
partnership interests or any options, warrants or other rights in respect



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thereof, except (a) in connection with compensation or benefit plans for employees or
officers, (b) issuances of stock or interests in Loan Parties to other Loan Parties; or (c) in
connection with: (i) the exchange of equity interests in Armstrong Land Company, LLC or Elk Creek,
L.P. for the minority equity interests held as of the Closing Date in Armstrong Resources Holdings,
LLC, Armstrong Land Company, LLC and Armstrong Energy, Inc; or (ii) the purchase of additional
equity by the Yorktown Parties or other existing owners of Armstrong Land Company, LLC or Elk Creek
L.P.




     8.2.13 Changes in Organizational Documents. Each of the Loan Parties shall not, and
shall not permit any of its Subsidiaries to, amend in any respect its certificate of incorporation
(including any provisions or resolutions relating to capital stock), by-laws, certificate of
limited partnership, partnership agreement, certificate of formation, limited liability company
agreement or other organizational documents without providing at least ten (10) calendar days’
prior written notice to the Administrative Agent and, in the event such change would be material
and adverse to the Lenders as determined by the Administrative Agent in its sole discretion,
obtaining the prior written consent of the Required Lenders.



     8.2.14 Minimum Fixed Charge Coverage Ratio. Commencing as of the fiscal quarter
ending March 31, 2012 and each fiscal quarter thereafter the Loan Parties shall not permit the
Fixed Charge Coverage Ratio, calculated as of the end of each fiscal quarter for the four fiscal
quarters then ended, to be less than 1.25 to 1.0.



     8.2.15 Maximum Leverage Ratio. The Loan Parties shall not at any time permit the
Leverage Ratio to exceed the ratio set forth below for the periods specified below:



	 	 	 
	Fiscal Quarter Ending	 	Maximum Ratio
	March 31, 2011
	 	3.75 to 1.00
	 	 	 
	June 30, 2011
	 	3.50 to 1.00
	 	 	 
	September 30, 2011
	 	3.25 to 1.00
	 	 	 
	December 31, 2011
	 	3.00 to 1.00
	 	 	 
	March 31, 2012
	 	3.00 to 1.00
	 	 	 
	June 30, 2012
	 	2.75 to 1.00
	 	 	 
	September 30, 2012
	 	2.75 to 1.00
	 	 	 
	December 31, 2012 and each fiscal
quarter thereafter
	 	2.50 to 1.00







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                    8.2.16 Minimum Consolidated EBITDA. The Loan Parties shall not at any time
permit Consolidated EBITDA to be less than the following amounts during the following periods:



	 	 	 	 	 
	Period	 	Minimum Amount	 
	March 31, 2011 for the fiscal quarter then ending
	 	$	10,000,000	 
	June 30, 2011 for the two fiscal quarters then ending
	 	$	25,000,000	 
	September 30, 2011 for the three fiscal quarters then ending
	 	$	40,000,000	 
	December 31, 2011 for the four fiscal quarters then ending
	 	$	55,000,000	 






                    8.2.17 Capital Expenditures and Leases. During each fiscal year, the Loan Parties and
their Subsidiaries shall not, and shall not permit any of its Subsidiaries (other than Permitted
Joint Ventures), to (a) contract for, purchase or make any expenditure for capital expenditures,
which if purchased would constitute fixed assets, and (b) incur Indebtedness for capital leases in
an aggregate amount for all Loan Parties and their Subsidiaries in excess of: (i) $80,000,000 for
the fiscal year ending December 31, 2011 and (ii) $50,000,000 for each fiscal year thereafter



     8.3 Reporting Requirements. The Loan Parties will furnish or cause to be furnished to
the Administrative Agent and each of the Lenders:



                    8.3.1 Monthly Financial Statements. As soon as available and in any event within
thirty (30) calendar days after the end of each of each calendar month, financial statements of the
Loan Parties, consisting of a consolidated balance sheet as of the end of such month and related
consolidated statements of income, stockholders’ equity and cash flows for the month then ended and
the fiscal year through that date, all in reasonable detail and certified (subject to normal
year-end audit adjustments) by an Authorized Officer of the Borrowers as having been prepared in
accordance with GAAP, consistently applied, and setting forth in comparative form the respective
financial statements for the corresponding date and period in the previous fiscal year.



                    8.3.2 Annual Financial Statements. As soon as available and in any event within 135
days of the end of the 2010 fiscal year and 120 days after the end of each fiscal year thereafter
of the Loan Parties, financial statements of each Loan Party consisting of a consolidated and
consolidating balance sheet as of the end of such fiscal year, and related consolidated and
consolidating statements of income, stockholders’ equity and cash flows for the fiscal year then
ended, all in reasonable detail and setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and, with respect to the
consolidated financial statements, certified by Ernst & Young or another independent certified
public



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accountants reasonably satisfactory to the Administrative Agent and delivered together with
any management letters of such accountants addressed to any Borrower. The certificate or report of
accountants shall be free of qualifications (other than any consistency qualification that may
result from a change in the method used to prepare the financial statements as to which such
accountants concur) and shall not indicate the occurrence or existence of any event, condition or
contingency which would materially impair the prospect of payment or performance of any covenant,
agreement or duty of any Loan Party under any of the Loan Documents.



                    8.3.3 Certificate of the Borrower. Concurrently with the financial statements of the
Borrowers furnished to the Administrative Agent and to the Lenders pursuant to Sections 8.3.1
[Monthly Financial Statements] and 8.3.2 [Annual Financial Statements], a certificate (each a
“Compliance Certificate”) of the Borrowers signed by an Authorized Officer of the Borrowers, in the
form of Exhibit 8.3.3; provided, however, that with respect to any certificates provided
under this Section with the financial statements provided pursuant to Sections 8.3.1 [Monthly
Financial Statements], the Borrowers shall only be required to deliver such certificates on a
quarterly basis for each fiscal quarter within forty-five (45) days after the end of such fiscal
quarter.




                    8.3.4 Notices.



               8.3.4.1 Default. Promptly after any officer of any Loan Party has learned of the
occurrence of an Event of Default or Potential Default, a certificate signed by an Authorized
Officer setting forth the details of such Event of Default or Potential Default and the action
which such Loan Party proposes to take with respect thereto.



               8.3.4.2 Litigation. Promptly after the commencement thereof, notice of all actions,
suits, proceedings or investigations before or by any Official Body or any other Person against any
Loan Party or Subsidiary of any Loan Party which relate to the Collateral, involve a claim or
series of claims in excess of $5,000,000 or which if adversely determined would constitute a
Material Adverse Change.



               8.3.4.3 Organizational Documents. Within the time limits set forth in Section 8.2.13
[Changes in Organizational Documents], any amendment to the organizational documents of any Loan
Party.



               8.3.4.4 Erroneous Financial Information. Immediately in the event that any Borrower
or its accountants conclude or advise that any previously issued financial statement, audit report
or interim review should no longer be relied upon or that disclosure should be made or action
should be taken to prevent future reliance.



               8.3.4.5 ERISA Event. Immediately upon the occurrence of any ERISA Event.



               8.3.4.6 Other Reports. Promptly upon their becoming available to the Borrower:



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          (i) Annual Budget. The annual budget and any forecasts or projections of the
Borrower, to be supplied not later than fifteen (15) days prior to commencement of the fiscal year
to which any of the foregoing may be applicable,



          (ii) Management Letters. Any reports including management letters submitted to any
Borrower by independent accountants in connection with any annual, interim or special audit,



          (iii) Other Information. Such other reports and information as any of the Lenders may
from time to time reasonably request.




9. DEFAULT



     9.1 Events of Default. An Event of Default shall mean the occurrence or existence of
any one or more of the following events or conditions (whatever the reason therefor and whether
voluntary, involuntary or effected by operation of Law):



                    9.1.1 Payments Under Loan Documents. Any Borrower shall fail to pay any principal of
any Loan (including scheduled installments, mandatory prepayments or the payment due at maturity),
Reimbursement Obligation or Letter of Credit or Obligation or any interest on any Loan,
Reimbursement Obligation or Letter of Credit Obligation or any other amount owing hereunder or
under the other Loan Documents on the date on which such principal, interest or other amount
becomes due in accordance with the terms hereof or thereof;



                    9.1.2 Breach of Warranty. Any representation or warranty made at any time by any of
the Loan Parties herein or by any of the Loan Parties in any other Loan Document, or in any
certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof,
shall prove to have been false or misleading in any material respect as of the time it was made or
furnished;



                    9.1.3 Breach of Negative Covenants or Visitation Rights. Any of the Loan Parties
shall default in the observance or performance of any covenant contained in Section 8.1.5
[Visitation Rights] or Section 8.2 [Negative Covenants];



                    9.1.4 Breach of Other Covenants. Any of the Loan Parties shall default in the
observance or performance of any other covenant, condition or provision hereof or of any other Loan
Document and such default shall continue unremedied for a period of ten (10) Business Days after
the earlier of the date on which (i) an Authorized Officer becomes aware of such failure or (ii)
written notice thereof shall have been given to the Borrowers by the Administrative Agent;



                    9.1.5 Defaults in Other Agreements or Indebtedness. A default or event of default
shall occur at any time under the terms of any other agreement involving borrowed money or the
extension of credit or any other Indebtedness under which any Loan Party or Subsidiary of any Loan
Party may be obligated as a borrower or guarantor in excess of $5,000,000 in the aggregate, and
such default or event of default consists of the failure to pay (beyond any period of grace
permitted with respect thereto, whether waived or not) any Indebtedness when due (whether at stated
maturity, by acceleration or otherwise) or if such



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breach or default permits or causes the acceleration of any Indebtedness (whether or not such
right shall have been waived);



                    9.1.6 Final Judgments or Orders. Any final judgments or orders for the payment of
money in excess of $5,000,000 in the aggregate shall be entered against any Loan Party by a court
having jurisdiction in the premises, which judgment is not discharged, vacated, bonded or stayed
pending appeal within a period of thirty (30) days from the date of entry;



                    9.1.7 Loan Document Unenforceable. Any of the Loan Documents shall cease to be legal,
valid and binding agreements enforceable against the party executing the same or such party’s
successors and assigns (as permitted under the Loan Documents) in accordance with the respective
terms thereof or shall in any way be terminated (except in accordance with its terms) or become or
be declared ineffective or inoperative or shall in any way be challenged or contested or cease to
give or provide the respective Liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby;



                    9.1.8 Uninsured Losses; Proceedings Against Assets. There shall occur any material
uninsured damage to or loss, theft or destruction of any of the Collateral in excess of $5,000,000
or the Collateral or any other of the Loan Parties’ or any of their Subsidiaries’ assets are
attached, seized, levied upon or subjected to a writ or distress warrant; or such come within the
possession of any receiver, trustee, custodian or assignee for the benefit of creditors and the
same is not cured within thirty (30) days thereafter;



                    9.1.9 Events Relating to Plans and Benefit Arrangements. (i) An ERISA Event occurs
with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of any Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $5,000,000, or (ii) any Borrower
or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period,
any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under
a Multiemployer Plan in an aggregate amount in excess of $5,000,000;



                    9.1.10 Change of Control. (i) The Yorktown Parties shall fail to own, directly or
indirectly, at least 51% of the voting capital stock, partnership interests and/or member interests
in each of the Borrowers; or (ii) to the extent managed by a board of directors or managers, within
a period of twelve (12) consecutive calendar months, individuals who were directors or managers of
any Borrower on the first day of such period shall cease to constitute a majority of the board of
directors or board of managers of such Borrowers.



                    9.1.11 Cross Default. For the avoidance of doubt, any Event of Default under this
Agreement or any other Loan Document by any Revolver Borrower shall result in an Event of Default
with respect to the Term Borrowers and any Event of Default under this Agreement or any other Loan
Document by any Term Borrower shall result in an Event of Default with respect to the Revolver
Borrowers.



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                    9.1.12 Relief Proceedings. (i) A Relief Proceeding shall have been instituted against
any Loan Party or Subsidiary of a Loan Party and such Relief Proceeding shall remain undismissed or
unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a
decree or order granting any of the relief sought in such Relief Proceeding, (ii) any Loan Party or
Subsidiary of a Loan Party institutes, or takes any action in furtherance of, a Relief Proceeding,
or (iii) any Loan Party or any Subsidiary of a Loan Party ceases to be solvent or admits in writing
its inability to pay its debts as they mature.



     9.2 Consequences of Event of Default.



                    9.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings. If an Event of Default specified under Sections 9.1.1 through 9.1.10 shall occur
and be continuing, the Lenders and the Administrative Agent shall be under no further obligation to
make Loans and the Issuing Lender shall be under no obligation to issue Letters of Credit and the
Administrative Agent may, and upon the request of the Required Lenders, shall (i) by written notice
to the Borrowers, declare the unpaid principal amount of the Notes then outstanding and all
interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrowers to the
Lenders hereunder and thereunder to be forthwith due and payable, and the same shall thereupon
become and be immediately due and payable to the Administrative Agent for the benefit of each
Lender without presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, and (ii) require the Borrowers to, and the Borrowers shall thereupon,
deposit in a non-interest-bearing account with the Administrative Agent, as cash collateral for its
Obligations under the Loan Documents, an amount equal to the maximum amount currently or at any
time thereafter available to be drawn on all outstanding Letters of Credit, and the Borrowers
hereby pledge to the Administrative Agent and the Lenders, and grants to the Administrative Agent
and the Lenders a security interest in, all such cash as security for such Obligations; and



                    9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings. If an Event of Default
specified under Section 9.1.12 [Relief Proceedings] shall occur, the Lenders shall be under no
further obligations to make Loans hereunder and the Issuing Lender shall be under no obligation to
issue Letters of Credit and the unpaid principal amount of the Loans then outstanding and all
interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrowers to the
Lenders hereunder and thereunder shall be immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived; and



                    9.2.3 Set-off. If an Event of Default shall have occurred and be continuing, each
Lender, the Issuing Lender, and each of their respective Affiliates and any participant of such
Lender or Affiliate which has agreed in writing to be bound by the provisions of Section 5.3
[Sharing of Payments] is hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable Law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final, in whatever currency) at any time held and other obligations (in
whatever currency) at any time owing by such Lender, the Issuing Lender or any such Affiliate or
participant to or for the credit or the account of any Loan Party against any and all of the
Obligations of such Loan Party now or hereafter existing under this Agreement or any other Loan
Document to such Lender, the Issuing Lender, Affiliate or participant, irrespective of



- 71 -









 





whether or not such Lender, Issuing Lender, Affiliate or participant shall have made any
demand under this Agreement or any other Loan Document and although such Obligations of the
Borrowers or such Loan Party may be contingent or unmatured or are owed to a branch or office of
such Lender or the Issuing Lender different from the branch or office holding such deposit or
obligated on such Indebtedness. The rights of each Lender, the Issuing Lender and their respective
Affiliates and participants under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender, the Issuing Lender or their respective
Affiliates and participants may have. Each Lender and the Issuing Lender agrees to notify the
Borrowers and the Administrative Agent promptly after any such setoff and application; provided
that the failure to give such notice shall not affect the validity of such setoff and application;
and



                    9.2.4 Application of Proceeds. From and after the date on which the Administrative
Agent has taken any action pursuant to this Section 9.2 and until all Obligations of the Loan
Parties have been paid in full, any and all proceeds received by the Administrative Agent from any
sale or other disposition of the Collateral, or any part thereof, or the exercise of any other
remedy by the Administrative Agent, shall be applied as follows:




                    (i) first, to reimburse the Administrative Agent and the Lenders for out-of-pocket
costs, expenses and disbursements, including reasonable attorneys’ and paralegals’ fees and
legal expenses, incurred by the Administrative Agent or the Lenders in connection with
realizing on the Collateral or collection of any Obligations of any of the Loan Parties
under any of the Loan Documents, including advances made by the Lenders or any one of them
or the Administrative Agent for the reasonable maintenance, preservation, protection or
enforcement of, or realization upon, the Collateral, including advances for taxes,
insurance, repairs and the like and reasonable expenses incurred to sell or otherwise
realize on, or prepare for sale or other realization on, any of the Collateral;




                    (ii) second, to the repayment of all Obligations of fees and expenses associated with
the Loans then due and unpaid of the Loan Parties to the Lenders or their Affiliates
incurred under this Agreement or any of the other Loan Documents or agreements evidencing
any Lender Provided Interest Rate Hedge or Other Lender Provided Financial Services
Obligations, whether of principal, interest, fees, expenses or otherwise and to cash
collateralize the Letter of Credit Obligations, in such manner as the Administrative Agent
may determine in its discretion;




                    (iii) third,




                         (a) with respect to any proceeds received from, and Collateral of, any Revolver
Borrower (including, but not limited to Armstrong Coal Company, Inc.), Armstrong Resources
Holdings, LLC, Armstrong Energy, Inc., and their Subsidiaries (other than Excluded
Subsidiaries or any Term Borrowers or such Term Borrower’s Subsidiaries) to the repayment of
all Obligations associated with the Revolving Credit Loans then due and unpaid, first to the
Revolver Lenders and their Affiliates incurred under this Agreement or any of the other Loan
Documents or agreements evidencing any Lender Provided Interest Rate Hedge or Other Lender



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Provided Financial Services Obligations, whether of principal, interest or otherwise
and the balance, if any, to the Term Lenders and their Affiliates for the repayment of all
Obligations associated with the Term Loans then due and unpaid, in such manner as the
Administrative Agent may determine in its discretion,




                         (b) with respect to any proceeds received from, and Collateral of, any Term Borrower
(other than Armstrong Coal Company, Inc.), Elk Creek GP, LLC, Western Diamond LLC, Western
Land Company, LLC and their Subsidiaries (other than Excluded Subsidiaries, any Revolver
Borrowers, Armstrong Resources Holdings, LLC, Armstrong Energy, Inc., Armstrong Coal
Company, Inc. and their Subsidiaries) to the repayment of all Obligations associated with
the Term Loans then due and unpaid, first to the Term Lenders and their Affiliates incurred
under this Agreement or any of the other Loan Documents or agreements evidencing any Lender
Provided Interest Rate Hedge or Other Lender Provided Financial Services Obligations,
whether of principal, interest or otherwise and the balance, if any, to the Revolver Lenders
and their Affiliates for the repayment of all Obligations associated with the Revolving
Credit Loans then due and unpaid, in such manner as the Administrative Agent may determine
in its discretion; and



                    (iv) the balance, if any, as required by Law.



10. THE ADMINISTRATIVE AGENT



     10.1 Appointment and Authority. Each of the Lenders and the Issuing Lender hereby
irrevocably appoints PNC to act on its behalf as the Administrative Agent hereunder and under the
other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental thereto. The
provisions of this Section 10 are solely for the benefit of the Administrative Agent, the Lenders
and the Issuing Lender, and neither the Borrowers nor any other Loan Party shall have rights as a
third party beneficiary of any of such provisions.



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



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



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



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



          (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any
duty to disclose, and shall not be liable for the failure to disclose, any information relating to
the Borrowers or any of their Affiliates that is communicated to or obtained by the Person serving
as the Administrative Agent or any of its Affiliates in any capacity.



          The Administrative Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 11.1 [Modifications, Amendments or
Waivers] and 9.2 [Consequences of Event of Default]) or (ii) in the absence of its own gross
negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge
of any Potential Default or Event of Default unless and until notice describing such Potential
Default or Event of Default is given to the Administrative Agent by the Borrowers, a Lender or the
Issuing Lender.



          The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with this Agreement or
any other Loan Document, (ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance
of any of the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Potential Default or Event of Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document or (v) the satisfaction of any condition set forth in Section 7 [Conditions
of Lending and Issuance of Letters of Credit] or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent.



     10.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing (including any electronic message,
Internet or intranet website posting or other distribution) in good faith believed by it to be
genuine and to have been signed, sent or otherwise authenticated by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by telephone and in good
faith believed by it to have been made by the proper Person, and shall not incur any



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liability for relying thereon. In determining compliance with any condition hereunder to the
making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or the Issuing Lender, the Administrative Agent may presume that such
condition is satisfactory to such Lender or the Issuing Lender unless the Administrative Agent
shall have received notice to the contrary from such Lender or the Issuing Lender prior to the
making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrowers), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.




     10.5 Delegation of Duties. The Administrative Agent may perform any and all of its
duties and exercise its rights and powers hereunder or under any other Loan Document by or through
any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any
such sub-agent may perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this Section 10 shall
apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Administrative Agent.



     10.6 Resignation of Administrative Agent. The Administrative Agent may at any time
give notice of its resignation to the Lenders, the Issuing Lender and the Borrowers. Upon receipt
of any such notice of resignation, the Required Lenders shall have the right, with approval from
the Borrowers (so long as no Event of Default has occurred and is continuing), to appoint a
successor, such approval not to be unreasonably withheld or delayed. If no such successor shall
have been so appointed by the Required Lenders and shall have accepted such appointment within
thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may on behalf of the Lenders and the Issuing Lender, appoint a
successor Administrative Agent; provided that if the Administrative Agent shall notify the
Borrowers and the Lenders that no qualifying Person has accepted such appointment, then such
resignation shall nonetheless become effective in accordance with such notice and (i) the retiring
Administrative Agent shall be discharged from its duties and obligations hereunder and under the
other Loan Documents (except that in the case of any collateral security held by the Administrative
Agent on behalf of the Lenders or the Issuing Lender under any of the Loan Documents, the retiring
Administrative Agent shall continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (ii) all payments, communications and determinations
provided to be made by, to or through the Administrative Agent shall instead be made by or to each
Lender and the Issuing Lender directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section 10.6. Upon the acceptance of a
successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the retiring (or retired)
Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its
duties and obligations hereunder or under the other Loan Documents (if not already discharged
therefrom as provided above in this Section). The fees payable by the Borrowers to a successor
Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrowers and such successor. After the retiring Administrative Agent’s resignation
hereunder and under the



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other Loan Documents, the provisions of this Section 10 and Section 11.3 [Expenses; Indemnity;
Damage Waiver] shall continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.




     If PNC resigns as Administrative Agent under this Section 10.6, PNC shall also resign as an
Issuing Lender. Upon the appointment of a successor Administrative Agent hereunder, such successor
shall (i) succeed to all of the rights, powers, privileges and duties of PNC as the retiring
Issuing Lender and Administrative Agent and PNC shall be discharged from all of its respective
duties and obligations as Issuing Lender and Administrative Agent under the Loan Documents, and
(ii) issue letters of credit in substitution for the Letters of Credit issued by PNC, if any,
outstanding at the time of such succession or make other arrangement satisfactory to PNC to
effectively assume the obligations of PNC with respect to such Letters of Credit.



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



     10.8 No Other Duties, etc. Anything herein to the contrary notwithstanding, none of
the Lenders listed on the cover page hereof shall have any powers, duties or responsibilities under
this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent, a Lender or the Issuing Lender hereunder.



     10.9 Administrative Agent’s Fee. The Borrowers shall pay to the Administrative Agent
a nonrefundable fee (the “Administrative Agent’s Fee”) under the terms of a letter (the
“Administrative Agent’s Letter”) among the Borrowers and Administrative Agent, as amended from time
to time.



     10.10 Authorization to Release Collateral and Guarantors. The Lenders and Issuing
Lenders authorize the Administrative Agent to release (i) any Collateral consisting of assets or
equity interests sold or otherwise disposed of in a sale or other disposition or transfer permitted
under Section 8.2.7 [Dispositions of Assets or Subsidiaries] or 8.2.6 [Liquidations, Mergers,
Consolidations, Acquisitions], and (ii) any Guarantor from its obligations under the Guaranty
Agreement if the ownership interests in such Guarantor are sold or otherwise disposed of or
transferred to persons other than Loan Parties or Subsidiaries of the Loan Parties in a transaction
permitted under Section 8.2.7 [Dispositions of Assets or Subsidiaries] or 8.2.6 [Liquidations,
Mergers, Consolidations, Acquisitions].



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     10.11 No Reliance on Administrative Agent’s Customer Identification Program. Each
Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or
assignees, may rely on the Administrative Agent to carry out such Lender’s, Affiliate’s,
participant’s or assignee’s customer identification program, or other obligations required or
imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”),
or any other Anti-Terrorism Law, including any programs involving any of the following items
relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the
Loan Documents or the transactions hereunder or contemplated hereby: (i) any identity verification
procedures, (ii) any recordkeeping, (iii) comparisons with government lists, (iv) customer notices
or (v) other procedures required under the CIP Regulations or such other Laws.



11. MISCELLANEOUS




     11.1 Modifications, Amendments or Waivers. With the written consent of the Required
Lenders, the Administrative Agent, acting on behalf of all the Lenders, and the Borrowers, on
behalf of the Loan Parties, may from time to time enter into written agreements amending or
changing any provision of this Agreement or any other Loan Document or the rights of the Lenders or
the Loan Parties hereunder or thereunder, or may grant written waivers or consents hereunder or
thereunder. Any such agreement, waiver or consent made with such written consent shall be
effective to bind all the Lenders and the Loan Parties; provided, that no such agreement,
waiver or consent may be made which will:



                    11.1.1 Increase of Commitment. Increase the amount of the Revolving Credit Commitment
or Term Loan Commitment of any Lender hereunder without the consent of such Lender;



                    11.1.2 Extension of Payment; Reduction of Principal Interest or Fees; Modification of
Terms of Payment. Whether or not any Loans are outstanding, extend the Expiration Date or the
time for payment of principal or interest of any Loan (excluding the due date of any mandatory
prepayment of a Loan), the Commitment Fee or any other fee payable to any Lender, or reduce the
principal amount of or the rate of interest borne by any Loan or reduce the Commitment Fee or any
other fee payable to any Lender, without the consent of each Lender directly affected thereby;



                    11.1.3 Release of Collateral or Guarantor. Except for sales of assets permitted by
Section 8.2.7 [Dispositions of Assets or Subsidiaries], release all or substantially all of the
Collateral or any Guarantor from its Obligations under the Guaranty Agreement without the consent
of all Lenders (other than Defaulting Lenders); or



                    11.1.4 Miscellaneous. Amend Section 5.2 [Pro Rata Treatment of Lenders], 10.3
[Exculpatory Provisions, Etc.] or 5.3 [Sharing of Payments by Lenders] or this Section 11.1, alter
any provision regarding the pro rata treatment of the Lenders or requiring all Lenders to authorize
the taking of any action or reduce any percentage specified in the definition of Required Lenders,
in each case without the consent of all of the Lenders (other than Defaulting Lenders);



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provided that no agreement, waiver or consent which would modify the interests, rights or
obligations of the Administrative Agent or the Issuing Lender may be made without the written
consent of such Administrative Agent or Issuing Lender, as applicable, and provided,
further that, if in connection with any proposed waiver, amendment or modification referred to
in Sections 11.1.1 through 11.1.4 above, the consent of the Required Lenders is obtained but the
consent of one or more of such other Lenders whose consent is required is not obtained (each a
“Non-Consenting Lender”), then the Borrowers shall have the right to replace any such
Non-Consenting Lender with one or more replacement Lenders pursuant to Section 5.6.2 [Replacement
of a Lender].




     11.2 No Implied Waivers; Cumulative Remedies. No course of dealing and no delay or
failure of the Administrative Agent or any Lender in exercising any right, power, remedy or
privilege under this Agreement or any other Loan Document shall affect any other or future exercise
thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any further exercise thereof or of any other right, power, remedy or privilege. The rights and
remedies of the Administrative Agent and the Lenders under this Agreement and any other Loan
Documents are cumulative and not exclusive of any rights or remedies which they would otherwise
have.



     11.3 Expenses; Indemnity; Damage Waiver.



                    11.3.1 Costs and Expenses. The Borrowers shall jointly and severally pay (i) all
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection
with the syndication of the credit facilities provided for herein, the preparation, negotiation,
execution, delivery and administration of this Agreement and the other Loan Documents or any
amendments, modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all out-of-pocket expenses
incurred by the Issuing Lender in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder, (iii) all out-of-pocket expenses
incurred by the Administrative Agent, any Lender or the Issuing Lender (including the fees, charges
and disbursements of any counsel for the Administrative Agent, any Lender or the Issuing Lender),
in connection with the enforcement or protection of its rights (A) in connection with this
Agreement and the other Loan Documents, including its rights under this Section, or (B) in
connection with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of
such Loans or Letters of Credit, and (iv) all reasonable out-of-pocket expenses of the
Administrative Agent’s regular employees and agents engaged periodically to perform audits of the
Loan Parties’ books, records and business properties. Notwithstanding anything to the contrary in
the foregoing, the Borrowers will not be obligated to pay any allocated costs of in-house counsel
of the Administrative Agent, the Lenders or their Affiliates.



                    11.3.2 Indemnification by the Borrowers. The Borrowers shall jointly and severally
indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the Issuing Lender,
and each Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from,



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any and all losses, claims, damages, liabilities and related expenses (including the fees,
charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or
asserted against any Indemnitee by any third party or by the Borrowers or any other Loan Party
arising out of, in connection with, or as a result of (i) the execution or delivery of this
Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby,
the performance or nonperformance by the parties hereto of their respective obligations hereunder
or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan
or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by
the Issuing Lender to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) breach of representations, warranties or covenants of any Borrower under the Loan
Documents, or (iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, including any such items or losses relating to or arising under
Environmental Laws or pertaining to environmental matters, whether based on contract, tort or any
other theory, whether brought by a third party or by any Borrower or any other Loan Party, and
regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such
Indemnitee or (y) result from a claim brought by the Borrowers or any other Loan Party against an
Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other
Loan Document, if the Borrowers or such Loan Party has obtained a final and nonappealable judgment
in its favor on such claim as determined by a court of competent jurisdiction.




                    11.3.3 Reimbursement by Lenders. To the extent that any Borrower for any reason fails
to indefeasibly pay any amount required under Sections 11.3.1 [Costs and Expenses] or 11.3.2
[Indemnification by the Borrowers] to be paid by it to the Administrative Agent (or any sub-agent
thereof), the Issuing Lender or any Related Party of any of the foregoing, each Lender severally
agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing Lender or such
Related Party, as the case may be, such Lender’s Ratable Share (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the Administrative Agent
(or any such sub-agent) or the Issuing Lender in its capacity as such, or against any Related Party
of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or Issuing
Lender in connection with such capacity.



                    11.3.4 Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable Law, each Borrower shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or as a result of,
this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the
proceeds thereof. No Indemnitee referred to in Section 11.3.2 [Indemnification by Borrowers] shall
be liable for any damages arising from the use by unintended recipients of any information or other
materials distributed by it through



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telecommunications, electronic or other information transmission systems in connection with
this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.




                    11.3.5 Payments. All amounts due under this Section shall be payable not later than
ten (10) days after demand therefor.



     11.4 Holidays. Whenever payment of a Loan to be made or taken hereunder shall be due
on a day which is not a Business Day such payment shall be due on the next Business Day (except as
provided in Section 4.2 [Interest Periods]) and such extension of time shall be included in
computing interest and fees, except that and/or Maturity Dates the Loans shall be due on the
Business Day preceding the Expiration Date and/or Maturity Dates if the Expiration Date is not a
Business Day. Whenever any payment or action to be made or taken hereunder (other than payment of
the Loans) shall be stated to be due on a day which is not a Business Day, such payment or action
shall be made or taken on the next following Business Day, and such extension of time shall not be
included in computing interest or fees, if any, in connection with such payment or action.



     11.5 Notices; Effectiveness; Electronic Communication.



                    11.5.1 Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in Section 11.5.2 [Electronic
Communications]), all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier (i) if to a Lender, to it at its address set forth in its administrative
questionnaire, or (ii) if to any other Person, to it at its address set forth on Schedule
1.1(B).



          Notices sent by hand or overnight courier service, or mailed by certified or registered mail,
shall be deemed to have been given when received; notices sent by telecopier shall be deemed to
have been given when sent (except that, if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the next Business Day
for the recipient). Notices delivered through electronic communications to the extent provided in
Section 11.5.2 [Electronic Communications], shall be effective as provided in such Section.



                    11.5.2 Electronic Communications. Notices and other communications to the Lenders and
the Issuing Lender hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative
Agent; provided that the foregoing shall not apply to notices to any Lender or the Issuing
Lender if such Lender or the Issuing Lender, as applicable, has notified the Administrative Agent
that it is incapable of receiving notices under such Article by electronic communication. The
Administrative Agent or the Borrowing Agent may, in their discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to procedures approved
by it; provided that approval of such procedures may be limited to particular notices or
communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient



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(such as by the “return receipt requested” function, as available, return e-mail or other
written acknowledgement); provided that if such notice or other communication is not sent
during the normal business hours of the recipient, such notice or communication shall be deemed to
have been sent at the opening of business on the next Business Day for the recipient, and (ii)
notices or communications posted to an Internet or intranet website shall be deemed received upon
the deemed receipt by the intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available and identifying the
website address therefor.




                    11.5.3 Change of Address, Etc. Any party hereto may change its address, e-mail
address or telecopier number for notices and other communications hereunder by notice to the other
parties hereto.



     11.6 Severability. The provisions of this Agreement are intended to be severable. If
any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.



     11.7 Duration; Survival. All representations and warranties of the Loan Parties
contained herein or made in connection herewith shall survive the execution and delivery of this
Agreement, the completion of the transactions hereunder and Payment In Full. All covenants and
agreements of the Borrowers contained herein relating to the payment of principal, interest,
premiums, additional compensation or expenses and indemnification, including those set forth in the
Notes, Section 5 [Payments] and Section 11.3 [Expenses; Indemnity; Damage Waiver], shall survive
Payment In Full. All other covenants and agreements of the Loan Parties shall continue in full
force and effect from and after the date hereof and until Payment In Full.



     11.8 Successors and Assigns.



                    11.8.1 Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their respective successors and
assigns permitted hereby, except that no Borrower nor any other Loan Party may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written consent of the
Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an assignee in accordance with the provisions of
Section 11.8.2 [Assignments by Lenders], (ii) by way of participation in accordance with the
provisions of Section 11.8.4 [Participations], or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of Section 11.8.6 [Certain Pledges; Successors and
Assigns Generally] (and any other attempted assignment or transfer by any party hereto shall be
null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon
any Person (other than the parties hereto, their respective successors and assigns permitted
hereby, Participants to the extent provided in Section 11.8.4 [Participations] and, to the extent
expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the
Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.



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                    11.8.2 Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that any such
assignment shall be subject to the following conditions:



          (i) Minimum Amounts.



               (A) in the case of an assignment of the entire remaining amount of the assigning Lender’s
Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an
Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and



               (B) in any case not described in clause (i)(A) of this Section 11.8.2, the aggregate amount of
the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable
Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment and Assumption
Agreement with respect to such assignment is delivered to the Administrative Agent or, if “Trade
Date” is specified in the Assignment and Assumption Agreement, as of the Trade Date) shall not be
less than $2,500,000, in the aggregate of all such Lender’s Commitments and such Commitments shall
be assigned pro-rata in accordance with subsection (ii) below, unless each of the Administrative
Agent and, so long as no Event of Default has occurred and is continuing, the Borrowing Agent
otherwise consents (each such consent not to be unreasonably withheld or delayed).



          (ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of
a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with
respect to the Loan or the Commitment assigned and such Lender’s proportionate amount of Term Loan
Commitments and Revolving Credit Commitments shall at all times be equal.



          (iii) Required Consents. No consent shall be required for any assignment except for
the consent of the Administrative Agent (which shall not be unreasonably withheld or delayed) and:



               (A) the consent of the Borrowing Agent, as applicable (such consent not to be unreasonably
withheld or delayed) shall be required unless (x) an Event of Default has occurred and is
continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a
Lender or an Approved Fund; provided that the Borrowers shall be deemed to have consented to any
such assignment unless it shall object thereto by written notice to the Administrative Agent within
five (5) Business Days after having received notice thereof; and



               (B) the consent of the Issuing Lender (such consent not to be unreasonably withheld or
delayed) shall be required for any assignment that increases the obligation of the assignee to
participate in exposure under one or more Letters of Credit (whether or not then outstanding).



          (iv) Assignment and Assumption Agreement. The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption



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Agreement, together with a processing and recordation fee of $3,500, and the assignee, if it
is not a Lender, shall deliver to the Administrative Agent an administrative questionnaire provided
by the Administrative Agent.




          (v) No Assignment to Borrowers. No such assignment shall be made to the Borrowers or
any of the Borrowers’ Affiliates or Subsidiaries.



          (vi) No Assignment to Natural Persons. No such assignment shall be made to a natural
person.


Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 11.8.3
[Register], from and after the effective date specified in each Assignment and Assumption
Agreement, the assignee thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Assumption Agreement, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption Agreement, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption Agreement covering all of
the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Sections 4.4 [LIBOR Rate
Unascertainable; Illegality; Increased Costs; Deposits Not Available], 5.8 [Increased Costs], and
11.3 [Expenses, Indemnity; Damage Waiver] with respect to facts and circumstances occurring prior
to the effective date of such assignment. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 11.8.2 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 11.8.4 [Participations].




                    11.8.3 Register. The Administrative Agent, acting solely for this purpose as an agent
of the Borrowers, shall maintain a record of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms
hereof from time to time. Such register shall be conclusive, and the Borrowers, the Administrative
Agent and the Lenders may treat each Person whose name is in such register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. Such register shall be available for inspection by the Borrowers and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.



                    11.8.4 Participations. Any Lender may at any time, without the consent of, or notice
to, the Borrowers or the Administrative Agent, sell participations to any Person (other than a
natural person or the Borrowers or any of their Affiliates or Subsidiaries) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all
or a portion of its Commitment and/or the Loans owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such obligations and (iii)
the Borrowers, the Administrative Agent and the Lenders, Issuing Lender shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and obligations under
this Agreement.



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          Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver with respect to Sections 11.1.1
[Increase of Commitment, Etc.], 11.1.2 [Extension of Payment, Etc.], or 11.1.3 [Release of
Collateral or Guarantor]). Subject to Section 11.8.5 [Limitations upon Participant Rights
Successors and Assigns Generally], the Borrowers agree that each Participant shall be entitled to
the benefits of Sections 4.4 [LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available] and 5.8 [Increased Costs] to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 11.8.2 [Assignments by Lenders]. To the extent
permitted by Law, each Participant also shall be entitled to the benefits of Section 9.2.3 [Setoff]
as though it were a Lender; provided such Participant agrees to be subject to Section 5.3
[Sharing of Payments by Lenders] as though it were a Lender.



                    11.8.5 Limitations upon Participant Rights Successors and Assigns Generally. A
Participant shall not be entitled to receive any greater payment under Sections 5.8 [Increased
Costs], 5.9 [Taxes] or 11.3 [ Expenses; Indemnity; Damage Waiver] than the applicable Lender would
have been entitled to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the applicable Borrower’s prior
written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 5.9 [Taxes] unless the Borrowers are notified of the
participation sold to such Participant and such Participant agrees, for the benefit of the
Borrowers, to comply with Section 5.9.5 [Status of Lenders] as though it were a Lender.



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



     11.9 Obligations Absolute. The obligations of the Borrowers hereunder shall not be
discharged or impaired or otherwise diminished by the failure, default, omission, or delay, willful
or otherwise, by any Lender, the Administrative Agent, or any Borrower or any other obligor on any
of the Obligations, or by any other act or thing or omission or delay to do any other act or thing
which may or might in any manner or to any extent vary the risk of any Borrower or would otherwise
operate as a discharge of any Borrower as a matter of law or equity. Each of the Borrowers agrees
that the Obligations will be paid and performed strictly in accordance with the terms of the Loan
Documents. Without limiting the generality of the foregoing, each Borrower hereby consents to, at
any time and from time to time, and the joint and several obligations of each Borrower hereunder
shall not be diminished, terminated, or otherwise similarly affected by any of the following:



          (i) Any lack of genuineness, legality, validity, enforceability or allowability (in a
bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any



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avoidance or subordination, in whole or in part, of any Loan Document or any of the
Obligations and regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of the Obligations, any of the terms of the Loan Documents, or any
rights of the Administrative Agent or the Lenders or any other Person with respect thereto;




          (ii) Any increase, decrease, or change in the amount, nature, type or purpose of any of, or
any release, surrender, exchange, compromise or settlement of any of the Obligations (whether or
not contemplated by the Loan Documents as presently constituted); any change in the time, manner,
method, or place of payment or performance of, or in any other term of, any of the Obligations; any
execution or delivery of any additional Loan Documents; or any amendment, modification or
supplement to, or refinancing or refunding of, any Loan Document or any of the Obligations;



          (iii) Any failure to assert any breach of or default under any Loan Document or any of the
Obligations; any extensions of credit in excess of the amount committed under or contemplated by
the Loan Documents, or in circumstances in which any condition to such extensions of credit has not
been satisfied; any other exercise or non-exercise, or any other failure, omission, breach,
default, delay, or wrongful action in connection with any exercise or non-exercise, of any right or
remedy against any Borrower or any other Person under or in connection with any Loan Document or
any of the Obligations; any refusal of payment or performance of any of the Obligations, whether or
not with any reservation of rights against any Borrower; or any application of collections
(including but not limited to collections resulting from realization upon any direct or indirect
security for the Obligations) to other obligations, if any, not entitled to the benefits of this
Agreement, in preference to Obligations entitled to the benefits of this Agreement, or if any
collections are applied to Obligations, any application to particular Obligations;



          (iv) Any taking, exchange, amendment, modification, waiver, supplement, termination,
subordination, compromise, release, surrender, loss, or impairment of, or any failure to protect,
perfect, or preserve the value of, or any enforcement of, realization upon, or exercise of rights,
or remedies under or in connection with, or any failure, omission, breach, default, delay, or
wrongful action by the Administrative Agent or the Lenders, or any of them, or any other Person in
connection with the enforcement of, realization upon, or exercise of rights or remedies under or in
connection with, or, any other action or inaction by the Administrative Agent or the Lenders, or
any of them, or any other Person in respect of, any direct or indirect security for any of the
Obligations. As used in this Agreement, “direct or indirect security” for the Obligations, and
similar phrases, includes any collateral security, guaranty, suretyship, letter of credit, capital
maintenance agreement, put option, subordination agreement, or other right or arrangement of any
nature providing direct or indirect assurance of payment or performance of any of the Obligations,
made by or on behalf of any Person;



          (v) Any merger, consolidation, liquidation, dissolution, winding-up, charter revocation, or
forfeiture, or other change in, restructuring or termination of the corporate structure or
existence of, any Borrower or any other Person; any bankruptcy, insolvency, reorganization or
similar proceeding with respect to such Borrower or any other Person; or any action taken or
election made by the Administrative Agent or the Lenders, or any of them



- 85 -









 




(including but not limited to any election under Section 1111(b)(2) of the United States
Bankruptcy Code), any Borrower, or any other Person in connection with any such proceeding;




          (vi) Any defense, setoff, or counterclaim which may at any time be available to or be asserted
by any Borrower or any other person with respect to any Loan Document or any of the Obligations; or
any discharge by operation of law or release of any Borrower or any other Person from the
performance or observance of any Loan Document or any of the Obligations; or



          (vii) Any other event or circumstance, whether similar or dissimilar to the foregoing, and
whether known or unknown, which might otherwise constitute a defense available to, or limit the
liability of, any Borrower, a guarantor or a surety, excepting only full, strict, and indefeasible
payment and performance of the Obligations.



     11.10 Joinder. Each Borrower acknowledges, consents, and agrees that new Borrowers or
Guarantors may join in this Agreement pursuant to Section 8.2.9 [Subsidiaries, Partnerships and
Joint Ventures] or in connection with a Permitted Acquisition and each Borrower affirms that its
obligations shall continue hereunder undiminished.



     11.11 Waivers, etc. Each of the Borrowers hereby waives any defense to or limitation on
its obligations under this Agreement arising out of or based on any event or circumstance referred
to in Section 11.9 [Obligations Absolute] hereof. Without limitation and to the fullest extent
permitted by applicable law, each Borrower waives each of the following:



          (i) Except as otherwise required under this Agreement, all notices, disclosures and demand of
any nature which otherwise might be required from time to time to preserve intact any rights
against any Borrower, including the following: any notice of any event or circumstance described
in Section 11.9 [Obligations Absolute] hereof; any notice required by any law, regulation or order
now or hereafter in effect in any jurisdiction; any notice of nonpayment, nonperformance, dishonor,
or protest under any Loan Document or any of the Obligations; any notice of the incurrence of any
Obligation; any notice of any default or any failure on the part of any Borrower or any other
Person to comply with any Loan Document or any of the Obligations or any direct or indirect
security for any of the Obligations; and any notice of any information pertaining to the business,
operations, condition (financial or otherwise) or prospects of any Borrower or any other Person;



          (ii) Any right to any marshalling of assets, to the filing of any claim against any Borrower
or any other Person in the event of any bankruptcy, insolvency, reorganization or similar
proceeding, or to the exercise against any Borrower or any other Person of any other right or
remedy under or in connection with any Loan Document or any of the Obligations or any direct or
indirect security for any of the Obligations; any requirement of promptness or diligence on the
part of the Administrative Agent or the Lenders, or any of them, or any other Person; any
requirement to exhaust any remedies under or in connection with, or to mitigate the damages
resulting from default under, any Loan Document or any of the Obligations or any direct or indirect
security for any of the Obligations; any benefit of any statute of limitations; and any requirement
of acceptance of this Agreement or any other Loan Document, and any requirement that any Borrower
receive notice of any such acceptance;



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          (iii) Any defense or other right arising by reason of any law now or hereafter in effect in
any jurisdiction pertaining to election of remedies (including but not limited to anti-deficiency
laws, “one action” laws or the like), or by reason of any election of remedies or other action or
inaction by the Administrative Agent or the Lenders, or any of them (including but not limited to
commencement or completion of any judicial proceeding or nonjudicial sale or other action in
respect of collateral security for any of the Obligations), which results in denial or impairment
of the right of the Administrative Agent or the Lenders, or any of them, to seek a deficiency
against any Borrower or any other Person or which otherwise discharges or impairs any of the
Obligations; and



          (iv) Any and all defenses it may now or hereafter have based on principles of suretyship,
impairment of Collateral or the like.



     11.12 Joint and Several Liability; Guaranty and Surety Matters. Each of the Borrowers
shall be jointly and severally liable with respect to the Loans, Obligations and all other
Indebtedness of Borrowers (or any one or more of them) to the Lenders arising out of the Loan
Documents. Each Borrower guarantees and becomes surety for the full and timely payment, whether by
declaration, acceleration or otherwise, by the other Borrower of each and every obligation and
liability (both those now in existence and those that shall hereafter arise, including without
limitation all costs and expenses of enforcement and collection including reasonable attorneys’
fees) of such other Borrower to Lenders. Further each Borrower agrees that the Administrative
Agent may from time to time or as many times as the Administrative Agent, in its sole discretion,
deems appropriate, do any of the following without adversely affecting the validity or
enforceability of this Agreement or any of the Loan Documents (i) release, surrender, exchange,
compromise or settle Indebtedness of any of the Borrowers to the Lenders; (ii) change, renew or
waive the terms of any note, instrument or agreement relating to Indebtedness of any of the
Borrowers or Lenders, such rights to include the right to change the rate of interest charged to
such Borrower; (iii) enter into any agreement of forbearance with respect to Indebtedness of any of
the Borrowers to Lenders; (iv) release, surrender, exchange or compromise any security hold by
Administrative Agent for Indebtedness of any of the Borrowers or Lenders; (v) release any person
who is a guarantor or surety or has agreed to purchase Indebtedness of any of the Borrowers to
Lenders; and (vi) release, surrender, exchange or compromise any security or lien held by the
Administrative Agent for the liabilities of any person who is a guarantor or surety for the
Indebtedness of any of the Borrowers to Lenders. Each of the Borrowers agree that the
Administrative Agent may do any of the above as the Administrative Agent deems necessary or
advisable, at the Administrative Agent’s sole discretion, and that each of the Borrowers agree to
make full payment immediately when due to be paid to the Lenders, irrespective of whether any one
or more of the following events have occurred: (i) Administrative Agent has made any demand on the
other Borrower; (ii) Administrative Agent has taken any action of any nature against any other
Borrower; (iii) Administrative Agent has pursued any rights which Administrative Agent has against
nay other person who may be liable for Indebtedness of such Borrower to Lenders; (iv)
Administrative Agent holds or has resorted to any security for Indebtedness of such Borrower to
Lenders; or (v) Administrative Agent has invoked any other remedies or rights Administrative Agent
has available with respect to Indebtedness of such Borrower to Lenders. Each of the Lenders and
the Administrative Agent hereby reserve all rights against each Borrower.



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     11.13 Confidentiality.



                    11.13.1 General. Each of the Administrative Agent, the Lenders and the Issuing Lender
agrees to maintain the confidentiality of the Information, except that Information may be disclosed
(i) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers,
employees, agents, advisors and other representatives (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (ii) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory authority, such as
the National Association of Insurance Commissioners), (iii) to the extent required by applicable
Laws or regulations or by any subpoena or similar legal process, (iv) to any other party hereto,
(v) in connection with the exercise of any remedies hereunder or under any other Loan Document or
any action or proceeding relating to this Agreement or any other Loan Document or the enforcement
of rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially
the same as those of this Section, to (A) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this Agreement or (B) any
actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating
to the Borrowers and their obligations, (vii) with the consent of the Borrowers or (viii) to the
extent such Information (Y) becomes publicly available other than as a result of a breach of this
Section or (Z) becomes available to the Administrative Agent, any Lender, the Issuing Lender or any
of their respective Affiliates on a nonconfidential basis from a source other than the Borrowers or
the other Loan Parties. Any Person required to maintain the confidentiality of Information as
provided in this Section shall be considered to have complied with its obligation to do so if such
Person has exercised the same degree of care to maintain the confidentiality of such Information as
such Person would accord to its own confidential information.



                    11.13.2 Sharing Information With Affiliates of the Lenders. Each Loan Party
acknowledges that from time to time financial advisory, investment banking and other services may
be offered or provided to the Borrowers or one or more of its Affiliates (in connection with this
Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender
and each of the Loan Parties hereby authorizes each Lender to share any information delivered to
such Lender by such Loan Party and its Subsidiaries pursuant to this Agreement to any such
Subsidiary or Affiliate subject to the provisions of Section 11.13.1 [General].



     11.14 Counterparts; Integration; Effectiveness.



                    11.14.1 Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement and the other Loan Documents, and any separate letter agreements with respect to
fees payable to the Administrative Agent, constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof including any prior confidentiality agreements
and commitments. Except as provided in Section 7 [Conditions Of Lending And Issuance Of Letters Of
Credit], this Agreement shall become



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effective when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature
page of this Agreement by telecopy or e-mail shall be effective as delivery of a manually executed
counterpart of this Agreement.




     11.15 CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS;
WAIVER OF JURY TRIAL.



                    11.15.1 Governing Law. This Agreement shall be deemed to be a contract under the Laws
of the State of New York without regard to its conflict of laws principles. Each standby Letter of
Credit issued under this Agreement shall be subject either to the rules of the Uniform Customs and
Practice for Documentary Credits, as most recently published by the International Chamber of
Commerce (the “ICC”) at the time of issuance (“UCP”) or the rules of the International Standby
Practices (ICC Publication Number 590) (“ISP98”), as determined by the Issuing Lender, and each
trade Letter of Credit shall be subject to UCP, and in each case to the extent not inconsistent
therewith, the Laws of the State of New York without regard to is conflict of laws principles.



                    11.15.2 SUBMISSION TO JURISDICTION. EACH BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED
STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY
OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING
LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AGAINST ANY BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.



                    11.15.3 WAIVER OF VENUE. EACH BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY



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OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN THIS SECTION 11.15. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF
AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES
NOT ASSERT ANY SUCH DEFENSE.




                    11.15.4 SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.5 [NOTICES; EFFECTIVENESS; ELECTRONIC
COMMUNICATION]. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.



                    11.15.5 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.



     11.16 Borrowing Agent. Each Loan Party hereby appoints the Borrowing Agent as its
agent to act as specified herein and authorizes the Borrowing Agent to take such action and perform
such duties on such Loan Parties’ behalf as are specified in this Agreement and the other Loan
Documents to be taken or performed by the Borrowing Agent, and to exercise such powers, take such
actions and perform such duties as are reasonably incidental thereto.



     11.17 USA Patriot Act Notice. Each Lender that is subject to the USA Patriot Act and
the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Loan Parties
that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and
record information that identifies the Loan Parties, which information includes the name and
address of Loan Parties and other information that will allow such Lender or Administrative Agent,
as applicable, to identify the Loan Parties in accordance with the USA Patriot Act.



[SIGNATURE PAGES FOLLOW]









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[SIGNATURE PAGE 1 OF 10 TO CREDIT AGREEMENT]




     IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have
executed this Agreement as of the day and year first above written.



	 	 	 	 	 
	 	REVOLVER AND TERM BORROWER:



ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	/s/ Martin D. Wilson
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President 	 
	 
	 	REVOLVER BORROWER AND TERM GUARANTOR:



ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	/s/ Martin D. Wilson
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President and Chief Financial Officer 	 
	 
	 	TERM BORROWERS AND REVOLVER GUARANTORS



WESTERN MINERAL DEVELOPMENT, LLC

 	 
	 	By:  	/s/ Martin D. Wilson
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 2 OF 10 TO CREDIT AGREEMENT]




	 	 	 	 	 
	 	WESTERN DIAMOND LLC

 	 
	 	By:  	/s/ Martin D. Wilson
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 
	 
	 	WESTERN LAND COMPANY, LLC

 	 
	 	By:  	/s/ Martin D. Wilson
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 
	 
	 	ELK CREEK L.P.
 	 



	 	 	 	 	 
	 	By:  	  ELK CREEK GP, LLC, as General Partner
 	 



	 	 	 	 	 
	 	By:  	  /s/ Martin D. Wilson
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President and Chief Financial Officer 	 



	 	 	 	 	 
	 	REVOLVER AND TERM GUARANTORS:



ARMSTRONG ENERGY, INC.

 	 
	 	By:  	/s/ Martin D. Wilson
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 3 OF 10 TO CREDIT AGREEMENT]




	 	 	 	 	 
	 	ARMSTRONG RESOURCES HOLDINGS, LLC

 	 
	 	By:  	/s/ Martin D. Wilson
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President and Chief Financial Officer 	 
	 
	 	ELK CREEK GP, LLC

 	 
	 	By:  	/s/ Martin D. Wilson
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President and Chief Financial Officer 	 
	 
	 	ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	/s/ Martin D. Wilson
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President and Chief Financial Officer 	 
	 
	 	ELK CREEK OPERATING, L.P.
 	 



	 	 	 	 	 
	 	By:  	  Elk Creek Operating GP, LLC, as General Partner
 	 



	 	 	 	 	 
	 	By:  	  /s/ Martin D. Wilson
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President and Chief Financial Officer 	 



	 	 	 	 	 
	 	CERALVO HOLDINGS, LLC

 	 
	 	By:  	/s/ Martin D. Wilson
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 4 OF 10 TO CREDIT AGREEMENT]




	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION, individually and as Administrative Agent

 	 
	 	By:  	/s/ Richard C. Munsick
 	 
	 	 	Name:  	Richard C. Munsick 	 
	 	 	Title:  	Senior Vice President 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 5 OF 10 TO CREDIT AGREEMENT]




	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Ronald M. Calhoun
 	 
	 	 	Name:  	Ronald M. Calhoun 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 6 OF 10 TO CREDIT AGREEMENT]




	 	 	 	 	 
	 	UNION BANK, N.A.

 	 
	 	By:  	/s/ Richard Reeves
 	 
	 	 	Name:  	Richard Reeves 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 7 OF 10 TO CREDIT AGREEMENT]




	 	 	 	 	 
	 	FIRST COMMONWEALTH BANK

 	 
	 	By:  	/s/ Stephen J. Orban
 	 
	 	 	Name:  	Stephen J. Orban 	 
	 	 	Title:  	Senior Vice President 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 8 OF 10 TO CREDIT AGREEMENT]




	 	 	 	 	 
	 	REGIONS BANK

 	 
	 	By:  	/s/ Steven A. Linton
 	 
	 	 	Name:  	Steven A. Linton 	 
	 	 	Title:  	Senior Vice President 	 
	 




 









 








[SIGNATURE PAGE 9 OF 10 TO CREDIT AGREEMENT]




	 	 	 	 	 
	 	THE HUNTINGTON NATIONAL BANK

 	 
	 	By:  	/s/ W. Christopher Kohler
 	 
	 	 	Name:  	W. Christopher Kohler 	 
	 	 	Title:  	Senior Vice President 	 
	 




 









 








[SIGNATURE PAGE 10 OF 10 TO CREDIT AGREEMENT]




	 	 	 	 	 
	 	RAYMOND JAMES BANK, FSB

 	 
	 	By:  	/s/ Alexander L. Rody
 	 
	 	 	Name:  	Alexander L. Rody 	 
	 	 	Title:  	Senior Vice President 	 
	 




 











 





SCHEDULE 1.1(A)




PRICING GRID—

VARIABLE PRICING AND FEES BASED ON LEVERAGE RATIO



	 	 	 	 	 	 	 	 	 
	 	 	 	 	Letter of Credit	 	Base Rate	 	LIBOR Rate
	Level	 	Leverage Ratio	 	Fee	 	Spread	 	Spread
	I
	 	Greater than or equal to 2.5 to 1.0
	 	3.75%
	 	2.75%
	 	3.75%
	II
	 	Greater than or equal to 2.0 to

1.0 but less than 2.5 to 1.0
	 	3.50%
	 	2.50%
	 	3.50%
	III
	 	Greater than or equal to 1.5 to

1.0 but less than 2.0 to 1.0
	 	3.25%
	 	2.25%
	 	3.25%
	IV
	 	Less than 1.5 to 1.0
	 	3.00%
	 	2.00%
	 	3.00%






     For purposes of determining the Applicable Margin and the Applicable Letter of Credit Fee
Rate:



     (a) The Applicable Margin and the Applicable Letter of Credit Fee Rate shall be set on the
Closing Date to the fees and spreads associated with “Level I” pricing and shall remain at such
level until the delivery of the Compliance Certificate for the fiscal quarter ending June 30, 2011.



     (b) The Applicable Margin and the Applicable Letter of Credit Fee Rate shall be recomputed for
the fiscal quarter ending June 30, 2011, and for each fiscal quarter thereafter based on the
Leverage Ratio as of such quarter end. Any increase or decrease in the Applicable Margin or the
Applicable Letter of Credit Fee Rate computed as of a quarter end shall be effective on the date on
which the Compliance Certificate evidencing such computation is due to be delivered under Section
8.3.3 [Certificate of Borrowers]. If a Compliance Certificate is not delivered when due in
accordance with such Section 8.3.3 , then the rates in Level I shall apply as of the first Business
Day after the date on which such Compliance Certificate was required to have been delivered and
shall remain in effect until the date on which such Compliance Certificate is delivered.



     (c) If, as a result of any restatement of or other adjustment to the financial statements of
the Borrowers or for any other reason, the Borrowers or the Lenders determine that (i) the Leverage
Ratio as calculated by the Borrowers as of any applicable date was inaccurate and (ii) a proper
calculation of the Leverage Ratio would have resulted in higher pricing for such period, the
Borrowers shall immediately and retroactively be obligated to pay to the Administrative Agent for
the account of the applicable Lenders, promptly on demand by the Administrative



SCHEDULE 1.1(A) — 1





 









 







Agent (or, after
the occurrence of an actual or deemed entry of an order for relief with respect to the Borrowers
under the Bankruptcy Code of the United States, automatically and without further action by the
Administrative Agent, any Lender or the Issuing Lender), an amount equal to the excess of the
amount of interest and fees that should have been paid for such period over
the amount of interest and fees actually paid for such period. This paragraph shall not limit
the rights of the Administrative Agent, any Lender or the Issuing Lender, as the case may be, under
Section 2.9 [Letter of Credit Subfacility] or 4.3 [Interest After Default] or 9 [Default]. The
Borrowers’ obligations under this paragraph shall survive the termination of the Commitments and
the repayment of all other Obligations hereunder.




SCHEDULE 1.1(A) — 2







 









 








SCHEDULE 1.1(B)




COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES



Page 1 of 2


Part 1 — Commitments of Lenders and Addresses for Notices to Lenders




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Amount of	 	 	Amount of	 	 	 	 	 	 	 
	 	 	Commitment for	 	 	Commitment	 	 	 	 	 	 	 
	 	 	Revolving Credit	 	 	for Term	 	 	 	 	 	 	 
	Lender	 	Loans	 	 	Loans	 	 	Commitment	 	 	Ratable Share	 
	Name: PNC Bank, National
Association

Address: 249 Fifth Avenue,
3rd Floor

Pittsburgh, PA 15222-2707

Attention: Richard C. Munsick

Telephone: (412) 762-4299

Telecopy: (412) 762-2571	 	$	13,333,333.34	 	 	$	26,666,666.66	 	 	$	40,000,000	 	 	 	26.666666667	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Name: U.S. Bank National
Association

Address: 721 Locust Street
St. Louis, MO 63103

Attention: Jennifer Hackman

Telephone: (314) 418-2264

Telecopy: (314) 418-8090	 	$	5,000,000	 	 	$	10,000,000	 	 	$	15,000,000	 	 	 	10.000000000	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Name: Union Bank, N.A. 

Address: 601 Potrero Grande Dr.
Monterey Park, CA 91754

Attention: Alberta Rosby

Telephone: (323) 720-2622

Telecopy: (323) 278-6173	 	$	8,333,333.33	 	 	$	16,666,666.67	 	 	$	25,000,000	 	 	 	16.666666667	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Name: First Commonwealth Bank

Address: 437 Grant Street

Frick Building, Suite 1600
Pittsburgh, PA 15219

Attention: Stephen J. Orban

Telephone: (412) 690-2212

Telecopy: (412) 690-2206	 	$	5,000,000	 	 	$	10,000,000	 	 	$	15,000,000	 	 	 	10.000000000	%






SCHEDULE 1.1(B) — 1





 









 








	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Amount of	 	 	Amount of	 	 	 	 	 	 	 
	 	 	Commitment for	 	 	Commitment	 	 	 	 	 	 	 
	 	 	Revolving Credit	 	 	for Term	 	 	 	 	 	 	 
	Lender	 	Loans	 	 	Loans	 	 	Commitment	 	 	Ratable Share	 
	Name: Regions Bank

Address: 8182 Maryland Avenue
St. Louis, MO 63105

Attention: John Holland

Telephone: (314) 615-2379

Telecopy: (314) 615-2355	 	$	5,000,000	 	 	$	10,000,000	 	 	$	15,000,000	 	 	 	10.000000000	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Name: The Huntington National
Bank

Address: 41 South High Street
(HC 0845) Columbus, OH 43215

Attention: Chad Lowe

Telephone: (614) 480-5810

Telecopy: (877) 274-8593	 	$	8,333,333.33	 	 	$	16,666,666.67	 	 	$	25,000,000	 	 	 	16.666666667	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Name: Raymond James Bank, FSB

Address: 710 Carillon Parkway
St. Petersburg, FL 33716

Attention: Garrett T. McKinnon

Telephone: (727) 567-4324

Telecopy: (727) 567-1815	 	$	5,000,000	 	 	$	10,000,000	 	 	$	15,000,000	 	 	 	10.000000000	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	$	50,000,000	 	 	$	100,000,000	 	 	$	150,000,000	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 





SCHEDULE 1.1(B) — 2






 









 








SCHEDULE 1.1(B)




COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES



Page 2 of 2


Part 2 — Addresses for Notices to Borrowers and Guarantors:




	 	 	 

	ADMINISTRATIVE AGENT
	 
	Name:

	 	PNC Bank, National Association
	Address:

	 	One PNC Plaza

249 Fifth Avenue

Pittsburgh, Pennsylvania 15222-2707
	Attention:

	 	Richard C. Munsick
	Telephone:

	 	(412) 762-4299
	Telecopy:

	 	(412) 762-2571
	 
	 	 
	With a Copy To:
	 
	 	 
	Agency Services, PNC Bank, National Association
	Mail Stop: P7-PFSC-04-I
	Address:

	 	500 First Avenue
	 

	 	Pittsburgh, PA 15219
	Attention:

	 	Agency Services
	Telephone:

	 	412 762 6442
	Telecopy:

	 	412 762 8672
	 
	 	 
	BORROWERS:
	 
	 	 
	Name:

	 	c/o Armstrong Coal Company, Inc.
	Address:

	 	7733 Forsyth Boulevard, Suite 1625
St. Louis, Missouri 63105
	Attention:

	 	Martin D. Wilson, President and Chief Financial Officer
	Telephone:

	 	(314) 721-8202
	Telecopy:

	 	(314) 721-8211
	 
	 	 
	GUARANTORS:
 
	Name:

	 	c/o Armstrong Coal Company, Inc.
	Address:

	 	7733 Forsyth Boulevard, Suite 1625
St. Louis, Missouri 63105
	Attention:

	 	Martin D. Wilson, President and Chief Financial Officer
	Telephone:

	 	(314) 721-8202
	Telecopy:

	 	(314) 721-8211






SCHEDULE 1.1(B) — 3





 











 





SCHEDULE 8.1.3




INSURANCE REQUIREMENTS RELATING TO THE COLLATERAL


COVENANTS:



At the request of the Administrative Agent, the Loan Parties shall deliver to the Administrative
Agent and each of the Lenders (x) on the Closing Date and annually thereafter an original
certificate of insurance signed by the Loan Parties’ independent insurance broker describing and
certifying as to the existence of the insurance on the Collateral required to be maintained by this
Agreement and the other Loan Documents, together with a copy of the endorsement described in the
next sentence attached to such certificate, and (y) from time to time a summary schedule indicating
all insurance then in force with respect to each of the Loan Parties. Such policies of insurance
shall contain special endorsements which include the provisions set forth below or are otherwise in
form acceptable to the Administrative Agent in its discretion. The applicable Loan Parties shall
notify the Administrative Agent promptly of any occurrence causing a material loss or decline in
value of the Collateral and the estimated (or actual, if available) amount of such loss or decline.
Any monies received by the Administrative Agent constituting insurance proceeds may, at the option
of the Administrative Agent, (i) in the case of property insurance proceeds received during the
existence of an Event of Default, be applied by the Administrative Agent to the payment of the
Obligations in accordance with the terms of the Credit Agreement, (ii) for losses of less than
$500,000 received at such time as no Event of Default or Potential Default exists, be disbursed by
the Administrative Agent to the applicable Loan Parties, and (iii) for losses equal to or greater
than $500,000 received at such time as no Event of Default or Potential Default exists, be
disbursed by the Administrative Agent to the applicable Loan Parties on such terms as are deemed
appropriate by the Administrative Agent for the repair, restoration and/or replacement of
Collateral and other property in respect of which such proceeds were received.



ENDORSEMENT:



(i) specify the Administrative Agent as an additional insured, mortgagee and lender loss payee as
its interests may appear,



(ii) with respect to all property insurance policies, provide that the interest of the Lenders
shall be insured regardless of any breach or violation by the applicable Loan Parties of any
warranties, declarations or conditions contained in such policies or any action or inaction of the
applicable Loan Parties or others insured under such policies, except that the insurer shall not be
obligated to maintain the insurance if the breach consists of non-payment of premiums which
continues for 30 days after written notice to Administrative Agent,



(iii) provide a waiver of any right of the insurers to set off or counterclaim or any other
deduction, whether by attachment or otherwise,



(iv) provide that any and all rights of subrogation which the insurers may have or acquire against
the Loan Parties shall be, at all times and in all respects, junior and subordinate to the prior
Payment In Full of the Indebtedness hereunder and that no insurer shall exercise or assert any
right of subrogation until such time as the Indebtedness hereunder has been paid in full and the
Commitments have terminated,




SCHEDULE 8.1.3




 









 







(v) provide that no cancellation of such policies for any reason (including non-payment of premium)
nor any change therein shall be effective until at least thirty (30) days after receipt by the
Administrative Agent of written notice of such cancellation or change,



(vi) be primary without right of contribution of any other insurance carried by or on behalf of any
additional insureds with respect to their respective interests in the Collateral, and



(vii) provide that inasmuch as the policy covers more than one insured, all terms, conditions,
insuring agreements and endorsements (except limits of liability) shall operate as if there were a
separate policy covering each insured.




SCHEDULE 8.1.3