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







 









 






	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	 	 	Commitment	 	 	 	 	 	 	 
	 	 	for Revolving	 	 	for Term	 	 	 	 	 	 	 
	Lender	 	Credit 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	 	 	Commitment	 	 	 	 	 	 	 
	 	 	for Revolving	 	 	for Term	 	 	 	 	 	 	 
	Lender	 	Credit 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 1.1(P)

Permitted Liens



1. Overriding Royalty Agreements




     a. Overriding Royalty Agreement in favor of David R. Cobb dated November 22, 2006, a
short form of which is of record in Deed Book 529, Page 692 in the Office of the Clerk of
Muhlenberg County, Kentucky, as amended and restated pursuant to Amended Overriding Royalty
Agreement, a short form of which is of record as Amended and Restated Short Form Overriding
Royalty Agreement, dated December 3, 2008, in Deed Book 540, page 576, in the Office of the
Clerk of Muhlenberg County, Kentucky.



     b. Overriding Royalty Agreement in favor of Kenneth E. Allen dated July 27, 2007, a
short form of which is of record in Deed Book 529, Page 686 in the Office of the Clerk of
Muhlenberg County, Kentucky, as amended and restated pursuant to Amended Overriding Royalty
Agreement, a short form of which is of record as Amended and Restated Short Form Overriding
Royalty Agreement, dated December 3, 2008, in Deed Book 540, page 571, in the Office of the Clerk of Muhlenberg County, Kentucky.



     c. Overriding Royalty Agreement in favor of Western Kentucky Royalty Trust dated July
25, 2008, a memorandum of which is of record in Deed Book 95, Page 684 in the Office of the
Clerk of Muhlenberg County, Kentucky.



     d. Overriding Royalty Agreement in favor of Western Kentucky Royalty Trust dated July
25, 2008, a memorandum of which is of record in Deed Book 539, Page 105 in the Office of
the Clerk of Muhlenberg County, Kentucky.



     e. Overriding Royalty Agreement in favor of Western Kentucky Royalty Trust dated July
25, 2008, a memorandum of which is of record in Deed Book 541, Page 634 in the Office of
the Clerk of Muhlenberg County, Kentucky.



     f. Overriding Royalty Agreement by Armstrong Coal Company, Inc. in favor of David R.
Cobb dated November 22, 2006, a short form of which is of record in Deed Book 369, Page 284
in the Office of the Clerk of Ohio County, Kentucky, as amended and restated pursuant to
Amended Overriding Royalty Agreement, a short form of which is of record as Amended and
Restated Short Form Overriding Royalty Agreement, dated December 3, 2008, in Deed Book 377,
page 87, in the Office of the Clerk of Ohio County, Kentucky.



     g. Overriding Royalty Agreement by Armstrong Mining, Inc. in favor of David R. Cobb
dated November 22, 2006, a short form of which is of record in Deed Book 369, Page 290 in
the Office of the Clerk of Ohio County, Kentucky, as amended and restated pursuant to
Amended Overriding Royalty Agreement, a short form of which is of record as Amended and
Restated Short Form Overriding Royalty Agreement, dated December 3, 2008, in Deed Book 377,
page 87, in the Office of the Clerk of Ohio County, Kentucky.



     h. Overriding Royalty Agreement by Armstrong Coal Company, Inc. in favor of Kenneth E.
Allen dated February 9, 2007, a short form of which is of record in Deed Book 369, Page 296
in the Office of the Clerk of Ohio County, Kentucky, as amended and restated pursuant to
Amended Overriding Royalty Agreement, a short form of which is of record as Amended and
Restated Short Form Overriding



 









 




Royalty Agreement, dated December 3, 2008, in Deed Book 377, page 94, in the Office of the Clerk of
Ohio County, Kentucky.




     i. Overriding Royalty Agreement by Armstrong Mining, Inc. in favor of Kenneth E. Allen
dated February 9, 2007, a short form of which is of record in Deed Book 369, Page 302 in
the Office of the Clerk of Ohio County, Kentucky, as amended and restated pursuant to
Amended Overriding Royalty Agreement, a short form of which is of record as Amended and
Restated Short Form Overriding Royalty Agreement, dated December 3, 2008, in Deed Book 377,
page 94, in the Office of the Clerk of Ohio County, Kentucky.



     j. Overriding Royalty Agreement in favor of Western Kentucky Royalty Trust dated July
25, 2008, a memorandum of which is of record in Deed Book 375, Page 705 in the Office of
the Clerk of Ohio County, Kentucky.



     k. Overriding Royalty Agreement by Ceralvo Holdings, LLC and Ceralvo Resources, LLC in
favor of Western Kentucky Royalty Trust dated July 25, 2008, a memorandum of which is of
record in Deed Book 375, Page 714 in the Office of the Clerk of Ohio County, Kentucky.


2. Vendor Liens:





a. Vendor’s Lien in the amount of $75,000.00 retained by Daniel Bell and Melissa Bell
(husband and wife) in deed dated July 8, 2010 to Armstrong Coal Company, Inc., a Delaware
corporation, of record in Deed Book 385, Page 57 in the Office of the Clerk of Ohio County,
Kentucky.




b. Vendor’s Lien in the amount of $716,250.00 retained by Kenneth H. Brown and Cynthia S.
Brown (husband and wife) in deed dated October 8, 2010 to Armstrong Coal Company, Inc., a
Delaware corporation, of record in Deed Book 386, Page 282 in the Office aforesaid.




c. Vendor’s Lien in the amount of $266,666.50 retained by Kathy Ann Shelton and
William Todd Shelton (wife and husband) in deed dated December 16, 2010 to Armstrong Coal
Company, Inc., a Delaware corporation, of record in Deed Book 387, Page 162 in the Office
aforesaid.




d. Vendor’s Lien in the amount of $266,666.50 retained by Richard Lee Brown and Doris
A. Brown (husband and wife) in deed dated December 16, 2010 to Armstrong Coal Company,
Inc., a Delaware corporation, of record in Deed Book 387, Page 167 in the Office aforesaid.


3. Mortgage in the principal amount of $561,000.00, from Armstrong Coal Company, Inc., a
Delaware corporation, to Anna Laura Dortch, dated as of October 13, 2010, recorded in Mortgage Book
448, Page 764 in the Office of the Clerk of Ohio County, Kentucky.



4. The following Equipment Leases to Armstrong Coal Company, Inc.




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Lease	 	 	Lease	 
	Lessor/	 	Serial	 	Beginning	 	 	Term	 
	Equipment Model / Description	 	Number	 	Date	 	 	(Months)	 
	Atlas Copco
	 	 	 	 	 	 	 	 	 	 
	DML/LP Drill
	 	9034	 	 	4/1/2010	 	 	 	49	 
	Catepillar Financial
	 	 	 	 	 	 	 	 	 	 
	CAT D9T Track Type Tractor
	 	RJS00943	 	 	4/11/2008	 	 	 	84	 






 









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Lease	 	 	Lease	 
	Lessor/	 	Serial	 	Beginning	 	 	Term	 
	Equipment Model / Description	 	Number	 	Date	 	 	(Months)	 
	CAT D10T (Rip) Dozer
	 	RJG01276	 	 	4/25/2008	 	 	 	84	 
	CAT 992G Wheel Loader
	 	AZX00820	 	 	5/9/2008	 	 	 	84	 
	CAT 992G Wheel
	 	AZX00821	 	 	5/9/2008	 	 	 	84	 
	CAT D9T Track Type Tractor
	 	RJS01157	 	 	9/19/2008	 	 	 	84	 
	CAT D9T Track Type Tractor
	 	RJS01195	 	 	9/19/2008	 	 	 	84	 
	CAT D9T Track Type Tractor
	 	RJS01227	 	 	10/24/2008	 	 	 	84	 
	Deere Credit
	 	 	 	 	 	 	 	 	 	 
	Hitachi EX2500LD Shovel
	 	FF018LQ001033	 	 	5/25/2008	 	 	 	72	 
	Hitachi Z850LCS3 Excavator
	 	FF01JDQ020567	 	 	4/25/2008	 	 	 	72	 
	Komatsu Financial
	 	 	 	 	 	 	 	 	 	 
	Komatsu D475A-5E0 Dozer
	 	30020	 	 	9/25/2007	 	 	 	60	 
	Komatsu D65WX-15EO Dozer
	 	69083	 	 	7/1/2008	 	 	 	42	 
	Komatsu D65PX-15EO Dozer
	 	71043	 	 	8/1/2008	 	 	 	42	 
	Komatsu D65PX-15EO Dozer
	 	70985	 	 	8/1/2008	 	 	 	42	 
	Komatsu PC220LC-8 Excavator
	 	A88694	 	 	8/1/2008	 	 	 	60	 
	Komatsu PC1250SP-8 Excavator
	 	30121	 	 	11/1/2008	 	 	 	60	 
	Komatsu HD785-7 Rigid Haul Truck
	 	A10021	 	 	12/1/2008	 	 	 	60	 
	Komatsu WA800-3E0 Front End Loader
	 	70025	 	 	5/1/2009	 	 	 	60	 
	Komatsu HD785-7 Rock Truck
	 	7922	 	 	5/1/2009	 	 	 	60	 
	Komatsu WA500-6 Wheel Loader
	 	A92671	 	 	6/20/2009	 	 	 	60	 
	Komatsu WA900-3E0 Wheel Loader
	 	60073	 	 	6/15/2009	 	 	 	60	 
	Komatsu PC1250LC-8 Excavator
	 	30146	 	 	7/15/2009	 	 	 	60	 
	Komatsu D375A-6 Dozer
	 	60026	 	 	10/1/2010	 	 	 	84	 
	Volvo Financial Services
	 	 	 	 	 	 	 	 	 	 
	Volvo G990 Grader
	 	40796	 	 	3/9/2008	 	 	 	60	 
	Volvo G990 Grader
	 	40981	 	 	3/9/2008	 	 	 	60	 





5. Financing statements as shown on CT Corporation System Search report dated 1/4/11.






 









 








Schedule 1.1(R)

Real Property




ALCOA

(Webster and Union County)





I. Lessee — Coal/Surface Mining Rights: Armstrong Coal Company, Inc.: (i) #6 seam of
coal; (ii) all coal lying above #6; and (iii) right to enter in, on and under the real
estate to mine and remove coal via underground mining, all of which being 20,000 acres of
coal and 1,500 acres of surface (per Coal Mining Lease from Alcoa Fuels, Inc., dated
October 27, 2010, a short form of which is of record in Miscellaneous Book 151, Page 260 in
the Office of the Clerk of Webster County, Kentucky and in Deed Book 343, Page 20 in the
Office of the Clerk of Union County, Kentucky).



ARMSTRONG DOCK (a/k/a Smallhouse Dock)

(Ohio County)





I. Owner — Surface/Plant/Facilities/Improvements: Western Land Company, LLC: 873 acres of
surface, together with all equipment, fixtures, plants, facilities, improvements, etc. (per
Deed to Western Land Company, LLC from Point Pleasant Dock Company, LLC, Central States
Coal Reserves of Kentucky, LLC and Beaver Dam Coal Company, LLC, dated December 27, 2006,
recorded in DB 365, p. 375).




II. Lessee: Armstrong Coal Company, Inc. pursuant to Surface Property Lease from the
above-referenced owner dated January 1, 2007, a short form of which will be recorded.



BIG RUN — EAST FORK (KRONOS/WARDEN) —
LEWIS CREEK — MIDWAY (PART)

(Ohio County)





I. Owners — Surface/Surface and Coal Mining Rights: Western Diamond LLC and Western Mineral
Development, LLC: (i) 505 acres in Big Run Underground Area; (ii) 1,354 acres in Lewis
Creek Surface Area; (iii) 156 acres in East Fork — Kronos Surface Area; and (iv) 112 acres
and an undivided 9/10th interest in an additional 87 acres in East Fork — Warden #14
Area (per Deed from Central States Coal Reserves of Kentucky, LLC and Beaver Dam Coal
Company, LLC to Western Diamond LLC, dated May 31, 2007, recorded in DB 368, p. 17, as
corrected by Deed of Correction dated September 11, 2007, recorded in DB 369, p. 759 and
Deed from Western Diamond LLC to Western Mineral Development, LLC dated February 9, 2011).




II. Owners — Coal: Western Diamond LLC and Western Mineral Development, LLC: (i) 8,289
acres of #9 seam coal only, and partial interest in additional 413 acres of #9 seam coal,
all in Big Run #9 Underground Area; (ii) 1,495 acres and a partial interest in an
additional 159 acres of all coal lying above #9 seam in Lewis Creek Area; (iii) 484 acres
of coal lying above #9 seam in East Fork — Kronos area; (iv) 174 acres of coal lying above
#9 seam in East Fork Warden #14



 









 







Area; and (v) 6,575 acres and a partial interest in an additional 413 acres of #8 seam
coal in Midway #8 Underground Area (per Deed from Central States Coal Reserves of Kentucky,
LLC and Beaver Dam Coal Company, LLC to Western Diamond LLC, dated May 31, 2007, recorded
in DB 368, p. 17, as corrected by Deed of Correction dated September 11, 2007, recorded in
DB 369, p. 759 and Special Warranty Deed from Western Diamond LLC to Western Mineral
Development, LLC dated February 9, 2011).




III. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Lease from the
above-referenced owners dated February 9, 2011.



CENTERTOWN (a/k/a Austin Shop & Acreage)

(Ohio County)





I. Owner: Surface/Plant/Facilities/Improvements: Western Land Company, LLC: 208.04 acres of
surface, together with all equipment, fixtures, plants, facilities, improvements, etc. (per
Deed from Central States Coal Reserves of Kentucky, LLC and Beaver Dam Coal Company, LLC to
Western Land Company, LLC, dated October 19, 2007, recorded in DB 371, p. 28), LESS AND
EXCEPT approx. 1 acre conveyed to City of Centertown by Deed dated December 12, 2008, of
record in Deed Book 380, Page 233; and approx. 35 acres conveyed to Joseph Michael Roe and
Sara Kelly Roe by unrecorded Deed dated April 4, 2008, to be recorded.




II. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Lease from the
above-referenced owner dated February 9, 2011.



ELK CREEK

(Ohio County)





I. Owner — Surface/Coal: Ceralvo Holdings, LLC: (i) 415 acres of surface and surface and
coal mining rights appurtenant thereto; (ii) entire interest in 18,153.5 acres of #9 seam
coal; and (ii) partial interest in 673.5 acres #9 coal (per Deed from Cypress Creek Land
Resources, LLC & Cyprus Creek Land Company, dated March 31, 2008, recorded in DB 373, p.
262).




II. Lessee — Coal: Ceralvo Holdings, LLC: #9 coal seam under 401.5 acres which is leased by
Assignor pursuant to “Danks/Ray Coal Lease” dated August 25, 1972 and recorded in DB 200,
p. 215 (per Assignment and Assumption of Mineral Leasehold Estate (Danks and Ray #9 Only)
from Cypress Creek Land Resources, LLC, dated March 31, 2008, recorded in DB 373, p. 199).




III. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Lease and Sublease from
the above-referenced owner and lessee dated February 9, 2011.



EQUALITY BOOT

(Ohio County)




 









 






I. Owners — Surface/Facilities/Coal Mining Rights/Oil & Gas: Western Land Company, LLC and
Western Mineral Development, LLC: (i) 2,163 acres of surface, surface facilities and
surface and coal mining rights; and all oil and gas interest aforesaid surface tract (per
Deed from Central States Coal Reserves of Kentucky, LLC and Beaver Dam Coal Company to
Western Land Company, LLC, dated December 12, 2006, recorded in DB 365, p. 36 and Special
Warranty Deed from Western Land Company, LLC to Western Mineral Development, LLC dated
February 9, 2011).




II. Owners — Coal/Oil & Gas: Western Land Company, LLC and Western Mineral Development,
LLC: (i) 2,923 acres owned coal and undivided 1⁄2 interest in 225 acres in surface mineable
coal lying above #9 seam and all coal and coal mining rights associated therewith (except
for all coal below the top of #9 seam); and (ii) all oil and gas interest aforesaid coal
tracts (per Deed from Central States Coal Reserves of Kentucky, LLC and Beaver Dam Coal
Company to Western Land Company, LLC, dated December 12, 2006, recorded in DB 365, p. 36
and Special Warranty Deed from Western Land Company, LLC to Western Mineral Development,
LLC dated February 9, 2011).




III. Lessees — Surface/Coal Mining Rights: Western Land Company, LLC and Western Mineral
Development, LLC: (i) 423.1 acres of surface tracts; (ii) undivided 1⁄2 interest in 152.1
acres of surface mineable coal tracts and coal mining rights and privileges, but only with
respect to all coal above #9 coal (except for all coal lying below the top of #9), and all
oil and gas interests, if any which is leased by Assignor pursuant to “Barnard” lease dated
June 17, 1994, a short form of which is recorded in DB 292, p. 697 (per Partial Assignment
and Assumption of Surface and Mineral Leasehold Estate (Barnard Surface Area and Coal Above
#9 Seam) from Central States Coal Reserves of Kentucky, LLC to Western Land Company, LLC,
dated December 12, 2006, recorded in DB 365, p. 57 and Assignment of Partial Lease Interest
from Western Land Company, LLC to Western Mineral Development, LLC dated February 9, 2011).




IV. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Lease and Sublease from
the above-referenced owners and lessees dated February 9, 2011.



FISH & WILDLIFE

(Ohio County)





I. Owner — Easement for Surface Mining: Western Diamond LLC: easement to conduct surface
mining on 3,000 acres in Ohio County (per Deed of Easement from Central States Coal
Reserves of Kentucky, LLC (“Central States”) and Beaver Dam Coal Company to Western Diamond
LLC, dated September 19, 2006, recorded in DB 363, p. 360).




II. Owners — Surface/Coal/Oil, Gas & Other Minerals: Western Diamond LLC and Western
Mineral Development, LLC: all coal, oil, gas, other minerals and surface property owned,
leased or otherwise held and controlled by Central States and Beaver Dam Coal Company
located in Ohio County, Kentucky which Central States and/or Beaver Dam Coal Company
acquired



 









 







pursuant to specifically listed source deeds, subject to (i) prior selloffs to the
Department of Fish & Wildlife Resources; and (ii) the remaining 4,000 acres of surface mining operations
reserved by Central States and Beaver Dam Coal Company for their operations in Muhlenberg
County (per Deed from Central States and Beaver Dam Coal Company to Western Diamond LLC,
dated September 19, 2006, recorded in DB 363, p. 369 and Special Warranty Deed from Western
Diamond LLC to Western Mineral Development, LLC dated February 9, 2011).




III. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Lease from the
above-referenced owners dated February 9, 2011.



JACOB’S CREEK — SUNNYSIDE (Part) — HILLSIDE — CYPRESS
CREEK — NELSON CREEK “B”

(Muhlenberg County)





I. Owners — Surface/Surface and Coal Mining Rights: Western Diamond LLC and Western Mineral
Development, LLC: (i) 197 acres surface and surface and coal mining rights in the Jacob’s
Creek/Drakesboro Area; and (ii) 399 acres surface and surface and coal mining rights in the
Sunnyside Area (per Deed from Central States Coal Reserves of Kentucky, LLC to Western
Diamond LLC, dated effective May 31, 2007, recorded in DB 528, p. 284, as confirmed by Deed
of Confirmation dated September 30, 2007, recorded in DB 531, p. 205 and Special Warranty
Deed from Western Diamond LLC to Western Mineral Development, LLC dated February 9, 2011).




II. Owners — Coal: Western Diamond LLC and Western Mineral Development, LLC: (i) 3,311
acres of all seams of owned coal in Jacob’s Creek/Drakesboro Area; (ii) 836 acres of owned
coal lying below #9 seam in Jacob’s Creek/Drakesboro Area; (iii) 333 acres of owned coal in
Hillside Area; (iv) 107 acres owned coal lying above #9 seam in Cypress Creek Coal Area;
(v) 212 acres owned coal lying above #9 seam in Nelson Creek “B” Area; and (vi) 399 acres
owned coal above #9 seam and a partial interest in an additional 2,142 acres of coal above
#9 seam, all in Sunnyside Area (per Deed from Central States Coal Reserves of Kentucky,
LLC, dated effective May 31, 2007, recorded in DB 528, p. 284, as confirmed by Deed of
Confirmation dated September 30, 2007, recorded in DB 531, p. 205 and Special Warranty Deed
from Western Diamond LLC to Western Mineral Development, LLC dated February 9, 2011).




III. Owner — Easement for Surface Mining: Western Diamond LLC: easement to conduct surface
mining on 1,828 acres in Muhlenberg County (per Deed of Easement from Central States Coal
Reserves of Kentucky, LLC to Western Diamond LLC, dated May 31, 2007, recorded in DB 528,
p. 344).




IV. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Sublease from the
above-referenced owners dated February 9, 2011.



McHENRY RAILROAD SPUR AND CHURCH OF GOD PROPERTY







 









 








(Ohio County)





I. Owners — Fee Simple: Western Land Company, LLC and Western Diamond LLC: fee simple
interest into real property referred to as the McHenry Railroad Spur (per Deed from Central
States Coal Reserves of Kentucky, LLC and Beaver Dam Coal Company, LLC, dated May 31, 2007,
recorded in DB 368, p. 106).




II. Owner — Fee Simple: Western Land Company, LLC: Property on the old Hartford and
Rockport Road about two miles west of McHenry (per Deed from Church of God of Prophecy,
dated February 14, 2008, recorded in Deed Book 372, Page 660).




III. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Lease from the
above-referenced owners dated February 9, 2011.



NELSON CREEK (PART) — SUNNYSIDE (PART)

(Muhlenberg County)





I. Lessees — Coal: Western Diamond LLC and Western Mineral Development, LLC: 358 acres of
coal above #9 seam in Rogers Nelson Creek “B” Area which is leased by Assignor pursuant to
“1947 Mineral Lease” dated December 4, 1947, recorded in DB 164, p. 525 (per Partial
Assignment and Assumption of Mineral Leasehold Estate from Central States Coal Reserves of
Kentucky, LLC, dated May 31, 2007, recorded in DB 528, p. 320 and Assignment of Partial
Lease Interest from Western Diamond LLC to Western Mineral Development, LLC dated February
9, 2011).




II. Lessees — Coal: Western Diamond LLC and Western Mineral Development, LLC:
undivided 1⁄2 interest in 2,142 acres of coal lying above #9 seam in the Sunnyside
(“Duncan”) Area, which is leased by Assignor pursuant to an Indenture dated June 10, 1967
from Kentucky Trust Company of Louisville, Trustee, as lessor, and Sentry Royalty Company
as lessee, recorded in DB 258, p. 488 (per Partial Assignment and Assumption of Mineral
Leasehold Estate from Central States Coal Reserves of Kentucky, LLC to Western Diamond LLC,
dated May 31, 2007, recorded in DB 528, p. 330 and Assignment of Partial Lease Interest
from Western Diamond LLC to Western Mineral Development, LLC dated February 9, 2011).




III. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Sublease from the
above-referenced owners dated February 9, 2011.



PARKWAY (Part)

(Muhlenberg County)





I. Owners — Surface/Facilities/Mining Rights/Oil & Gas: Western Land Company, LLC and
Western Mineral Development, LLC: (i) 661.54 acres of surface, surface facilities, and
surface and coal mining rights; and (ii) any oil and gas underlying any of the surface
tracts (per Deed



 









 







from Central States Coal Reserves of Kentucky, LLC to Western Land Company, LLC, dated
December 12, 2006, recorded in DB 524, p. 505 and Special Warranty Deed from Western Land
Company, LLC to Western Mineral Development, LLC dated February 9, 2011).




II. Owners — Coal/Oil & Gas: Western Land Company, LLC and Western Mineral
Development, LLC: (i) 298 acres of #9 seam coal (except for coal lying above and below #9
seam); and (ii) any oil and gas underlying any of the coal tracts (per Deed from Central
States Coal Reserves of Kentucky, LLC to Western Land Company, LLC, dated December 12,
2006, recorded in DB 524, p. 505 and Deed from Western Land Company, LLC to Western Mineral
Development, LLC dated February 9, 2011).




III. Lessees — Coal: Western Land Company, LLC and Western Mineral Development, LLC: deep
#9 coal south of Western Kentucky Parkway which is leased by Assignor pursuant to “1947
Mineral Lease” dated December 4, 1947, recorded in DB 164, p. 525 (per Partial Assignment
and Assumption of Mineral Leasehold Estate (Deep #9 Coal) from Central States Coal Reserves
of Kentucky, LLC to Western Land Company, LLC, dated December 12, 2006, recorded in DB 524,
p. 523, as amended and restated by instrument dated April 17, 2007 and recorded in DB 527,
p. 186 and Assignment of Partial Lease Interest from Western Land Company, LLC to Western
Mineral Development, LLC dated February 9, 2011).




IV. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Lease and Sublease from
the above-referenced owners and lessees dated February 9, 2011.



ROCKPORT (Part)

(Ohio County)





I. Owner — Coal: Western Diamond LLC: (i) #8 seam of coal; and (ii) two tracts of all
seams of coal lying above #9 seam (per Deed from Beaver Dam Coal Company, LLC to Western
Diamond LLC, dated October 19, 2007, recorded in DB 371, p. 40).




II. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Lease from the
above-referenced owner dated February 9, 2011.



ROCKPORT (Part) — LEWIS CREEK (Part)

(Ohio County)





I. Owners — Coal: Western Diamond LLC and Western Mineral Development, LLC: all #9 seam of
coal (no acreage specified) (per Deed from Beaver Dam Coal Company, LLC to Western Diamond
LLC, dated September 19, 2006, recorded in DB 363, p. 393 and Special Warranty Deed from
Western Land Company, LLC to Western Mineral Development, LLC dated February
9, 2011).



 









 






II. Owners — Surface/Coal Mining Rights: Western Diamond LLC and Western Mineral
Development, LLC: 256 acres of surface, surface facilities and coal mining rights (per Deed
from Beaver Dam Coal Company to Western Diamond LLC, dated September 19, 2006, recorded in
DB 363, p. 403 and Special Warranty Deed from Western Diamond LLC to Western Mineral
Development, LLC dated February 9, 2011).




III. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Lease from the
above-referenced owners dated February 9, 2011.



TERTELING LEASE AND HIGHVIEW

(Ohio County)





I. Owner — Surface/Facilities/Coal Mining Rights (Highview): Western Diamond LLC: 179.5
acres of surface, surface facilities and coal mining rights (per Deed from Central States
Coal Reserves of Kentucky, LLC and Beaver Dam Coal Company, LLC to Western Diamond LLC,
dated September 19, 2006, recorded in DB 363, p. 414).




II. Lessee — Coal/Surface: Western Diamond LLC: all coal and coal mining rights and
privileges and surface and other interests in property Lying east of Bull Run and west of
Kentucky Highway 269 which is leased by Assignor pursuant to “Terteling” lease dated May
10, 1957, a short form of which is recorded in DB 133, p. 9 (per Partial Assignment of Coal
Mining Lease from Central States Coal Reserves of Kentucky, LLC to Western Diamond LLC,
dated September 19, 2006, recorded in DB 363, p. 428).




III. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Lease and Sublease from
the above-referenced owner dated February 9, 2011.



VOGUE — SUNNYSIDE (Part) — GAME PRESERVE — PARADISE #9

(Muhlenberg County)





I. Owners — Surface/Coal Mining Rights/Oil & Gas: Western Land Company, LLC and Western
Mineral Development, LLC: (i) 1,732 acres and an undivided 50% interest in an additional
1,376 acres in the Vogue — Pond River Levee & Earles Areas, including all oil and gas and
other minerals and the mining and mineral rights and privileges related thereto; and (ii)
4,782 acres in Gibralter Surface Area (Sunnyside) (per Deed from Central States Coal
Reserves of Kentucky, LLC to Western Land Company, LLC, dated March 30, 2007, recorded in
DB 527, p. 118, as corrected by Deed of Correction dated September 30, 2007, recorded in DB
531, p. 213 and Special Warranty Deed from Western Land Company, LLC to Western Mineral
Development, LLC dated February 9, 2011), LESS AND EXCEPT so much thereof conveyed to
Western Leasing, Inc. by Quitclaim Deed dated January 25, 2010, of record in Deed Book 546,
Page 279, in the office of the Clerk of Muhlenberg County, Kentucky.



 









 






II. Owners — Surface Mining Operations/Coal Mining Rights/Oil & Gas: Western Land
Company, LLC and Western Mineral Development, LLC: 50 acres of surface mining operations
and access rights, coal mining rights and privileges, including all oil and gas and other
minerals, all regarding Paradise #9 (per Deed from Central States Coal Reserves of
Kentucky, LLC to Western Land Company, LLC, dated March 30, 2007, recorded in DB 527, p.
118, as corrected by Deed of Correction dated September 30, 2007, recorded in DB 531, p.
213 and Special Warranty Deed from Western Land Company, LLC to Western Mineral
Development, LLC dated February 9, 2011).




III. Owners — Coal/Oil & Gas: Western Land Company, LLC and Western Mineral
Development, LLC: (i) 2,854 acres of #9 seam coal and all seams of coal above #9 seam in
the Vogue — Pond River Levee & Earles Areas; (ii) 548 acres of #9 seam coal and all coal
above #9 seam in the Game Preserve B & C Area; (iii) 803 acres of all #9 seam coal
regarding Paradise #9; and (iv) all oil and gas and other minerals underlying said coal
tracts and the mining and mineral rights and privileges related thereto (per Deed from
Central States Coal Reserves of Kentucky, LLC to Western Land Company, LLC, dated March 30,
2007, recorded in DB 527, p. 118, as corrected by Deed of Correction dated September 30,
2007, recorded in DB 531, p. 213 and Special Warranty Deed from Western Land Company, LLC
to Western Mineral Development, LLC dated February 9, 2011).




IV. Sub-Lessees — Surface/Coal: Western Land Company, LLC and Western Mineral Development,
LLC: an undivided 1⁄2 interest in (i) 1,003 acres of leased surface; and (ii) 2,781 acres of
#9, #11, #12, #13 and #14 seam coal, which is leased by Assignor pursuant to “Martin” lease
dated August 19, 1958, recorded in DB 254, p. 349 (per Partial Assignment and Assumption of
Surface and Mineral Leasehold Estate from Central States Coal Reserves of Kentucky, LLC to
Western Land Company, LLC, dated March 30, 2007, recorded in DB 527, p. 161 and Assignment
of Partial Lease Interest from Western Land Company, LLC to Western Mineral Development,
LLC dated February 9, 2011).




V. Owner — Easement for Surface Mining: Western Land Company, LLC: easement to conduct
surface mining on 50 acres in Muhlenberg County (per Deed of Easement from Central States
Coal Reserves of Kentucky, LLC to Western Land Company, LLC, dated March 30, 2007, recorded
in DB 527, p. 153).




VI. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Lease and Sublease
from the above-referenced owners and lessees dated February 9, 2011.



WARDEN (Part)

(Ohio County)





I. Lessee — Surface/Coal: Ceralvo Holdings, LLC: all leased surface and #9 and #14
coal seams and the surface and coal mining rights appurtenant thereto which is leased by
Assignor pursuant to “Carter/Harrel Heirs Lease” dated May 21, 1977, a short form of which
is recorded in DB 223, p. 833 (per Assignment and Assumption of Coal Lease Agreement
(Carter/Harrel Heirs



 









 







(Warden Area) from Cypress Creek Land Resources, LLC, dated March 31, 2008, recorded
in DB 373, p. 210).




II. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Sublease from the
above-referenced lessee dated February 9, 2011.



WEST FORK — MIDWAY (Part) — BEN’S LICK — CENTRAL GROVE MCHENRY — ROCKPORT
(Part) — KEN WYE

(Ohio County)





I. Owners — Surface/Coal Mining Rights/Oil & Gas: Western Land Company, LLC and
Western Mineral Development, LLC: (i) 4,999 acres and an undivided 95% interest in an
additional 21 acres in West Fork and Midway; (ii) 691 acres in Ben’s Lick and Central Grove
Church Areas; (iii) 2,041 acres and an undivided 2/3 interest in an additional 116 acres in
the area south of Ky. Hwy 62, north of Western Kentucky Parkway and west of U.S. Hwy. 231
(“3 Highways”) (McHenry Area and part of Rockport Area); (iv) 512 acres in Ken Wye Surface
Area; and (v) including all oil and gas and other minerals and the mining and mineral
rights and privileges related thereto (except regarding the Ken Wye Surface Area) (per Deed
from Central States Coal Reserves of Kentucky, LLC, Beaver Dam Coal Company, LLC, Ohio
County Coal Company, LLC and Grand Eagle Mining, Inc. to Western Land Company, LLC, dated
March 30, 2007, recorded in DB 367, p. 1 and Special Warranty Deed from Western Land
Company, LLC to Western Mineral Development, LLC dated February 9, 2011).




II. Owners — Coal/Oil & Gas: Western Land Company, LLC and Western Mineral Development,
LLC: (i) 6,575 acres and a partial interest in an additional 413 acres of coal above #9
seam in the West Fork and Midway Areas; (ii) 865 acres of all coal owned in Ben’s Lick and
Central Grove Church Area; (iii) 4,347 acres and an undivided 2/3 interest in an additional
116 acres of all coal owned in 3 Highways (McHenry/pt. Rockport) Area; and (iv) including
all oil and gas and other minerals and the mining and mineral rights and privileges related
thereto (per Deed from Central States Coal Reserves of Kentucky, LLC, Beaver Dam Coal
Company, LLC, Ohio County Coal Company, LLC and Grand Eagle Mining, Inc. to Western Land
Company, LLC, dated March 30, 2007, recorded in DB 367, p. 1 and Special Warranty Deed from
Westem Land Company, LLC to Western Mineral Development, LLC dated February 9, 2011).




III. Lessee: Armstrong Coal Company, Inc. pursuant to Coal Mining Lease and Sublease from
the above-referenced owners dated February 9, 2011.



ADDITIONAL INTERESTS





Surface Lease from Lyman P. and Joyce M. Barnes and Jerry Carson and Zexia Barnes Bishop to
Armstrong Coal Company, Inc., a Delaware corporation, dated February 14, 2008, a short form of
which is of record in Deed Book 372, Page 582 in the Office of the Clerk of Ohio County, Kentucky.



 









 




Deed from Daniel Bell and Melissa Bell (husband and wife) to Armstrong Coal Company, Inc., a
Delaware corporation, dated July 8, 2010, of record in Deed Book 385, Page 57 in the Office
aforesaid.



Deed from Richard Lee Brown and Doris A. Brown (husband and wife) to Armstrong Coal Company, Inc.,
a Delaware corporation, dated December 16, 2010, of record in Deed Book 387, Page 167 in the Office
aforesaid.



Deed from Kenneth H. Brown and Cynthia S. Brown (husband and wife) to Armstrong Coal Company, Inc.,
a Delaware corporation, dated October 8, 2010, of record in Deed Book 386, Page 279 in the Office
aforesaid.



Deed from Kenneth H. Brown and Cynthia S. Brown (husband and wife) to Armstrong Coal Company, Inc.,
a Delaware corporation, dated October 8, 2010, of record in Deed Book 386, Page 282 in the Office
aforesaid.



Deed from Edgar H. Duncan and Bernice H. Duncan (husband and wife) to Armstrong Coal Company, Inc.,
a Delaware corporation, dated March 8, 2010, Deed Book 383, Page 225 in the Office aforesaid.



Deed from Anna Laura Dortch (widow) to Armstrong Coal Company, Inc., a Delaware corporation, dated
October 13, 2010, of record in Deed Book 386, Page 349 in the Office aforesaid.



Deed from Delois Jane Geary (unm.) and Mary Etta Hurst, formerly Mary Etta Geary, and Ronald
Hurst (husband and wife) to Armstrong Coal Company, Inc., a Delaware corporation, dated March 19,
2008, of record in Deed Book 373, Page 514 in the Office aforesaid.



Deed from Glendale James and Wanda James (husband and wife) to Armstrong Coal Company, Inc., a
Delaware corporation, dated September 12, 2010, of record in Deed Book 386, Page 286 in the Office
aforesaid.



General Warranty Deed from Charles and Brenda Jarvis (husband and wife), Leon and Cathy Hardison
(husband and wife) and Ronald and Martha Dame (husband and wife) to Armstrong Coal Company, Inc., a
Delaware corporation, dated March 19, 2008, of record in Deed Book 373, Page 510 in the Office
aforesaid.



Quitclaim Deed from CSX Transportation, Inc., a Virginia corporation, to Armstrong Coal
Company, Inc., a Delaware corporation, dated December 8, 2009, of record in Deed Book 382, Page 155
in the Office aforesaid.



Deed from Kathy Ann Shelton and William Todd Shelton (wife and husband) to Armstrong Coal Company,
Inc., a Delaware corporation, dated December 16, 2010, of record in Deed Book 387, Page 162 in the
Office aforesaid.






 









 







Coal Mining Lease from Dennis and Deborah Farris (husband and wife) to Armstrong Coal Company,
Inc., a Delaware corporation, dated May 20, 2010, a short form of which is of record in Lease Book
189, Page 212 in the Office aforesaid.



Coal Mining Lease from Bradford and Miranda Luppino (husband and wife) to Armstrong Coal
Company, Inc., a Delaware corporation, dated November 12, 2010, a short form of which is of record
in Deed Book 386, Page 698 in the Office aforesaid.



Coal Mining Lease from Young Manufacturing Company, Inc. to Armstrong Coal Company, Inc., a
Delaware corporation, dated August 30, 2010, a short form of which is of record in Deed Book 385,
Page 689 in the Office aforesaid.



Deed from Randal Schultz (unm.), Sandra G. Schultz (widow), Kenneth Schultz and Patricia Schultz
(husband and wife) and Tammy Gaddis (unm.) to Armstrong Coal Company, Inc., a Delaware corporation,
dated November 24, 2008, of record in Deed Book 377, Page 134 in the Office aforesaid.



Deed from Agnes Tanner and Forrest Tanner (wife and husband), Wendell Lynch (unm.), Donald Stone
and Toni Stone (husband and wife), Robert Stone (unm.), E. T. Jones and Ann Jones (husband and
wife), Dorothy Cook and Robert Cook (wife and husband), Iven Jones (unm.), Wilbur Jones and Phyllis
Jones (husband and wife), Jerry Jones and Vadis Jones (husband and wife), David Jones and Janis
Jones (husband and wife), Earl Jones and Mary Jones (husband and wife), Carroll Jones and Peggy
Jones (husband and wife), Paul Jones and Cherie Jones (husband and wife), Janice Ziemba (unm.),
Patricia Faye Cundiff and David Cundiff (wife and husband), Pearlie Arnold (widow), Charles W.
Lynch and Margaret Lynch (husband and wife) and William Ray Lynch (unm.) to Armstrong Coal Company,
Inc., a Delaware corporation, dated October 23, 2008, of record in Deed Book 376, Page 395 in the
Office aforesaid.



Deed from Norman Spring and Charline Spring (husband and wife) and Tammy Harris and Keith Harris
(wife and husband) to Armstrong Coal Company, Inc., a Delaware corporation, dated November 19,
2008, of record in Deed Book 376, Page 630 in the Office aforesaid.



Deed from Nina A. Schultz (widow), Monica Fay LeCompte and James Michael LeCompte (wife and
husband), Glenn T. Schultz, Jr. and Brenda Schultz (husband and wife), Karla Kristianna Canan
(unm.), Sharon Smitha (unm.) and Charles E. Schultz and Angela Schultz (husband and wife) to
Armstrong Coal Company, Inc., a Delaware corporation, dated November 19, 2008, of record in Deed
Book 376, Page 633 in the Office aforesaid.



Deed from Maxie E. Schultz and Charlotte Schultz (husband and wife) to Armstrong Coal Company,
Inc., a Delaware corporation, dated November 19, 2008, of record in Deed Book 376, Page 639 in the
Office aforesaid.



Coal Mining Lease from Betty R. Craig Trust to Armstrong Coal Company, Inc., a Delaware
corporation, dated July 17, 2008, a memorandum of which is of record in Deed Book 376, Page 580 in
the Office aforesaid.






 









 







Coal Mining Lease from Bertha S. Grider (widow), Joe Brent Grider, Jr., Jessica Gwenlyn,
Amanda Westerfield, and Joe Brent Grider to Armstrong Coal Company, Inc., a Delaware corporation,
dated March 17, 2008, a memorandum of which is of record in Deed Book 373, Page 490 in the Office
aforesaid.



Coal Mining Lease from Allen Gray Limited Partnership III, an Illinois limited partnership, to
Armstrong Coal Company, Inc., a Delaware corporation, dated August 12, 2010, a memorandum of which
is of record in Deed Book 385, Page 434 in the Office aforesaid.



Coal Mining Lease from Allen Gray Limited Partnership II, an Illinois limited partnership, and
Allen Gray Limited Partnership III, an Illinois limited partnership, to Armstrong Coal Company,
Inc., a Delaware corporation, dated August 12, 2010, a memorandum of which is of record in Deed
Book 385, Page 439 in the Office aforesaid.



Coal Mining Lease from Allen Gray Limited Partnership III, an Illinois limited partnership, to
Armstrong Coal Company, Inc., a Delaware corporation, dated August 12, 2010, a memorandum of which
is of record in Deed Book 385, Page 429 in the Office aforesaid.



Coal Mining Lease from Joseph L. Ralph and Rose A. Ralph (husband and wife) to Armstrong Coal
Company, Inc., a Delaware corporation, dated May 20, 2010, a memorandum of which is of record in
Lease Book 189, Page 207 in the Office aforesaid.



Coal Mining Lease from Joe Michael Barnard and Kristina M. Barnard (husband and wife), Richard
L. Hocker (unm.), John W. Hocker and Janet R. Hocker (husband and wife) and Ruth Ann Hocker
Szymanski and Conrad Szymanski (wife and husband) to Armstrong Coal Company, Inc., a Delaware
corporation, dated August 3, 2010, a memorandum of which is of record in Deed Book 385, Page 338 in
the Office aforesaid.



Coal Mining Lease from Hazel Birchwell (widow) to Armstrong Coal Company, Inc., a Delaware
corporation, dated February 22, 2010, a memorandum of which is of record in Deed Book 383, Page 198
in the Office aforesaid.



Coal Mining Lease from Mark Little and Janis Little to Armstrong Coal Company, Inc., a Delaware
corporation, dated July 17, 2008, a memorandum of which is of record in Deed Book 376, Page 576 in
the Office aforesaid.



Special Warranty Deed from Cyprus Creek Land Company, a Delaware corporation, to Armstrong
Coal Company, Inc., a Delaware corporation, dated June 19, 2009, of record in Deed Book 381, Page
467 in the Office aforesaid.



Coal Mining Lease from Angela Danielle Jones and David C. Jones, Felicia Leigh-Ann Hughes and
Pamela Gabrielle Fowler, to Armstrong Coal Company, Inc. dated March 7, 2008, to be recorded.






 









 







Roadway Lease by Cloyd R. Mellot to Armstrong Coal Company, Inc., dated January 1, 2009, a Short
Form of which is of record in Miscellaneous Book 68, Page 406, in the Office aforesaid.



Coal Mining Lease from Dennis H. Woods and Brenda Woods and Damien L. Brown and Deborah Brown
to Armstrong Coal Company, Inc., dated effective as of October 2, 2008, to be recorded.



Coal Mining Lease from James Jones and Lola Jones to Armstrong Coal Company, Inc., dated May
14, 2010, a Short Form of which is of record in Lease Book 189, Page 202, as amended by instrument
of record in Deed Book 387, Page 649, both in the Office aforesaid.



Coal Mining Lease from Daisy Curtis Scroggins to Armstrong Coal Company, Inc., dated March 7,
2008, to be recorded.



Coal Mining Lease from Sue Hughes Bartlett to Armstrong Coal Company, Inc. dated March 7, 2008, a
short form of which is of record in Deed Book 387, Page 752, in the Office aforesaid.



Coal Mining Lease from Gerald Wayne Powers and Linda Powers to Armstrong Coal Company, Inc., dated
December 3, 2009, a short form of which is of record in Deed Book 387, Page 637, in the Office
aforesaid.



Coal Mining Lease from Michelle L. Queen to Armstrong Coal Company, Inc., dated September 30,
2009, a short form of which is of record in Deed Book 387, Page 631, in the Office aforesaid.



Coal Mining Lease from William Todd Paul to Armstrong Coal Company, Inc. dated September 30,
2009, to be recorded.



Coal Mining Lease from William A. Holladay to Armstrong Coal Company, Inc. dated September 30,
2009, a short form of which is of record in Deed Book 387, Page 708, in the Office aforesaid.



Coal Mining Lease from John Brown, Jr. and Patricia Brown to Armstrong Coal Company, Inc. dated
January 2, 2008, a short form of which is of record in Deed Book 387, Page 643, in the Office
aforesaid.



Coal Mining Lease from Noel D. Cavendar, Rhonda D. Cavender, Cheryl Ann Lacefield and Garry
Dale Lacefield, to Armstrong Coal Company, Inc. dated April 13, 2009, a short form of which is of
record in Deed Book 387, Page 625, in the Office aforesaid.



Coal Mining Lease from Glenn W. Danks, Ronald A. Danks, Clyde Richard Danks, Kelly Richard
Danks, Phillip Andrew Danks, Michael Edgar Danks and Melissa Ann Danks Sandberg to Armstrong Coal
Company, Inc. dated April 15, 2010, a short form of which is of record in Deed Book 387, Page 652,
in the Office aforesaid.



Coal Mining Lease from Bertha S. Grider, Carolyn M. Casteel, Parent and Agent of and for Katlin M.
Grider and John M. Grider, minors, and Timothy Casteel to Armstrong Coal Company, Inc., dated March
18, 2009, a short form of which is of record in Deed Book 387, Page 738, in the Office aforesaid.






 









 







Coal Mining Lease from Timothy and Mary Stenberg to Armstrong Coal Company, Inc., dated June 1,
2010, a short form of which is of record in Deed Book 387, Page 618, in the Office aforesaid.



Coal Mining Lease from Warren C. Roe, Josephine Roe, Joseph Michel Roe and Sara Kelly Roe to
Armstrong Coal Company, Inc., dated March 7, 2008, a short form of which is of record in Deed Book
387, Page 743, in the Office aforesaid.



Coal Mining Lease by Cyprus Creek Land Company, LLC and Cyprus Creek Land Resources, LLC to
Armstrong Coal Company, Inc. dated as of February 1, 2010, a short form of which is of record in
Deed Book 387, Page 714, in the Office aforesaid.





 











 





Schedule 1.1(V)

Vendor Liens




All “Vendor Liens” listed on Schedule 1.1(P) above.



 









 





Schedule 6.1.1

Good Standing and Qualification



Each Loan Party is in good standing in its jurisdiction of formation (as listed in Schedule
6.1.2).



The following Loan Parties are qualified to transact business as foreign entities in the
following jurisdictions:




	 	 	 
	Entity	 	Jurisdiction
	Armstrong Coal Company, Inc.

	 	Kentucky
	Western Diamond LLC

	 	Kentucky
	Ceralvo Holdings, LLC

	 	Kentucky






 









 






Schedule 6.1.2

Subsidiaries, Jurisdiction of Formation and Ownership





	I.	 	 Subsidiaries of Loan Parties
	 
	A.	 	Subsidiaries of Armstrong Land Company, LLC





       1. Elk Creek GP, LLC, a Delaware limited liability company (100% ownership of
membership interests)



       2. Armstrong Resources Holdings, LLC, a Delaware limited liability company (99.56%
ownership of units)



       3. Armstrong Energy, Inc., a Delaware corporation (99.36% ownership of common stock)



       4. Armstrong Technology Services, LLC, a Kentucky limited liability company (33.3%
ownership of membership interests)




	B.	 	Subsidiaries of Armstrong Energy, Inc.





       1. Armstrong Fabricators, Inc., a Delaware corporation (100% of common stock)



       2. Armstrong Logistics Services, LLC, a Kentucky limited liability company (100% of
membership interests)



       3. Armstrong Mining, Inc., a Delaware corporation (100% of common stock)



       4. Armstrong Coal Company, Inc., a Delaware corporation (100% of common stock)




	C.	 	Subsidiaries of Armstrong Resources Holdings, LLC





       1. Armstrong Coal Reserves, Inc., a Delaware corporation (100% of common stock)



       2. Armstrong Resources, LLC, a Kentucky limited liability company (100% of membership
interests)



       3. Western Land Company, LLC, a Kentucky limited liability company (100% of membership
interests)



       4. Western Diamond LLC, a Nevada limited liability company (100% of membership
interests)




	D.	 	Subsidiaries of Elk Creek, L.P.





       1. Elk Creek Operating GP, LLC, a Delaware limited liability company (100% of
membership interests)



       2. Elk Creek Operating, LP, a Delaware limited partnership (99.999% of partnership
interests)




	E.	 	Subsidiaries of Elk Creek Operating, LP





       1. Ceralvo Resources, LLC, a Delaware limited liability company (100% of membership
interests)



       2. Ceralvo Holdings, LLC, a Delaware limited liability company (100% of membership
interests)



       3. Western Mineral Development, LLC, a Delaware limited liability company (100% of
membership interests)



 









 






	II.	 	Jurisdiction and Ownership of Loan Parties





	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Type of	 	 	 	 
	Loan Party	 	Jurisdiction	 	Interest	 	Ownership	 	Options, etc.
	Armstrong Land Company, LLC

	 	Delaware
	 	 	U	 	 	Yorktown Energy Partners VI, L.P.
— 4.70%
	 	Richard Gist-
	

	 	 	 	 	1,916,000	 	 	Yorktown Energy Partners VII, L.P.
- 65.24%
	 	Option for
	 

	 	 	 	 	currently
	 	Yorktown Energy Partners VIII,
L.P. — 26.10%
	 	2000 Units
	 

	 	 	 	 	outstanding
	 	J. Hord Armstrong, III — 1.31%	 	 
	 

	 	 	 	 	 	 	 	Martin D. Wilson — 1.04%
	 	Brian Landry-
	 

	 	 	 	 	 	 	 	James H. Brandi — .78%
	 	Option for
	 

	 	 	 	 	 	 	 	Lucy B Trust — .22%
	 	1800 Units
	 

	 	 	 	 	 	 	 	Lorenzo and Danielle Weisman — .21%	 	 
	 

	 	 	 	 	 	 	 	Brim Family 2004 Trust — .21%	 	 
	 

	 	 	 	 	 	 	 	Franklin W. Hobbs, IV — .20%	 	 
	Armstrong Resources

	 	Delaware
	 	 	U	 	 	Armstrong Land Company, LLC —
99.56%	 	 
	Holdings, LLC

	 	 	 	 	 	 	 	Hutchinson Brothers, LLC — .08%	 	 
	 

	 	 	 	 	 	 	 	John H. Stites, III — .36%	 	 
	Armstrong Energy, Inc.

	 	Delaware
	 	 	CS
	 	Armstrong Land Company, LLC —
99.36%	 	 
	 

	 	 	 	 	 	 	 	Hutchinson Brothers, LLC and John
H. Stites,	 	 
	 

	 	 	 	 	 	 	 	III — .64%	 	 
	Western Diamond LLC

	 	Nevada
	 	 	M	 	 	Armstrong Resources Holdings, LLC

- 100%	 	 
	Western Land Company, LLC

	 	Kentucky
	 	 	M	 	 	Armstrong Resources Holdings, LLC

- 100%	 	 
	Western Mineral

	 	Delaware
	 	 	M	 	 	Elk Creek Operating, L.P. — 100%	 	 
	Development, LLC
	 	 	 	 	 	 	 	 	 	 
	Armstrong Coal 

Company, Inc.

	 	Delaware
	 	 	CS
	 	Armstrong Energy, Inc. — 100%	 	 
	Elk Creek GP, LLC

	 	Delaware
	 	 	M	 	 	Armstrong Land Company, LLC — 100%	 	 
	Elk Creek, LP

	 	Delaware
	 	 	P	 	 	Yorktown Energy Partners VII, L.P.
- 28.62%	 	 
	 

	 	 	 	 	 	 	 	Yorktown Energy Partners VIII,
L.P. -70.79%	 	 
	 

	 	 	 	 	 	 	 	Elk Creek GP, LLC — 0.58%	 	 
	Elk Creek Operating 

GP, LLC

	 	Delaware
	 	 	M	 	 	Elk Creek, LP — 100%	 	 
	Elk Creek Operating, 

LP

	 	Delaware
	 	 	P	 	 	Elk Creek, LP — 99.999%	 	 
	 

	 	 	 	 	 	 	 	Elk Creek Operating GP, LLC — .001%	 	 
	Ceralvo Holdings, LLC

	 	Delaware
	 	 	M	 	 	Elk Creek Operating, LP — 100%	 	 






	 	 	 	 	 
	Key	 	 	 	 
	M

	 	=
	 	Membership Interests
	U

	 	=
	 	Units
	CS

	 	=
	 	Common Stock






 









 






Schedule 6.1.12

Insurance



Named Insureds: Armstrong Coal Company, Inc., Armstrong Coal Reserves, Inc., Armstrong Energy,
Inc., Armstrong Fabricators, Inc., Armstrong Land Company, LLC, Armstrong Logistics, LLC, Armstrong
Mining, Inc., Armstrong Resources Holdings, LLC, Armstrong Resources, LLC, Armstrong Technology,
LLC, Western Diamond LLC and Western Land Company, LLC.



Term: March 31, 2010 through March 31, 2011




	 	 	 

	1.

	 	Type of Policy: Property
	 

	 	Insurance Company: Travelers Property & Casualty Co. of America
	 

	 	Policy Number: QT6308757M624TIL10
	 

	 	Limits of Liability: $61,043,360 as of December 31, 2010 — blanket limit including buildings and business personal property.
	 
	 	 
	2.

	 	Type of Policy: Inland Marine
	 

	 	Insurance Company: Travelers Property & Casualty Co. of America
	 

	 	Policy Number: QT6308757M624TIL10
	 

	 	Limits of Liability: $75,000,000
	 
	 	 
	3.

	 	Type of Policy: Business Automobile
	 

	 	Insurance Company: American Guarantee & Liability Insurance Co.
	 

	 	Policy Number: BAP938366801
	 

	 	Limits of Liability: $1,000,000 per accident combined single limit bodily injury and
property damage liability — owned, hired, non-owned
	 
	 	 
	4.

	 	Type of Policy: Commercial General Liability
	 

	 	Insurance Company: American Guarantee & Liability Insurance Co.
	 

	 	Policy Number: GL0938366901
	 

	 	Limits of Insurance: $2,000,000 each occurrence, $3,000,000 general aggregate limit
	 
	 	 
	5.

	 	Type of Policy: Workers Compensation
	 

	 	Insurance Company: American Zurich Insurance Company
	 

	 	Policy Number: WC938366701
	 

	 	States of Operation: Kentucky and Missouri
	 

	 	Employers Liability: $2,000,000 bodily injury by accident (each accident)

$2,000,000 bodily injury by disease (policy limit)
	 
	 	 
	6.

	 	Type of Policy: Commercial Umbrella
	 

	 	Insurance Company: American Guarantee and Liability Insurance Company
	 

	 	Policy Number: UMB488640900
	 

	 	Limits of Liability: $20,000,000 general aggregate






 









 






Schedule 6.1.13

ERISA Compliance




None



 









 





Schedule 6.1.14

Environmental Matters




None



 









 





Schedule 7.1




Indebtedness Paid Off


1. Indebtedness of Ceralvo Holdings, LLC to Cyprus Creek Land Resources, LLC and Cyprus Creek
Land Company, which has previously been paid in full, as evidenced by a letter of confirmation
dated January 19, 2011, a copy of which has been delivered to Administrative Agent.



2. Indebtedness of Western Diamond LLC and Western Land Company to Central States Coal Reserves of
Kentucky, LLC and Beaver Dam Coal Company, LLC, as described in the payoff letter dated February 8,
2011, among the four above-referenced entities, a copy of which has been delivered to
Administrative Agent, which indebtedness is being paid in full upon the Closing Date.








 









 








SCHEDULE 7.1.1




REQUIREMENTS OF OPINION OF COUNSEL



     The opinions of counsel shall confirm those representations and warranties contained
in Section 6.1 of the Credit Agreement which are listed below:



     6.1.1 Organization and Qualification; Power and Authority



     6.1.2 Subsidiaries; Investment Companies



     6.1.3 Validity and Binding Effect



     6.1.4 No Conflict; Material Agreements; Consents



     6.1.5 Litigation



     6.1.11 Liens in Collateral



     Such other matters as the Administrative Agent may reasonably request



 









 






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



 









 





Schedule 8.2.1

Existing Indebtedness





	1.	 	Indebtedness related to the following promissory notes:






	 	a.	 	Promissory Note in the principal amount of $75,000 payable by Armstrong Coal Company,
Inc. to the order of Daniel Bell and Melissa Bell dated July 8, 2010.
	 
	 	b.	 	Promissory Note in the principal amount of $561,000 payable by Armstrong Coal Company,
Inc. to the order of Anna Laura Dortch dated October 13, 2010.
	 
	 	c.	 	Promissory Note in the principal amount of $716,520 payable by Armstrong Coal Company,
Inc. to the order of Kenneth H. Brown and Cynthia S. Brown dated October 8, 2010.
	 
	 	d.	 	Promissory Note in the principal amount of $266,666.50 payable by Armstrong Coal
Company, Inc. to the order of Kathy Ann Shelton dated December 16, 2010.
	 
	 	e.	 	Promissory Note in the principal amount of $266,666.50 payable by Armstrong Coal
Company, Inc. to the order of Richard Lee Brown dated December 16, 2010.






	2.	 	Advance minimum royalties payable under real property leases.
	 
	3.	 	Royalties payable pursuant to the royalty agreements set forth in Schedule 1.1(P).
	 
	4.	 	Existing Capital Leases of Equipment — see schedule 1.1(P).




 









 











Schedule 8.2.4

Loans to Officers, Directors and Affiliates




and



Loans, Investments, Advances and Contributions

of Assets to Survant Joint Venture




	1.	 	Loans to Officers, Directors and Affiliates





     a. Promissory Note dated September 28, 2006 payable by J. Hord Armstrong, III to the
order of Armstrong Land Company, LLC in the amount of $250,000.



     b. Promissory Note dated December 6, 2006 payable by J. Hord Armstrong, III to the
order of Armstrong Land Company, LLC in the amount of $250,000.



     c. Promissory Note dated May 31, 2007 payable by J. Hord Armstrong, III to the order
of Armstrong Land Company, LLC in the amount of $500,000.



     d. Promissory Note dated June 9, 2008 payable by J. Hord Armstrong, III to the order
of Armstrong Land Company, LLC in the amount of $125,000.



     e. Promissory Note dated September 28, 2006 payable by Martin D. Wilson to the order
of Armstrong Land Company, LLC in the amount of $250,000.



     f. Promissory Note dated December 6, 2006 payable by Martin D. Wilson to the order of
Armstrong Land Company, LLC in the amount of $250,000.



     g. Promissory Note dated June 14, 2007 payable by Martin D. Wilson to the order of
Armstrong Land Company, LLC in the amount of $500,000.



     h. Promissory Note dated March 1, 2007 payable by James H. Brandi to the order of
Armstrong Land Company, LLC in the amount of $500,000.



     i. Promissory Note dated June 9, 2008 payable by James H. Brandi to the order of
Armstrong Land Company, LLC in the amount of $250,000.



     j. Promissory Note dated April 28, 2009 payable by James H. Brandi to the order of
Armstrong Land Company, LLC in the amount of $125,000.




	2.	 	Loans, Investments, Advances and Contributions of Assets to Survant Joint Venture






	 	•	 	Armstrong to contribute Parkway Preparation Plant, infrastructure and mining equipment
valued at approximately $31.4 million and $10,000 in cash (not including up to $35,000,000
cash investment referenced in Section 8.2.4(vii)(B) of the Credit Agreement)




 









 











EXHIBIT 1.1(A)




FORM OF

ASSIGNMENT AND ASSUMPTION AGREEMENT



     THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the “Assignment and Assumption”) is dated as
of the Effective Date set forth below and is entered into by and between [Insert name of
Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement identified below (as the same may be amended, restated, modified, or
supplemented, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed
to and incorporated herein by reference and made a part of this Assignment and Assumption as if set
forth herein in full.



     For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor,
subject to and in accordance with the Standard Terms and Conditions and the Credit
Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated
below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under
the Credit Agreement and any other documents or instruments delivered pursuant thereto to
the extent related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective facilities
identified below (including, without limitation, any Letters of Credit and guarantees
included in such facilities), and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the Assignor (in
its capacity as a Lender) against any Person, whether known or unknown, arising under or in
connection with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or related to any
of the foregoing, including, but not limited to, contract claims, tort claims, malpractice
claims, statutory claims and all other claims at law or in equity related to the rights and
obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold
and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively
as, the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor
and, except as expressly provided in this Assignment and Assumption, without representation
or warranty by the Assignor.




	 	 	 	 	 	 	 

	1.

	 	Assignor:
	 	 

	 	 
	 
	 	 	 	 	 	 
	2.

	 	Assignee:
	 	 
[and is an Affiliate of [identify Lender]]
	 	 
	 
	 	 	 	 	 	 
	3.

	 	Borrowing Agent:
	 	ARMSTRONG LAND COMPANY, INC.	 	 
	 
	 	 	 	 	 	 
	4.

	 	Administrative Agent:
	 	PNC BANK, NATIONAL ASSOCIATION, as the

administrative agent under the Credit Agreement	 	 






 









 






	 	 	 	 	 

	5 .

	 	Credit Agreement:
	 	The Credit Agreement dated as of February 9, 2011,
among Borrowing Agent, Armstrong Land
Company, LLC, Elk Creek, L.P., Western Mineral
Development, LLC, Western Diamond LLC,
Western Land Company, LLC, the Lenders party
thereto, the Guarantors party thereto and PNC
Bank, National Association, as Administrative
Agent.
	 
	 	 	 	 
	6 .

	 	Assigned Interest:	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Aggregate Amount	 	 	 	 	 	 	 	 
	 	 	of	 	Amount of	 	Percentage Assigned	 	 	 	 
	Facility	 	Commitment/Loans	 	Commitment/	 	of	 	 	CUSIP	 
	Assigned	 	for all Lenders	 	Loans Assigned1	 	Commitment/Loans2	 	 	Number	 
	Revolving
	 	$	 	$	 	 	%	 
	Credit
	 	 	 	 	 	 	 	 
	Commitment
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Term Loan
	 	$	 	$	 	 	%	 
	Credit
	 	 	 	 	 	 	 	 
	Commitment
	 	 	 	 	 	 	 	 






	 	 	 	 	 

	7.

	 	[Trade Date:
	 	                    ] 3








 




			
	I	 	Lender must assign a pro rata percentage of its Revolving Credit Commitment & Term Loan Credit
Commitment.
	 
	2	 	Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders
thereunder.
	 
	3	 	To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to
be determined as of the Trade Date.




2









 











     Effective Date: ______, 20___[TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]4


The terms set forth in this Assignment and Assumption are hereby agreed to:




	 	 	 	 	 
	 	ASSIGNOR

 	 
	 	 	 
	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	ASSIGNEE

 	 
	 	 	 
	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 


Consented to and Accepted:




	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 





 




			
	4	 	Assignor shall pay a fee of $3,500.00 to the Administrative Agent in connection with the
Assignment and Assumption.




3









 











	 	 	Consented to5:





	 	 	 	 	 
	 	ARMSTRONG COAL COMPANY, INC.,

a                     corporation, as Borrowing Agent

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 





 




			
	5	 	If applicable.




4









 










ANNEX 1




$50,000,000 REVOLVING CREDIT FACILITY

$100,000,000 TERM LOAN

CREDIT FACILITY



STANDARD TERMS AND CONDITIONS

FOR ASSIGNMENT AND ASSUMPTION AGREEMENT




     1. Representations and Warranties.



          1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim, and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Credit
Agreement or any other Loan Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
collateral thereunder, (iii) the financial condition of the Borrowers, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document, or (iv) the performance or observance by the Borrowers, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.




          1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it meets all
requirements of an eligible assignee under the Credit Agreement (subject to receipt
of such consents as may be required under the Credit Agreement), (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall
have the obligations of a Lender thereunder, (iv) it has received a copy of the
Credit Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 8.3 [Reporting Requirements] thereof, as applicable,
and such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Assumption and
to purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or any
other Lender, and (v) if Assignee is not incorporated or organized under the Laws
of the United States of America or a state thereof, attached to the Assignment and
Assumption is any documentation required to be delivered by it pursuant to the
terms of the Credit Agreement, duly completed and executed by the Assignee; and (b)
agrees that (i) it will, independently and without reliance on the Administrative
Agent, the Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and (ii)
it will






 









 







perform in accordance with their terms all of the obligations which by the terms of the Loan
Documents are required to be performed by it as a Lender.




     2. Payments. From and after the Effective Date, the Administrative Agent shall make
all payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have accrued to but
excluding the Effective Date and to the Assignee for amounts which have accrued from and
after the Effective Date.



     3. General Provisions. This Assignment and Assumption shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together
shall constitute one instrument. Delivery of an executed counterpart of a signature page of
this Assignment and Assumption by telecopy shall be effective as delivery of a manually
executed counterpart of this Assignment and Assumption. This Assignment and Assumption
shall be governed by, and construed in accordance with, the internal laws of the State of
New York without regard to its conflict of laws principles.




 











 





EXHIBIT 1.1(C)




FORM OF

COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS



     THIS COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS (the
“Assignment”) is made and entered into the 9th day of February, 2011, by EACH OF THE PERSONS
LISTED ON THE SIGNATURE PAGES HERETO (each an “Assignor” and collectively, the “Assignors”), in
favor of PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent (“Assignee”).



WITNESSETH:



     WHEREAS, pursuant to that certain Credit Agreement (as it may hereafter from time to
time be restated, amended, modified or supplemented, the “Credit Agreement”) dated as of
even herewith, by and among Armstrong Coal Company, Inc., Armstrong Land Company, LLC, Elk
Creek, L.P., Western Mineral Development, LLC, Western Diamond LLC, Western Land Company,
LLC (collectively, the “Borrower”), each of the Guarantors party thereto, the Lenders party
thereto, and the Administrative Agent, the Administrative Agent and the Lenders have agreed
to provide certain loans and other financial accommodations to the Borrower; and



     WHEREAS, in order to provide additional security for the repayment of such loans, the
parties hereto desire that Assignee, for the benefit of the Lenders, be granted an
assignment and security interest in all rights of Assignors under those certain contracts
listed on Schedule I hereto (each, as further amended, modified or supplemented from time
to time, an “Assigned Contract” and collectively the “Assigned Contracts”).



     NOW, THEREFORE, in consideration of the promises and covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged by Assignors, and intending to be legally bound, the Assignors assign to
Assignee for the benefit of the Lenders all of their right, title and interest in and to
each Assigned Contract to the extent assignable and to the fullest extent permitted by Law;
provided, that until such time as the Revolving Loans are indefeasibly paid in full and the
Revolving Loan Commitments have terminated, this Assignment shall only be for the benefit
of the Revolver Lenders.



     1. Except as otherwise expressly provided herein, capitalized terms used in this
Assignment shall have the respective meanings given to them in the Credit Agreement.



     2. Assignor has granted, bargained, sold, assigned, transferred and set over and by
these presents does hereby grant, bargain, sell, assign, transfer and set over unto
Assignee, its respective successors and assigns, all the rights, interests and privileges
which the Assignor has or may have in or under any Assigned Contract, including without
limiting the generality of the foregoing, the present and continuing right with full power
and authority, in its own name, or in the name of the Assignor, or otherwise, but subject
to the provisions and limitations of Section 3



 









 




hereof, (i) to make claim for, enforce, perform, collect and receive any and all rights under any
Assigned Contract, (ii) to do any and all things which Assignor is or may become entitled to do
under any Assigned Contract, and (iii) to make all waivers and agreements, give all notices,
consents and releases and other instruments and to do any and all other things whatsoever which
Assignor is or may become entitled to do under any Assigned Contract. The parties acknowledge that
this Assignment is not intended to alter or modify the terms of the Assigned Contracts or the
rights, obligations or interests of the parties under the Assigned Contracts, including without
limitation indemnification or set-off rights.




     3. The acceptance of this Assignment and the payment or performance under the Assigned
Contracts shall not constitute a waiver of any rights of Assignee under the terms of the
Notes, the Credit Agreement or any other of the Loan Documents, it being understood that,
until the occurrence of an Event of Default, and the exercise of Assignee’s rights under
Section 4 hereof, Assignor shall have all rights, interests and privileges in to and under
to the Assigned Contracts and to retain, use and enjoy the same.



     4. Assignor, upon the occurrence and during the continuance of an Event of Default,
hereby authorizes Assignee, at Assignee’s option, to do all acts required or permitted
under any Assigned Contract as Assignee in its sole discretion may deem proper. Assignor
does hereby irrevocably constitute and appoint Assignee, while this Assignment remains in
force and effect and, in each instance, to the full extent permitted by applicable Law, its
true and lawful attorney in fact, coupled with an interest and with full power of
substitution and revocation, for Assignor and in its name, place and stead, to demand and
enforce compliance with all the terms and conditions of each Assigned Contract and all
benefits accrued thereunder, whether at law, in equity or otherwise; provided, however,
that Assignee shall not exercise any such power unless and until an Event of Default shall
have occurred and is continuing.



     5. Assignee shall not be obligated to perform or discharge any obligation or duty to
be performed or discharged by Assignor under any Assigned Contract, and Assignor hereby
agrees to indemnify Assignee for, and to save Assignee harmless from, any and all liability
arising under the Assigned Contracts, other than arising or resulting from Assignee’s (or
its agents, employees or contractors) gross negligence or willful misconduct.



     6. Assignor agrees that this Assignment and the designation and directions herein set
forth are irrevocable.



     7. Neither this Assignment nor any action or inaction on the part of Assignee shall
constitute an assumption on the part of Assignee of any obligations or duties under any
Assigned Contract.



     8. Assignor covenants and warrants that:



     (a) it has the power and authority to assign each Assigned Contract and there have
been no prior assignments of any Assigned Contract;



2









 





     (b) each Assigned Contract is and shall be a valid contract, and that there are and
shall be, to the extent ascertainable by Assignor, no material defaults on the part of any
of the parties thereto;



     (c) it will not assign, pledge or otherwise encumber any Assigned Contract without the
prior written consent of Assignee, except as may be otherwise permitted under the Credit
Agreement;



     (d) except as may otherwise be permitted by the Credit Agreement, it will not cancel,
terminate or accept any surrender of any Assigned Contract, other than in accordance with
its terms, without having obtained the prior written consent of Assignee thereto;



     (e) except as may otherwise be permitted by the Credit Agreement, it will not waive or
give any consent with respect to any default or material variation in the performance under
any Assigned Contract, it will at all times take proper steps to enforce all of the
material provisions and conditions thereof, except where the failure to do so would not
result in a Material Adverse Change, and it will forthwith notify Assignee of any material
default under any Assigned Contract;



     (f) it will maintain and comply with the terms and conditions of the Assigned
Contracts, except where the failure to do so, either individually or in the aggregate,
would not result in a Material Adverse Change; and



     (g) it will execute from time to time any and all additional assignments or
instruments of further assurance to Assignee, as Assignee may at any time reasonably
request.



     9. At such time as the Loans are indefeasibly paid in full and the Commitments have
terminated, this Assignment and all of Assignee’s right, title and interest hereunder with
respect to the Assigned Contracts shall terminate.



     10. This Assignment shall inure to the benefit of Assignee, its respective successors
and assigns, and shall be binding upon Assignor, its successors, successors in title and
assigns.



     11. This Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York without regard to its conflicts of law principles.



[SIGNATURE PAGE FOLLOWS]





3









 








[SIGNATURE PAGE 1 OF 3 TO COLLATERAL

ASSIGNMENT OF CONTRACT RIGHTS]




     IN WITNESS WHEREOF, the undersigned has executed this instrument under seal as of the
day and year first above written.



	 	 	 	 	 
	 	ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG RESOURCES HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






SIGNATURE PAGE 2 OF 3 TO COLLATERAL

ASSIGNMENT OF CONTRACT RIGHTS]




	 	 	 	 	 
	 	ELK CREEK GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK, L.P.

 	 
	 	 	By:	
Elk Creek GP, LLC, as General

Partner

 	 
	 	 	By:  	 	 
	 	 	  	Name: J. Richard Gist 	 
	 	 	  	Title:  
Authorized Person 	 
	 



	 	 	 	 	 
	 	ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ELK CREEK OPERATING, L.P.

 	 
	 	 	By: 	
Elk Creek Operating GP, LLC, as

General Partner

 	 
	 	 	By:  	 	 
	 	 	  	Name: J. Richard Gist 	 
	 	 	 	Title:  Authorized Person 	 
	 
	 	CERALVO HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE 3 OF 3 TO COLLATERAL

ASSIGNMENT OF CONTRACT RIGHTS]




	 	 	 	 	 
	 	WESTERN LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN DIAMOND LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN MINERAL DEVELOPMENT, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[PAGE 1 OF 1 OF CONSENT TO

ASSIGNMENT OF CONTRACT RIGHTS]



Each of the undersigned hereby consents to the assignment of the Assignor’s interest under the
Assigned Contracts by Assignor to Assignee. [INSERT IF CONSENT IS REQUIRED UNDER THE CONTRACT]



                                        
                                        

Name:



                                                                     
           

Name:






 









 








COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS




SCHEDULE I



 









 





EXHIBIT 1.1(G)(1)



FORM OF

GUARANTOR JOINDER AND ASSUMPTION AGREEMENT




     THIS GUARANTOR JOINDER AND ASSUMPTION AGREEMENT is made as of
                    , 20                     , by                                   
                                                                  , a            
                              [corporation/partnership/limited liability company] (the “New Guarantor”).


Background




     Reference is made to (i) the Credit Agreement dated as of February 9, 2011 (as the
same may be modified, supplemented, or amended, the “Credit Agreement”) by and among
Armstrong Coal Company, Inc., a Delaware corporation (“Borrowing Agent”), Armstrong Land
Company, LLC, a Delaware limited liability company (together with Borrowing Agent, the
“Revolving Credit Borrowers”), Elk Creek LP, a Delaware limited partnership, Western
Mineral Development, LLC, a Delaware limited liability company, Western Diamond LLC, a
Nevada limited liability company, and Western Land Company, LLC, a Kentucky limited
liability company (together with the Borrowing Agent, the “Term Loan Borrowers”, and
collectively, the “Borrowers”), the Guarantors party thereto, the Lenders party thereto,
and PNC Bank, National Association, in its capacity as administrative agent for the Lenders
party thereto (in such capacity, the “Administrative Agent”), (ii) the Continuing Agreement
of Guaranty and Suretyship dated as of February 9, 2011 (as the same may be modified,
supplemented, or amended, the “Revolver Guaranty”) of Revolver Guarantors issued to the
Revolver Lenders and the Administrative Agent, (iii) the Continuing Agreement of Guaranty
and Suretyship dated as of February 9, 2011 (as the same may be modified, supplemented, or
amended, the “Term Guaranty” and together with the Revolving Credit Guaranty, the
“Guaranty”) of Term Guarantors issued to the Term Lenders and the Administrative Agent,
(iv) the Regulated Substances Certificate and Indemnity Agreement dated as of February 9,
2011 (as the same may be modified, supplemented, or amended, the “Revolver Indemnity”) of
the Revolver Borrowers and the Revolver Guarantors party thereto to the Revolver Lenders
and the Administrative Agent, (v) the Regulated Substances Certificate and Indemnity
Agreement dated as of February
9, 2011 (as the same may be modified, supplemented, or amended, the “Term Indemnity” and
together with the Revolving Credit Indemnity, the “Indemnity”) of the Term Borrower and the Term
Guarantors party thereto to the Term Lenders and the Administrative Agent, (vi) the Intercompany
Subordination Agreement dated as of February 9, 2011 (as the same may be modified, supplemented, or
amended, the “Intercompany Subordination Agreement”) by and among the Borrowers, the Guarantors
party thereto, and the Lenders and the Administrative Agent, (vii) the Pledge Agreement dated as of
February 9, 2011 (as the same may be modified, supplemented, or amended, the “Revolver Pledge
Agreement”) by and among the Revolver Borrowers, the Revolver Guarantors party thereto, and the
Revolver Lenders and the Administrative Agent, (viii) the Pledge Agreement dated as of February 9,
2011 (as the same may be modified, supplemented, or amended, the “Term Pledge Agreement” and
together with the Revolving Credit Pledge Agreement, the “Pledge Agreement”) by and among the Term
Borrowers, the Term Guarantors party thereto, and the Term Lenders and the Administrative



 









 




Agent, (ix) the Security Agreement dated as of February 9, 2011 (as the same may be modified,
supplemented, or amended, the “Revolver Security Agreement”) by and among the Revolver Borrowers,
the Revolver Guarantors party thereto, and the Revolver Lenders and the Administrative Agent, (x)
the Security Agreement dated as of February 9, 2011 (as the same may be modified, supplemented, or
amended, the “Term Security Agreement” and together with the Revolving Credit Security Agreement,
the “Security Agreement”) by and among the Term Borrowers, the Term Guarantors party thereto, and
the Term Lenders and the Administrative Agent, (xi) the Patent, Trademark and Copyright Security
Agreement dated as of February 9, 2011 (as the same may be modified, supplemented, or amended, the
“Revolver PTC
Agreement”) by and among the Revolver Borrowers, the Revolver Guarantors party thereto, and the
Revolver Lenders and the Administrative Agent, (xii) the Patent, Trademark and Copyright Security
Agreement dated as of February 9, 2011 (as the same may be modified, supplemented, or amended, the
“Term PTC Agreement” and together with the Revolving Credit PTC
Agreement, the “PTC Agreement”) by and among the Term Borrowers, the Term Guarantors party
thereto, and the Term Lenders and the Administrative Agent, and (xiii) the other Loan Documents
referred to in the Credit Agreement, as the same may be modified, supplemented, or amended.



Agreement




     Capitalized terms defined in the Credit Agreement are used herein as defined therein.
In consideration of the New Guarantor becoming a [Revolver/Term] Guarantor under the terms
of the Credit Agreement and in consideration of the value of the direct and indirect
benefits received by New Guarantor as a result of becoming affiliated with the
[Revolver/Term] Borrower and the [Revolver/Term] Guarantors, the New Guarantor hereby
agrees that effective as of the date hereof it hereby is, and shall be deemed to be, a
[Revolver/Term] Guarantor under the Credit Agreement, the [Revolver/Term] Guaranty, the
[Revolver/Term] Indemnity, the Intercompany Subordination Agreement, the [Revolver/Term]
Pledge Agreement, the [Revolver/Term] Security Agreement, the [Revolver/Term] PTC
Agreement, and each of the other Loan Documents to which the [Revolver/Term] Guarantors are
a party and agrees that from the date hereof and so long as any [Revolver/Term] Loan or any
[Revolver/Term] Commitment of any [Revolver/Term] Lender shall remain outstanding and until
the Payment In Full, New Guarantor has assumed the joint and several obligations of a
“Guarantor”, a “Loan Party”, a “Company”, a “Pledgor”, or a “Debtor” under, and New
Guarantor shall perform, comply with and be subject to and bound by, jointly and severally,
each of the terms, provisions and waivers of the Credit Agreement, the [Revolver/Term]
Guaranty, the[Revolver/Term] Indemnity, the Intercompany Subordination Agreement, the
[Revolver/Term] Pledge Agreement, the [Revolver/Term] Security Agreement, the
[Revolver/Term] PTC Agreement, and each of the other Loan Documents which are stated to
apply to or are made by a “Guarantor”, a “Loan Party”, a “Company”, a “Pledgor”, or a
“Debtor”. Without limiting the generality of the foregoing, the New Guarantor hereby
represents and warrants that (i) each of the representations and warranties set forth in
Article 6 of the Credit Agreement applicable to New Guarantor as a Guarantor is true and
correct as to New Guarantor on and as of the date hereof, and (ii) New Guarantor has
heretofore received a true and correct copy of the Credit Agreement, the [Revolver/Term]
Guaranty, the [Revolver/Term] Indemnity, the Intercompany Subordination Agreement, the
[Revolver/Term] Pledge Agreement, the [Revolver/Term] Security Agreement, [Revolver/Term]
PTC Agreement, and each of the other Loan Documents



2









 




(including any modifications thereof or supplements or waivers thereto) in effect on the date
hereof.




     New Guarantor hereby makes, affirms, and ratifies in favor of the [Revolver/Term]
Lenders and the Administrative Agent the Credit Agreement, the [Revolver/Term] Guaranty,
the [Revolver/Term] Indemnity, the Intercompany Subordination Agreement, the
[Revolver/Term] Pledge Agreement, the [Revolver/Term] Security Agreement, the
[Revolver/Term] PTC Agreement, and each of the other Loan Documents given by the
[Revolver/Term] Guarantors to Administrative Agent and any of the [Revolver/Term] Lenders.



     New Guarantor is simultaneously delivering to the Administrative Agent the following
documents together with the Guarantor Joinder required under Section 8.2.9 [Subsidiaries,
Partnerships and Joint Ventures]:




Updated Schedules to Credit Agreement.

 [Note:
updates to schedules do not cure any breach of
warranties].



	 	 	 	 	 
	 	 	 	 	Not
	Schedule No. and Description	 	Delivered	 	Delivered
	Schedule 1.1(R) — Real Property (if
applicable)
	 	o	 	o
	 
	 	 	 	 
	Schedule 6.1.1 - Qualifications To Do
Business
	 	o	 	o
	 
	 	 	 	 
	Schedule 6.1.2 - Subsidiaries
	 	o	 	o
	 
	 	 	 	 
	Schedule 6.1.12 - Insurance (if applicable)
	 	o	 	o
	 
	 	 	 	 
	Opinion of Counsel (Schedule 7.1.1)
	 	o	 	o
	 
	 	 	 	 
	Any other Schedules to Credit Agreement
that necessitate updates after giving effect to
this Guarantor Joinder and Assumption
Agreement
	 	o	 	o






     In furtherance of the foregoing, New Guarantor shall execute and deliver or cause to
be executed and delivered at any time and from time to time such further instruments and
documents and do or cause to be done such further acts as may be reasonably necessary in
the reasonable opinion of the Administrative Agent to carry out more effectively the
provisions and purposes of this Guarantor Joinder and Assumption Agreement.



     This Guarantor Joinder and Assumption Agreement may be executed in any number of
counterparts, and by different parties hereto in separate counterparts, each of which, when
so



3









 




executed, shall be deemed an original, but all such counterparts shall constitute one and the
same instrument. New Guarantor acknowledges and agrees that a telecopy transmission to the
Administrative Agent or any Lender of signature pages hereof purporting to be signed on behalf of
New Guarantor shall constitute effective and binding execution and delivery hereof by New
Guarantor.




[SIGNATURE PAGE FOLLOWS]




4









 








     IN WITNESS WHEREOF, and intending to be legally bound hereby, the New Guarantor has
duly executed this Guarantor Joinder and Assumption Agreement and delivered the same to the
Administrative Agent for the benefit of the Lenders, as of the date and year first above
written with the intention that it constitute a sealed instrument.



	 	 	 	 	 
	 	[NEW GUARANTOR]

 	 
	 	By:  	 	(SEAL) 
	 	Name:  	 	 
	 	Title:  	 	 
	 


Acknowledged and accepted:



PNC BANK, NATIONAL ASSOCIATION,


as Administrative Agent




	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 



 









 






	 	 	 	 	 



EXHIBIT 1.1(G)(2)(a)




CONTINUING AGREEMENT OF GUARANTY AND SURETYSHIP

(REVOLVER)




     THIS CONTINUING AGREEMENT OF GUARANTY AND SURETYSHIP (REVOLVER) (this “Guaranty”),
dated as of this 9th day of February, 2011, is jointly and severally given by EACH OF THE
UNDERSIGNED AND EACH OF THE OTHER PERSONS WHICH BECOME GUARANTORS HEREUNDER FROM TIME TO
TIME (each a “Revolver Guarantor” and collectively the “Revolver Guarantors”) in favor of
PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Revolver Lenders (the
“Administrative Agent”) in connection with that Credit Agreement, dated as of February 9,
2011, by and among Armstrong Coal Company, Inc., Armstrong Land Company, LLC, Elk Creek,
L.P., Western Mineral Development, LLC, Western Diamond LLC, Western Land Company, LLC
(collectively, the “Borrower”), the Administrative Agent, the Lenders now or hereafter
party thereto (the “Lenders”) and the Guarantors (as amended, restated, modified, or
supplemented from time to time hereafter, the “Credit Agreement”). Capitalized terms not
otherwise defined herein shall have the respective meanings ascribed to them by the Credit
Agreement and the rules of construction set forth in Section 1.2 [Construction] of the
Credit Agreement shall apply to this Guaranty.



     1. Guarantied Obligations. To induce the Administrative Agent and the Revolver Lenders
to make loans and grant other financial accommodations to the Revolver Borrowers under the
Credit Agreement, each Revolver Guarantor hereby jointly and severally unconditionally, and
irrevocably, guaranties to the Administrative Agent, each Revolver Lender and any provider
of a Lender Provided Interest Rate Hedge or any provider of Other Lender Provided Financial
Services Products; and becomes surety, as though it was a primary obligor for, the full and
punctual payment and performance when due (whether on demand, at stated maturity, by
acceleration, or otherwise and including any amounts which would become due but for the
operation of an automatic stay under the federal bankruptcy code of the United States or
any similar Laws of any country or jurisdiction) of all Obligations of the Revolver
Borrowers, including, without limiting the generality of the foregoing, all obligations,
liabilities, and indebtedness from time to time of the Revolver Borrowers or any other
Revolver Guarantor to the Administrative Agent or any of the Revolver Lenders or any
Affiliate of any Revolver Lender under or in connection with the Credit Agreement or any
other Loan Document, whether for principal, interest, fees, indemnities, expenses, or
otherwise, and all renewals, extensions, amendments, refinancings or refundings thereof,
whether such obligations, liabilities, or indebtedness are direct or indirect, secured or
unsecured, joint or several, absolute or contingent, due or to become due, whether for
payment or performance, now existing or hereafter arising (and including obligations,
liabilities, and indebtedness arising or accruing after the commencement of any bankruptcy,
insolvency, reorganization, or similar proceeding with respect to the Revolver Borrowers or
any Revolver Guarantor or which would have arisen or accrued but for the commencement of
such proceeding, even if the claim for such obligation, liability, or indebtedness is not
enforceable or allowable in such proceeding, and including all Obligations, liabilities,
and Indebtedness of the Revolver Borrowers arising from any extensions of credit under or
in connection with any Loan Document from time to time, regardless of



 









 




whether any such extensions of credit are in excess of the amount committed under or contemplated
by the Loan Documents or are made in circumstances in which any condition to extension of credit is
not satisfied) (all of the foregoing obligations, liabilities and indebtedness are referred to
herein collectively as the “Guarantied Obligations” and each as a “Guarantied Obligation”). Without
limitation of the foregoing, any of the Guarantied Obligations shall be and remain Guarantied
Obligations entitled to the benefit of this Guaranty if the Administrative Agent or any of the
Revolver Lenders (or any one or more assignees or transferees thereof) from time to time assign or
otherwise transfer all or any portion of their respective rights and obligations under the Loan
Documents, or any other Guarantied Obligations, to any other Person. In furtherance of the
foregoing, each Revolver Guarantor jointly and severally agrees as follows.




     2. Guaranty. Each Revolver Guarantor hereby promises to pay and perform all such
Guarantied Obligations immediately upon demand of the Administrative Agent and the Revolver
Lenders or any one or more of them. All payments made hereunder shall be made by each
Revolver Guarantor in immediately available funds in U.S. Dollars and shall be made without
setoff, counterclaim, withholding, or other deduction of any nature.



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



     (a) Any lack of genuineness, legality, validity, enforceability or allowability (in a
bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any
avoidance or subordination, in whole or in part, of any Loan Document or any of the
Guarantied Obligations and regardless of any Law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of the Guarantied Obligations, any of the terms of
the Loan Documents, or any rights of the Administrative Agent or the Revolver Lenders or
any other Person with respect thereto;



     (b) 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 Guarantied
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 Guarantied Obligations; any execution or delivery of any
additional Loan Documents; or any amendment, modification or supplement to, or renewals,
extensions, refinancing or refunding of, any Loan Document or any of the Guarantied
Obligations;



2









 





     (c) Any failure to assert any breach of or default under any Loan Document or any of
the Guarantied 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 the Revolver Borrowers or any
other Person under or in connection with any Loan Document or any of the Guarantied
Obligations; any refusal of payment or performance of any of the Guarantied Obligations,
whether or not with any reservation of rights against any Revolver Guarantor; or any
application of collections (including but not limited to collections resulting from
realization upon any direct or indirect security for the Guarantied Obligations) to other
obligations, if any, not entitled to the benefits of this Guaranty, in preference to
Guarantied Obligations entitled to the benefits of this Guaranty, or if any collections are
applied to Guarantied Obligations, any application to particular Guarantied Obligations;



     (d) 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 Revolver
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 Revolver Lenders, or any of
them, or any other Person in respect of, any direct or indirect security for any of the
Guarantied Obligations. As used in this Guaranty, “direct or indirect security” for the
Guarantied 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 Guarantied Obligations, made by or on
behalf of any Person;



     (e) 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, the Revolver Borrowers or any other Person; any
bankruptcy, insolvency, reorganization or similar proceeding with respect to the Revolver
Borrowers or any other Person; or any action taken or election made by the Administrative
Agent or the Revolver Lenders, or any of them (including but not limited to any election
under Section 1111(b)(2) of the United States Bankruptcy Code), the Revolver Borrowers, or
any other Person in connection with any such proceeding;



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



     (g) 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



3









 




limit the liability of, any Revolver Guarantor, a guarantor or a surety, excepting only full,
strict, and indefeasible payment and performance of the Guarantied Obligations in full.




     Each Revolver Guarantor acknowledges, consents, and agrees that new Revolver
Guarantors may join in this Guaranty pursuant to Section 8.2.9 [Subsidiaries, Partnerships
and Joint Ventures] of the Credit Agreement and each Revolver Guarantor affirms that its
obligations shall continue hereunder undiminished.



     4. Waivers, etc. Each of the Revolver Guarantors hereby waives any defense to or
limitation on its obligations under this Guaranty arising out of or based on any event or
circumstance referred to in Section 3 hereof. Without limitation and to the fullest extent
permitted by applicable Law, each Revolver Guarantor waives each of the following:



     (a) All notices, disclosures and demand of any nature which otherwise might be
required from time to time to preserve intact any rights against any Revolver Guarantor,
including the following: any notice of any event or circumstance described in Section 3
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 Guarantied Obligations; any notice of the incurrence of any
Guarantied Obligation; any notice of any default or any failure on the part of the Revolver
Borrowers or any other Person to comply with any Loan Document or any of the Guarantied
Obligations or any direct or indirect security for any of the Guarantied Obligations; and
any notice of any information pertaining to the business, operations, condition (financial
or otherwise) or prospects of the Borrower or any other Person;



     (b) Any right to any marshalling of assets, to the filing of any claim against the
Revolver Borrowers or any other Person in the event of any bankruptcy, insolvency,
reorganization or similar proceeding, or to the exercise against the Borrower or any other
Person of any other right or remedy under or in connection with any Loan Document or any of
the Guarantied Obligations or any direct or indirect security for any of the Guarantied
Obligations; any requirement of promptness or diligence on the part of the Administrative
Agent or the Revolver 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 Guarantied Obligations or any direct or
indirect security for any of the Guarantied Obligations; any benefit of any statute of
limitations; and any requirement of acceptance of this Guaranty or any other Loan Document,
and any requirement that any Guarantor receive notice of any such acceptance;



     (c) 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
Guarantied 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 the
Revolver Borrowers or any other Person or which otherwise discharges or impairs any of the
Guarantied Obligations; and



4









 





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



     5. Reinstatement. This Guaranty is a continuing obligation of the Revolver Guarantors
and shall remain in full force and effect notwithstanding that no Guarantied Obligations
may be outstanding from time to time and notwithstanding any other event or circumstance.
Upon termination of all Commitments, the expiration of all Letters of Credit and
indefeasible payment in full of all Guarantied Obligations, this Guaranty shall terminate;
provided, however, that this Guaranty shall continue to be effective or be reinstated, as
the case may be, any time any payment of any of the Guarantied Obligations is rescinded,
recouped, avoided, or must otherwise be returned or released by any Revolver Lender or
Administrative Agent upon or during the insolvency, bankruptcy, or reorganization of, or
any similar proceeding affecting, the Revolver Borrowers or for any other reason
whatsoever, all as though such payment had not been made and was due and owing.



     6. Subrogation. Each Revolver Guarantor waives and agrees it will not exercise any
rights against Revolver Borrowers or any other Revolver Guarantor arising in connection
with, or any Collateral securing, the Guarantied Obligations (including rights of
subrogation, contribution, and the like) until the Guarantied Obligations have been
indefeasibly paid in full, and all Revolver Commitments have been terminated and all
Letters of Credit have expired. If any amount shall be paid to any Revolver Guarantor by or
on behalf of the Revolver Borrowers or any other Revolver Guarantor by virtue of any right
of subrogation, contribution, or the like, such amount shall be deemed to have been paid to
such Revolver Guarantor for the benefit of, and shall be held in trust for the benefit of,
the Administrative Agent and the Revolver Lenders and shall forthwith be paid to the
Administrative Agent to be credited and applied upon the Guarantied Obligations, whether
matured or unmatured, in accordance with the terms of the Credit Agreement.



     7. No Stay. Without limitation of any other provision of this Guaranty, if any
declaration of default or acceleration or other exercise or condition to exercise of rights
or remedies under or with respect to any Guarantied Obligation shall at any time be stayed,
enjoined, or prevented for any reason (including but not limited to stay or injunction
resulting from the pendency against the Revolver Borrowers or any other Person of a
bankruptcy, insolvency, reorganization or similar proceeding), the Revolver Guarantors
agree that, for the purposes of this Guaranty and their obligations hereunder, the
Guarantied Obligations shall be deemed to have been declared in default or accelerated, and
such other exercise or conditions to exercise shall be deemed to have been taken or met.



     8. Taxes.



     (a) No Deductions. All payments made by any Revolver Guarantor under any of the Loan
Documents shall be made free and clear of and without deduction for any present or future
taxes, levies, imposts, deductions, charges, or withholdings, and all liabilities with
respect thereto, excluding Excluded Taxes (all such non-Excluded Taxes, levies, imposts,
deductions, charges, withholdings, and liabilities being hereinafter referred to as
“Taxes”). If any Revolver Guarantor shall be required by Law to deduct any Taxes from or in
respect of any sum payable under any of the Loan Documents, (i) the sum payable shall be
increased as may be necessary so



5









 




that after making all required deductions (including deductions applicable to additional sums
payable under this Subsection (a) such Revolver Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Revolver Guarantor shall make such
deductions, and (iii) such Revolver Guarantor shall timely pay the full amount deducted to the
relevant tax authority or other authority in accordance with applicable Law.




     (b) Stamp Taxes. In addition, each Revolver Guarantor agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges, or
similar levies which arise from any payment made hereunder or from the execution, delivery,
or registration of, or otherwise with respect to, any of the Loan Documents (hereinafter
referred to as “Other Taxes”).



     (c) Indemnification for Taxes Paid by any Lender. Each Revolver Guarantor shall
indemnify each Revolver Lender for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this Subsection) paid by any Revolver Lender and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made
within thirty (30) days from the date a Revolver Lender makes written demand therefor.



     (d) Certificate. Within thirty (30) days after the date of any payment of any Taxes by
any Revolver Guarantor, such Revolver Guarantor shall furnish to each Revolver Lender, the
original or a certified copy of a receipt evidencing payment thereof. If no Taxes are
payable in respect of any payment by such Revolver Guarantor, such Revolver Guarantor
shall, if so requested by a Revolver Lender, provide a certificate of an officer of such
Revolver Guarantor to that effect.



     9. Notices. Each Revolver Guarantor agrees that all notices, statements, requests,
demands and other communications under this Guaranty shall be given to such Revolver
Guarantor at the address set forth on a Schedule to, or in a Guarantor Joinder and
Assumption Agreement given under, the Credit Agreement and in the manner provided in
Section 11.5 [Notices; Effectiveness; Electronic Communication] of the Credit Agreement.
The Administrative Agent and the Revolver Lenders may rely on any notice (whether or not
made in a manner contemplated by this Guaranty) purportedly made by or on behalf of a
Revolver Guarantor, and the Administrative Agent and the Revolver Lenders shall have no
duty to verify the identity or authority of the Person giving such notice.



     10. Counterparts; Telecopy Signatures. This Guaranty may be executed in any number of
counterparts, each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. Each Revolver Guarantor
acknowledges and agrees that a telecopy transmission to Administrative Agent or any
Revolver Lender of signature pages hereof purporting to be signed on behalf of any Revolver
Guarantor shall constitute effective and binding execution and delivery hereof by such
Revolver Guarantor.



6









 





     11. Setoff, Default Payments by Borrower.



     (a) In the event that at any time any obligation of the Revolver Guarantors now or
hereafter existing under this Guaranty shall have become due and payable, the
Administrative Agent and the Revolver Lenders, or any of them, shall have the right from
time to time, without notice to any Revolver Guarantor, to set off against and apply to
such due and payable amount any obligation of any nature of any Revolver Lender or the
Administrative Agent, or any subsidiary or affiliate of any Revolver Lender or
Administrative Agent, to any Revolver Guarantor, including but not limited to all deposits
(whether time or demand, general or special, provisionally credited or finally credited,
however evidenced) now or hereafter maintained by any Guarantor with the Administrative
Agent or any Revolver Lender. Such right shall be absolute and unconditional in all
circumstances and, without limitation, shall exist whether or not the Administrative Agent
or the Revolver Lenders, or any of them, shall have given any notice or made any demand
under this Guaranty or under such obligation to the Revolver Guarantor, whether such
obligation to the Revolver Guarantor is absolute or contingent, matured or unmatured (it
being agreed that the Administrative Agent and the Revolver Lenders, or any of them, may
deem such obligation to be then due and payable at the time of such setoff), and regardless
of the existence or adequacy of any collateral, guaranty, or other direct or indirect
security or right or remedy available to the Administrative Agent or any of the Revolver
Lenders. The rights of the Administrative Agent and the Revolver Lenders under this Section
are in addition to such other rights and remedies (including, without limitation, other
rights of setoff and banker’s lien) which the Administrative Agent and the Revolver
Lenders, or any of them, may have, and nothing in this Guaranty or in any other Loan
Document shall be deemed a waiver of or restriction on the right of setoff or banker’s lien
of the Administrative Agent and the Revolver Lenders, or any of them. Each of the Revolver
Guarantors hereby agrees that, to the fullest extent permitted by Law, any affiliate or
subsidiary of the Administrative Agent or any of the Revolver Lenders and any holder of a
participation in any obligation of any Revolver Guarantor under this Guaranty, shall have
the same rights of setoff as the Administrative Agent and the Revolver Lenders as provided
in this Section (regardless whether such affiliate or participant otherwise would be deemed
a creditor of the Revolver Guarantor).



     (b) Upon the occurrence and during the continuation of any default under any
Guarantied Obligation, if any amount shall be paid to any Revolver Guarantor by or for the
account of Revolver Borrowers, such amount shall be held in trust for the benefit of each
Revolver Lender and Administrative Agent and shall forthwith be paid to the Administrative
Agent to be credited and applied to the Guarantied Obligations when due and payable.



     12. Construction. The section and other headings contained in this Guaranty are for
reference purposes only and shall not affect interpretation of this Guaranty in any
respect. This Guaranty has been fully negotiated between the applicable parties, each party
having the benefit of legal counsel, and accordingly neither any doctrine of construction
of guaranties or suretyships in favor of the guarantor or surety, nor any doctrine of
construction of ambiguities in agreement or instruments against the party controlling the
drafting thereof, shall apply to this Guaranty.



     13. Successors and Assigns. This Guaranty shall be binding upon each Revolver
Guarantor, its successors and assigns, and shall inure to the benefit of and be enforceable
by the



7









 




Administrative Agent and the Revolver Lenders, or any of them, and their successors and
permitted assigns; provided, however, that no Revolver Guarantor may assign or transfer any of its
rights or obligations hereunder or any interest herein and any such purported assignment or
transfer shall be null and void. Without limitation of the foregoing, the Administrative Agent and
the Revolver Lenders, or any of them (and any successive assignee or transferee), from time to time
may assign or otherwise transfer all or any portion of its rights or obligations under the Loan
Documents (including all or any portion of any commitment to extend credit), or any other
Guarantied Obligations, to any other person and such Guarantied Obligations (including any
Guarantied Obligations resulting from extension of credit by such other Person under or in
connection with the Loan Documents) shall be and remain Guarantied Obligations entitled to the
benefit of this Guaranty, and to the extent of its interest in such Guarantied Obligations such
other Person shall be vested with all the benefits in respect thereof granted to the Administrative
Agent and the Lenders in this Guaranty or otherwise.




     14. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.



     (a) Governing Law. This Guaranty shall be governed by, construed, and enforced in
accordance with, the internal Laws of the State of New York, without regard to conflict of
laws principles.



     (b) Certain Waivers. Each Revolver Guarantor hereby irrevocably:




     (i) Submits to the nonexclusive jurisdiction of any New York state or federal
court sitting in New York County, in any action or proceeding arising out of or
relating to this Agreement, and each Revolver Guarantor hereby irrevocably agrees
that all claims in respect of such action or proceeding may be heard and determined
in such New York state or federal court. Each Revolver Guarantor hereby waives to
the fullest extent it may effectively do so, the defense of an inconvenient forum
to the maintenance of any such action or proceeding. Each Revolver Guarantor hereby
appoints the process agent identified below (the “Process Agent”) as its agent to
receive on behalf of such party and its respective property service of copies of
the summons and complaint and any other process which may be served in any action
or proceeding. Such service may be made by mailing or delivering a copy of such
process to the Revolver Guarantor in care of the Process Agent at the Process
Agent’s address, and each Revolver Guarantor hereby authorizes and directs the
Process Agent to receive such service on its behalf. Each Revolver Guarantor agrees
that a final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions (or any political subdivision thereof) by suit
on the judgment or in any other manner provided at law. Each Revolver Guarantor
further agrees that it shall, for so long as any commitment or any obligation of
any Loan Party to any Revolver Lender remains outstanding, continue to retain
Process Agent for the purposes set forth in this Section 14. The Process Agent is
Armstrong Coal Company, Inc., with an office on the date hereof as set forth in the
Credit Agreement. The Process Agent hereby accepts the appointment of Process Agent
by the Companies and agrees to act as Process Agent on behalf of the Companies;



8









 






     (ii) Waives any objection to jurisdiction and venue of any action instituted
against it as provided herein and agrees not to assert any defense based on lack of
jurisdiction or venue; and




     (iii) WAIVES TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM OF
ANY KIND ARISING OUT OF OR RELATED TO THIS GUARANTY, THE CREDIT AGREEMENT, OR ANY
OTHER LOAN DOCUMENT TO THE FULLEST EXTENT PERMITTED BY LAW.



     15. Severability; Modification to Conform to Law.



     (a) It is the intention of the parties that this Guaranty be enforceable to the
fullest extent permissible under applicable Law, but that the unenforceability (or
modification to conform to such Law) of any provision or provisions hereof shall not render
unenforceable, or impair, the remainder hereof. If any provision in this Guaranty shall be
held invalid or unenforceable in whole or in part in any jurisdiction, this Guaranty shall,
as to such jurisdiction, be deemed amended to modify or delete, as necessary, the offending
provision or provisions and to alter the bounds thereof in order to render it or them valid
and enforceable to the maximum extent permitted by applicable Law, without in any manner
affecting the validity or enforceability of such provision or provisions in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.



     (b) Without limitation of the preceding subsection (a), to the extent that applicable
Law (including applicable Laws pertaining to fraudulent conveyance or fraudulent or
preferential transfer) otherwise would render the full amount of the Revolver Guarantors’
obligations hereunder invalid, voidable, or unenforceable on account of the amount of a
Revolver Guarantor’s aggregate liability under this Guaranty, then, notwithstanding any
other provision of this Guaranty to the contrary, the aggregate amount of such liability
shall, without any further action by the Administrative Agent or any of the Revolver
Lenders or such Revolver Guarantor or any other Person, be automatically limited and
reduced to the highest amount which is valid and enforceable as determined in such action
or proceeding, which (without limiting the generality of the foregoing) may be an amount
which is equal to the greater of:




     (i) the fair consideration actually received by such Revolver Guarantor under
the terms and as a result of the Loan Documents and the value of the benefits
described in this Section 15 (b) hereof, including (and to the extent not
inconsistent with applicable federal and state Laws affecting the enforceability of
guaranties) distributions, commitments, and advances made to or for the benefit of
such Revolver Guarantor with the proceeds of any credit extended under the Loan
Documents, or




     (ii) the excess of (A) the amount of the fair value of the assets of such
Revolver Guarantor as of the date of this Guaranty as determined in accordance with
applicable federal and state Laws governing determinations of the insolvency of
debtors as in effect on the date hereof, over (B) the amount of all liabilities of
such Revolver Guarantor as of the date of this Guaranty, also as determined on the
basis of applicable federal and state Laws governing the insolvency of debtors as
in effect on the date hereof.



9









 





     (c) Notwithstanding anything to the contrary in this Section or elsewhere in this
Guaranty, this Guaranty shall be presumptively valid and enforceable to its full extent in
accordance with its terms, as if this Section (and references elsewhere in this Guaranty to
enforceability to the fullest extent permitted by Law) were not a part of this Guaranty,
and in any related litigation the burden of proof shall be on the party asserting the
invalidity or unenforceability of any provision hereof or asserting any limitation on any
Guarantor’s obligations hereunder as to each element of such assertion.



     16. Additional Revolver Guarantors. At any time after the initial execution and
delivery of this Guaranty to the Administrative Agent and the Revolver Lenders, additional
Persons may become parties to this Guaranty and thereby acquire the duties and rights of
being Revolver Guarantors hereunder by executing and delivering to the Administrative Agent
and the Revolver Lenders a Guarantor Joinder pursuant to the Credit Agreement. No notice of
the addition of any Revolver Guarantor shall be required to be given to any pre-existing
Revolver Guarantor and each Revolver Guarantor hereby consents thereto.



     17. Joint and Several Obligations. The obligations and additional liabilities of the
Revolver Guarantors under this Guaranty are joint and several obligations of the Revolver
Guarantors, and each Revolver Guarantor hereby waives to the full extent permitted by Law
any defense it may otherwise have to the payment and performance of the Obligations that
its liability hereunder is limited and not joint and several. Each Revolver Guarantor
acknowledges and agrees that the foregoing waivers and those set forth below serve as a
material inducement to the agreement of the Administrative Agent and the Revolver Lenders
to make the Loans, and that the Administrative Agent and the Revolver Lenders are relying
on each specific waiver and all such waivers in entering into this Guaranty. The
undertakings of each Revolver Guarantor hereunder secure the obligations of itself and the
other Revolver Guarantors. The Administrative Agent and the Revolver Lenders, or any of
them, may, in their sole discretion, elect to enforce this Guaranty against any Guarantor
without any duty or responsibility to pursue any other Revolver Guarantor and such an
election by the Administrative Agent and the Revolver Lenders, or any of them, shall not be
a defense to any action the Administrative Agent and the Revolver Lenders, or any of them,
may elect to take against any Revolver Guarantor. Each of the Revolver Lenders and
Administrative Agent hereby reserve all rights against each Revolver Guarantor.



     18. Receipt of Credit Agreement, Other Loan Documents, Benefits.



     (a) Each Revolver Guarantor hereby acknowledges that it has received a copy of the
Credit Agreement and the other Loan Documents and each Revolver Guarantor certifies that
the representations and warranties made therein with respect to such Revolver Guarantor are
true and correct. Further, each Revolver Guarantor acknowledges and agrees to perform,
comply with, and be bound by all of the provisions of the Credit Agreement and the other
Loan Documents.



     (b) Each Revolver Guarantor hereby acknowledges, represents, and warrants that it
receives direct and indirect benefits by virtue of its affiliation with Revolver Borrowers
and the other Revolver Guarantors and that it will receive direct and indirect benefits
from the financing arrangements contemplated by the Credit Agreement and that such
benefits, together with the



10









 




rights of contribution and subrogation that may arise in connection herewith are a reasonably
equivalent exchange of value in return for providing this Guaranty.




     19. Miscellaneous.



     (a) Generality of Certain Terms. As used in this Guaranty, the terms “hereof’,
“herein” and terms of similar import refer to this Guaranty as a whole and not to any
particular term or provision; the term “including”, as used herein, is not a term of
limitation and means “including without limitation”.



     (b) Amendments, Waivers. No amendment to or waiver of any provision of this Guaranty,
and no consent to any departure by any Revolver Guarantor herefrom, shall in any event be
effective unless in a writing manually signed by or on behalf of the Administrative Agent
and the Revolver Lenders. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No delay or failure of the
Administrative Agent or the Revolver Lenders, or any of them, in exercising any right or
remedy under this Guaranty shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right or remedy preclude any other or further exercise thereof
or the exercise of any other right or remedy. The rights and remedies of the Administrative
Agent and the Revolver Lenders under this Guaranty are cumulative and not exclusive of any
other rights or remedies available hereunder, under any other agreement or instrument, by
Law, or otherwise.



     (c) Telecommunications. Each Revolver Lender and Administrative Agent shall be
entitled to rely on the authority of any individual making any telecopy, electronic or
telephonic notice, request, or signature without the necessity of receipt of any
verification thereof.



     (d) Expenses. Each Revolver Guarantor unconditionally agrees to pay all costs and
expenses, including reasonable attorney’s fees incurred by the Administrative Agent or any
of the Revolver Lenders in enforcing this Guaranty against any Revolver Guarantor and each
Revolver Guarantor shall pay and indemnify each Revolver Lender and Administrative Agent
for, and hold it harmless from and against, any and all obligations, liabilities, losses,
damages, costs, expenses (including disbursements and reasonable legal fees of counsel to
any Revolver Lender or Administrative Agent), penalties, judgments, suits, actions, claims,
and disbursements imposed on, asserted against, or incurred by any Lender or Administrative
Agent:




     (i) relating to the preparation, negotiation, execution, administration, or
enforcement of or collection under this Guaranty or any document, instrument, or
agreement relating to any of the Obligations, including in any bankruptcy,
insolvency, or similar proceeding in any jurisdiction or political subdivision
thereof;




     (ii) relating to any amendment, modification, waiver, or consent hereunder or
relating to any telecopy or telephonic transmission purporting to be by any
Revolver Guarantor or Revolver Borrowers; and




     (iii) in any way relating to or arising out of this Guaranty, or any document,
instrument, or agreement relating to any of the Guarantied Obligations, or any
action taken or omitted to be taken by any Revolver Lender or Administrative Agent
hereunder, and including those arising directly or indirectly from the violation or
asserted violation by



11









 






any Revolver Guarantor or Revolver Borrowers or Administrative Agent or any Revolver
Lender of any Law, rule, regulation, judgment, order, or the like of any jurisdiction or
political subdivision thereof (including those relating to environmental protection,
health, labor, importing, exporting, or safety) and regardless whether asserted by any
governmental entity or any other Person;


provided that the foregoing indemnity shall not, as to any Revolver Lender or Administrative
Agent, be available to the extent that such liabilities, losses, damages, costs, expenses,
penalties or claims (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
Revolver Lender or Administrative Agent or (y) result from a claim brought by the Revolver
Guarantors or any other Loan Party against a Revolver Lender or Administrative Agent for breach in
bad faith of such Revolver Lender’s or Administrative Agent’s (as the case may be) obligations
hereunder or under any other Loan Document, if the Revolver Guarantor 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.




     (e) Prior Understandings. This Guaranty and the Credit Agreement constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and supersede any
and all other prior and contemporaneous understandings and agreements.



     (f) Survival. All representations and warranties of the Revolver Guarantors made in
connection with this Guaranty shall survive, and shall not be waived by, the execution and
delivery of this Guaranty, any investigation by or knowledge of the Administrative Agent
and the Revolver Lenders, or any of them, any extension of credit, or any other event or
circumstance whatsoever.



[SIGNATURE PAGE FOLLOWS]






12









 








[SIGNATURE PAGE — CONTINUING

AGREEMENT OF GUARANTY AND SURETYSHIP (REVOLVER)]




     IN WITNESS WHEREOF, the undersigned parties intending to be legally bound, have
executed this Guaranty as of the date first above written with the intention that this
Guaranty shall constitute a sealed instrument.


        REVOLVER GUARANTORS


	 	 	 	 	 
	 	ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG RESOURCES

HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN MINERAL

DEVELOPMENT, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE — CONTINUING

AGREEMENT OF GUARANTY AND SURETYSHIP (REVOLVER)]




	 	 	 	 	 
	 	WESTERN LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN DIAMOND, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK, L.P.
 	 
	 	 	By: 	
Elk Creek GP, LLC, as General
Partner

 	 
	 	 	By:  	 	 
	 	 	  	Name: J. Richard Gist 	 
	 	 	 	Title:  Authorized Person 	 
	 
	 	ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 





[SIGNATURE PAGE — CONTINUING

AGREEMENT OF GUARANTY AND SURETYSHIP (REVOLVER)]




	 	 	 	 	 
	 	ELK CREEK OPERATING, L.P.

 	 
	 	 	By: 	
Elk Creek Operating GP, LLC, as

General Partner

 	 
	 	 	By:  	 	 
	 	 	  	Name: J. Richard Gist 	 
	 	 	 	Title:  Authorized Person 	 
	 
	 	CERALVO HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 


Acknowledged and consented to:



REVOLVER BORROWERS



ARMSTRONG COAL COMPANY, INC.




	 	 	 	 	 
	 	 
	By:  	 	 
	 	Name:  	J. Richard Gist 	 
	 	Title:  	Authorized Person 	 
	 



ARMSTRONG LAND COMPANY, LLC




	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 




 











 





EXHIBIT 1.1(G)(2)(b)




CONTINUING AGREEMENT OF GUARANTY AND SURETYSHIP 

(TERM)



     THIS CONTINUING AGREEMENT OF GUARANTY AND SURETYSHIP (TERM) (this “Guaranty”), dated
as of this 9th day of February, 2011, is jointly and severally given by EACH OF THE UNDERSIGNED
AND EACH OF THE OTHER PERSONS WHICH BECOME GUARANTORS HEREUNDER FROM TIME TO TIME
(each a “Term Guarantor” and collectively the “Term Guarantors”) in favor of PNC BANK,
NATIONAL ASSOCIATION, as administrative agent for the Term Lenders (the “Administrative Agent”) in
connection with that Credit Agreement, dated as of February 9, 2011, by and among Armstrong Coal
Company, Inc., Armstrong Land Company, LLC, Elk Creek, L.P., Western Mineral Development, LLC,
Western Diamond LLC, Western Land Company, LLC (collectively, the “Borrower”), the Administrative
Agent, the Lenders now or hereafter party thereto (the “Lenders”) and the Guarantors (as amended,
restated, modified, or supplemented from time to time hereafter, the “Credit Agreement”).
Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them
by the Credit Agreement and the rules of construction set forth in Section 1.2 [Construction] of
the Credit Agreement shall apply to this Guaranty.



     1. Guarantied Obligations. To induce the Administrative Agent and the Term Lenders to
make loans and grant other financial accommodations to the Term Borrowers under the Credit
Agreement, each Term Guarantor hereby jointly and severally unconditionally, and irrevocably,
guaranties to the Administrative Agent, each Term Lender and any provider of a Lender Provided
Interest Rate Hedge or any provider of Other Lender Provided Financial Services Products; and
becomes surety, as though it was a primary obligor for, the full and punctual payment and
performance when due (whether on demand, at stated maturity, by acceleration, or otherwise and
including any amounts which would become due but for the operation of an automatic stay under the
federal bankruptcy code of the United States or any similar Laws of any country or jurisdiction) of
all Obligations of the Term Borrowers, including, without limiting the generality of the foregoing,
all obligations, liabilities, and indebtedness from time to time of the Term Borrowers or any other
Term Guarantor to the Administrative Agent or any of the Term Lenders or any Affiliate of any Term
Lender under or in connection with the Credit Agreement or any other Loan Document, whether for
principal, interest, fees, indemnities, expenses, or otherwise, and all renewals, extensions,
amendments, refinancings or refundings thereof, whether such obligations, liabilities, or
indebtedness are direct or indirect, secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance, now existing or hereafter
arising (and including obligations, liabilities, and indebtedness arising or accruing after the
commencement of any bankruptcy, insolvency, reorganization, or similar proceeding with respect to
the Term Borrowers or any Term Guarantor or which would have arisen or accrued but for the
commencement of such proceeding, even if the claim for such obligation, liability, or indebtedness
is not enforceable or allowable in such proceeding, and including all Obligations, liabilities, and
Indebtedness of the Term Borrowers arising from any extensions of credit under or in connection
with any Loan Document from time to time, regardless of whether any such extensions of credit are
in excess of the amount



 









 




committed under or contemplated by the Loan Documents or are made in circumstances in which
any condition to extension of credit is not satisfied) (all of the foregoing obligations,
liabilities and indebtedness are referred to herein collectively as the “Guarantied Obligations”
and each as a “Guarantied Obligation”). Without limitation of the foregoing, any of the Guarantied
Obligations shall be and remain Guarantied Obligations entitled to the benefit of this Guaranty if
the Administrative Agent or any of the Term Lenders (or any one or more assignees or transferees
thereof) from time to time assign or otherwise transfer all or any portion of their respective
rights and obligations under the Loan Documents, or any other Guarantied Obligations, to any other
Person. In furtherance of the foregoing, each Term Guarantor jointly and severally agrees as
follows.




     2. Guaranty. Each Term Guarantor hereby promises to pay and perform all such
Guarantied Obligations immediately upon demand of the Administrative Agent and the Term Lenders or
any one or more of them. All payments made hereunder shall be made by each Term Guarantor in
immediately available funds in U.S. Dollars and shall be made without setoff, counterclaim,
withholding, or other deduction of any nature.



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



     (a) Any lack of genuineness, legality, validity, enforceability or allowability (in a
bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any
avoidance or subordination, in whole or in part, of any Loan Document or any of the
Guarantied Obligations and regardless of any Law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of the Guarantied Obligations, any of the terms of
the Loan Documents, or any rights of the Administrative Agent or the Term Lenders or any
other Person with respect thereto;



     (b) 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 Guarantied
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 Guarantied Obligations; any execution or delivery of any
additional Loan Documents; or any amendment, modification or supplement to, or renewals,
extensions, refinancing or refunding of, any Loan Document or any of the Guarantied
Obligations;



     (c) Any failure to assert any breach of or default under any Loan Document or any of
the Guarantied 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



2









 




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 the Term Borrowers or any other Person under or in
connection with any Loan Document or any of the Guarantied Obligations; any refusal of payment or
performance of any of the Guarantied Obligations, whether or not with any reservation of rights
against any Term Guarantor; or any application of collections (including but not limited to
collections resulting from realization upon any direct or indirect security for the Guarantied
Obligations) to other obligations, if any, not entitled to the benefits of this Guaranty, in
preference to Guarantied Obligations entitled to the benefits of this Guaranty, or if any
collections are applied to Guarantied Obligations, any application to particular Guarantied
Obligations;




     (d) 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 Term 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 Term Lenders, or any of them, or any other
Person in respect of, any direct or indirect security for any of the Guarantied
Obligations. As used in this Guaranty, “direct or indirect security” for the Guarantied
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 Guarantied Obligations, made by or on behalf of any Person;



     (e) 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, the Term Borrowers or any other Person; any
bankruptcy, insolvency, reorganization or similar proceeding with respect to the Term
Borrowers or any other Person; or any action taken or election made by the Administrative
Agent or the Term Lenders, or any of them (including but not limited to any election under
Section 1111(b)(2) of the United States Bankruptcy Code), the Term Borrowers, or any other
Person in connection with any such proceeding;



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



     (g) 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 Term Guarantor, a guarantor or a surety, excepting only full,
strict, and indefeasible payment and performance of the Guarantied Obligations in full.



3









 





     Each Term Guarantor acknowledges, consents, and agrees that new Term Guarantors may
join in this Guaranty pursuant to Section 8.2.9 [Subsidiaries, Partnerships and Joint
Ventures] of the Credit Agreement and each Term Guarantor affirms that its obligations
shall continue hereunder undiminished.



     4. Waivers, etc. Each of the Term Guarantors hereby waives any defense to or
limitation on its obligations under this Guaranty arising out of or based on any event or
circumstance referred to in Section 3 hereof. Without limitation and to the fullest extent
permitted by applicable Law, each Term Guarantor waives each of the following:



     (a) All notices, disclosures and demand of any nature which otherwise might be
required from time to time to preserve intact any rights against any Term Guarantor,
including the following: any notice of any event or circumstance described in Section 3
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 Guarantied Obligations; any notice of the incurrence of any
Guarantied Obligation; any notice of any default or any failure on the part of the Term
Borrowers or any other Person to comply with any Loan Document or any of the Guarantied
Obligations or any direct or indirect security for any of the Guarantied Obligations; and
any notice of any information pertaining to the business, operations, condition (financial
or otherwise) or prospects of the Borrower or any other Person;



     (b) Any right to any marshalling of assets, to the filing of any claim against the
Term Borrowers or any other Person in the event of any bankruptcy, insolvency,
reorganization or similar proceeding, or to the exercise against the Borrower or any other
Person of any other right or remedy under or in connection with any Loan Document or any of
the Guarantied Obligations or any direct or indirect security for any of the Guarantied
Obligations; any requirement of promptness or diligence on the part of the Administrative
Agent or the Term 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 Guarantied Obligations or any direct or indirect
security for any of the Guarantied Obligations; any benefit of any statute of limitations;
and any requirement of acceptance of this Guaranty or any other Loan Document, and any
requirement that any Guarantor receive notice of any such acceptance;



     (c) 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
Guarantied 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 the Term
Borrowers or any other Person or which otherwise discharges or impairs any of the
Guarantied Obligations; and



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



4









 





     5. Reinstatement. This Guaranty is a continuing obligation of the Term
Guarantors and shall remain in full force and effect notwithstanding that no Guarantied
Obligations may be outstanding from time to time and notwithstanding any other event or
circumstance. Upon termination of all Commitments, the expiration of all Letters of Credit
and indefeasible payment in full of all Guarantied Obligations, this Guaranty shall
terminate;provided, however, that this Guaranty shall continue to be effective or be
reinstated, as the case may be, any time any payment of any of the Guarantied Obligations
is rescinded, recouped, avoided, or must otherwise be returned or released by any Term
Lender or Administrative Agent upon or during the insolvency, bankruptcy, or reorganization
of, or any similar proceeding affecting, the Term Borrowers or for any other reason
whatsoever, all as though such payment had not been made and was due and owing.



     6. Subrogation. Each Term Guarantor waives and agrees it will not exercise any
rights against Term Borrowers or any other Term Guarantor arising in connection with, or
any Collateral securing, the Guarantied Obligations (including rights of subrogation,
contribution, and the like) until the Guarantied Obligations have been indefeasibly paid in
full, and all Term Commitments have been terminated and all Letters of Credit have expired.
If any amount shall be paid to any Term Guarantor by or on behalf of the Term Borrowers or
any other Term Guarantor by virtue of any right of subrogation, contribution, or the like,
such amount shall be deemed to have been paid to such Term Guarantor for the benefit of,
and shall be held in trust for the benefit of, the Administrative Agent and the Term
Lenders and shall forthwith be paid to the Administrative Agent to be credited and applied
upon the Guarantied Obligations, whether matured or unmatured, in accordance with the terms
of the Credit Agreement.



     7. No Stay. Without limitation of any other provision of this Guaranty, if any
declaration of default or acceleration or other exercise or condition to exercise of rights
or remedies under or with respect to any Guarantied Obligation shall at any time be stayed,
enjoined, or prevented for any reason (including but not limited to stay or injunction
resulting from the pendency against the Term Borrowers or any other Person of a bankruptcy,
insolvency, reorganization or similar proceeding), the Term Guarantors agree that, for the
purposes of this Guaranty and their obligations hereunder, the Guarantied Obligations shall
be deemed to have been declared in default or accelerated, and such other exercise or
conditions to exercise shall be deemed to have been taken or met.



     8. Taxes.



     (a) No Deductions. All payments made by any Term Guarantor under any of the
Loan Documents shall be made free and clear of and without deduction for any present or
future taxes, levies, imposts, deductions, charges, or withholdings, and all liabilities
with respect thereto, excluding Excluded Taxes (all such non-Excluded Taxes, levies,
imposts, deductions, charges, withholdings, and liabilities being hereinafter referred to
as “Taxes”). If any Term Guarantor shall be required by Law to deduct any Taxes from or in
respect of any sum payable under any of the Loan Documents, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Subsection (a) such Term Lender
receives an amount equal to the sum it would have received had no such deductions been
made, (ii) such Term Guarantor shall make



5









 




such deductions, and (iii) such Term Guarantor shall timely pay the full amount deducted to
the relevant tax authority or other authority in accordance with applicable Law.




     (b) Stamp Taxes. In addition, each Term Guarantor agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges, or
similar levies which arise from any payment made hereunder or from the execution, delivery,
or registration of, or otherwise with respect to, any of the Loan Documents (hereinafter
referred to as “Other Taxes”).



     (c) Indemnification for Taxes Paid by any Lender. Each Term Guarantor shall
indemnify each Term Lender for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Subsection) paid by any Term Lender and any liability (including penalties, interest,
and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. This indemnification shall be made within thirty
(30) days from the date a Term Lender makes written demand therefor.



     (d) Certificate. Within thirty (30) days after the date of any payment of any
Taxes by any Term Guarantor, such Term Guarantor shall furnish to each Term Lender, the
original or a certified copy of a receipt evidencing payment thereof. If no Taxes are
payable in respect of any payment by such Term Guarantor, such Term Guarantor shall, if so
requested by a Term Lender, provide a certificate of an officer of such Term Guarantor to
that effect.



     9. Notices. Each Term Guarantor agrees that all notices, statements, requests,
demands and other communications under this Guaranty shall be given to such Term Guarantor
at the address set forth on a Schedule to, or in a Guarantor Joinder and Assumption
Agreement given under, the Credit Agreement and in the manner provided in Section 11.5
[Notices; Effectiveness; Electronic Communication] of the Credit Agreement. The
Administrative Agent and the Term Lenders may rely on any notice (whether or not made in a
manner contemplated by this Guaranty) purportedly made by or on behalf of a Term Guarantor,
and the Administrative Agent and the Term Lenders shall have no duty to verify the identity
or authority of the Person giving such notice.



     10. Counterparts; Telecopv Signatures. This Guaranty may be executed in any
number of counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. Each Term Guarantor
acknowledges and agrees that a telecopy transmission to Administrative Agent or any Term
Lender of signature pages hereof purporting to be signed on behalf of any Term Guarantor
shall constitute effective and binding execution and delivery hereof by such Term
Guarantor.



     11. Setoff, Default Payments by Borrower.



     (a) In the event that at any time any obligation of the Term Guarantors now or
hereafter existing under this Guaranty shall have become due and payable, the
Administrative Agent and the Term Lenders, or any of them, shall have the right from time
to time, without notice to any Term Guarantor, to set off against and apply to such due and
payable amount any obligation of any nature of any Term Lender or the Administrative Agent,
or any subsidiary or



6









 




affiliate of any Term Lender or Administrative Agent, to any Term Guarantor, including but not
limited to all deposits (whether time or demand, general or special, provisionally credited or
finally credited, however evidenced) now or hereafter maintained by any Guarantor with the
Administrative Agent or any Term Lender. Such right shall be absolute and unconditional in all
circumstances and, without limitation, shall exist whether or not the Administrative Agent or the
Term Lenders, or any of them, shall have given any notice or made any demand under this Guaranty or
under such obligation to the Term Guarantor, whether such obligation to the Term Guarantor is
absolute or contingent, matured or unmatured (it being agreed that the Administrative Agent and the
Term Lenders, or any of them, may deem such obligation to be then due and payable at the time of
such setoff), and regardless of the existence or adequacy of any collateral, guaranty, or other
direct or indirect security or right or remedy available to the Administrative Agent or any of the
Term Lenders. The rights of the Administrative Agent and the Term Lenders under this Section are in
addition to such other rights and remedies (including, without limitation, other rights of setoff
and banker’s lien) which the Administrative Agent and the Term Lenders, or any of them, may have,
and nothing in this Guaranty or in any other Loan Document shall be deemed a waiver of or
restriction on the right of setoff or banker’s lien of the Administrative Agent and the Term
Lenders, or any of them. Each of the Term Guarantors hereby agrees that, to the fullest extent
permitted by Law, any affiliate or subsidiary of the Administrative Agent or any of the Term
Lenders and any holder of a participation in any obligation of any Term Guarantor under this
Guaranty, shall have the same rights of setoff as the Administrative Agent and the Term Lenders as
provided in this Section (regardless whether such affiliate or participant otherwise would be
deemed a creditor of the Term Guarantor).




     (b) Upon the occurrence and during the continuation of any default under any
Guarantied Obligation, if any amount shall be paid to any Term Guarantor by or for the
account of Term Borrowers, such amount shall be held in trust for the benefit of each Term
Lender and Administrative Agent and shall forthwith be paid to the Administrative Agent to
be credited and applied to the Guarantied Obligations when due and payable.



     12. Construction. The section and other headings contained in this Guaranty
are for reference purposes only and shall not affect interpretation of this Guaranty in any
respect. This Guaranty has been fully negotiated between the applicable parties, each party
having the benefit of legal counsel, and accordingly neither any doctrine of construction
of guaranties or suretyships in favor of the guarantor or surety, nor any doctrine of
construction of ambiguities in agreement or instruments against the party controlling the
drafting thereof, shall apply to this Guaranty.



     13. Successors and Assigns. This Guaranty shall be binding upon each Term
Guarantor, its successors and assigns, and shall inure to the benefit of and be enforceable
by the Administrative Agent and the Term Lenders, or any of them, and their successors and
permitted assigns; provided, however, that no Term Guarantor may assign or
transfer any of its rights or obligations hereunder or any interest herein and any such
purported assignment or transfer shall be null and void. Without limitation of the
foregoing, the Administrative Agent and the Term Lenders, or any of them (and any
successive assignee or transferee), from time to time may assign or otherwise transfer all
or any portion of its rights or obligations under the Loan Documents (including all or any
portion of any commitment to extend credit), or any other Guarantied Obligations, to any
other person and such Guarantied Obligations (including any



7









 




Guarantied Obligations resulting from extension of credit by such other Person under or in
connection with the Loan Documents) shall be and remain Guarantied Obligations entitled to the
benefit of this Guaranty, and to the extent of its interest in such Guarantied Obligations such
other Person shall be vested with all the benefits in respect thereof granted to the Administrative
Agent and the Lenders in this Guaranty or otherwise.




     14. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.



     (a) Governing Law. This Guaranty shall be governed by, construed, and enforced
in accordance with, the internal Laws of the State of New York, without regard to conflict
of laws principles.



     (b) Certain Waivers. Each Term Guarantor hereby irrevocably:




     (i) Submits to the nonexclusive jurisdiction of any New York state or federal
court sitting in New York County, in any action or proceeding arising out of or
relating to this Agreement, and each Term Guarantor hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined in
such New York state or federal court. Each Term Guarantor hereby waives to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of any such action or proceeding. Each Term Guarantor hereby
appoints the process agent identified below (the “Process Agent”) as its agent to
receive on behalf of such party and its respective property service of copies of
the summons and complaint and any other process which may be served in any action
or proceeding. Such service may be made by mailing or delivering a copy of such
process to the Term Guarantor in care of the Process Agent at the Process Agent’s
address, and each Term Guarantor hereby authorizes and directs the Process Agent to
receive such service on its behalf. Each Term Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be enforced
in other jurisdictions (or any political subdivision thereof) by suit on the
judgment or in any other manner provided at law. Each Term Guarantor further agrees
that it shall, for so long as any commitment or any obligation of any Loan Party to
any Term Lender remains outstanding, continue to retain Process Agent for the
purposes set forth in this Section 14. The Process Agent is Armstrong Coal Company,
Inc., with an office on the date hereof as set forth in the Credit Agreement. The
Process Agent hereby accepts the appointment of Process Agent by the Companies and
agrees to act as Process Agent on behalf of the Companies;




     (ii) Waives any objection to jurisdiction and venue of any action instituted
against it as provided herein and agrees not to assert any defense based on lack of
jurisdiction or venue; and




     (iii) WAIVES TRIAL BY JURY lN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM OF
ANY KIND ARISING OUT OF OR RELATED TO THIS GUARANTY, THE CREDIT AGREEMENT, OR ANY
OTHER LOAN DOCUMENT TO THE FULLEST EXTENT PERMITTED BY LAW.



8









 





     15. Severability; Modification to Conform to Law.



     (a) It is the intention of the parties that this Guaranty be enforceable to the
fullest extent permissible under applicable Law, but that the unenforceability (or
modification to conform to such Law) of any provision or provisions hereof shall not render
unenforceable, or impair, the remainder hereof. If any provision in this Guaranty shall be
held invalid or unenforceable in whole or in part in any jurisdiction, this Guaranty shall,
as to such jurisdiction, be deemed amended to modify or delete, as necessary, the offending
provision or provisions and to alter the bounds thereof in order to render it or them valid
and enforceable to the maximum extent permitted by applicable Law, without in any manner
affecting the validity or enforceability of such provision or provisions in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.



     (b) Without limitation of the preceding subsection (a), to the extent that applicable
Law (including applicable Laws pertaining to fraudulent conveyance or fraudulent or
preferential transfer) otherwise would render the full amount of the Term Guarantors’
obligations hereunder invalid, voidable, or unenforceable on account of the amount of a
Term Guarantor’s aggregate liability under this Guaranty, then, notwithstanding any other
provision of this Guaranty to the contrary, the aggregate amount of such liability shall,
without any further action by the Administrative Agent or any of the Term Lenders or such
Term Guarantor or any other Person, be automatically limited and reduced to the highest
amount which is valid and enforceable as determined in such action or proceeding, which
(without limiting the generality of the foregoing) may be an amount which is equal to the
greater of:




     (i) the fair consideration actually received by such Term Guarantor under the
terms and as a result of the Loan Documents and the value of the benefits described
in this Section 15 (b) hereof, including (and to the extent not inconsistent with
applicable federal and state Laws affecting the enforceability of guaranties)
distributions, commitments, and advances made to or for the benefit of such Term
Guarantor with the proceeds of any credit extended under the Loan Documents, or




     (ii) the excess of (A) the amount of the fair value of the assets of such Term
Guarantor as of the date of this Guaranty as determined in accordance with
applicable federal and state Laws governing determinations of the insolvency of
debtors as in effect on the date hereof, over (B) the amount of all liabilities of
such Term Guarantor as of the date of this Guaranty, also as determined on the
basis of applicable federal and state Laws governing the insolvency of debtors as
in effect on the date hereof.



     (c) Notwithstanding anything to the contrary in this Section or elsewhere in this
Guaranty, this Guaranty shall be presumptively valid and enforceable to its full extent in
accordance with its terms, as if this Section (and references elsewhere in this Guaranty to
enforceability to the fullest extent permitted by Law) were not a part of this Guaranty,
and in any related litigation the burden of proof shall be on the party asserting the
invalidity or unenforceability of any provision hereof or asserting any limitation on any
Guarantor’s obligations hereunder as to each element of such assertion.



9









 





     16. Additional Term Guarantors. At any time after the initial execution and
delivery of this Guaranty to the Administrative Agent and the Term Lenders, additional
Persons may become parties to this Guaranty and thereby acquire the duties and rights of
being Term Guarantors hereunder by executing and delivering to the Administrative Agent and
the Term Lenders a Guarantor Joinder pursuant to the Credit Agreement. No notice of the
addition of any Term Guarantor shall be required to be given to any pre-existing Term
Guarantor and each Term Guarantor hereby consents thereto.



     17. Joint and Several Obligations. The obligations and additional liabilities
of the Term Guarantors under this Guaranty are joint and several obligations of the Term
Guarantors, and each Term Guarantor hereby waives to the full extent permitted by Law any
defense it may otherwise have to the payment and performance of the Obligations that its
liability hereunder is limited and not joint and several. Each Term Guarantor acknowledges
and agrees that the foregoing waivers and those set forth below serve as a material
inducement to the agreement of the Administrative Agent and the Term Lenders to make the
Loans, and that the Administrative Agent and the Term Lenders are relying on each specific
waiver and all such waivers in entering into this Guaranty. The undertakings of each Term
Guarantor hereunder secure the obligations of itself and the other Term Guarantors. The
Administrative Agent and the Term Lenders, or any of them, may, in their sole discretion,
elect to enforce this Guaranty against any Guarantor without any duty or responsibility to
pursue any other Term Guarantor and such an election by the Administrative Agent and the
Term Lenders, or any of thern, shall not be a defense to any action the Administrative
Agent and the Term Lenders, or any of them, may elect to take against any Term Guarantor.
Each of the Term Lenders and Administrative Agent hereby reserve all rights against each
Term Guarantor.



     18. Receipt of Credit Agreement, Other Loan Documents, Benefits.



     (a) Each Term Guarantor hereby acknowledges that it has received a copy of the Credit
Agreement and the other Loan Documents and each Term Guarantor certifies that the
representations and warranties made therein with respect to such Term Guarantor are true
and correct. Further, each Term Guarantor acknowledges and agrees to perform, comply with,
and be bound by all of the provisions of the Credit Agreement and the other Loan Documents.



     (b) Each Term Guarantor hereby acknowledges, represents, and warrants that it receives
direct and indirect benefits by virtue of its affiliation with Term Borrowers and the other
Term Guarantors and that it will receive direct and indirect benefits from the financing
arrangements contemplated by the Credit Agreement and that such benefits, together with the
rights of contribution and subrogation that may arise in connection herewith are a
reasonably equivalent exchange of value in return for providing this Guaranty.



     19. Miscellaneous.



     (a) Generality of Certain Terms. As used in this Guaranty, the terms “hereof’,
“herein” and terms of similar import refer to this Guaranty as a whole and not to any
particular term or provision; the term “including”, as used herein, is not a term of
limitation and means “including without limitation”.



10









 





     (b) Amendments, Waivers. No amendment to or waiver of any provision of this
Guaranty, and no consent to any departure by any Term Guarantor herefrom, shall in any
event be effective unless in a writing manually signed by or on behalf of the
Administrative Agent and the Term Lenders. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No delay or
failure of the Administrative Agent or the Term Lenders, or any of them, in exercising any
right or remedy under this Guaranty shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right or remedy preclude any other or further exercise
thereof or the exercise of any other right or remedy. The rights and remedies of the
Administrative Agent and the Term Lenders under this Guaranty are cumulative and not
exclusive of any other rights or remedies available hereunder, under any other agreement or
instrument, by Law, or otherwise.



     (c) Telecommunications. Each Term Lender and Administrative Agent shall be
entitled to rely on the authority of any individual making any telecopy, electronic or
telephonic notice, request, or signature without the necessity of receipt of any
verification thereof.



     (d) Expenses. Each Term Guarantor unconditionally agrees to pay all costs and
expenses, including reasonable attorney’s fees incurred by the Administrative Agent or any
of the Term Lenders in enforcing this Guaranty against any Term Guarantor and each Term
Guarantor shall pay and indemnify each Term Lender and Administrative Agent for, and hold
it harmless from and against, any and all obligations, liabilities, losses, damages, costs,
expenses (including disbursements and reasonable legal fees of counsel to any Term Lender
or Administrative Agent), penalties, judgments, suits, actions, claims, and disbursements
imposed on, asserted against, or incurred by any Lender or Administrative Agent:




     (i) relating to the preparation, negotiation, execution, administration, or
enforcement of or collection under this Guaranty or any document, instrument, or
agreement relating to any of the Obligations, including in any bankruptcy,
insolvency, or similar proceeding in any jurisdiction or political subdivision
thereof;




     (ii) relating to any amendment, modification, waiver, or consent hereunder or
relating to any telecopy or telephonic transmission purporting to be by any Term
Guarantor or Term Borrowers; and




     (iii) in any way relating to or arising out of this Guaranty, or any document,
instrument, or agreement relating to any of the Guarantied Obligations, or any
action taken or omitted to be taken by any Term Lender or Administrative Agent
hereunder, and including those arising directly or indirectly from the violation or
asserted violation by any Term Guarantor or Term Borrowers or Administrative Agent
or any Term Lender of any Law, rule, regulation, judgment, order, or the like of
any jurisdiction or political subdivision thereof (including those relating to
environmental protection, health, labor, importing, exporting, or safety) and
regardless whether asserted by any governmental entity or any other Person;


provided that the foregoing indemnity shall not, as to any Term Lender or Administrative
Agent, be available to the extent that such liabilities, losses, damages, costs, expenses,
penalties or claims (x) are determined by a court of competent jurisdiction by final and
nonappealable






11









 







judgment to have resulted from the gross negligence or willful misconduct of such Term Lender or
Administrative Agent or (y) result from a claim brought by the Term Guarantors or any other Loan
Party against a Term Lender or Administrative Agent for breach in bad faith of such Term Lender’s
or Administrative Agent’s (as the case may be) obligations hereunder or under any other Loan
Document, if the Term Guarantor 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.




     (e) Prior Understandings. This Guaranty and the Credit Agreement constitute
the entire agreement of the parties hereto with respect to the subject matter hereof and
supersede any and all other prior and contemporaneous understandings and agreements.



     (f) Survival. All representations and warranties of the Term Guarantors made
in connection with this Guaranty shall survive, and shall not be waived by, the execution
and delivery of this Guaranty, any investigation by or knowledge of the Administrative
Agent and the Term Lenders, or any of them, any extension of credit, or any other event or
circumstance whatsoever.



[SIGNATURE PAGE FOLLOWS]




12









 





[SIGNATURE PAGE — CONTINUING

AGREEMENT OF GUARANTY AND SURETYSHIP (TERM)]




     IN WITNESS WHEREOF, the undersigned parties intending to be legally bound, have
executed this Guaranty as of the date first above written with the intention that this
Guaranty shall constitute a sealed instrument.



TERM GUARANTORS




	 	 	 	 	 
	 	ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG RESOURCES

HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE — CONTINUING

AGREEMENT OF GUARANTY AND SURETYSHIP (TERM)]




	 	 	 	 	 
	 	ELK CREEK OPERATING, L.P.

 	 
	 	By:  	Elk Creek Operating GP, LLC, as
General Partner
 	 
	 	
 	 
	 	 	By:  	 	 
	 	 	 	Name:  J. Richard Gist 	 
	 	 	 	Title:    Authorized Person 	 
	 
	 	CERALVO HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE — CONTINUING

AGREEMENT OF GUARANTY AND SURETYSHIP (TERM)]




	 	 	 	 	 
	 	Acknowledged and consented to:



TERM BORROWERS



ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK, L.P.

 	 
	 	  By: 	Elk Creek GP, LLC, as General Partner
 	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN MINERAL DEVELOPMENT, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN DIAMOND, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



EXHIBIT 1.1(I)(1)(a)




FORM OF



REGULATED SUBSTANCES CERTIFICATE AND INDEMNITY AGREEMENT

(REVOLVER)




     THIS REGULATED SUBSTANCES CERTIFICATE AND INDEMNITY AGREEMENT (REVOLVER), dated as of
the 9th day of February, 2011 (as amended, restated, supplemented or modified from time to
time, the “Indemnity”), is given, made and entered into by EACH OF THE PERSONS LISTED ON
THE SIGNATURE PAGES HERETO AS A BORROWER AND EACH OF THE OTHER PERSONS WHICH BECOME
BORROWERS HEREUNDER FROM TIME TO TIME (each a “Borrower” and collectively, the
“Borrowers”), EACH OF THE PERSONS LISTED ON THE SIGNATURE PAGES HERETO AS A GUARANTOR AND
EACH OF THE OTHER PERSONS WHICH BECOME GUARANTORS HEREUNDER FROM TIME TO TIME (each a “Guarantor” and collectively, the “Guarantors”) (the Borrowers and the Guarantors collectively
are referred to herein as the “Loan Parties” and each individually as a “Loan Party”, and PNC BANK,
NATIONAL ASSOCIATION, as the administrative agent for itself and the other Revolver Lenders under
the Credit Agreement described below (the “Administrative Agent”).



RECITALS



     A. Reference is made to that certain Credit Agreement, dated as of even date herewith,
by and among, inter alia, Administrative Agent, Borrowers, the Guarantors
party thereto, and the Lenders party thereto, as the same may be supplemented, amended,
restated, refinanced, replaced or modified from time to time (the “Credit Agreement”).



     B. Pursuant to the Credit Agreement, the Revolver Lenders (as defined in the Credit
Agreement) have agreed to make certain loans to the Revolver Borrowers (as defined in the
Credit Agreement) (the “Revolving Credit Loans”) and to continue to grant other financial
accommodations to the Revolver Borrowers, which Revolving Credit Loans and other financial
accommodations are to be secured by, among other things, various mortgages encumbering
certain Real Property of the Loan Parties in favor of the Administrative Agent for the
ratable benefit of the Revolver Lenders (each of the said various mortgages and other
security documents encumbering the Real Property, together with all amendments,
modifications, consolidations, increases, supplements and spreaders thereof, being herein
collectively called the “Mortgages”).



     C. Pursuant to the Credit Agreement, the Loan Parties have agreed to execute and
deliver this Indemnity, and to induce the Administrative Agent and the Revolver Lenders to
enter into the Credit Agreement, each Loan Party has agreed to enter into this Indemnity in
favor of the Administrative Agent for the ratable benefit of the Revolver Lenders.



 









 





     NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and intending
to be legally bound, each Loan Party hereby covenants, warrants, represents and agrees as
follows:



     1. Definitions.



     1.1 All capitalized terms used herein but not otherwise defined herein shall have the
meaning given such terms in the Credit Agreement. The following term shall have the
following meaning unless the context hereof otherwise clearly requires:



     1.2 “Contamination” shall mean the presence or release or threat of release of
Regulated Substances in, on, under or emanating to or from the Real Property, which
pursuant to Environmental Laws requires notification or reporting to any national, federal,
state, local or other government or political subdivision or any agency, authority, board,
bureau, central bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic, or which
pursuant to Environmental Laws requires the investigation, cleanup, removal, remediation,
containment, abatement of or other response action or which otherwise constitutes a
violation of Environmental Laws.



     1.3 “Regulated Substances” shall mean, without limitation, any substance, material or
waste, regardless of its form or nature, defined under Environmental Laws as a “hazardous
substance,” “toxic chemical,” “toxic substance,” “toxic waste,” “hazardous waste,” “special
handling waste,” “industrial waste,” “residual waste,” “solid waste,” “municipal waste,”
“mixed waste,” “infectious waste,” “chemotherapeutic waste,” “medical waste,” “regulated
substance” or any other material, substance or waste, regardless of its form or nature,
which otherwise is regulated by Environmental Laws.



     1.4 “Responsible Officer” means 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.



     2. Representations and Warranties. The Loan Parties, each for themselves
respectively, and as applicable to each such Loan Party’s ownership, occupation or leasing
of or conducting operations and activities at any Real Property, hereby reaffirm the
representations and warranties set forth in Section 6.1.14 of the Credit Agreement.



     3. Environmental Covenants.



     (a) Each Loan Party, for themselves respectively, and as applicable to each such Loan
Party’s ownership, occupation or leasing of or conducting operations and activities at any
Real Property, shall keep the Real Property free of Regulated Substances and Contamination
and shall remove, or cause their lessees to remove, all Regulated Substances and
Contamination which are



2









 




now or at any time in the future in or on the Real Property, irrespective of the source thereof,
except to the extent that such Regulated Substances are present on or stored and/or used
substantially in compliance with Environmental Laws. Each Loan Party, for themselves respectively,
and as applicable to each such Loan Party’s ownership, occupation or leasing of or conducting
operations and activities at any Real Property, shall not suffer or permit the Real Property to be
used to generate, manufacture, refine, transport, treat, dispose of, transfer, produce or process
Regulated Substances in violation of Environmental Laws; provided, that it shall not be deemed to
be a violation of this Section 3(a) unless or until any failure to comply with any applicable
Environmental Law would result in fines, penalties, remediation costs, other similar liabilities or
injunctive relief which, considered either individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Change.




     (b) Each Loan Party, for themselves respectively, and as applicable to each such Loan
Party’s ownership, occupation or leasing of or conducting operations and activities at any
Real Property, shall immediately, upon their respective Responsible Officer having
knowledge of any of the following, notify the Agent for the benefit of Revolver Lenders in
writing upon the occurrence of:




     (i) the release of any Regulated Substance or Contamination on or about the
Real Property in violation of Environmental Laws that could reasonably be expected
to result in fines, penalties, remediation costs, other similar liabilities or
injunctive relief which, considered either individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Change;




     (ii) any violation affecting the Real Property of any Environmental Laws, if
such violation is reasonably likely to result in fines, penalties, remediation
costs, other similar liabilities or injunctive relief which, considered either
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Change; and




     (iii) any liability arising in any manner out of Environmental Laws or any
claim or claims made against or the Real Property relating to damage, contribution,
cost of recovery, compensation, loss or injury resulting from any Regulated
Substance or Contamination affecting the Real Property if such claim or series of
claims, when considered either individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Change.



     (c) Except as otherwise disclosed in written reports delivered to the Administrative
Agent prior to the date hereof, the Loan Parties certify that, as of the date of this
Indemnity, to their knowledge, no report, analysis, study or other document prepared by or
for any Person exists which identifies any Regulated Substances or Contamination as being
located upon or as being released or discharged from the Real Property which, considered
either individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Change.



     (d) The Loan Parties, at their sole expense and for themselves respectively, and as
applicable to each such Loan Party’s ownership, occupation or leasing of or conducting
operations and activities at any Real Property, shall, or shall cause the tenants of the
Real



3









 




Property to, conduct and complete all investigations, studies, sampling and testing and all
removal and other actions necessary to clean up and remove all Regulated Substances and
Contamination on, under, from or affecting any of the Real Property in accordance with all
Environmental Laws; provided, however that it shall not be deemed to be a violation of this Section
3(d) unless or until any failure to conduct and complete all investigations, studies, sampling and
testing and all removal and other actions is reasonably likely to result in fines, penalties,
remediation costs or other similar liabilities which, considered either individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Change.




     4. Indemnity.



     (a) The Loan Parties shall indemnify, defend and hold harmless the Administrative
Agent, the other Revolver Lenders and their employees, agents, officers and directors from
and against any claims, demands, penalties, fines, liabilities, settlements or damages of
whatever kind or nature and associated reasonable costs or expenses, including reasonable
attorneys’ fees, fees of environmental consultants and laboratory fees, known or unknown,
contingent or otherwise (collectively, “Indemnified Matters”), arising out of or in any way
related to the following matters:




     (i) the presence, disposal, release or threatened release of any Regulated
Substances or Contamination on, over, under, from or affecting the Real Property or
the soil, water, vegetation, buildings, personal Real Property, persons or animals
thereon;




     (ii) any personal injury (including wrongful death) or Real Property damage
(real or personal) arising out of or related to such Regulated Substances or
Contamination;




     (iii) any lawsuit brought or threatened, settlement reached or governmental
order relating to such Regulated Substances or Contamination with respect to the
Real Property;




     (iv) any violation of Environmental Laws; and/or




     (v) the breach of any warranty, representation or covenant of any Loan Party
contained in this Indemnity.



     (b) The liability covered by this Section 4 shall include, but not be limited to,
losses sustained by the Administrative Agent and the other Revolver Lenders and/or their
successors and assigns for (i) diminution in value of the Real Property resulting from
matters covered by this Indemnity, (ii) amounts arising out of personal injury or death
claims with respect to the matters covered by this Indemnity, (iii) amounts charged for any
environmental or Contamination or Regulated Substances cleanup costs and expenses, liens or
other such charges or impositions, (iv) payment for reasonable attorneys’ fees and
disbursements, expert witness fees, court costs, environmental tests and design studies in
connection with the matters covered by this Indemnity, and (v) any other amounts reasonably
expended by the Administrative Agent and the other Revolver Lenders and their successors
and assigns with respect to matters covered by this



4









 




Indemnity. Notwithstanding anything to the contrary contained herein, the liability of the Loan
Parties under this Section 4, (A) with respect to diminution in value of the Real Property, shall
be limited to the diminution in value of the Real Property in its use by the Loan Parties in their
mining operations and (B) with respect to environmental or Contamination or Regulated Substances
cleanup costs and expenses, shall be limited to the costs and expenses for cleanup of the Real
Property so that it is suitable for use in mining operations and in compliance with all
Environmental Laws (including without limitation, any permanent reclamation or water treatment
resulting from the operations of the Loan Parties or their predecessors).




     5. Each Loan Party’s Obligation to Deliver Real Property. Each Loan Party
agrees for themselves respectively, and as applicable to each such Loan Party’s ownership,
occupation or leasing of or conducting operations and activities at any Real Property that,
in the event any Mortgage is foreclosed (whether judicially or by power of sale) or any
such Loan Party tenders a deed in lieu of foreclosure or any such Loan Party otherwise
voluntarily or involuntarily conveys possession of or title to the Real Property, such Loan
Party shall deliver the Real Property or any parcel comprising such portion of the Real
Property to the Administrative Agent free of any and all Regulated Substances or
Contamination which violate any applicable Environmental Laws affecting the Real Property.
The obligations of each Loan Party as set forth in this paragraph are strictly for the
benefit of the Administrative Agent and the other Revolver Lenders and any successors and
assigns of the Administrative Agent and the other Revolver Lenders as holders of any
portion of the Obligations and shall not in any way impair or affect the Administrative
Agent’s and/or the other Revolver Lenders’ right to foreclose against any parcel comprising
a portion of the Real Property.



     6. The Administrative Agent’s and/or Revolver Lenders’ Rights Under This
Indemnity. The rights of the Administrative Agent and the other Revolver Lenders under
this Indemnity shall be in addition to all rights of the Administrative Agent and/or the
other Revolver Lenders under the Mortgages, the Credit Agreement, and any other Loan
Documents. Any default by any Loan Party under this Indemnity (including without limitation
any breach of any representation, warranty or covenant made by any Loan Party in this
Indemnity) shall, at the Administrative Agent’s option, constitute an Event of Default
under Section 9.1 of the Credit Agreement, subject to the cure right specified in Section
9.1.4 thereof.



     7. The Administrative Agent’s and/or the Revolver Lenders’ Right to Cure. In
addition to the other remedies provided to the Administrative Agent and/or the other
Revolver Lenders in the Credit Agreement, the Mortgages, and the other Loan Documents,
should any Loan Party fail to abide by the terms and covenants of this Indemnity, the
Administrative Agent on behalf of the Revolver Lenders and/or the Revolver Lenders may,
should they elect to do so in order to protect their security interest, cause the removal,
remediation or cleanup of any Regulated Substances or Contamination located on the Real
Property and repair and remedy any damage to the Real Property caused by the Regulated
Substances or Contamination or any such removal, remediation or cleanup, as necessary to
assure substantial compliance with all applicable Environmental Laws. In such event, all
funds expended by the Administrative Agent on behalf of the Revolver Lenders and/or the
Revolver Lenders in connection with the removal of such Regulated Substances or
Contamination or the cleanup of such Regulated Substances or Contamination, including but
not limited to all reasonable attorneys’ fees, engineering fees,



5









 




consultant fees and similar charges, shall become a part of the obligation secured by the
Mortgages and shall be due and payable by each of the Loan Parties on demand. Each disbursement
made by the Administrative Agent and/or the other Revolver Lenders pursuant to this provision shall
bear interest at the highest rate then applicable following the occurrence of an Event of Default
under the terms of the Credit Agreement, until Payment in Full. The Borrowers and each of the other
Loan Parties shall permit the Administrative Agent, the other Revolver Lenders, and their agents
and employees access to its respective Real Property (or in the case of the Borrowers any and all
Properties) for any purpose consistent with this provision.




     8. The Administrative Agent’s Right to Conduct an Investigation. In the event
the Revolver Lenders shall have reasonable cause to suspect that any Loan Party has failed
to comply with the terms of this Indemnity, the Administrative Agent may obtain one or more
environmental audits of the Real Property, at any Loan Party’s sole expense. The nature and
scope of the environmental audits shall be determined by the Administrative Agent in its
judgment. Each Loan Party shall permit the Administrative Agent for the benefit of the
Revolver Lenders and the Administrative Agent’s agents and employees access to the Real
Property for the purpose of conducting the environmental audit and shall otherwise
cooperate and provide such additional information as may be requested by the Administrative
Agent or the Administrative Agent’s agents and employees. In the event any Loan Party fails
to pay in accordance with this Section 8 for the cost of any such environmental audit, the
Revolver Lenders may pay for same. Each such payment made by the Revolver Lenders shall
become a part of the indebtedness secured by the Mortgages, shall be due and payable upon
demand and shall bear interest at the highest rate then applicable following the occurrence
of an Event of Default under the terms of the Credit Agreement, until Payment in Full.



     9. Scope of Liability. The liability under this Indemnity shall in no way be
limited or impaired by (a) any extension of time for performance required by the Credit
Agreement or any of the Loan Documents, (b) any exculpatory provisions in any of the Loan
Documents limiting the Administrative Agent’s and/or the Revolver Lenders’ recourse, (c)
the accuracy or inaccuracy of the representations and warranties made by any Loan Party or
any other obligor under the Credit Agreement or any of the Loan Documents, (d) the release
of any Loan Party or any other Person from performance or observance of any of the
agreements, covenants, terms or conditions contained in any of the Loan Documents by
operation of law, the Administrative Agent’s and/or the Revolver Lenders’ voluntary act or
otherwise, (e) the release or substitution, in whole or in part, of any security for any
Loan Party’s obligations or (f) the Administrative Agent’s failure to record any of the
Mortgages or file any UCC financing statements (or the Administrative Agent’s improper
recording or filing of any thereof) or to otherwise perfect, protect, secure or insure any
security interest or lien given as security for any Loan Party’s obligations; and, in any
such case, whether with or without notice to any Loan Party or other Person and with or
without consideration. The indemnity provided in Section 4 above shall survive (i) any
sale, assignment or foreclosure of any of the Mortgages or other Loan Documents, the
acceptance of a deed in lieu of foreclosure or trustee’s sale, or any sale or transfer of
all or part of the possession of or title to the Real Property, or (ii) the discharge of
any of the other Loan Documents and/or the reconveyance or release of any of the Mortgages.



6









 





     10.
Preservation of Rights. No delay on the Administrative Agent’s and/or the
Revolver Lenders’ part in exercising any right, power or privilege under this Indemnity
shall operate as a waiver of any such privilege, power or right.



     11. Notices. All notices hereunder shall be in writing and shall be deemed to
have been sufficiently given or served for all purposes when sent by registered or
certified mail to any Loan Party or the Administrative Agent and/or the Revolver Lenders as
provided in Section 11.5 [Notices; Effectiveness; Electronic Communications] of the Credit
Agreement.



     12. Changes in Writing. No provision of this Indemnity may be changed, waived,
discharged or terminated orally, by telephone or by any other means, except by an
instrument in writing signed by all parties hereto.



     13. Joint and Several Obligations. With respect to the obligations of each
Loan Party in connection with this Indemnity, each Borrower and each Guarantor are jointly
and severally liable hereunder. Any party liable upon or in respect of this Indemnity or
any obligations under any of the other Loan Documents may be released without affecting the
liability of any party not so released.



     14. Survival. The obligations of each of the Loan Parties under Section 4 of
this Indemnity shall survive any judicial foreclosure, foreclosure by power of sale, deed
in lieu of foreclosure, transfer of possession of or title to the Real Property by any Loan
Party or Revolver Lenders and payment of the Obligations in full.



     15. Severability. In the event any one or more of the provisions contained in
this Indemnity should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions, or any portions thereof, shall not
in any way be affected or impaired thereby.



     16. Governing Law and Jurisdiction. This Indemnity and the rights and
obligations of the parties hereunder shall in all respects be governed by, construed and
enforced in accordance with the governing laws as set forth in the Credit Agreement;
provided, however, that the applicable federal, state and local Environmental Laws of the
jurisdiction in which the Real Property is situated shall govern the Loan Parties’
obligations with respect to compliance with Environmental Laws. Each of the Loan Parties
and the Administrative Agent hereby irrevocably submit to the personal 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, over any action or proceeding arising out of or relating to this Indemnity.



     17. Construction. Unless the context of this Indemnity otherwise clearly
requires, the rules of construction set forth in Section 1.2 [Construction] of the Credit
Agreement shall apply to this Indemnity and are incorporated herein by reference.



7









 





     18. Counterparts. This Indemnity may be executed in any one or more
counterparts, each of which shall be deemed an original document and all of which shall be
deemed the same document.



     19. WAIVER OF JURY TRIAL.



     EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE BASED UPON OR RELATING TO THIS
INDEMNITY, THE SUBJECT MATTER OF THIS INDEMNITY, ANY DOCUMENTS EXECUTED IN CONNECTIONS WITH
THIS INDEMNITY OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THIS WAIVER IS
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY THE PARTIES HERETO AND EACH OF THE PARTIES
HERETO ACKNOWLEDGES THAT NEITHER THE OTHER PARTIES HERETO NOR ANY PERSON ACTING ON BEHALF
OF ANY OF THEM HAS OR HAVE MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL
BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. EACH OF THE PARTIES HERETO FURTHER
ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN
THE SIGNING OF THIS INDEMNITY AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED BY ITS OWN FREE WILL AND THAT EACH OF THE PARTIES TO THIS INDEMNITY HAS
HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. EACH OF THE PARTIES TO THIS
INDEMNITY FURTHER ACKNOWLEDGES THAT IT HAS READ AND THAT IT FULLY UNDERSTAND THE MEANING OF
THIS PROVISION.



     20. The parties agree that in the event of any conflict between the provisions of this
Indemnity and the provisions of the Credit Agreement, the provisions of the Credit
Agreement shall control. Notwithstanding any provision in this Indemnity to the contrary,
the parties and signatories hereto acknowledge and agree that any and all rights, powers,
privileges, duties, responsibilities, liabilities and/or obligations (including but not
limited to the right to grant or withhold consent and the right to act or refrain from
acting), whether discretionary or mandatory, are and shall be exercised by the
Administrative Agent solely in accordance with the terms and conditions of the Credit
Agreement, and subject further to the rights of the Administrative Agent to require
officers’ certificate(s), opinion(s) and advice from counsel, accountants, appraisers and
other third parties, advancement of expenses and/or assurances of indemnity satisfactory to
the Administrative Agent.



[SIGNATURE PAGES FOLLOW]




8









 





[SIGNATURE PAGE 1 OF 4 REGULATED SUBSTANCES

CERTIFICATE AND INDEMNITY AGREEMENT (REVOLVER)]




     WITNESS the due execution hereof as of the day and year first above written with the
intent that it constitute a sealed instrument.



	 	 	 	 	 
	 	BORROWERS:



ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG LAND COMPANY, LLC, as

Revolver Borrower and Term Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK, L.P., as Term Borrower and

Revolver Guarantor

 	 
	 	By: 	Elk Creek GP, LLC, as General Partner
 	 
	 	 	 
	 	 	By:  	
 	 
	 	 	 	Name:  J. Richard Gist 	 
	 	 		Title:    Authorized Person 	 
	 
	 	WESTERN MINERAL DEVELOPMENT, LLC,

as Term Borrower and Revolver Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 2 OF 4 REGULATED SUBSTANCES

CERTIFICATE AND INDEMNITY AGREEMENT (REVOLVER)]




	 	 	 	 	 
	 	WESTERN DIAMOND LLC, as Term Borrower

and Revolver Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN LAND COMPANY, LLC, as Term

Borrower and Revolver Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	GUARANTORS:



ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG RESOURCES HOLDINGS,

LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 3 OF 4 REGULATED SUBSTANCES

CERTIFICATE AND INDEMNITY AGREEMENT (REVOLVER)]




	 	 	 	 	 
	 	CERALVO HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 


	 	 	 	 	 
	 	ELK CREEK OPERATING, L.P.

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

 	 
	 	 	 
	 	 	By:  	
 	 
	 	 	 	Name:  J. Richard Gist 	 
	 	 	 	Title:    Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 4 OF 4 REGULATED SUBSTANCES

CERTIFICATE AND INDEMNITY AGREEMENT (REVOLVER)]




	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION, as

Administrative Agent

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



 









 








EXHIBIT 1.1(I)(1)(b)



FORM OF



REGULATED SUBSTANCES CERTIFICATE AND INDEMNITY AGREEMENT

(TERM)




     THIS REGULATED SUBSTANCES CERTIFICATE AND INDEMNITY AGREEMENT (TERM), dated as of the
9th day of February, 2011 (as amended, restated, supplemented or modified from time to
time, the “Indemnity”), is given, made and entered into by EACH OF THE PERSONS LISTED ON
THE SIGNATURE PAGES HERETO AS A BORROWER AND EACH OF THE OTHER PERSONS WHICH BECOME
BORROWERS HEREUNDER FROM TIME TO TIME (each a “Borrower” and collectively, the
“Borrowers”), EACH OF THE PERSONS LISTED ON THE SIGNATURE PAGES HERETO AS A GUARANTOR AND
EACH OF THE OTHER PERSONS WHICH BECOME GUARANTORS HEREUNDER FROM TIME TO TIME (each a “Guarantor"
and collectively, the “Guarantors”) (the Borrowers and the Guarantors collectively
are referred to herein as the “Loan Parties” and each individually as a “Loan Party”, and PNC BANK,
NATIONAL ASSOCIATION, as the administrative agent for itself and the other Term Lenders under the
Credit Agreement described below (the “Administrative Agent”).



RECITALS



     A. Reference is made to that certain Credit Agreement, dated as of even date herewith,
by and among, inter alia, Administrative Agent, Borrowers, the Guarantors
party thereto, and the Lenders party thereto, as the same may be supplemented, amended,
restated, refinanced, replaced or modified from time to time (the “Credit Agreement”).



     B. Pursuant to the Credit Agreement, the Term Lenders (as defined in the Credit
Agreement) have agreed to make certain loans to the Term Borrowers (as defined in the
Credit Agreement) (the “Term Loans”) and to continue to grant other financial
accommodations to the Term Borrowers, which Term Loans and other financial accommodations
are to be secured by, among other things, various mortgages encumbering certain Real
Property of the Loan Parties in favor of the Administrative Agent for the ratable benefit
of the Term Lenders (each of the said various mortgages and other security documents
encumbering the Real Property, together with all amendments, modifications, consolidations,
increases, supplements and spreaders thereof, being herein collectively called the
“Mortgages”).



     C. Pursuant to the Credit Agreement, the Loan Parties have agreed to execute and
deliver this Indemnity, and to induce the Administrative Agent and the Term Lenders to
enter into the Credit Agreement, each Loan Party has agreed to enter into this Indemnity in
favor of the Administrative Agent for the ratable benefit of the Term Lenders.



 









 





     NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and intending
to be legally bound, each Loan Party hereby covenants, warrants, represents and agrees as
follows:



     1. Definitions.



     1.1 All capitalized terms used herein but not otherwise defined herein shall have the
meaning given such terms in the Credit Agreement. The following term shall have the
following meaning unless the context hereof otherwise clearly requires:



     1.2 “Contamination” shall mean the presence or release or threat of release of
Regulated Substances in, on, under or emanating to or from the Real Property, which
pursuant to Environmental Laws requires notification or reporting to any national, federal,
state, local or other government or political subdivision or any agency, authority, board,
bureau, central bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic, or which
pursuant to Environmental Laws requires the investigation, cleanup, removal, remediation,
containment, abatement of or other response action or which otherwise constitutes a
violation of Environmental Laws.



     1.3 “Regulated Substances” shall mean, without limitation, any substance, material or
waste, regardless of its form or nature, defined under Environmental Laws as a “hazardous
substance,” “toxic chemical,” “toxic substance,” “toxic waste,” “hazardous waste,” “special
handling waste,” “industrial waste,” “residual waste,” “solid waste,” “municipal waste,”
“mixed waste,” “infectious waste,” “chemotherapeutic waste,” “medical waste,” “regulated
substance” or any other material, substance or waste, regardless of its form or nature,
which otherwise is regulated by Environmental Laws.



     1.4 “Responsible Officer” means 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.



     2. Representations and Warranties. The Loan Parties, each for themselves
respectively, and as applicable to each such Loan Party’s ownership, occupation or leasing
of or conducting operations and activities at any Real Property, hereby reaffirm the
representations and warranties set forth in Section 6.1.14 of the Credit Agreement.



     3. Environmental Covenants.



     (a) Each Loan Party, for themselves respectively, and as applicable to each such Loan
Party’s ownership, occupation or leasing of or conducting operations and activities at any
Real Property, shall keep the Real Property free of Regulated Substances and Contamination
and shall remove, or cause their lessees to remove, all Regulated Substances and
Contamination which are



2









 




now or at any time in the future in or on the Real Property, irrespective of the source
thereof, except to the extent that such Regulated Substances are present on or stored and/or used
substantially in compliance with Environmental Laws. Each Loan Party, for themselves respectively,
and as applicable to each such Loan Party’s ownership, occupation or leasing of or conducting
operations and activities at any Real Property, shall not suffer or permit the Real Property to be
used to generate, manufacture, refine, transport, treat, dispose of, transfer, produce or process
Regulated Substances in violation of Environmental Laws; provided, that it shall not be deemed to
be a violation of this Section 3(a) unless or until any failure to comply with any applicable
Environmental Law would result in fines, penalties, remediation costs, other similar liabilities or
injunctive relief which, considered either individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Change.




     (b) Each Loan Party, for themselves respectively, and as applicable to each such Loan
Party’s ownership, occupation or leasing of or conducting operations and activities at any
Real Property, shall immediately, upon their respective Responsible Officer having
knowledge of any of the following, notify the Agent for the benefit of Term Lenders in
writing upon the occurrence of:




     (i) the release of any Regulated Substance or Contamination on or about the
Real Property in violation of Environmental Laws that could reasonably be expected
to result in fines, penalties, remediation costs, other similar liabilities or
injunctive relief which, considered either individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Change;




     (ii) any violation affecting the Real Property of any Environmental Laws, if
such violation is reasonably likely to result in fines, penalties, remediation
costs, other similar liabilities or injunctive relief which, considered either
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Change; and




     (iii) any liability arising in any manner out of Environmental Laws or any
claim or claims made against or the Real Property relating to damage, contribution,
cost of recovery, compensation, loss or injury resulting from any Regulated
Substance or Contamination affecting the Real Property if such claim or series of
claims, when considered either individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Change.



     (c) Except as otherwise disclosed in.written reports delivered to the Administrative
Agent prior to the date hereof, the Loan Parties certify that, as of the date of this
Indemnity, to their knowledge, no report, analysis, study or other document prepared by or
for any Person exists which identifies any Regulated Substances or Contamination as being
located upon or as being released or discharged from the Real Property which, considered
either individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Change.



     (d) The Loan Parties, at their sole expense and for themselves respectively, and as
applicable to each such Loan Party’s ownership, occupation or leasing of or conducting
operations and activities at any Real Property, shall, or shall cause the tenants of the
Real



3









 




Property to, conduct and complete all investigations, studies, sampling and testing and all
removal and other actions necessary to clean up and remove all Regulated Substances and
Contamination on, under, from or affecting any of the Real Property in accordance with all
Environmental Laws; provided, however that it shall not be deemed to be a violation of this Section
3(d) unless or until any failure to conduct and complete all investigations, studies, sampling and
testing and all removal and other actions is reasonably likely to result in fines, penalties,
remediation costs or other similar liabilities which, considered either individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Change.




     4. Indemnity.



     (a) The Loan Parties shall indemnify, defend and hold harmless the Administrative
Agent, the other Term Lenders and their employees, agents, officers and directors from and
against any claims, demands, penalties, fines, liabilities, settlements or damages of
whatever kind or nature and associated reasonable costs or expenses, including reasonable
attorneys’ fees, fees of environmental consultants and laboratory fees, known or unknown,
contingent or otherwise (collectively, “Indemnified Matters”), arising out of or in any way
related to the following matters:




     (i) the presence, disposal, release or threatened release of any Regulated
Substances or Contamination on, over, under, from or affecting the Real Property or
the soil, water, vegetation, buildings, personal Real Property, persons or animals
thereon;




     (ii) any personal injury (including wrongful death) or Real Property damage
(real or personal) arising out of or related to such Regulated Substances or
Contamination;




     (iii) any lawsuit brought or threatened, settlement reached or governmental
order relating to such Regulated Substances or Contamination with respect to the
Real Property;




     (iv) any violation of Environmental Laws; and/or




     (v) the breach of any warranty, representation or covenant of any Loan Party
contained in this Indemnity.



     (b) The liability covered by this Section 4 shall include, but not be limited to,
losses sustained by the Administrative Agent and the other Term Lenders and/or their
successors and assigns for (i) diminution in value of the Real Property resulting from
matters covered by this Indemnity, (ii) amounts arising out of personal injury or death
claims with respect to the matters covered by this Indemnity, (iii) amounts charged for any
environmental or Contamination or Regulated Substances cleanup costs and expenses, liens or
other such charges or impositions, (iv) payment for reasonable attorneys’ fees and
disbursements, expert witness fees, court costs, environmental tests and design studies in
connection with the matters covered by this Indemnity, and (v) any other amounts reasonably
expended by the Administrative Agent and the other Term Lenders and their successors and
assigns with respect to matters covered by this Indemnity.



4









 




Notwithstanding anything to the contrary contained herein, the liability of the Loan Parties under
this Section 4, (A) with respect to diminution in value of the Real Property, shall be limited to
the diminution in value of the Real Property in its use by the Loan Parties in their mining
operations and (B) with respect to environmental or Contamination or Regulated Substances cleanup
costs and expenses, shall be limited to the costs and expenses for cleanup of the Real Property so
that it is suitable for use in mining operations and in compliance with all Environmental Laws
(including without limitation, any permanent reclamation or water treatment resulting from the
operations of the Loan Parties or their predecessors).




     5. Each Loan Party’s Obligation to Deliver Real Property. Each Loan Party
agrees for themselves respectively, and as applicable to each such Loan Party’s ownership,
occupation or leasing of or conducting operations and activities at any Real Property that,
in the event any Mortgage is foreclosed (whether judicially or by power of sale) or any
such Loan Party tenders a deed in lieu of foreclosure or any such Loan Party otherwise
voluntarily or involuntarily conveys possession of or title to the Real Property, such Loan
Party shall deliver the Real Property or any parcel comprising such portion of the Real
Property to the Administrative Agent free of any and all Regulated Substances or
Contamination which violate any applicable Environmental Laws affecting the Real Property.
The obligations of each Loan Party as set forth in this paragraph are strictly for the
benefit of the Administrative Agent and the other Term Lenders and any successors and
assigns of the Administrative Agent and the other Term Lenders as holders of any portion of
the Obligations and shall not in any way impair or affect the Administrative Agent’s and/or
the other Term Lenders’ right to foreclose against any parcel comprising a portion of the
Real Property.



     6. The Administrative Agent’s and/or Term Lenders’ Rights Under This Indemnity. The
rights of the Administrative Agent and the other Term Lenders under this Indemnity shall be in
addition to all rights of the Administrative Agent and/or the other Term Lenders under the
Mortgages, the Credit Agreement, and any other Loan Documents. Any default by any Loan Party
under this Indemnity (including without limitation any breach of any representation, warranty
or covenant made by any Loan Party in this Indemnity) shall, at the Administrative Agent’s
option, constitute an Event of Default under Section 9.1 of the Credit Agreement, subject to
the cure right specified in Section 9.1.4 thereof.



     7. The Administrative Agent’s and/or the Term Lenders’ Right to Cure. In
addition to the other remedies provided to the Administrative Agent and/or the other Term
Lenders in the Credit Agreement, the Mortgages, and the other Loan Documents, should any
Loan Party fail to abide by the terms and covenants of this Indemnity, the Administrative
Agent on behalf of the Term Lenders and/or the Term Lenders may, should they elect to do so
in order to protect their security interest, cause the removal, remediation or cleanup of
any Regulated Substances or Contamination located on the Real Property and repair and
remedy any damage to the Real Property caused by the Regulated Substances or Contamination
or any such removal, remediation or cleanup, as necessary to assure substantial compliance
with all applicable Environmental Laws. In such event, all funds expended by the
Administrative Agent on behalf of the Term Lenders and/or the Term Lenders in connection
with the removal of such Regulated Substances or Contamination or the cleanup of such
Regulated Substances or Contamination, including but not limited to all reasonable
attorneys’ fees, engineering fees, consultant fees and similar charges,



5









 




shall become a part of the obligation secured by the Mortgages and shall be due and payable by
each of the Loan Parties on demand. Each disbursement made by the Administrative Agent and/or the
other Term Lenders pursuant to this provision shall bear interest at the highest rate then
applicable following the occurrence of an Event of Default under the terms of the Credit Agreement,
until Payment in Full. The Borrowers and each of the other Loan Parties shall permit the
Administrative Agent, the other Term Lenders, and their agents and employees access to its
respective Real Property (or in the case of the Borrowers any and all Properties) for any purpose
consistent with this provision.




     8. The Administrative Agent’s Right to Conduct an Investigation. In the event
the Term Lenders shall have reasonable cause to suspect that any Loan Party has failed to
comply with the terms of this Indemnity, the Administrative Agent may obtain one or more
environmental audits of the Real Property, at any Loan Party’s sole expense. The nature and
scope of the environmental audits shall be determined by the Administrative Agent in its
judgment. Each Loan Party shall permit the Administrative Agent for the benefit of the Term
Lenders and the Administrative Agent’s agents and employees access to the Real Property for
the purpose of conducting the environmental audit and shall otherwise cooperate and provide
such additional information as may be requested by the Administrative Agent or the
Administrative Agent’s agents and employees. In the event any Loan Party fails to pay in
accordance with this Section 8 for the cost of any such environmental audit, the Term
Lenders may pay for same. Each such payment made by the Term Lenders shall become a part of
the indebtedness secured by the Mortgages, shall be due and payable upon demand and shall
bear interest at the highest rate then applicable following the occurrence of an Event of
Default under the terms of the Credit Agreement, until Payment in Full.



     9. Scope of Liability. The liability under this Indemnity shall in no way be
limited or impaired by (a) any extension of time for performance required by the Credit
Agreement or any of the Loan Documents, (b) any exculpatory provisions in any of the Loan
Documents limiting the Administrative Agent’s and/or the Term Lenders’ recourse, (c) the
accuracy or inaccuracy of the representations and warranties made by any Loan Party or any
other obligor under the Credit Agreement or any of the Loan Documents, (d) the release of
any Loan Party or any other Person from performance or observance of any of the agreements,
covenants, terms or conditions contained in any of the Loan Documents by operation of law,
the Administrative Agent’s and/or the Term Lenders’ voluntary act or otherwise, (e) the
release or substitution, in whole or in part, of any security for any Loan Party’s
obligations or (f) the Administrative Agent’s failure to record any of the Mortgages or
file any UCC financing statements (or the Administrative Agent’s improper recording or
filing of any thereof) or to otherwise perfect, protect, secure or insure any security
interest or lien given as security for any Loan Party’s obligations; and, in any such case,
whether with or without notice to any Loan Party or other Person and with or without
consideration. The indemnity provided in Section 4 above shall survive (i) any sale,
assignment or foreclosure of any of the Mortgages or other Loan Documents, the acceptance
of a deed in lieu of foreclosure or trustee’s sale, or any sale or transfer of all or part
of the possession of or title to the Real Property, or (ii) the discharge of any of the
other Loan Documents and/or the reconveyance or release of any of the Mortgages.



6









 





     10. Preservation of Rights. No delay on the Administrative Agent’s and/or the
Term Lenders’ part in exercising any right, power or privilege under this Indemnity shall
operate as a waiver of any such privilege, power or right.



     11. Notices. All notices hereunder shall be in writing and shall be deemed to
have been sufficiently given or served for all purposes when sent by registered or
certified mail to any Loan Party or the Administrative Agent and/or the Term Lenders as
provided in Section 11.5 [Notices; Effectiveness; Electronic Communications] of the Credit
Agreement.



     12. Changes in Writing. No provision of this Indemnity may be changed, waived,
discharged or terminated orally, by telephone or by any other means, except by an
instrument in writing signed by all parties hereto.



     13. Joint and Several Obligations. With respect to the obligations of each
Loan Party in connection with this Indemnity, each Borrower and each Guarantor are jointly
and severally liable hereunder. Any party liable upon or in respect of this Indemnity or
any obligations under any of the other Loan Documents may be released without affecting the
liability of any party not so released.



     14. Survival. The obligations of each of the Loan Parties under Section 4 of
this Indemnity shall survive any judicial foreclosure, foreclosure by power of sale, deed
in lieu of foreclosure, transfer of possession of or title to the Real Property by any Loan
Party or Term Lenders and payment of the Obligations in full.



     15. Severability. In the event any one or more of the provisions contained in
this Indemnity should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions, or any portions thereof, shall not
in any way be affected or impaired thereby.



     16. Governing Law and Jurisdiction. This Indemnity and the rights and
obligations of the parties hereunder shall in all respects be governed by, construed and
enforced in accordance with the governing laws as set forth in the Credit Agreement;
provided, however, that the applicable federal, state and local Environmental Laws of the
jurisdiction in which the Real Property is situated shall govern the Loan Parties’
obligations with respect to compliance with Environmental Laws. Each of the Loan Parties
and the Administrative Agent hereby irrevocably submit to the personal 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, over any action or proceeding arising out of or relating to this Indemnity.



     17. Construction. Unless the context of this Indemnity otherwise clearly
requires, the rules of construction set forth in Section 1.2 [Construction] of the Credit
Agreement shall apply to this Indemnity and are incorporated herein by reference.



7









 





     18. Counterparts. This Indemnity may be executed in any one or more
counterparts, each of which shall be deemed an original document and all of which shall be
deemed the same document.



     19. WAIVER OF JURY TRIAL.



     EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE BASED UPON OR RELATING TO THIS
INDEMNITY, THE SUBJECT MATTER OF THIS INDEMNITY, ANY DOCUMENTS EXECUTED IN CONNECTIONS WITH
THIS INDEMNITY OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THIS WAIVER IS
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY THE PARTIES HERETO AND EACH OF THE PARTIES
HERETO ACKNOWLEDGES THAT NEITHER THE OTHER PARTIES HERETO NOR ANY PERSON ACTING ON BEHALF
OF ANY OF THEM HAS OR HAVE MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL
BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. EACH OF THE PARTIES HERETO FURTHER
ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN
THE SIGNING OF THIS INDEMNITY AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED BY ITS OWN FREE WILL AND THAT EACH OF THE PARTIES TO THIS INDEMNITY HAS
HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. EACH OF THE PARTIES TO THIS
INDEMNITY FURTHER ACKNOWLEDGES THAT IT HAS READ AND THAT IT FULLY UNDERSTAND THE MEANING OF
THIS PROVISION.



     20. The parties agree that in the event of any conflict between the provisions of this
Indemnity and the provisions of the Credit Agreement, the provisions of the Credit
Agreement shall control. Notwithstanding any provision in this Indemnity to the contrary,
the parties and signatories hereto acknowledge and agree that any and all rights, powers,
privileges, duties, responsibilities, liabilities and/or obligations (including but not
limited to the right to grant or withhold consent and the right to act or refrain from
acting), whether discretionary or mandatory, are and shall be exercised by the
Administrative Agent solely in accordance with the terms and conditions of the Credit
Agreement, and subject further to the rights of the Administrative Agent to require
officers’ certificate(s), opinion(s) and advice from counsel, accountants, appraisers and
other third parties, advancement of expenses and/or assurances of indemnity satisfactory to
the Administrative Agent.



[SIGNATURE PAGES FOLLOW]




8









 





[SIGNATURE PAGE 1 OF 4 REGULATED SUBSTANCES

CERTIFICATE AND INDEMNITY AGREEMENT (TERM)]




     WITNESS the due execution hereof as of the day and year first above written with the
intent that it constitute a sealed instrument.



	 	 	 	 	 
	 	BORROWERS:



ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG LAND COMPANY, LLC, as

Revolver Borrower and Term Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 


	 	 	 	 	 
	 	ELK CREEK, L.P., as Term Borrower and

Revolver Guarantor

 	 
	 	By:  	Elk Creek GP, LLC, as General Partner
 	 
	 	 	 
	 	 	By:  	
 	 
	 	 	 	Name:  J. Richard Gist 	 
	 	 	 	Title:    Authorized Person 	 
	 


	 	 	 	 	 
	 	WESTERN MINERAL DEVELOPMENT, LLC,

as Term Borrower and Revolver Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 2 OF 4 REGULATED SUBSTANCES CERTIFICATE AND

INDEMNITY AGREEMENT (TERM)]




	 	 	 	 	 
	 	WESTERN DIAMOND LLC, as Term Borrower

and Revolver Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN LAND COMPANY, LLC, as Term

Borrower and Revolver Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	GUARANTORS:



ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG RESOURCES HOLDINGS,
LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 3 OF 4 REGULATED SUBSTANCES CERTIFICATE AND

INDEMNITY AGREEMENT (TERM)]




	 	 	 	 	 
	 	CERALVO HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 


	 	 	 	 	 
	 	ELK CREEK OPERATING, L.P.

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

 	 
	 	 	 
	 	 	By:  	
 	 
	 	 	 	Name:  J. Richard Gist 	 
	 	 	 	Title:    Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 4 OF 4 REGULATED SUBSTANCES CERTIFICATE AND

INDEMNITY AGREEMENT (TERM)]




	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION, as

Administrative Agent

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



 









 






	 	 	 	 	 



EXHIBIT 1.1(2)




FORM OF

INTERCOMPANY SUBORDINATION AGREEMENT




     THIS INTERCOMPANY SUBORDINATION 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 ELK CREEK, L.P., a Delaware limited partnership,
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 (each a “Borrower” and collectively, the “Borrowers”), EACH OF THE
GUARANTORS AND EACH OF THE OTHER PERSONS WHICH BECOME GUARANTORS HEREUNDER FROM TIME TO
TIME, (the Borrower and each Guarantor being individually referred to herein as a “Company”
and collectively as the “Companies”), and PNC BANK, NATIONAL ASSOCIATION, as administrative
agent (the “Administrative Agent”), for the Lenders (defined below).



WITNESSETH THAT:



     WHEREAS, each capitalized term used herein shall, unless otherwise defined herein,
have the meaning specified in that certain Credit Agreement by and among the Borrowers, the
Guarantors now or hereafter party thereto, the Lenders now or hereafter party thereto (the
“Lenders”), and the Administrative Agent, dated as of even date hereof (as it may be
hereafter amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”); and



     WHEREAS, pursuant to the Credit Agreement and the other Loan Documents referred to and
defined in the Credit Agreement, the Lenders intend to make Loans to the Borrowers; and



     WHEREAS, the Companies have or, in the future, may have liabilities, obligations or
indebtedness owed to each other (the liabilities, obligations and indebtedness of each of
the Companies to any other Company, now existing or hereafter incurred (whether created
directly or acquired by assignment or otherwise), and interest and premiums, if any,
thereon and other amounts payable in respect thereof and all other obligations and other
amounts payable by any Company to any other Company are hereinafter collectively referred
to as the “Intercompany Indebtedness”); and



     WHEREAS, the obligations of the Lenders to maintain the Commitments and make Loans to
the Borrowers from time to time are subject to the condition, among others, that the
Companies subordinate the Intercompany Indebtedness to the Obligations of the Borrowers or
any other Company to the Administrative Agent or the Lenders pursuant to the Credit
Agreement, the other Loan Documents, any Lender Provided Interest Rate Hedge or any Other
Lender Provided Financial Service Product (collectively, the “Senior Debt”) in the manner
set forth herein.



 









 





     NOW, THEREFORE, intending to be legally bound hereby, the parties hereto covenant and
agree as follows:



     1. Intercompany Indebtedness Subordinated to Senior Debt. The recitals set
forth above are hereby incorporated by reference. All Intercompany Indebtedness shall be
subordinate and subject in right of payment to the prior indefeasible payment in full of
all Senior Debt pursuant to the provisions contained herein.



     2. Payment Over of Proceeds Upon Dissolution, Etc. Upon any distribution of
assets of any Company in the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to any such Company or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up of any such Company,
whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or
(c) any assignment for the benefit of creditors or any marshalling of assets and
liabilities of any such Company (a Company distributing assets as set forth herein being
referred to in such capacity as a “Distributing Company”), then and in any such event, the
Administrative Agent shall be entitled to receive, for the benefit of the Administrative
Agent and the Lenders as their respective interests may appear, indefeasible payment in
full of all amounts due or to become due (whether or not an Event of Default has occurred
under the terms of the Loan Documents or the Senior Debt has been declared due and payable
prior to the date on which it would otherwise have become due and payable) on or in respect
of any and all Senior Debt before the holder of any Intercompany Indebtedness owed by the
Distributing Company is entitled to receive any payment on account of the principal of or
interest on such Intercompany Indebtedness, and to that end, the Administrative Agent shall
be entitled to receive, for application to the payment of the Senior Debt, any payment or
distribution of any kind or character, whether in cash, property or securities, which may
be payable or deliverable in respect of the Intercompany Indebtedness owed by the
Distributing Company in any such case, proceeding, dissolution, liquidation or other
winding up event.



     3. No Commencement of Any Proceeding. Each Company agrees that, so long as the
Senior Debt shall remain unpaid, it will not commence, or join with any creditor other than
the Lenders and the Administrative Agent in commencing, any proceeding referred to in the
first paragraph of Section 2 against any other Company that owes it any Intercompany
Indebtedness.



     4. Prior Payment of Senior Debt Upon Acceleration of Intercompany
Indebtedness. If any portion of the Intercompany Indebtedness owed by any Company
becomes or is declared due and payable before its stated terms of repayment, then and
in such event the Administrative Agent and the Lenders shall be entitled to receive
indefeasible payment in full of all amounts due and to become due on or in respect of
the Senior Debt (whether or not an Event of Default has occurred under the terms of the
Loan Documents or the Senior Debt has been declared due and payable prior to the date
on which it would otherwise have become due and payable) before the holder of any such
Intercompany Indebtedness is entitled to receive any payment thereon.



     5. No Payment When Senior Debt in Default. If any Event of Default shall have
occurred and be continuing, or such an Event of Default or Potential Default would result
from or exist after giving effect to a payment with respect to any portion of the
Intercompany



2









 




Indebtedness, unless the Required Lenders shall have consented to or waived the same, so long as
any of the Senior Debt shall remain outstanding, no payment shall be made by any Company owing such
Intercompany Indebtedness on account of principal or interest on any portion of the Intercompany
Indebtedness.




     6. Payment Permitted if No Default. Nothing contained in this Agreement shall
prevent any of the Companies, at any time except during the pendency of any of the
conditions described in Sections 2, 4 and 5, from making regularly scheduled payments of
principal of or interest on any portion of the Intercompany Indebtedness, or the retention
thereof by any of the Companies of any money deposited with them for the payment of or on
account of the principal of or interest on the Intercompany Indebtedness.



     7. Receipt of Prohibited Payments. If, notwithstanding the foregoing
provisions of Sections 2, 4, 5 and 6, a Company that is owed Intercompany Indebtedness by a
Distributing Company shall have received any payment or distribution of assets from the
Distributing Company of any kind or character, whether in cash, property or securities,
then and in such event such payment or distribution shall be held in trust for the benefit
of the Administrative Agent and the Lenders as their respective interests may appear, shall
be segregated from other funds and property held by such Company, and shall be forthwith
paid over to the Administrative Agent in the same form as so received (with any necessary
endorsement) to be applied (in the case of cash) to or held as collateral (in the case of
noncash property or securities) for the payment or prepayment of the Senior Debt in
accordance with the terms of the Credit Agreement.



     8. Rights of Subrogation. Each Company agrees that no payment or distribution
to the Administrative Agent or the Lenders pursuant to the provisions of this Agreement
shall entitle it to exercise any rights of subrogation in respect thereof until the Senior
Debt shall have been indefeasibly paid in full and the Commitments shall have terminated
and the Letters of Credit have expired.



     9. Agreement Solely to Define Relative Rights. The purpose of this Agreement
is solely to define the relative rights of the Companies, on the one hand, and the
Administrative Agent and the Lenders, on the other hand. Nothing contained in this
Agreement is intended to or shall impair, as between any of the Companies and their
creditors other than the Administrative Agent and the Lenders, the obligation of the
Companies to each other to pay the principal of and interest on the Intercompany
Indebtedness as and when the same shall become due and payable in accordance with its
terms, or is intended to or shall affect the relative rights among the Companies and their
creditors other than the Administrative Agent and the Lenders, nor shall anything herein
prevent any of the Companies from exercising all remedies otherwise permitted by applicable
Law upon default under any agreement pursuant to which the Intercompany Indebtedness is
created, subject to the rights, if any, under this Agreement of the Administrative Agent
and the Lenders to receive cash, property or securities otherwise payable or deliverable
with respect to the Intercompany Indebtedness.



     10. Instruments Evidencing Intercompany Indebtedness. Each Company shall cause
each instrument which now or hereafter evidences all or a portion of the Intercompany
Indebtedness to be conspicuously marked as follows:



3









 






     “This instrument is subject to the terms of that certain Intercompany
Subordination Agreement dated as of February 9, 2011, in favor of PNC BANK,
NATIONAL ASSOCIATION, as Administrative Agent for the Lenders referred to
therein, which Intercompany Subordination Agreement is incorporated herein by
reference. Notwithstanding any contrary statement contained in the within
instrument, no payment on account of the principal thereof or interest thereon
shall become due or payable except in accordance with the express terms of the
Intercompany Subordination Agreement.”


Each Company will further mark its internal records in such a manner as shall be effective to give
proper notice to the effect of this Agreement.




     11. No Implied Waivers of Subordination. No right of the Administrative Agent
or any Lender to enforce subordination, as herein provided, shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Company or by any
act or failure to act by the Administrative Agent or any Lender, or by any non-compliance
by any Company with the terms, provisions and covenants of any agreement pursuant to which
the Intercompany Indebtedness is created, regardless of any knowledge thereof with which
the Administrative Agent or any Lender may have or be otherwise charged. Each Company by
its acceptance hereof shall agree that, so long as there is Senior Debt outstanding or
Commitments in effect under the Credit Agreement, such Company shall not agree to sell,
assign, pledge, encumber or otherwise dispose of, or agree to compromise, the obligations
of the other Companies with respect to their Intercompany Indebtedness, other than by means
of payment of such Intercompany Indebtedness according to its terms, without the prior
written consent of the Administrative Agent.



     Without in any way limiting the generality of the foregoing paragraph, the
Administrative Agent or any of the Lenders may, at any time and from time to time, without
the consent of or notice to the Companies, without incurring responsibility to the
Companies and without impairing or releasing the subordination provided in this Agreement
or the obligations hereunder of the Companies to the Administrative Agent and the Lenders,
do any one or more of the following in accordance with the terms of the Credit Agreement:
(i) change the manner, place or terms of payment, or extend the time of payment, renew or
alter the Senior Debt or otherwise amend or supplement the Senior Debt or the Loan
Documents; (ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing the Senior Debt; (iii) release any person liable in any
manner for the payment or collection of the Senior Debt; and (iv) exercise or refrain from
exercising any rights against any of the Companies and any other person.



     12. Additional Subsidiaries. The Companies covenant and agree that they shall
cause Subsidiaries (other than Excluded Subsidiaries) created or acquired after the date of
this Agreement, and any other Subsidiaries required to join this Agreement pursuant to
Section 8.2.9 [Subsidiaries, Partnerships and Joint Ventures] or otherwise under the Credit
Agreement, to execute a Guarantor Joinder in substantially the form of Exhibit 1.1(G)(1) to
the Credit Agreement, whereby such Subsidiary joins this Agreement and subordinates all
Indebtedness owed to any such Subsidiary by any of the Companies or other Subsidiaries
hereafter created or acquired to the Senior Debt.



4









 





     13. Continuing Force and Effect. This Agreement shall continue in force for so
long as any portion of the Senior Debt remains unpaid and any Commitments or Letters of
Credit under the Credit Agreement remain outstanding, it being contemplated that this
Agreement be of a continuing nature.



     14. Modification, Amendments or Waivers. Any and all agreements amending or
changing any provision of this Agreement or the rights of the Administrative Agent or the
Lenders hereunder, and any and all waivers or consents to Events of Default or other
departures from the due performance of the Companies hereunder, shall be made only by
written agreement, waiver or consent signed by the Administrative Agent, acting on behalf
of all the Lenders, with the written consent of the Required Lenders, any such agreement,
waiver or consent made with such written consent being effective to bind all the Lenders.



     15. Expenses. The Companies unconditionally and jointly and severally agree
upon demand to pay to the Administrative Agent and the Lenders the amount of any and all
out-of-pocket costs, expenses and disbursements, including fees and expenses of counsel
(including the allocated costs of staff counsel) for which reimbursement is customarily
obtained, which the Administrative Agent or any of the Lenders may incur in connection with
(a) the exercise or enforcement of any of the rights of the Administrative Agent or the
Lenders hereunder, or (b) the failure by the Companies to perform or observe any of the
provisions hereof.



     16. 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.



     17. Governing Law. This Agreement shall be a contract under the internal laws
of the State of New York and for all purposes shall be construed in accordance with the
internal laws of the State of New York without giving effect to its principles of conflict
of laws.



     18. Successors and Assigns. This Agreement shall inure to the benefit of the
Administrative Agent and the Lenders and their respective successors and assigns, and the
obligations of the Companies shall be binding upon their respective successors and
permitted assigns, provided, that no company may assign or transfer its rights or
obligations hereunder or any interest herein and any such purported assignment or transfer
shall be null and void. The duties and obligations of the Companies may not be delegated or
transferred by the Companies without the written consent of the Required Lenders and any
such delegation or transfer without such consent shall be null and void. Except to the
extent otherwise required by the context of this Agreement, the word “Lenders” when used
herein shall include, without limitation, any holder of a Note or an assignment of rights
therein originally issued to a Lender under the Credit Agreement, and each such holder of a
Note or assignment shall have the benefits of this Agreement to the same extent as if such
holder had originally been a Lender under the Credit Agreement.



     19. Joint and Several Obligations. Each of the obligations of each and every
Company under this Agreement is joint and several. The Administrative Agent and the
Lenders,



5









 




or any of them, may, in their sole discretion, elect to enforce this Agreement against any
Company without any duty or responsibility to pursue any other Company and such an election by the
Administrative Agent and the Lenders, or any of them, shall not be a defense to any action the
Administrative Agent and the Lenders, or any of them, may elect to take against any Company. Each
of the Lenders and Administrative Agent hereby reserve all right against each Company.




     20. Counterparts. This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which, when executed
and delivered, shall be deemed an original, but all such counterparts shall constitute but
one and the same instrument. Each Company acknowledges and agrees that a telecopy or
electronic transmission to the Administrative Agent or any Lender of the signature page
hereof purporting to be signed on behalf of such Company shall constitute effective and
binding execution and delivery hereof by such Company.



     21. Attorneys-in-Fact. Each of the Companies hereby authorizes and empowers
the Administrative Agent, at its election and in the name of either itself, for the benefit
of the Administrative Agent and the Lenders as their respective interests may appear, or in
the name of each such Company as is owed Intercompany Indebtedness, to execute and file
proofs and documents and take any other action the Administrative Agent may deem advisable
to completely protect the Administrative Agent’s and the Lenders’ interests in the
Intercompany Indebtedness and their right of enforcement thereof, and to that end each of
the Companies hereby irrevocably makes, constitutes and appoints the Administrative Agent,
its officers, employees and agents, or any of them, with full power of substitution, as the
true and lawful attorney-in-fact and agent of such Company, and with full power for such
Company, and in the name, place and stead of such Company for the purpose of carrying out
the provisions of this Agreement, and taking any action and executing, delivering, filing
and recording any instruments that the Administrative Agent may deem necessary or advisable
to accomplish the purposes hereof, which power of attorney, being given for security, is
coupled with an interest and is irrevocable. Each Company hereby ratifies and confirms, and
agrees to ratify and confirm, all action taken by the Administrative Agent, its officers,
employees or agents pursuant to the foregoing power of attorney.



     22. Application of Payments. In the event any payments are received by the
Administrative Agent under the terms of this Agreement for application to the Senior Debt
at any time when the Senior Debt has not been declared due and payable and prior to the
date on which it would otherwise become due and payable, such payment shall constitute a
voluntary prepayment of the Senior Debt for all purposes under the Credit Agreement.



     23. Remedies. In the event of a breach by any of the Companies in the
performance of any of the terms of this Agreement, the Administrative Agent, on behalf of
the Lenders, may demand specific performance of this Agreement and seek injunctive relief
and may exercise any other remedy available at law or in equity, it being recognized that
the remedies of the Administrative Agent on behalf of the Lenders at law may not fully
compensate the Administrative Agent on behalf of the Lenders for the damages they may
suffer in the event of a breach hereof.



6









 





     24. Consent to Jurisdiction; Waiver of Jury Trial. Each Company hereby
irrevocably submits 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, and each Company hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in such New York
state or federal court. Each Company hereby waives to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of any such action or
proceeding. Each Company hereby appoints the process agent identified below (the “Process
Agent”) as its agent to receive on behalf of such party and its respective property service
of copies of the summons and complaint and any other process which may be served in any
action or proceeding. Such service may be made by mailing or delivering a copy of such
process to the Company in care of the Process Agent at the Process Agent’s address, and
each Company hereby authorizes and directs the Process Agent to receive such service on its
behalf. Each Company agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions (or any political subdivision
thereof) by suit on the judgment or in any other manner provided at law. Each Company
further agrees that it shall, for so long as any commitment or any obligation of any Loan
Party to any Lender remains outstanding, continue to retain Process Agent for the purposes
set forth in this Section 24. The Process Agent is Armstrong Coal Company, Inc., with an
office on the date hereof as set forth in the Credit Agreement. The Process Agent hereby
accepts the appointment of Process Agent by the Companies and agrees to act as Process
Agent on behalf of the Companies.



     25. EXCEPT AS PROHIBITED BY LAW, EACH COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY WAIVE TRIAL BY A JURY IN ANY ACTION, SUIT, PROCEEDING
OR COUNTERCLAIM OF ANY KIND ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULLEST EXTENT PERMITTED BY LAW.



     26. Notices. All notices, statements, requests and demands and other
communications given to or made upon the Companies, the Administrative Agent or the Lenders
in accordance with the provisions of this Agreement shall be given or made as provided in
Section 11.5 [Notices; Effectiveness; Electronic Communication] of the Credit Agreement.



     27. Rules of Construction. The rules of construction set forth in Section
1.2 [Construction] of the Credit Agreement shall apply to this Agreement.



[SIGNATURES APPEAR ON THE FOLLOWING PAGES]




7









 





[SIGNATURE PAGE 1 OF 4 INTERCOMPANY SUBORDINATION AGREEMENT]




     WITNESS the due execution hereof as of the day and year first above written with the
intent that it constitute a sealed instrument.



	 	 	 	 	 
	 	BORROWERS:



ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	
 	 (SEAL)
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	
 	 (SEAL)
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 


	 	 	 	 	 
	 	ELK CREEK, L.P.

 	 
	 	By:  	Elk Creek GP, LLC, as General Partner
 	 
	 
	 	 	By:  	
 	 (SEAL)
	 	 	 	Name:  J. Richard Gist 	 
	 	 	 	Title:    Authorized Person 	 



	 	 	 	 	 
	 	WESTERN MINERAL DEVELOPMENT, LLC

 	 
	 	By:  	
 	 (SEAL)
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 













 






	 	 	 	 	 



[SIGNATURE PAGE 2 OF 4 INTERCOMPANY SUBORDINATION AGREEMENT]




	 	 	 	 	 
	 	WESTERN DIAMOND LLC

 	 
	 	By:  	
 	 (SEAL)
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN LAND COMPANY, LLC

 	 
	 	By:  	
 	 (SEAL)
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	GUARANTORS:



ARMSTRONG ENERGY, INC.

 	 
	 	By:  	
 	 (SEAL)
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG RESOURCES HOLDINGS,
LLC

 	 
	 	By:  	
 	 (SEAL)
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 













 






	 	 	 	 	 



[SIGNATURE PAGE 3 OF 4 INTERCOMPANY SUBORDINATION AGREEMENT]




	 	 	 	 	 
	 	CERALVO HOLDINGS, LLC

 	 
	 	By:  	
 	 (SEAL)
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK GP, LLC

 	 
	 	By:  	
 	 (SEAL)
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	
 	 (SEAL)
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ELK CREEK OPERATING, L.P.

 	 
	 	By:  	Elk Creek Operating GP, LLC, as 
General Partner
 	 
	 	
 	 
	 	 	By:  	
 	 (SEAL)
	 	 	 	Name:  J. Richard Gist 	 
	 	 	 	Title:    Authorized Person 	 













 






	 	 	 	 	 



[SIGNATURE PAGE 4 OF 4 INTERCOMPANY SUBORDINATION AGREEMENT]




	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION, as

Administrative Agent

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
















 





[INSERT PROPERTY HEADER]




                    County, KY




EXHIBIT 1.1(M)(1)

FORM OF MORTGAGE (REVOLVER)



LINE OF CREDIT MORTGAGE, LEASEHOLD MORTGAGE, SECURITY AGREEMENT,

ASSIGNMENT OF RENTS AND LEASES, FINANCING STATEMENT,

FIXTURE FILING AND AS-EXTRACTED COLLATERAL FILING (KENTUCKY)




(THIS MORTGAGE SECURES FUTURE ADVANCES)



by and from



[                    
                    ]



(collectively, the “Mortgagor”),

to

PNC BANK, NATIONAL ASSOCIATION,



a national banking association, not in its individual capacity, but solely as Administrative Agent,

pursuant to that certain Credit Agreement, effective as of February 9, 2011, as amended, for the

benefit of the Lenders under the Credit Agreement (as all such terms are hereinafter defined),



“Mortgagee”



Dated February 8, 2011; effective as of February       , 2011



County:                     




State: Kentucky




THE ADDRESS OF MORTGAGEE IS:




PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent 249
Fifth Avenue 
Pittsburgh, Allegheny County, Pennsylvania

15222-2707 Attention: Richard Munsick, Senior Vice President




NOTE TO RECORDER: THIS MORTGAGE CONSTITUTES A FIXTURE FILING AND COVERS AS- EXTRACTED COLLATERAL
UNDER THE UCC (AS DEFINED HEREIN) AND IS TO BE CROSS- REFERENCED IN THE RECORDS RELATING TO FIXTURE
FILINGS AND AS-EXTRACTED
COLLATERAL FILINGS.



THE MORTGAGEE, AS SECURED PARTY, DESIRES THIS FIXTURE FILING AND FINANCING STATEMENT COVERING
AS-EXTRACTED COLLATERAL TO BE INDEXED AGAINST THE
OWNERS OF THE INTEREST IN THE REAL ESTATE DESCRIBED HEREIN.



PREPARED BY, RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:



 



Matthew E. Shames, Esquire

Buchanan Ingersoll & Rooney PC

301 Grant Street, 20th Floor

One Oxford Centre

Pittsburgh, PA 15219-1410



REVIEWED FOR COMPLIANCE WITH APPLICABLE KENTUCKY LAW BY:


  



Andrew Fleischman, Esquire

Miller Wells PLLC

710 West Main Street, 4th Floor

Louisville, KY 40202



 









 





[INSERT PROPERTY HEADER]




LINE OF CREDIT MORTGAGE, LEASEHOLD MORTGAGE, SECURITY AGREEMENT,

ASSIGNMENT OF RENTS AND LEASES, FINANCING STATEMENT,

FIXTURE FILING AND AS-EXTRACTED COLLATERAL FILING (KENTUCKY)




THIS MORTGAGE SECURES FUTURE ADVANCES



     THIS LINE OF CREDIT MORTGAGE, LEASEHOLD MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF
RENTS AND LEASES, FINANCING STATEMENT, FIXTURE FILING AND AS-EXTRACTED COLLATERAL FILING
(this “Mortgage”) is made and executed the 8th day of February, 2011, to be effective as of
February      , 2011, and is made and delivered by [WESTERN MINERAL DEVELOPMENT, LLC, a Delaware
limited liability company having an address at 7733 Forsyth Boulevard, Suite 1625, St.
Louis, Missouri 63105 (“Western Mineral”), ] [WESTERN DIAMOND LLC, a Nevada limited
liability company having an address at 7733 Forsyth Boulevard, Suite 1625, St. Louis,
Missouri 63105 (“Western Diamond”), ][WESTERN LAND COMPANY, LLC, a Kentucky limited
liability company having an address at 407 Brown Road, Madisonville, Kentucky 42431
(“Western Land”), ][CERALVO HOLDINGS, LLC, a Delaware limited liability company having an
address at 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105 (“Ceralvo”), ]and
ARMSTRONG COAL COMPANY, INC., a Delaware corporation having an address at 7733 Forsyth
Boulevard, Suite 1625, St. Louis, Missouri 63105 (“Armstrong” and together with             , the
“Mortgagor”), to and in favor of PNC BANK, NATIONAL ASSOCIATION, a national banking
association with an address at 249 Fifth Avenue, Pittsburgh, Allegheny County, Pennsylvania
15222-2707, as Administrative Agent (“Administrative Agent”) for the Revolver Lenders under
the Credit Agreement (as defined below) (Administrative Agent, together with its successors
and assigns, “Mortgagee”).



     The maximum amount of indebtedness (exclusive of interest thereon) which may be
outstanding hereunder at any time is One Hundred Million and 00/100 Dollars
($100,000,000.00), as further described in the Credit Agreement dated as of February 9,
2011 (as hereinafter defined) with a maturity date of February 9, 2016, together with any
additional sums advanced by Mortgagee pursuant to the provisions of this Mortgage or any
Security Document, including but not limited to any payments by Mortgagee of impositions,
expenses of maintenance, repair or preservation of the Mortgaged Property, costs of
insurance incurred by Mortgagee, reasonable legal, management and consulting fees, and any
other expenses and advances of Mortgagee whatsoever, the reimbursement of which by
Mortgagor is provided for herein or in any Security Document, whether such sums are
advanced before or after the entry of any judgment hereunder or under any other Security
Document. Such indebtedness of the Mortgagor to the Mortgagee is evidenced by (i) those
certain Revolver Notes dated as of the effective date hereof in the aggregate face
principal amount of $50,000,000.00, with interest thereon at the rate provided therein,
payable to the order of the Mortgagor before February 9, 2016, which is the final maturity
date thereof, as defined in the Credit Agreement, and (ii) that certain Swing Loan Note
dated as of the effective date hereof in the face principal amount of $5,000,000.00, with
interest thereon at the rate provided therein, payable to the order of the Mortgagor before
February 9, 2016.



Notices pursuant to this Mortgage shall be delivered to:






 









 








PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent

249 Fifth Avenue

Pittsburgh, Pennsylvania 15222-2707

Attention: Richard Munsick, Senior Vice President




ARTICLE 1

DEFINITIONS




     Section 1.1 Use of Capitalized Terms; Rules of Construction. All capitalized terms
used herein without definition, unless otherwise indicated, shall have the respective
meanings ascribed to them in the Credit Agreement. The rules of construction set forth in
Section 1.2 of the Credit Agreement shall apply to this Mortgage.



     Section 1.2 Definitions. The following terms used in this Mortgage shall have the
meanings set forth:



          (a) “Administrative Agent”: shall mean PNC Bank, National Association, in its
capacity as Administrative Agent for the Lenders under the Credit Agreement, and
any successor entity acting in such capacity.




          (b) “Bankruptcy Code”: shall have the meaning set forth in Section 4.4(a).




          (c) “Borrowers”: shall mean 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.




          (d) “Credit Agreement”: shall mean that certain Credit Agreement, dated as of
February 9, 2011, by and among Borrowers, the Lenders, each Guarantor (including
Mortgagors), and PNC Bank, National Association, in its capacity as Administrative
Agent for the Lenders, as amended and as the same may be supplemented, amended,
restated, refinanced, replaced, or modified from time to time.




          (e) “Event of Default”: shall mean an Event of Default as defined in Section
9.1 of the Credit Agreement.




          (f) “Guarantied Obligations”: shall have the meaning set forth in the Guaranty
Agreement (Revolver).




          (g) “Guarantor”: shall have the meaning set forth in the Credit Agreement.




          (h) “Guaranty Agreement (Revolver)”: shall mean that certain Guaranty and
Suretyship Agreement (Revolver), dated as of February 9, 2011, delivered by the
Revolver Guarantors to the Administrative Agent, as the same may be supplemented,
amended, restated, replaced, or modified from time to time.






2









 








          (i) “Lenders”: shall mean those financial institutions from time to time
identified as “Lenders”, as defined in and pursuant to the Credit Agreement, and
any of their respective successors and assigns.




          (j) “Loan Documents” shall have the meaning set forth in the Credit Agreement,
and “Loan Document” shall mean any of the Loan Documents.




          (k) “Loan Parties”: shall mean Borrowers and the Guarantors, including
Mortgagor, and “Loan Party” shall mean any of the Loan Parties.




          (1) “Loans” shall mean collectively, and “Loan” shall mean separately, all
Loans or any Loan made by the Lenders or one of the Lenders to the Borrowers
pursuant to the Credit Agreement.




          (m) “Mortgaged Property”: shall mean all of Mortgagor’s right, title and
interest now owned or hereafter acquired, installed, maintained or in force, in and
to all of the following:




               (1) the fee interests owned by             , as indicated on Schedule A, in the
real property indicated on Schedule A, together with any greater estate
therein as may now exist or hereafter may be acquired by any Mortgagor
(the “Owned Property”);



               (2) the leasehold interests of             , as indicated on Schedule B, in the
real property indicated on Schedule B (the “Leased Property”), demised
pursuant to the agreements identified at Schedule B (as such agreements
may be supplemented, amended, restated, replaced, or modified from time to
time, each such agreement a “Mortgaged Lease”, and collectively the
“Mortgaged Leases”), together with any greater estate therein as may now
exist or hereafter may be acquired by            ;



               (3) the leasehold interest of Armstrong in the Owned Property and the
Leased Property set forth on Schedules A and B, demised pursuant to the
agreements identified on Schedule C (each of which agreements, as they may
be supplemented, amended, restated, replaced, or modified from time to
time, shall be also defined herein as a “Mortgaged Lease”, and included
collectively in the definition of “Mortgaged Leases”), together with any
greater estate therein as may now exist or hereafter may be acquired by
Armstrong;



               (4) all fee and leasehold real estate interests now owned or
hereafter acquired by Mortgagor in the County in which this Mortgage is
recorded (the “Other Current or After-Acquired Property”);


(the Owned Property, the Leased Property, and the Other Current or After-Acquired Property are
sometimes referred to herein collectively as the “Property”);




               (5) all coal and other minerals owned by Mortgagor or leased to
Mortgagor (whether pursuant to the Mortgaged Leases or otherwise), located
upon, under or in the Property, included within the Property in place and
as produced and extracted (as produced and extracted, and including, but
not limited to, “as-extracted collateral” as defined in the UCC,



3









 




the “as-extracted collateral”), and all rights, privileges, titles and interests appurtenant
and relating thereto and in connection therewith (including, without limitation, rights,
privileges, titles and interests for the development, production, extraction, processing,
treatment, storage, transportation and sale and other disposition of minerals and all contracts and
other agreements relating to such activities as well as all accounts, accounts receivable, contract
rights, other rights to the payments of monies, chattel paper and general intangibles arising from
or relating to such activities) (the “Mineral Interests”);




               (6) except to the extent excluded from the lien of this Mortgage, all
buildings, structures and improvements of Mortgagor, now or at any time
situated, placed or constructed upon or under the Property (the
“Improvements”; the Property and Improvements are collectively referred to
as the “Premises”);



               (7) all materials, supplies, equipment (including, but not limited
to, “equipment” as defined in the UCC), apparatus, standing timber and
other goods attached to or installed in any of the Improvements or the
Property, and water, gas, electrical, telephone, storm and sanitary sewer
facilities and all other utilities and fixtures (including, but not
limited to, “fixtures” as defined in the UCC) placed or constructed upon
the Property whether or not situated in easements (the “Fixtures”);



               (8) all goods, inventory, cut timber, accounts, general intangibles,
instruments, documents, chattel paper, equipment, and all other personal
property of any kind or character (including, but not limited to, “goods”,
“inventory”, “accounts”, “general intangibles”, “instruments”,
“documents”, “chattel paper” and “equipment” as defined in the UCC) as now
or hereafter placed upon, used in connection with, arising from or
otherwise related to the Premises (the “Personality”);



               (9) all reserves, escrows or impounds required under the Loan
Documents and all deposit accounts (including, but not limited to,
“deposit accounts” as defined in the UCC) maintained by Mortgagor with
respect to the Mortgaged Property (the “Deposit Accounts”);



               (10) all leases, licenses, concessions, occupancy agreements or other
agreements (written or oral, now or hereafter in effect), including,
without limitation, contract mining agreements, which grant to any Person,
other than Mortgagor, a possessory interest in, or the right to use, all
or any part of the Property, together with all related security and other
deposits (as any of the foregoing may be supplemented, amended, restated,
replaced, or modified from time to time, each a “Lease”, and collectively
the “Leases”);



               (11) all of the rents, revenues, royalties, income, proceeds,
profits, security and other types of deposits, and other benefits paid or
payable to Mortgagor by parties to the Leases or otherwise, for using,
leasing, licensing, possessing, operating from, residing in, selling or
otherwise enjoying all or any part of the Property (the “Rents”);



               (12) all other agreements, such as construction contracts,
architects’ agreements, engineers’ contracts, utility contracts,
maintenance agreements, management agreements, service contracts, listing
agreements, guaranties, warranties, all permits (subject to



4









 




any required regulatory approval), licenses, certificates and entitlements in any way relating
to the construction, use, occupancy, operation, maintenance, enjoyment or ownership of all or any
part of the Property (as any of the foregoing may be supplemented, amended, restated, renewed,
replaced, or modified from time to time, each a “Permit”, and collectively the “Permits”);




               (13) all property tax refunds payable with respect to all or any part
of the Property (the “Tax Refunds”);



               (14) all proceeds from any insurance policies covering any of the
foregoing described in clauses (1) through and including (12) (the
“Insurance”);



               (15) all awards, damages, remunerations, reimbursements, settlements
or compensation made by any governmental authority pertaining to any
condemnation or other taking (or any purchase in lieu thereof) of all or
any part of the Property and any other property (the “Condemnation
Awards”);



               (16) all rights, privileges, tenements, hereditaments, rights-of-way,
easements, appendages and appurtenances appertaining to all or any part of
the Property, Mineral Interests, Fixtures and Premises; and



               (17) all accessions to, products of, and replacements and substitutions for any of
the foregoing described in clauses (1) through and including (15) and all
proceeds thereof (including, but not limited to, “proceeds” and
“accessions” as defined in the UCC) (the “Proceeds”).



          (n) “Notes”: shall mean, collectively, and “Note” shall mean separately, all
of the Notes of the Borrowers in the form set forth in the Credit Agreement
evidencing the Loans, together with all amendments, extensions, modifications,
restatements, renewals, replacements, refinancings or refundings thereof, in whole
or in part.




          (o) “Obligation(s)”: shall mean any obligation or liability of any of the Loan
Parties to the Administrative Agent (as administrative agent on behalf of the
Revolver Lenders) or any of the Revolver Lenders, 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 the Credit
Agreement, the Revolver Notes, the Letters of Credit (including, without
limitation, the Reimbursement Obligations thereunder), the Agent’s Letter, this
Mortgage or any other Loan Document. Obligations shall include the liabilities to
any Revolver Lender, or any Affiliate or Subsidiary thereof, under any Lender
Provided Interest Rate Hedge and Lender Provided Financial Services Obligations.




          (p) “Permitted Liens” shall have the meaning given to such term in the Credit
Agreement, including all matters listed as “exceptions” in the Schedules and
Exhibits thereto and hereto.




          (q) “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.






5









 








          (r) “Revolver Borrowers” shall mean those Borrowers from time to time
identified as “Revolver Borrowers”, as defined in and pursuant to the Credit
Agreement, and any of their respective successors and assigns, and “Revolver
Borrower” shall mean any of the Revolver Borrowers.




          (s) “Revolver Lenders”: shall mean those financial institutions from time to
time identified as “Revolver Lenders”, as defined in and pursuant to the Credit
Agreement, and any of their respective successors and assigns.




          (t) “Revolver Loans” shall mean collectively, and “Revolver Loan” shall mean
separately, all Loans or any Loan made by the Revolver Lenders or one of the
Revolver Lenders to the Revolver Borrowers pursuant to the Credit Agreement.




          (u) “Revolver Notes”: shall mean, collectively, and “Revolver Note” shall mean
separately, all of the Notes of the Revolver Borrowers in the form set forth in the
Credit Agreement evidencing the Revolver Loans, together with all amendments,
extensions, modifications, restatements, renewals, replacements, refinancings or
refundings thereof, in whole or in part.




          (v) “Secured Debt”: shall mean: (1) the Obligations; (2) all Guarantied
Obligations of any Guarantor under the Guaranty Agreement (Revolver); (3) all
filing, registration and recording fees, and all expenses incident to the
preparation, execution and acknowledgment of this Mortgage and all intangible,
documentary, stamp or similar taxes due upon recording this Mortgage or any
amendment or modification of this Mortgage, together with any penalties, interest,
charges and other amounts imposed upon or due in connection with such intangible,
documentary, stamp or similar taxes, and all duties, imposts, assessments and
charges arising out of or in connection with the execution and delivery of the
Revolver Notes; (4) all amounts expended by Mortgagee after declaration of an Event
of Default pursuant to Article 5, to maintain the lien of this Mortgage, or to
protect the property secured by this Mortgage, including, without limitation,
amounts in respect of insurance premiums, real estate taxes, litigation expenses to
prosecute or defend the rights, remedies and lien of this Mortgage or title to the
property secured hereby, and any costs, charges or amounts to which Mortgagee
becomes subrogated upon payment, whether under recognized principles of law or
equity or under express statutory authority, together with interest on all the
foregoing amounts at the highest rate at which interest is then computed on any
portion of the Secured Debt; and (5) all obligations from time to time of any Loan
Party under or in connection with any Lender Provided Financial Services
Obligations or a Lender Provided Interest Rate Hedge, as the same may be amended,
modified or supplemented from time to time in accordance with the terms therewith.
The Secured Debt shall include all Revolver Loans, all Participation Advances, all
Reimbursement Obligations of Revolver Borrowers, Mortgagor, and any other Loan
Party with respect to any Letter of Credit, each made or issued in accordance with
the terms of the Credit Agreement, and all Letter of Credit Borrowings.




          (w) “Security Agreement (Revolver)”: shall mean that certain Security
Agreement (Revolver) dated as of February 9, 2011, to which the Mortgagor and
Mortgagee (among others) are parties, as the same may be supplemented, amended,
restated, replaced, or modified from time to time.






6









 








          (x) “Security Documents”: shall mean all security agreements, pledge
agreements, mortgages, deeds of trust and all other documents, instruments, and
agreements sufficient to provide the Administrative Agent for the benefit of the
Revolver Lenders with a perfected Lien, subject only to Permitted Liens, on any
property of the Mortgagor.




          (y) “Term Mortgage” shall mean that certain Mortgage, Leasehold Mortgage,
Security Agreement, Assignment of Rents and Leases, Financing Statement, Fixture
Filing and As-Extracted Collateral Filing, from Mortgagor in favor of Mortgagee, of
even date herewith, encumbering the Mortgaged Property and recorded in the Clerk’s
Office of                      County, Kentucky.




          (z) “UCC”: shall mean the Uniform Commercial Code in effect in the state in
which the Property is located, as amended from time to time.




ARTICLE 2

GRANT



     Section 2.1 Grant. To secure the full and timely payment and performance of the
Secured Debt, including without limitation the Guarantied Obligations, Mortgagor MORTGAGES,
GRANTS, BARGAINS, ASSIGNS, SELLS, CONVEYS and CONFIRMS, to Mortgagee, as Administrative
Agent for the Revolver Lenders, the Mortgaged Property, subject, however, only to the Term
Mortgage and Permitted Liens, TO HAVE AND TO HOLD the Mortgaged Property to Mortgagee, as
Administrative Agent for the Revolver Lenders and for other Persons from time to time
holders of the Secured Debt. Mortgagor does hereby bind itself, its respective successors
and assigns to WARRANT AND FOREVER DEFEND the title to its respective interests in and to
the Mortgaged Property.



     Provided further, subject to the terms hereof and of the Credit Agreement, the Loan
Documents and the other Security Documents, until an Event of Default shall occur,
Mortgagor shall have and possess the full right and privilege to own, lease, operate,
manage and control its interests in and to the Mortgaged Property in all respects, to
extract the Mineral Interests therefrom, and to do all other matters and things that
Mortgagor deems necessary, desirable or appropriate thereon and therewith, subject only to
the Term Mortgage and Permitted Liens.



     Section 2.2 Maximum Secured Amount. Pursuant to Kentucky Revised Statutes (“KRS”)
382.520, this Mortgage shall secure the payment of the Secured Debt in the original amount
of $50,000,000, plus an additional amount up to $50,000,000, plus accrued interest and
costs and fees.



     Section 2.3 Revolving Credit Plan; Line of Credit. To the extent that the Secured Debt
is deemed to be a “revolving credit plan” or “line of credit” pursuant to KRS 382.385,
$100,000,000 is the maximum principal amount of credit that may be extended under the line
of credit or the maximum credit limit of the revolving credit plan which, in each case, may
be outstanding at any time or times under the line of credit or revolving credit plan, and
which is to be secured by this Mortgage. It shall be an Event of Default under this
Mortgage if Mortgagor requests a reduction or release, in the manner provided by KRS
382.385 or KRS 382.520, of any portion of the Secured Debt prior to the date that all of
the Obligations have been indefeasibly



7









 







paid in full in cash, the Letters of Credit have expired or terminate, and the Commitments
terminated, and this Mortgage has been terminated in writing, and Mortgagor hereby waives any and
all right to request such a reduction or release to the maximum extent permitted by Law.



     Section 2.4 Maturity of the Secured Debt. The final maturity date of the Secured Debt
is February 9, 2016, as such date may be extended by agreement of the parties from time to
time.



     Section 2.5 Priority of Lien. The parties hereto agree and acknowledge that the Term
Mortgage shall be deemed to be prior to this Mortgage, regardless of whether this Mortgage
is recorded before the Term Mortgage.



ARTICLE 3

WARRANTIES, REPRESENTATIONS AND COVENANTS



          Mortgagor hereby warrants and represents to, and covenants with, Mortgagee as
follows:




     Section 3.1 Second Lien Status. Except for Permitted Liens and the Term Mortgage,
Mortgagor shall preserve and protect the second lien and security interest status of this
Mortgage against the Mortgaged Property. If any lien or security interest other than a
Permitted Lien is asserted against the Mortgaged Property, Mortgagor shall as promptly as
practical, and at its expense, take such reasonable action so as to cause it to be released
or contest the same (as determined by Mortgagor) in compliance with the requirements of the
Credit Agreement, the Loan Documents and the other Security Documents.



     Section 3.2 Payment and Performance. Mortgagor shall pay and perform the Secured Debt
in a timely manner, when required, and in compliance with all terms, covenants and
conditions set forth in the Credit Agreement.



     Section 3.3 Inspection. Mortgagor shall permit Mortgagee, and its agents,
representatives and employees, upon reasonable prior notice to the Mortgagor, to inspect
the Mortgaged Property and all books and records of each Mortgagor related thereto, as
provided in the Credit Agreement.



     Section 3.4 Insurance; Condemnation Awards and Insurance Proceeds.



          (a) Insurance. Mortgagor shall maintain or cause to be maintained, with
respect to its Mortgaged Property, insurance against loss or damage as and to the
extent required pursuant to the terms of the Credit Agreement. Other than those
buildings, structures and improvements specified on Schedule D, which buildings,
structures and improvements expressly do not constitute Mortgaged Property subject
to the terms of this Mortgage, if any portion of an enclosed structure now or
hereafter located on the Mortgaged Property is located in an area identified by the
Federal Emergency Management Agency as an area having special flood hazards and in
which flood insurance has been made available under the National Flood Insurance
Act of 1968 (or any amendment or successor act thereto), then Mortgagor shall
maintain, or cause to be maintained, with a financially sound and reputable
insurer, flood


8









 







 insurance in an amount sufficient to comply with all applicable rules and regulations
promulgated pursuant to such Act.




          (b) Condemnation Awards. Subject to the terms of the Credit Agreement
applicable to proceeds payable as the result of any condemnation proceeding,
Mortgagor assigns all Condemnation Awards to Mortgagee and authorizes Mortgagee to
collect and receive such Condemnation Awards and to give proper receipts and
acquittances therefor.




          (c) Insurance Proceeds. Subject to the terms of the Credit Agreement
applicable to proceeds payable as the result of an insured loss or casualty or
other event, Mortgagor assigns to Mortgagee all proceeds of any Insurance policies
insuring against loss or damage or other event with respect to the Mortgaged
Property. Subject to the terms of the Credit Agreement, Mortgagor authorizes
Mortgagee to collect and receive such proceeds and authorizes and directs the
issuer of each of such Insurance policies to make payment for all such losses
directly to Mortgagee, instead of to Mortgagor and Mortgagee jointly.


     Section 3.5 Impositions. Subject to Section 8.1.2 of the Credit Agreement, before the
date when any fine, late charge or other penalty for late payment may be imposed, Mortgagor
shall pay and discharge or cause to be paid or discharged all taxes of every kind and
nature (including real and personal property taxes on the Mortgaged Property and income,
franchise, withholding, profits and gross receipts taxes if such taxes are required to be
paid in lieu of real or personal property taxes, any tax imposed directly or indirectly on
the Mortgagee with respect to the Mortgaged Property or this Mortgage, the value of the
equity of Mortgagor therein or the indebtedness evidenced by the Notes), all charges for
any easement or agreement maintained for the benefit of any of the Mortgaged Property, all
general and special assessments (including, without limitation, any condominium or planned
unit development assessments, if any), levies, permits, inspection and license fees, all
mortgages and other liens which may be permitted by Mortgagee, all water and sewer rents
and charges and all other charges and liens, even if unforeseen or extraordinary, imposed
upon or assessed against Mortgagor or any of the Mortgaged Property or arising in respect
of the occupancy, use or possession thereof.



ARTICLE 4

LEASEHOLD MORTGAGE PROVISIONS



          Mortgagor hereby represents and warrants to, and covenants with, Mortgagee as
follows:




     Section 4.1 Estoppel Certificates. Mortgagors shall, within thirty (30) days after
written request from Mortgagee, use its reasonable efforts to obtain from each lessor and
deliver to Mortgagee a certificate setting forth the name of the tenant under each
Mortgaged Lease and stating that such Mortgaged Lease is in full force and effect, is
unmodified or, if such Mortgaged Lease has been modified, the date of each modification
(together with copies of each such modification), that no notice of termination thereof has
been served on Mortgagor, stating that no default or event which with notice or lapse of
time (or both) would become a default is existing under such Mortgaged Lease (or if any
such default or event is existing, specifying the nature of such default or event), stating
the date to which rent has been paid, and containing such other statements and
representations as may be reasonably requested by Mortgagee.



9









 





     Section 4.2 No Merger. So long as any of the Secured Debt remains unpaid or
unperformed, the fee title to, and the leasehold estate in, the Leased Property subject to
any Mortgaged Lease shall not merge but shall always be kept separate and distinct
notwithstanding the union of such estates in the lessor or in Mortgagor, or in a third
party, by purchase or otherwise. If Mortgagor acquires the fee title or any other estate,
title or interest in the Leased Property, or any part thereof, the lien of this Mortgage
shall attach to, cover and be a lien upon such acquired estate, title or interest and the
same shall thereupon be and become a part of the Mortgaged Property with the same force and
effect as if specifically encumbered herein. Mortgagor agrees to execute all instruments
and documents that Mortgagee may reasonably require to ratify, confirm and further evidence
the lien of this Mortgage on the acquired estate, title or interest. Furthermore, Mortgagor
hereby appoints Mortgagee as its true and lawful attorney-in-fact to execute and deliver,
following an Event of Default, all such instruments and documents in the name and on behalf
of Mortgagor. This power, being coupled with an interest, shall be irrevocable until all of
the Obligations are indefeasibly paid in full in cash, the Letters of Credit have expired
or are terminated, and the Commitments terminated.



     Section 4.3 No Duties Imposed on Mortgagee. Notwithstanding anything to the contrary
contained herein, Mortgagee shall have no liability or obligation under any Mortgaged Lease
by reason of its acceptance of this Mortgage, except as set forth in the following
sentence. Mortgagee shall be liable for the obligations of the tenant arising out of any
Mortgaged Lease for only that period of time for which Mortgagee is in possession of the
Premises or has acquired, by foreclosure or otherwise, and is holding all of Mortgagor’s
right, title and interest therein, subject, however, in any case to the obligations and
requirements of the Mortgagor and the Loan Parties to indemnify Mortgagee as provided in
the Credit Agreement and any of the other Loan Documents.



     Section 4.4 Bankruptcy Provisions Relating to Mortgaged Leases.



          (a) Election under Section 365(h) of Bankruptcy Code. If any lessor under any
Mortgaged Lease rejects or disaffirms, or seeks or purports to reject or disaffirm,
any such Mortgaged Lease pursuant to any proceeding under Title 11 of the United
States Code (the “Bankruptcy Code”), then Mortgagor shall not exercise an election
under Section 365(h) of the Bankruptcy Code (a “365(h) Election”) except as
otherwise provided in this paragraph. To the extent permitted by Law, Mortgagor
shall not suffer or permit the termination of a Mortgaged Lease by exercise of the
365(h) Election or otherwise without Mortgagee’s consent. Mortgagor acknowledges
that because the Mortgaged Leases are a primary element of Mortgagee’s security for
the Secured Debt, it is not anticipated that Mortgagee would consent to termination
of any Mortgaged Lease. If Mortgagor makes any 365(h) Election in violation of this
Mortgage, then such 365(h) Election shall be void and of no force or effect.




          (b) Assignment to Mortgagee. Mortgagor hereby assigns to Mortgagee the 365(h)
Election with respect to each Mortgaged Lease until the Obligations have been
indefeasibly paid in full in cash, the Letters of Credit have expired or are
terminated, and the Commitments terminated. Mortgagor acknowledges and agrees that
the foregoing assignment of the 365(h) Election and related rights is one of the
rights that Mortgagee may use at any time to protect and preserve Mortgagee’s other
rights and interests under this Mortgage. Mortgagor


10









 







 further acknowledges that exercise of the 365(h) Election in favor of terminating any
Mortgaged Lease would constitute waste prohibited by this Mortgage.




          (c) Occupancy Rights. Mortgagor acknowledges that if the 365(h) Election is
exercised in favor of such Mortgagor remaining in possession under a Mortgaged
Lease, then Mortgagor’s resulting occupancy rights, as adjusted by the effect of
Section 365 of the Bankruptcy Code, shall then be part of the Mortgaged Property
and shall be subject to the lien of this Mortgage.




          (d) Rejection of Mortgaged Lease by Lessor. If a lessor under any Mortgaged
Lease rejects or disaffirms any such Mortgaged Lease or purports or seeks to
disaffirm any such Mortgaged Lease pursuant to any proceeding under the Bankruptcy
Code, then (1) the Mortgagor shall remain in possession of the Property demised
under any such Mortgaged Lease so rejected or disaffirmed and shall perform all
acts reasonably necessary for Mortgagor to remain in such possession for the
unexpired term of any such Mortgaged Lease, whether the then existing terms and
provisions of such Mortgaged Lease require such acts or otherwise; and (2) all of
the terms and provisions of this Mortgage and the lien created by this Mortgage
shall remain in full force and effect and shall extend automatically to all of
Mortgagor’s rights and remedies arising at any time under, or pursuant to, Section
365(h) of the Bankruptcy Code, including all of its rights to remain in possession
of the Property.




          (e) Assignment of Claims to Mortgagee. Mortgagor, as promptly as practical
after learning that a lessor under any Mortgaged Lease has failed to perform the
terms and provisions thereunder (including by reason of a rejection or
disaffirmance or purported rejection or disaffirmance of any such Mortgaged Lease
pursuant to any proceeding under the Bankruptcy Code), shall notify Mortgagee of
any such failure to perform. Mortgagor unconditionally assigns, transfers, and sets
over to Mortgagee any and all damage claims thereunder. This assignment
constitutes a present, irrevocable, and unconditional assignment of all damage
claims under the Mortgaged Leases, and shall continue in effect until the
Obligations have been indefeasibly paid in full in cash, the Letters of Credit have
expired or are terminated, and the Commitments terminated. Notwithstanding the
foregoing, Mortgagee grants to the Mortgagor a revocable license to exercise any
such Mortgaged Lease damage claims, which license may only be revoked by Mortgagee
upon the occurrence and during the continuance of any Event of Default.




          (f) New Lease Issued to Mortgagee. If any Mortgaged Lease is for any reason
whatsoever terminated before the expiration of its term and, pursuant to any
provision thereof, Mortgagee or its designee shall acquire from the lessor thereunder a new lease of the same leased premises, then Mortgagor shall not have any
right, title or interest in or to such new leases or the estates created thereby.






11









 








ARTICLE 5

DEFAULT AND FORECLOSURE




     Section 5.1 Remedies. Upon the occurrence and during the continuance of an Event of
Default, any one or more of the following rights, remedies and recourses may be exercised:



          (a) Acceleration. Subject to the terms of the Credit Agreement, any of the
Obligations or any portion thereof may become immediately due and payable, without
further notice, presentment, protest, notice of intent to accelerate, notice of
acceleration, demand or action of any nature whatsoever (each of which hereby is
expressly waived by Mortgagor). Upon the occurrence of an Event of Default under
Section 9.1.12 of the Credit Agreement, all Obligations shall automatically and
immediately become due and payable without notice or any other act on the part of
Administrative Agent or any other holder of any portion of the Obligations.




          (b) Entry on Mortgaged Property. Subject to applicable Law, Mortgagee may
enter the Mortgaged Property and take exclusive possession thereof and of all
books, records and accounts relating thereto or located thereon. If Mortgagor
remains in possession of the Mortgaged Property following the occurrence and during
the continuance of an Event of Default, without Mortgagee’s prior written consent,
subject to applicable Law, Mortgagee may invoke any legal remedies to dispossess
Mortgagor.




          (c) Operation of Mortgaged Property. Subject to applicable Law, Mortgagee may
hold, lease, develop, manage, operate or otherwise use the Mortgaged Property upon
such terms and conditions as Mortgagee may deem reasonable under the circumstances
(including making such repairs, alterations, additions and improvements and taking
other actions, from time to time, as Mortgagee deems necessary, also including the
mining and sale of Mineral Interests on the Mortgaged Property), and apply all
Rents, Proceeds and other amounts collected by Mortgagee in connection therewith in
accordance with the provisions of Section 9.2.4 of the Credit Agreement.




          (d) Foreclosure and Sale. Mortgagee may (i) institute and maintain an action
of mortgage foreclosure against the Mortgaged Property and the interests of the
Mortgagor therein, (ii) institute and maintain an action on any instruments
evidencing the Secured Debt or any portion thereof, and (iii) take such other
action at law or in equity for the enforcement of the Credit Agreement, the Loan
Documents or any of the other Security Documents as the law may allow, and in each
such action Mortgagee shall be entitled to all costs of suit and attorneys’ fees.
Mortgagee may institute proceedings for the complete foreclosure of this Mortgage
by judicial action, in which case the Mortgaged Property may be sold for cash or
credit in one or more parcels. With respect to any notices required or permitted
under the UCC, Mortgagor agrees that ten (10) days’ prior written notice shall be
deemed commercially reasonable. At any such sale by virtue of any judicial
proceedings, or any other legal right, remedy or recourse, the title to and right
of possession of any such property shall pass to the purchaser thereof, and to the
fullest extent permitted by Law, Mortgagor shall be completely and irrevocably
divested of all of its right, title, interest, claim, equity, equity of redemption,
and demand whatsoever, either at law or in equity, in and to the property sold and
such sale shall be a perpetual bar both at law and in equity against Mortgagor, and
against all other Persons claiming or to claim the property sold or


12









 







 any part thereof, by, through or under Mortgagor. Mortgagee or Administrative Agent (if
different than Mortgagee) may be a purchaser at such sale. If Mortgagee is the highest bidder,
Mortgagee may credit the portion of the purchase price that would be distributed to the Secured
Debt in accordance with the Credit Agreement.




          (e) Receiver. Mortgagee may make application to a court of competent
jurisdiction for, and obtain from such court as a matter of strict right and
without notice to Mortgagor or regard to the adequacy of the Mortgaged Property
for the repayment of the Secured Debt, the appointment of a receiver of the
Mortgaged Property, and Mortgagor irrevocably consents to such appointment. Any
such receiver shall have all the usual powers and duties of receivers in similar
cases, including the full power to rent, maintain and otherwise operate the
Mortgaged Property upon such terms as may be approved by such court, and in a
manner consistent with the terms of any applicable Mortgaged Lease, and shall
apply such Rents, Proceeds and other amounts collected by Mortgagee in accordance
with the provisions of Section 9.2.4 of the Credit Agreement.




          (f) Other Remedies. Subject to applicable Law, Mortgagee may exercise all
other rights, remedies and recourses granted to Mortgagee with respect to all or
any portion of the Mortgaged Property pursuant to the terms of the Credit
Agreement, the Loan Documents or the Security Documents, or otherwise available at
law or in equity.




     Section 5.2 Separate Sales. The Mortgaged Property may be sold in one or more parcels
and in such other manner and order as Mortgagee in its sole discretion may elect. The right
of sale arising out of any Event of Default shall not be exhausted by any one or more
sales.



     Section 5.3 Remedies, Cumulative, Concurrent and Nonexclusive. Mortgagee shall have
all rights, remedies and recourses with respect to the enforcement against all or any
portion of the Mortgaged Property granted pursuant to this Mortgage, under the Credit
Agreement or any of the Loan Documents or the other Security Documents, and available at
law or equity (including the UCC), which rights, (a) shall be cumulative and concurrent,
(b) may be pursued separately, successively or concurrently against Mortgagor or others
obligated for the payment or performance of the Secured Debt or against the Mortgaged
Property, or against any one or more of them, at the sole discretion of Mortgagee, as the
case may be, (c) may be exercised as often as occasion therefor shall arise, and the
exercise or failure to exercise any of them shall not be construed as a waiver or release
thereof or of any other right, remedy or recourse, and (d) are intended to be, and shall
be, nonexclusive. No action by Mortgagee in the enforcement of any rights, remedies or
recourses relating to all or any portion of the Mortgaged Property, or otherwise at law or
equity shall be deemed to cure any Event of Default.



     Section 5.4 Release of and Resort to Collateral. Subject to the terms of the Credit
Agreement, Mortgagee may release, regardless of consideration and without the necessity for
any notice to or consent by the holder of any subordinate lien on the Mortgaged Property,
all or any portion of the Mortgaged Property without, as to the remainder, in any way
impairing, affecting, subordinating or releasing the lien or security interest created in
or evidenced by this Mortgage or its status as a second and prior lien and security
interest in and to the Mortgaged Property. For payment of the Secured Debt, Mortgagee may
resort to any other security in such order and manner as Mortgagee may elect.



13









 





     Section 5.5 Waiver of Redemption, Notice and Marshalling of Assets. To the fullest
extent permitted by Law, Mortgagor hereby irrevocably and unconditionally waives and
releases (a) all benefit that might accrue to any Mortgagor by virtue of any present or
future statute of limitations or Law or judicial decision exempting the Mortgaged Property
from attachment, levy or sale on execution or providing for any stay of execution,
exemption from civil process, redemption or extension of time for payment, (b) except as
otherwise expressly set forth herein or in the Credit Agreement, all notices of any Event
of Default or of Mortgagee’s election to exercise or the actual exercise of any right,
remedy or recourse provided for under each Loan Document, including this Mortgage, and (c)
any right to a marshalling of assets or a sale in inverse order of alienation.



     Section 5.6 Discontinuance of Proceedings. If Mortgagee shall have proceeded to invoke
any right, remedy or recourse permitted under the Credit Agreement, this Mortgage or any
other Loan Document or Security Document, and shall thereafter elect to discontinue or
abandon it for any reason, Mortgagee shall have the unqualified right to do so and, in such
an event, Mortgagor and Mortgagee shall be restored to their respective former positions
with respect to the Secured Debt, the Loan Documents, the other Security Documents, the
Mortgaged Property and otherwise, and the rights, remedies, recourses and powers of
Mortgagee shall continue as if the right, remedy or recourse had never been invoked, but no
such discontinuance or abandonment shall waive any Event of Default which may then exist,
or the right of Mortgagee thereafter to exercise any right, remedy or recourse under the
Credit Agreement, this Mortgage, the Loan Documents or any Security Document for such Event
of Default.



     Section 5.7 No Liability of the Mortgagee in Collecting. The Mortgagee is hereby
absolved from all liability for failure to enforce collection of any Proceeds assigned by
this Mortgage (and no such failure shall be deemed to be waiver of any right of the
Mortgagee under this Article 5) and from all other responsibility in connection therewith,
except the responsibility to account to the Mortgagor for funds actually received, it being
understood and agreed that Mortgagee’s ledger and other relevant records shall, in the
absence of manifest error, be conclusive as the statement of funds so received.



     Section 5.8 Occupancy After Foreclosure. Any sale of the Mortgaged Property or any
part thereof in accordance with Section 5.1 will divest all right, title and interest of
Mortgagor in and to the property sold. Subject to applicable Law, any purchaser at a
foreclosure sale will receive immediate possession of the property purchased. If Mortgagor
retains possession of such property or any part thereof subsequent to such sale, such
Mortgagor will be considered a tenant at sufferance of the purchaser, and will, if
Mortgagor remains in possession after demand to remove, be subject to eviction and removal,
forcible or otherwise, with or without process of law.



     Section 5.9 Additional Advances and Disbursements; Costs of Enforcement.



          (a) Upon the occurrence and during the continuance of any Event of Default,
Mortgagee shall have the right, but not the obligation, to cure such Event of
Default in the name and on behalf of Mortgagor. All sums advanced and expenses
incurred at any time by Mortgagee under this Section 5.9, or otherwise under this
Mortgage, the Credit Agreement, the other Loan Documents or any of the other
Security Documents, or applicable Law, shall bear


14









 







 interest from the date that such sum is advanced or expense incurred, to and including the
date of reimbursement, computed at the highest rate at which interest is then computed on any
portion of the Secured Debt, and all such sums, together with interest thereon, shall be secured by
this Mortgage.




          (b) Mortgagor shall pay all reasonable expenses (including reasonable
attorneys’ fees and expenses) of or incidental to the perfection and enforcement of
this Mortgage, or the enforcement, compromise or settlement of the Secured Debt or
any claim under this Mortgage and for the curing thereof, or for defending or
asserting the rights and claims of Mortgagee in respect thereof, by litigation or
otherwise.




     Section 5.10 No Mortgagee in Possession. Neither the enforcement of any of the
remedies under this Article 5, the assignment of the Rents and Leases under Article 6, the
security interests under Article 7, nor any other remedies afforded to Mortgagee hereunder
or under the Credit Agreement or under any other Loan Document, or at law or in equity,
shall cause Mortgagee to be deemed or construed to be a mortgagee in possession of the
Mortgaged Property, to obligate Mortgagee to lease the Mortgaged Property or attempt to do
so, or to take any action, incur any expense, or perform or discharge any obligation, duty
or liability whatsoever under any of the Leases, Mortgaged Leases, or otherwise.



     Section 5.11 Effect of Sale. Any sale or sales of any portion of the Mortgaged
Property, whether by virtue of foreclosure proceedings or otherwise, shall operate to
divest all right, title, interest, claim and demand whatsoever either at law or in equity,
of Mortgagor of, in and to its interests in the premises and the property sold, and shall
be a perpetual bar, both at law and in equity, against Mortgagor of, in and to the premises
and the property sold, and shall be a perpetual bar, both at law and in equity, against
Mortgagor, and its successors or assigns, and against any and all persons claiming or who
shall thereafter claim all or any of the property sold from, through or under Mortgagor or
its successors or assigns. Nevertheless, Mortgagor, if requested by Mortgagee so to do,
shall join in the execution and delivery of all proper conveyances, assignments and
transfers of the properties so sold.



     Section 5.12 Obligations Survive Judgment.



          (a) All of the Secured Debt then outstanding shall survive the entry of any
judgment for foreclosure of this Mortgage, and shall also survive the entry of any
judgment on the Credit Agreement, the Notes, or any of the other Loan Documents or
Security Documents, or with respect to any of the Secured Debt then outstanding.
Without limiting the generality of the foregoing, despite the entry of any such
judgment, the Mortgagor shall continue to be bound by all of its covenants and
promises contained in the Credit Agreement, the Loan Documents and the other
Security Documents.




          (b) It is the intention of Mortgagor and Mortgagee that none of the Secured
Debt then outstanding shall merge into or be extinguished by any judgment referred
to in the above subsection (a), but that all of such Secured Debt shall continue in
full force and effect notwithstanding the entry of any such judgment, and that all
of such Secured Debt shall continue to be secured by this Mortgage.






15









 








          (c) Notwithstanding the entry of any judgment referred to in the above
subsection (a), interest shall continue to accrue after the entry of any such
judgment on all of the Secured Debt then outstanding at the rate or rates provided
for in the Credit Agreement or the applicable Lender Provided Interest Rate Hedge
or Lender Provided Financial Services Product (including any applicable default
rate or post maturity rate) until paid despite any statutory provision with respect
to interest rates on judgments, and all such interest shall continue to be secured
by this Mortgage.




ARTICLE 6

ASSIGNMENT OF RENTS AND LEASES



     Section 6.1 Assignment. In furtherance of and in addition to the grant and assignment
made by Mortgagor in Section 2.1 of this Mortgage, the Mortgagor hereby absolutely and
unconditionally assigns, sells, transfers and conveys to Mortgagee all of its respective
right, title and interest in and to all Leases, whether now existing or hereafter entered
into, and all of its respective right, title and interest in and to all Rents. This
assignment is an absolute assignment and not an assignment for additional security only. So
long as no Event of Default shall have occurred and be continuing, the Mortgagor shall have
a revocable license from Mortgagee to exercise all rights extended to the landlord under
the Leases, including the right to receive and collect all Rents. The foregoing license is
granted subject to the conditional limitation that no Event of Default shall have occurred
and be continuing. Upon the occurrence and during the continuance of an Event of Default,
whether or not legal proceedings have commenced, and without regard to waste, adequacy of
security for the Secured Debt or solvency of Mortgagor, the license herein granted shall
automatically expire and terminate, without notice to Mortgagor by Mortgagee (any such
notice being hereby expressly waived by Mortgagor to the extent permitted by applicable
Law).



     Section 6.2 Indebtedness Secured. This Assignment is made for the purposes of
securing:



          (a) The payment of the Secured Debt; and




          (b) the performance and discharge of each and every obligation, covenant and
agreement of Mortgagor contained herein and in the Credit Agreement and the other
Loan Documents.




     Section 6.3 Perfection Upon Recordation. Mortgagor acknowledges that Mortgagee has
taken all actions necessary to obtain, and that upon recordation of this Mortgage, and
Mortgagee shall have, to the extent permitted under applicable Law, a valid and fully
perfected, second priority, present assignment of the Rents arising out of the Leases and
all security for such Leases. Mortgagor acknowledges and agrees that upon recordation of
this Mortgage, Mortgagee’s interest in the Rents shall be deemed to be fully perfected,
“choate” and enforced as to Mortgagor and to the extent permitted under applicable Law, all
third parties, including any subsequently appointed trustee in any case under the
Bankruptcy Code, without the necessity of commencing a foreclosure action with respect to
this Mortgage, making formal demand for the Rents, obtaining the appointment of a receiver
or taking any other affirmative action.



16









 





     Section 6.4 Bankruptcy Provisions. Without limitation of the absolute nature of the
assignment of the Rents hereunder, Mortgagor and Mortgagee agree that (a) this Mortgage
shall constitute a “security agreement” for purposes of Section 552(b) of the Bankruptcy
Code, (b) the security interest created by this Mortgage extends to property of Mortgagor
acquired before the commencement of a case under the Bankruptcy Code and to all amounts
paid as Rents, and (c) such security interest shall extend to all Rents acquired by the
estate after the commencement of any case under the Bankruptcy Code.



     Section 6.5 Application of Rents. All Rents received by Mortgagee pursuant to this
Article 6 shall be applied and disposed of as provided in the Credit Agreement,
specifically in Section 9.1.4 of the Credit Agreement.



     Section 6.6 No Liability of Mortgagee in Collecting. Mortgagee is hereby absolved from
all liability for failure to enforce collection of any Rents so assigned (and no such
failure shall be deemed to be waiver of any right of Mortgagee under this Article 6) and
from all other responsibility in connection therewith, except the responsibility to account
to Mortgagor for funds actually received.



     Section 6.7 Assignment Not a Restriction on Mortgagee’s Rights. Nothing herein
contained shall detract from or limit the absolute obligation of the Mortgagor to make
payment of the Secured Debt regardless of whether the Rents assigned by this Article 6 are
sufficient to pay the same, and the rights under this Article 6 shall be in addition to all
other security now or hereafter existing to secure the payment and performance of the
Secured Debt.



ARTICLE 7

SECURITY AGREEMENT AND FIXTURE FILING



     Section 7.1 Security Interest. This Mortgage constitutes a “security agreement” on
personal property within the meaning of the UCC and other applicable Law with respect to
all existing or hereafter acquired “as-extracted collateral”, “Mineral Interests”,
“Improvements”, “Premises”, “Fixtures”, “Leases”, “Rents”, “Personalty”, “Permits”,
“Proceeds”, “Deposit Accounts”, “Tax Refunds”, “Insurance” and “Condemnation Awards”, each
as defined herein. To this end, Mortgagor grants to Mortgagee a second and prior security
interest in all existing or hereafter acquired “as-extracted collateral”, “Mineral
Interests”, “Improvements”, “Premises”, “Fixtures”, “Leases”, “Rents”, “Personalty”,
“Permits”, “Proceeds”, “Deposit Accounts”, “Tax Refunds”, “Insurance” and “Condemnation
Awards”, to secure the payment and performance of the Secured Debt, and agrees that
Mortgagee shall have all the rights and remedies of a secured party under the UCC with
respect to such property. Any notice of sale, disposition or other intended action by
Mortgagee with respect to all existing or hereafter acquired “as-extracted collateral”,
“Mineral Interests”, “Improvements”, “Premises”, “Fixtures”, “Leases”, “Rents”,
“Personalty”, “Permits”, “Proceeds”, “Deposit Accounts”, “Tax Refunds”, “Insurance” and
“Condemnation Awards” or other Mortgaged Property, sent to Mortgagor at least ten (10) days
prior to any action under the UCC shall constitute reasonable notice to Mortgagor.



     Section 7.2 Financing Statements. Each Mortgagor hereby irrevocably authorizes
Mortgagee to cause financing statements (and amendments thereto and continuations thereof),
naming itself, individually, and/or as Administrative Agent for the Lenders, as secured
party, and



17









 







such Mortgagor as debtor with respect to any of its Mortgaged Property, together with any
further such documents, instruments and assurances to be recorded and filed, at such times and
places as may be required or permitted by Law to so create, perfect and preserve such security
interest. Each Mortgagor specifically also authorizes Mortgagee to file any such financing
statements without such Mortgagor’s execution of any such financing statements. Mortgagor
represents and warrants to Mortgagee that Mortgagor’s jurisdiction of organization, as set forth in
Schedule 1 is correct. After the date of this Mortgage, Mortgagor shall not change its name, type
of organization, organizational identification number (if any), jurisdiction of organization or
location (within the meaning of the UCC) without giving at least ten (10) days’ prior written
notice to Mortgagee.



     Section 7.3 Fixture and “as-extracted collateral” Filing. This Mortgage shall also
constitute a “fixture filing” and an “as-extracted collateral” filing for the purposes of
the UCC against all of the Mortgaged Property which is or is to become “fixtures” or
“as-extracted collateral” related to the Premises. Mortgagor is a “Debtor” and its exact
legal name and mailing address are set forth in the preamble of this Mortgage immediately
preceding Article 1. Mortgagee is the “Secured Party” and its name and mailing address from
which information concerning the security interest granted herein may be obtained are also
set forth in the preamble of this Mortgage immediately preceding Article 1. A statement
describing the portion of the Mortgaged Property comprising the Fixtures, and “as-extracted
collateral”, hereby secured is set forth in Section 1.2(m) of this Mortgage. Mortgagor
represents and warrants to Mortgagee that Mortgagor is the record owner of the fee
interests or owner of its leasehold interest in the Mortgaged Property, as the case may be,
as set forth on Schedules A, B and C. With respect to Fixtures and “as-extracted
collateral” located on Mortgaged Property in which the Mortgagor has an unrecorded
leasehold interest, Schedule B sets forth the name and address of the record owner of such
Mortgaged Property. The information provided in this Section 7.3 is provided so that this
Mortgage shall comply with the requirements of the UCC for a mortgage instrument to be
filed as a financing statement.



     Section 7.4 Mortgage Also a Security Agreement. This Mortgage shall also constitute a
“security agreement” under the UCC. In the event of any irreconcilable conflict with
respect to the “Collateral” (as such term is defined in any Security Agreement), between
the provisions of this Mortgage and the provisions of such Security Agreement, the
provisions of such Security Agreement shall control.



ARTICLE 8

MISCELLANEOUS




     Section 8.1 Notices. Any notice required or permitted to be given under this Mortgage
shall be given in accordance with Section 11.5 of the Credit Agreement.



     Section 8.2 Effect of Guaranty Agreement. If this Mortgage secures an obligation of
guaranty or suretyship or if this Mortgage is securing the obligation of another person or
entity, then Mortgagor further agrees that:



          (a) Mortgagee may do any of the following without notice to Mortgagor or to
any other party obligated to Mortgagee with respect to any of the Secured Debt,
and without


18









 







 adversely affecting the validity or enforceability of this Mortgage or any of the Secured
Debt: (i) release, surrender, exchange, compromise or settle the Secured Debt or any part thereof;
(ii) change, renew or waive the terms of the Secured Debt, or any part thereof; (iii) change, renew
or waive the terms of any Loan Document or any other note, instrument or agreement relating to the
Secured Debt, such rights in Mortgagee to include without limitation the right to change the rate
of interest charged with respect to the Secured Debt or any part thereof (in which event the
obligations of Mortgagor shall be deemed also to include all interest at such changed rate); (iv)
grant any extension or indulgence with respect to the payment or performance of the Secured Debt or
any part thereof; (v) enter into any agreement of forbearance with respect to the Secured Debt, or
any part thereof; (vi) release, surrender, exchange or compromise any security held by Mortgagee
for any of the Secured Debt; (vii) release any other person who is a guarantor or surety or other
obligor of, or who has agreed to purchase, the Secured Debt or any part thereof; and (viii)
release, surrender, exchange or compromise any security or lien held by Mortgagee for the Secured
Debt or any part thereof. Mortgagor agrees that Mortgagee may do any of the above as Mortgagee
deems necessary or advisable, in Mortgagee’s sole discretion, without giving any notice to
Mortgagor, and that Mortgagor will remain liable for full payment and performance of the Secured
Debt.




          (b) Mortgagor waives and agrees not to enforce any of the rights of
Mortgagee against any guarantor or other obligor of any of the Secured Debt, or
obligor of any obligations which the Secured Debt secure, unless and until all
Secured Debt shall have been paid in full to Mortgagee including, but not
limited to: (i) any right of Mortgagor to be subrogated in whole or in part to
any right or claim with respect to any of the Secured Debt or any portion
thereof; and (ii) any right of Mortgagor to require the marshaling of assets
which might otherwise arise from partial payment or performance by Mortgagor to
Mortgagee on account of the Secured Debt or any portion thereof.




     Section 8.3 Covenants Running with the Land. All obligations contained in this
Mortgage are intended by Mortgagor and Mortgagee to be, and shall be construed as,
covenants running with the land. All Persons who may have or acquire an interest in the
Mortgaged Property shall be deemed to have notice of, and be bound by, the terms of this
Mortgage; provided, however, that no such party shall be entitled to any rights hereunder
without the prior written consent of Mortgagee.



     Section 8.4 Mortgagee’s Right to Protect Security. Mortgagee is hereby authorized to
do any one or more of the following, irrespective of whether an Event of Default has
occurred: (a) appear in and defend any action or proceeding purporting to affect the
security hereof or the rights or powers of Mortgagee hereunder; and (b) take such action as
Mortgagee may determine to pay, perform or comply with any insurance or other legal
requirements, to cure any Event of Default and to protect its security in the Mortgaged
Property.



     Section 8.5 Attorney-in-Fact. Upon the occurrence of an Event of Default that has not
been waived, Mortgagor hereby irrevocably appoints Mortgagee as its attorney-in-fact, which
agency is coupled with an interest and with full power of substitution, with full authority
in the place and stead of Mortgagor and in the name of Mortgagor or otherwise, (a) to
execute and/or record any notices of completion, cessation of labor or any other notices
that Mortgagee deems appropriate to protect Mortgagee’s interest, if Mortgagor shall fail
to do so within ten (10)



19









 







days after written request by Mortgagee, (b) upon the issuance of a deed pursuant to the
foreclosure of this Mortgage or the delivery of a deed in lieu of foreclosure, to execute all
instruments of assignment, conveyance or further assurance with respect to the “Mineral Interests”,
“as-extracted collateral”, “Improvements”, “Premises”, “Fixtures”, “Leases”, “Rents”,
“Personalty”, “Permits”, “Proceeds”, “Deposit Accounts”, “Tax Refunds”, “Insurance” and
“Condemnation Awards” or other Mortgaged Property in favor of the grantee of any such deed and as
may be necessary or desirable for such purpose, (c) to prepare, execute, and file or record
financing statements and continuation statements, and to prepare, execute and file or record
applications for registration and like papers necessary to create, perfect or preserve Mortgagee’s
security interests and rights in or to any of the Mortgaged Property, and (d) after the occurrence
and during the continuance of any Event of Default, to perform any obligation of Mortgagor
hereunder, provided, however, that (1) Mortgagee shall not under any circumstances be obligated to
perform any obligation of Mortgagor, (2) any sums advanced by Mortgagee in such performance shall
be added to and included in the Secured Debt and shall bear interest at the highest rate at which
interest is then computed on any portion of the Secured Debt, (3) Mortgagee as such
attorney-in-fact shall only be accountable for such funds as are actually received by Mortgagee,
and (4) Mortgagee shall not be liable to Mortgagor or any other person or entity for any failure to
take any action which it is empowered to take under this Section 8.5.



     Section 8.6 Mortgagee’s Costs and Expenses. If, as the result of an occurrence of an
Event of Default, or the exercise by Mortgagee of any of its rights under this Mortgage,
Mortgagee shall become a party, either as plaintiff or defendant or otherwise, to any suit
or legal proceeding affecting any of the Mortgaged Property or the Secured Debt, or if
review and approval of any document, or any other matter related to any of the Secured
Debt, is required by, or requested of, Mortgagee, Mortgagor shall pay to Mortgagee on
demand its reasonable costs, expenses and attorneys’ fees incurred in connection therewith.
If such amounts are not paid, they shall be added to the principal secured hereby, shall be
included as part of the Secured Debt and shall bear interest at the highest rate at which
interest is then computed on any portion of the Secured Debt from the date of demand.



     Section 8.7 Successors and Assigns. This Mortgage shall be binding upon and inure to
the benefit of Mortgagee and each Mortgagor and their respective successors and assigns.
Each Mortgagor shall not, without the prior written consent of Mortgagee, assign any
rights, duties or obligations hereunder. Each Mortgagor agrees, (i) that nothing herein
shall be deemed to prohibit the assignment or negotiation, with or without recourse, of the
Notes or any future advances, amendments, restatements, supplements, modifications,
extensions, renewals, replacements, substitutions, refinancings, refundings or waivers
thereof, or of the Credit Agreement or any of the other Loan Documents or Security
Documents, or any interest of Mortgagee, the Administrative Agent, or the Lenders therein,
or the assignment of this Mortgage, provided any such assignment or negotiation is
permitted under and in compliance with the Credit Agreement, and (ii) within thirty (30)
days after request by Mortgagee, Mortgagor shall certify to the assignee of this Mortgage,
to Mortgagee and to such other persons as Mortgagee may reasonably request, that this
Mortgage is in full force and effect, and the amount or amounts of the principal balance of
the Loans, and amounts due under any Letters of Credit, the terms of the Notes, and all
such other matters relating to the status of this Mortgage and the Notes, and in such form
as Mortgagee or such assignee may reasonably require.



20









 





     Section 8.8 No Waiver. Any failure by Mortgagee to insist upon strict performance of
any of the terms, provisions or conditions of the Credit Agreement or this Mortgage, or of
any other Loan Document, shall not be deemed to be a waiver of same, and Mortgagee shall
have the right at any time to insist upon strict performance of all of such terms,
provisions and conditions thereof.



     Section 8.9 Conflicts Between Documents. In the event of any irreconcilable conflict
between the provisions of this Mortgage and the provisions of the Credit Agreement, the
provisions of the Credit Agreement shall control.



     Section 8.10 Release or Reconveyance. Notwithstanding anything to the contrary
contained in this Mortgage, upon indefeasible payment in full in cash of the Obligations,
termination of the Commitments, expiration or termination of all Letters of Credit, and
payment and performance of all Obligations, or upon a sale or other disposition of the
Mortgaged Property permitted by the Credit Agreement, all obligations of Mortgagor under
this Mortgage shall terminate, and Mortgagee, at Mortgagor’s request and expense, shall
release the liens and security interests created by this Mortgage or reconvey the Mortgaged
Property to the Mortgagor.



     Section 8.11 Waiver of Stay, Moratorium and Similar Rights. Each Mortgagor agrees, to
the full extent that it may lawfully do so, that it will not at any time insist upon or
plead or in any way take advantage of any stay, marshalling of assets, extension,
redemption or moratorium Law now or hereafter in force and effect so as to prevent or
hinder the enforcement of the provisions of this Mortgage or any other Loan Document or the
Credit Agreement, or any agreement between Mortgagor and Mortgagee or any rights or
remedies of Mortgagee.



     Section 8.12 Applicable Law. The provisions of this Mortgage shall be governed by, and
construed in accordance with, the Laws of the State where the Property is located.



     Section 8.13 Headings. The Article, Section and Subsection titles hereof are inserted
for convenience of reference only and shall in no way alter, modify or define, or be used
in construing, the text of such Articles, Sections or Subsections.



     Section 8.14 Further Assurances. Mortgagor agrees to execute such further assurances,
documents and instruments as may be reasonably requested by Mortgagee for the purposes of
further evidencing, carrying out and/or confirming this Mortgage and for all other purposes
intended by this Mortgage.



     Section 8.15 Severability. If any provision of this Mortgage shall be held by any
court of competent jurisdiction to be unlawful, void or unenforceable for any reason, such
provision shall be deemed severable from and shall in no way affect the enforceability and
validity of the remaining provisions of this Mortgage.



     Section 8.16 Subrogation. If the proceeds of any Loan or other credit extended by
Mortgagee, the repayment of which is hereby secured, is used directly or indirectly to pay
off, discharge or satisfy, in whole or in part, any prior lien or encumbrance upon the
Mortgaged Property or any part thereof, then Mortgagee shall be subrogated to any
additional security held by the holder of such lien or encumbrance.



21









 





     Section 8.17 Time of Essence. Time is of the essence as to all of Mortgagor’s
obligations hereunder and under the Credit Agreement, the Loan Documents and the other
Security Documents and under any and all other documents relating in any manner to any of
the Secured Debt.



     Section 8.18 Status of Parties. It is understood and agreed that nothing contained in
this Mortgage, the Credit Agreement, the Loan Documents or the other Security Documents
shall be construed to constitute a partnership, joint venture or co-tenancy between or
among Borrowers, Mortgagor and any of their respective Affiliates, and Mortgagee, the
Administrative Agent and/or any of the Lenders.



     Section 8.19 Entire Agreement. This Mortgage, the Credit Agreement, the Loan Documents
and the other Security Documents embody the entire agreement and understanding between
Mortgagee and Mortgagor relating to the subject matter hereof and thereof and supersede all
prior agreements and understandings between such parties relating to the subject matter
hereof and thereof. Accordingly, such documents may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten
oral agreements between the parties.



     Section 8.20 Joint and Several Obligations. If there is more than one party identified
in this Mortgage as a “Mortgagor”, then each such party so identified shall be liable,
jointly and severally, for all obligations of any Mortgagor hereunder. As used herein,
“Mortgagor” and “Mortgagors” shall also refer to any subsequent owners or lessees of all or
any portion of the Mortgaged Property.



[Remainder of Page intentionally left blank]



22









 





     Section 8.21 WAIVER OF TRIAL BY JURY.



     MORTGAGOR AND MORTGAGEE EACH WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON OR RELATED TO THE SUBJECT MATTER OF THIS MORTGAGE OR THE CREDIT
AGREEMENT, OR ANY OF THE OTHER LOAN DOCUMENTS OR SECURITY DOCUMENTS TO WHICH MORTGAGOR IS A
PARTY, OR ANY OF THE TRANSACTIONS RELATED TO ANY OF THE SECURED DEBT. THIS WAIVER IS
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY MORTGAGOR AND MORTGAGEE, AND MORTGAGOR AND
MORTGAGEE EACH ACKNOWLEDGE THAT NO ONE OF THE OTHER NOR ANY PERSON ACTING ON BEHALF OF THE
OTHER HAS OR HAVE MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. MORTGAGOR AND MORTGAGEE EACH FURTHER
ACKNOWLEDGE THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN
THE SIGNING OF THIS MORTGAGE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL
SELECTED OF ITS OWN FREE WILL AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER
WITH COUNSEL.



Initials of Western Mineral:                     

Initials of Western Diamond:                     

Initials of Western Land:                     

Initials of Ceralvo:                     

Initials of Armstrong:                     





	 	 	[EDIT ABOVE LIST AS APPLICABLE]




     Section 8.22 Exempted Transactions. MORTGAGOR AND MORTGAGEE EACH AGREE THAT THE
SECURED DEBT REPRESENTS EXEMPTED TRANSACTIONS UNDER THE TRUTH-IN-LENDING ACT, 15 U.S.C.
SECTION 1601, ET SEQ.




	[Remainder of Page intentionally left blank]




23









 











[INSERT PROPERTY HEADER]




[SIGNATURE PAGE TO MORTGAGE —                      COUNTY, KY]



          IN WITNESS WHEREOF, Mortgagor has on the date set forth in the acknowledgement
hereto, effective as of the date first above written, caused this instrument to
be duly EXECUTED AND DELIVERED by authority duly given.




	 	 	 	 	 
	 	MORTGAGOR:



WESTERN MINERAL DEVELOPMENT, LLC, a

Delaware limited liability company

 	 
	 	By:  	 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 
	 
	 	WESTERN DIAMOND LLC, a Nevada limited

liability company

 	 
	 	By:  	 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 
	 
	 	WESTERN LAND COMPANY, LLC, a Kentucky

limited liability company

 	 
	 	By:  	 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 
	 
	 	CERALVO HOLDINGS, LLC, a Delaware limited

liability company

 	 
	 	By:  	 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 
	 
	 	ARMSTRONG COAL COMPANY, INC., a

Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President 	 
	 



[Section 8.21 must be initialed]



 









 





[NOTARY PAGE TO MORTGAGE-                                          COUNTY, KY]




	 	 	 	 	 

	COMMONWEALTH OF PENNSYLVANIA

	 	)	 
	 

	 	) ss.:

	COUNTY OF ALLEGHENY

	 	)	 






          On this, the 8th day of February, 2011, before me, a notary public, the
undersigned officer, personally appeared Martin D. Wilson, who acknowledged himself
to be the                      of [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, Ceralvo Holdings, LLC, a
Delaware limited liability company, Armstrong Coal Company, Inc., a Delaware
corporation], and that he, in such capacity, being authorized to do so, executed
the foregoing instrument for the purposes therein contain, by signing his name in
such capacity.




          Witness my hand and official seal.



[Notarial Seal]



My Commission Expires:



                                        




	 	 	 	 	 
	 	 	 
	 	  	                            Notary Public
 	 
	 	 	 	 
	 	 	 	 



 









 






	 	 	 	 	 



[INSERT PROPERTY HEADER]




SCHEDULE A




OWNED PROPERTY



 









 





[INSERT PROPERTY HEADER]




SCHEDULE B




LEASED PROPERTY



 









 





SCHEDULE C




ARMSTRONG LEASE



 









 





[INSERT PROPERTY HEADER]




SCHEDULE D




CERTAIN BUILDINGS, STRUCTURES AND IMPROVEMENTS


None.






 









 








[INSERT PROPERTY HEADER]




SCHEDULE 1




	 	 	 
	 	 	Jurisdiction of
	Name of Mortgagor	 	Organization
	Western Mineral Development, LLC

	 	Delaware
	 
	 	 
	Western Diamond LLC

	 	Nevada
	 
	 	 
	Western Land Company, LLC

	 	Kentucky
	 
	 	 
	Ceralvo Holdings, LLC

	 	Delaware
	 
	 	 
	Armstrong Coal Company, Inc.

	 	Delaware







 











 





[INSERT PROPERTY HEADER]




______County, KY




EXHIBIT 1.1(M)(2)

FORM OF MORTGAGE (TERM)




MORTGAGE, LEASEHOLD MORTGAGE, SECURITY AGREEMENT,

ASSIGNMENT OF RENTS AND LEASES, FINANCING STATEMENT,

FIXTURE FILING AND AS-EXTRACTED COLLATERAL FILING (KENTUCKY)



(THIS MORTGAGE SECURES FUTURE ADVANCES)



by and from



[_____________________]



(collectively, the “Mortgagor”),



to



PNC BANK, NATIONAL ASSOCIATION,



a national banking association, not in its individual capacity, but solely as Administrative Agent,
pursuant to that certain Credit Agreement, effective as of February 9, 2011, as amended, for the
benefit of the Lenders under the Credit Agreement (as all such terms are hereinafter defined),



“Mortgagee”



Dated February 8, 2011; effective as of February       , 2011



	 	 	 

	 

	 	County:                                 
	 

	 	State: Kentucky
	 

	 	THE ADDRESS OF MORTGAGEE IS:
	 
	 

	 	PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent
	 

	 	249 Fifth Avenue
	 

	 	Pittsburgh, Allegheny County, Pennsylvania 15222-2707
	 

	 	Attention: Richard Munsick, Senior Vice President






NOTE TO RECORDER: THIS MORTGAGE CONSTITUTES A FIXTURE FILING AND COVERS AS-

EXTRACTED COLLATERAL UNDER THE UCC (AS DEFINED HEREIN) AND IS TO BE CROSS-

REFERENCED IN THE RECORDS RELATING TO FIXTURE FILINGS AND AS-EXTRACTED

COLLATERAL FILINGS.



THE MORTGAGEE, AS SECURED PARTY, DESIRES THIS FIXTURE FILING AND FINANCING

STATEMENT COVERING AS-EXTRACTED COLLATERAL TO BE INDEXED AGAINST THE

OWNERS OF THE INTEREST IN THE REAL ESTATE DESCRIBED HEREIN.



PREPARED BY, RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:



 





Matthew E. Shames, Esquire

Buchanan Ingersoll & Rooney PC

301 Grant Street, 20th Floor

One Oxford Centre

Pittsburgh, PA 15219-1410



REVIEWED FOR COMPLIANCE WITH APPLICABLE KENTUCKY LAW BY:



 





Andrew Fleischman, Esquire

Miller Wells PLLC

710 West Main Street, 4th Floor

Louisville, KY 40202



 









 





[INSERT PROPERTY HEADER]




MORTGAGE, LEASEHOLD MORTGAGE, SECURITY AGREEMENT,

ASSIGNMENT OF RENTS AND LEASES, FINANCING STATEMENT,

FIXTURE FILING AND AS-EXTRACTED COLLATERAL FILING (KENTUCKY)




THIS MORTGAGE SECURES FUTURE ADVANCES



     THIS MORTGAGE, LEASEHOLD MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES,
FINANCING STATEMENT, FIXTURE FILING AND AS-EXTRACTED COLLATERAL FILING (this “Mortgage”) is
made and executed the 8th day of February, 2011, to be effective as of February      , 2011, and
is made and delivered by [WESTERN MINERAL DEVELOPMENT, LLC, a Delaware limited liability
company having an address at 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105
(“Western Mineral”), ] [WESTERN DIAMOND LLC, a Nevada limited liability company having an
address at 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105 (“Western
Diamond”), ][WESTERN LAND COMPANY, LLC, a Kentucky limited liability company having an
address at 407 Brown Road, Madisonville, Kentucky 42431 (“Western Land”), ICERALVO
HOLDINGS, LLC, a Delaware limited liability company having an address at 7733 Forsyth
Boulevard, Suite 1625, St. Louis, Missouri 63105 (“Ceralvo”), land ARMSTRONG COAL COMPANY,
INC., a Delaware corporation having an address at 7733 Forsyth Boulevard, Suite 1625, St.
Louis, Missouri 63105 (“Armstrong” and together with                         , the “Mortgagor”), to and in favor
of PNC BANK, NATIONAL ASSOCIATION, a national banking association with an address at 249
Fifth Avenue, Pittsburgh, Allegheny County, Pennsylvania 15222-2707, as Administrative
Agent (“Administrative Agent”) for the Term Lenders under the Credit Agreement (as defined
below) (Administrative Agent, together with its successors and assigns, “Mortgagee”).



     The maximum amount of indebtedness (exclusive of interest thereon) which may be
outstanding hereunder at any time is Two Hundred Million and 00/100 Dollars
($200,000,000.00), as further described in the Credit Agreement dated as of February 9,
2011 (as hereinafter defined) with a maturity date of February 9, 2016, together with any
additional sums advanced by Mortgagee pursuant to the provisions of this Mortgage or any
Security Document, including but not limited to any payments by Mortgagee of impositions,
expenses of maintenance, repair or preservation of the Mortgaged Property, costs of
insurance incurred by Mortgagee, reasonable legal, management and consulting fees, and any
other expenses and advances of Mortgagee whatsoever, the reimbursement of which by
Mortgagor is provided for herein or in any Security Document, whether such sums are
advanced before or after the entry of any judgment hereunder or under any other Security
Document. Such indebtedness of the Mortgagor to the Mortgagee is evidenced by those certain
Term Notes dated as of the effective date hereof in the aggregate face principal amount of
$100,000,000.00, with interest thereon at the rate provided therein, payable to the order
of the Mortgagor before February 9, 2016, which is the final maturity date thereof, as
defined in the Credit Agreement.



          Notices pursuant to this Mortgage shall be delivered to:



               PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent 249 Fifth Avenue




 









 








Pittsburgh, Pennsylvania 15222-2707




Attention: Richard Munsick, Senior Vice President




ARTICLE 1

DEFINITIONS



     Section 1.1 Use of Capitalized Terms; Rules of Construction. All capitalized terms
used herein without definition, unless otherwise indicated, shall have the respective
meanings ascribed to them in the Credit Agreement. The rules of construction set forth in
Section 1.2 of the Credit Agreement shall apply to this Mortgage.



     Section 1.2 Definitions. The following terms used in this Mortgage shall have the
meanings set forth:


          (a) “Administrative Agent”: shall mean PNC Bank, National Association, in its
capacity as Administrative Agent for the Lenders under the Credit Agreement, and
any successor entity acting in such capacity.




          (b) “Bankruptcy Code”: shall have the meaning set forth in Section 4.4(a).




          (c) “Borrowers”: shall mean 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.




          (d) “Credit Agreement”: shall mean that certain Credit Agreement, dated as of
February 9, 2011, by and among Borrowers, the Lenders, each Guarantor (including
Mortgagors), and PNC Bank, National Association, in its capacity as Administrative
Agent for the Lenders, as amended and as the same may be supplemented, amended,
restated, refinanced, replaced, or modified from time to time.




          (e) “Event of Default”: shall mean an Event of Default as defined in Section
9.1 of the Credit Agreement.




          (f) “Guarantied Obligations”: shall have the meaning set forth in the Guaranty
Agreement (Term).




          (g) “Guarantor”: shall have the meaning set forth in the Credit Agreement.




          (h) “Guaranty Agreement (Term)”: shall mean that certain Guaranty and
Suretyship Agreement (Term), dated as of February 9, 2011, delivered by the Term
Guarantors to the Administrative Agent, as the same may be supplemented, amended,
restated, replaced, or modified from time to time.




          (i) “Lenders”: shall mean those financial institutions from time to time
identified as “Lenders”, as defined in and pursuant to the Credit Agreement, and
any of their respective successors and assigns.






2









 








          (j) “Loan Documents” shall have the meaning set forth in the Credit
Agreement, and “Loan Document” shall mean any of the Loan Documents.




          (k) “Loan Parties”: shall mean Borrowers and the Guarantors, including
Mortgagor, and “Loan Party” shall mean any of the Loan Parties.




          (l) “Loans” shall mean collectively, and “Loan” shall mean separately, all
Loans or any Loan made by the Lenders or one of the Lenders to the Borrowers
pursuant to the Credit Agreement.




          (m) “Mortgaged Property”: shall mean all of Mortgagor’s right, title and
interest now owned or hereafter acquired, installed, maintained or in force, in
and to all of the following:




               (1) the fee interests owned by ___, as indicated on Schedule A, in the
real property indicated on Schedule A, together with any greater estate
therein as may now exist or hereafter may be acquired by any Mortgagor
(the “Owned Property”);



               (2) the leasehold interests of ___, as indicated on Schedule B, in the
real property indicated on Schedule B (the “Leased Property”), demised
pursuant to the agreements identified at Schedule B (as such agreements
may be supplemented, amended, restated, replaced, or modified from time to
time, each such agreement a “Mortgaged Lease”, and collectively the
“Mortgaged Leases”), together with any greater estate therein as may now
exist or hereafter may be acquired by                               ;



               (3) the leasehold interest of Armstrong in the Owned Property and the
Leased Property set forth on Schedules A and B, demised pursuant to the
agreements identified on Schedule C (each of which agreements, as they may
be supplemented, amended, restated, replaced, or modified from time to
time, shall be also defined herein as a “Mortgaged Lease”, and included
collectively in the definition of “Mortgaged Leases”), together with any
greater estate therein as may now exist or hereafter may be acquired by
Armstrong;



               (4) all fee and leasehold real estate interests now owned or
hereafter acquired by Mortgagor in the County in which this Mortgage is
recorded (the “Other Current or After-Acquired Property”);


(the Owned Property, the Leased Property, and the Other Current or After-Acquired Property are
sometimes referred to herein collectively as the “Property”);




               (5) all coal and other minerals owned by Mortgagor or leased to
Mortgagor (whether pursuant to the Mortgaged Leases or otherwise), located
upon, under or in the Property, included within the Property in place and
as produced and extracted (as produced and extracted, and including, but
not limited to, “as-extracted collateral” as defined in the UCC, the
“as-extracted collateral”), and all rights, privileges, titles and
interests appurtenant and relating thereto and in connection therewith
(including, without limitation, rights, privileges, titles and interests
for the development, production, extraction, processing, treatment,
storage, transportation and sale and other disposition of minerals and all
contracts and other agreements relating to such activities as well as all
accounts, accounts receivable, contract rights, other rights



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to the payments of monies, chattel paper and general intangibles arising from or relating to such
activities) (the “Mineral Interests”);




               (6) except to the extent excluded from the lien of this Mortgage, all
buildings, structures and improvements of Mortgagor, now or at any time
situated, placed or constructed upon or under the Property (the
“Improvements”; the Property and Improvements are collectively referred to
as the “Premises”);



               (7) all materials, supplies, equipment (including, but not limited
to, “equipment” as defined in the UCC), apparatus, standing timber and
other goods attached to or installed in any of the Improvements or the
Property, and water, gas, electrical, telephone, storm and sanitary sewer
facilities and all other utilities and fixtures (including, but not
limited to, “fixtures” as defined in the UCC) placed or constructed upon
the Property whether or not situated in easements (the “Fixtures”);



               (8) all goods, inventory, cut timber, accounts, general intangibles,
instruments, documents, chattel paper, equipment, and all other personal
property of any kind or character (including, but not limited to, “goods”,
“inventory”, “accounts”, “general intangibles”, “instruments”,
“documents”, “chattel paper” and “equipment” as defined in the UCC) as now
or hereafter placed upon, used in connection with, arising from or
otherwise related to the Premises (the “Personalty”);



               (9) all reserves, escrows or impounds required under the Loan
Documents and all deposit accounts (including, but not limited to,
“deposit accounts” as defined in the UCC) maintained by Mortgagor with
respect to the Mortgaged Property (the “Deposit Accounts”);



               (10) all leases, licenses, concessions, occupancy agreements or other
agreements (written or oral, now or hereafter in effect), including,
without limitation, contract mining agreements, which grant to any Person,
other than Mortgagor, a possessory interest in, or the right to use, all
or any part of the Property, together with all related security and other
deposits (as any of the foregoing may be supplemented, amended, restated,
replaced, or modified from time to time, each a “Lease”, and collectively
the “Leases”);



               (11) all of the rents, revenues, royalties, income, proceeds,
profits, security and other types of deposits, and other benefits paid or
payable to Mortgagor by parties to the Leases or otherwise, for using,
leasing, licensing, possessing, operating from, residing in, selling or
otherwise enjoying all or any part of the Property (the “Rents”);



               (12) all other agreements, such as construction contracts,
architects’ agreements, engineers’ contracts, utility contracts,
maintenance agreements, management agreements, service contracts, listing
agreements, guaranties, warranties, all permits (subject to any required
regulatory approval), licenses, certificates and entitlements in any way
relating to the construction, use, occupancy, operation, maintenance,
enjoyment or ownership of all or any part of the Property (as any of the
foregoing may be supplemented, amended, restated, renewed, replaced, or
modified from time to time, each a “Permit”, and collectively the
“Permits”);



4









 





               (13) all property tax refunds payable with respect to all or any part
of the Property (the “Tax Refunds”);



               (14) all proceeds from any insurance policies covering any of the
foregoing described in clauses (1) through and including (12) (the
“Insurance”);



               (15) all awards, damages, remunerations, reimbursements, settlements
or compensation made by any governmental authority pertaining to any
condemnation or other taking (or any purchase in lieu thereof) of all or
any part of the Property and any other property (the “Condemnation
Awards”);



               (16) all rights, privileges, tenements, hereditaments, rights-of-way,
easements, appendages and appurtenances appertaining to all or any part of
the Property, Mineral Interests, Fixtures and Premises; and



               (17) all accessions to, products of, and replacements and
substitutions for any of the foregoing described in clauses (1) through
and including (15) and all proceeds thereof (including, but not limited
to, “proceeds” and “accessions” as defined in the UCC) (the
“Proceeds”).



          (n) “Notes”: shall mean, collectively, and “Note” shall mean separately, all
of the Notes of the Borrowers in the form set forth in the Credit Agreement
evidencing the Loans, together with all amendments, extensions, modifications,
restatements, renewals, replacements, refinancings or refundings thereof, in whole
or in part.




          (o) “Obligation(s)”: shall mean any obligation or liability of any of the Loan
Parties to the Administrative Agent (as administrative agent on behalf of the Term
Lenders) or any of the Term Lenders, 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 the Credit Agreement, the Term
Notes, the Letters of Credit (including, without limitation, the Reimbursement
Obligations thereunder), the Agent’s Letter, this Mortgage or any other Loan
Document. Obligations shall include the liabilities to any Term Lender, or any
Affiliate or Subsidiary thereof, under any Lender Provided Interest Rate Hedge and
Lender Provided Financial Services Obligations.




          (p) “Permitted Liens” shall have the meaning given to such term in the Credit
Agreement, including all matters listed as “exceptions” in the Schedules and
Exhibits thereto and hereto.




          (q) “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.




          (r) “Revolver Mortgage” shall mean that certain Line of Credit Mortgage,
Leasehold Mortgage, Security Agreement, Assignment of Rents and Leases, Financing
Statement, Fixture Filing and As-Extracted Collateral Filing, from Mortgagor in
favor of Mortgagee, of even date herewith, encumbering the Mortgaged Property and
recorded in the Clerk’s Office of ___County, Kentucky.






5









 








          (s) “Secured Debt”: shall mean: (1) the Obligations; (2) all Guarantied
Obligations of any Guarantor under the Guaranty Agreement (Term); (3) all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage and all intangible, documentary,
stamp or similar taxes due upon recording this Mortgage or any amendment or
modification of this Mortgage, together with any penalties, interest, charges and
other amounts imposed upon or due in connection with such intangible, documentary,
stamp or similar taxes, and all duties, imposts, assessments and charges arising
out of or in connection with the execution and delivery of the Term Notes; (4) all
amounts expended by Mortgagee after declaration of an Event of Default pursuant to
Article 5, to maintain the lien of this Mortgage, or to protect the property
secured by this Mortgage, including, without limitation, amounts in respect of
insurance premiums, real estate taxes, litigation expenses to prosecute or defend
the rights, remedies and lien of this Mortgage or title to the property secured
hereby, and any costs, charges or amounts to which Mortgagee becomes subrogated
upon payment, whether under recognized principles of law or equity or under express
statutory authority, together with interest on all the foregoing amounts at the
highest rate at which interest is then computed on any portion of the Secured Debt;
and (5) all obligations from time to time of any Loan Party under or in connection
with any Lender Provided Financial Services Obligations or a Lender Provided
Interest Rate Hedge, as the same may be amended, modified or supplemented from time
to time in accordance with the terms therewith. The Secured Debt shall include all
Term Loans, all Participation Advances, all Reimbursement Obligations of Term
Borrowers, Mortgagor, and any other Loan Party with respect to any Letter of
Credit, each made or issued in accordance with the terms of the Credit Agreement,
and all Letter of Credit Borrowings.




          (t) “Security Agreement (Term)”: shall mean that certain Security Agreement
(Term) dated as of February 9, 2011, to which the Mortgagor and Mortgagee (among
others) are parties, as the same may be supplemented, amended, restated, replaced,
or modified from time to time.




          (u) “Security Documents”: shall mean all security agreements, pledge
agreements, mortgages, deeds of trust and all other documents, instruments, and
agreements sufficient to provide the Administrative Agent for the benefit of the
Term Lenders with a perfected Lien, subject only to Permitted Liens, on any
property of the Mortgagor.




          (v) “Term Borrowers” shall mean those Borrowers from time to time identified
as “Term Borrowers”, as defined in and pursuant to the Credit Agreement, and any of
their respective successors and assigns, and “Term Borrower” shall mean any of the
Term Borrowers.




          (w) “Term Lenders”: shall mean those financial institutions from time to time
identified as “Term Lenders”, as defined in and pursuant to the Credit Agreement,
and any of their respective successors and assigns.




          (x) “Term Loans” shall mean collectively, and “Term Loan” shall mean
separately, all Loans or any Loan made by the Term Lenders or one of the Term
Lenders to the Term Borrowers pursuant to the Credit Agreement.






6









 








          (y) “Term Notes”: shall mean, collectively, and “Term Note” shall mean
separately, all of the Notes of the Term Borrowers in the form set forth in the
Credit Agreement evidencing the Term Loans, together with all amendments,
extensions, modifications, restatements, renewals, replacements, refinancings or
refundings thereof, in whole or in part.




          (z) “UCC”: shall mean the Uniform Commercial Code in effect in the state in
which the Property is located, as amended from time to time.




ARTICLE 2 

GRANT




     Section 2.1 Grant. To secure the full and timely payment and performance of the
Secured Debt, including without limitation the Guarantied Obligations, Mortgagor MORTGAGES,
GRANTS, BARGAINS, ASSIGNS, SELLS, CONVEYS and CONFIRMS, to Mortgagee, as Administrative
Agent for the Term Lenders, the Mortgaged Property, subject, however, only to Permitted
Liens, TO HAVE AND TO HOLD the Mortgaged Property to Mortgagee, as Administrative Agent for
the Term Lenders and for other Persons from time to time holders of the Secured Debt.
Mortgagor does hereby bind itself, its respective successors and assigns to WARRANT AND
FOREVER DEFEND the title to its respective interests in and to the Mortgaged Property.



     Provided further, subject to the terms hereof and of the Credit Agreement, the Loan
Documents and the other Security Documents, until an Event of Default shall occur,
Mortgagor shall have and possess the full right and privilege to own, lease, operate,
manage and control its interests in and to the Mortgaged Property in all respects, to
extract the Mineral Interests therefrom, and to do all other matters and things that
Mortgagor deems necessary, desirable or appropriate thereon and therewith, subject only to
Permitted Liens.



     Section 2.2 Maximum Secured Amount. Pursuant to Kentucky Revised Statutes (“KRS”)
382.520, this Mortgage shall secure the payment of the Secured Debt in the original amount
of $100,000,000, plus an additional amount up to $100,000,000, plus accrued interest and
costs and fees.



     Section 2.3 Maturity of the Secured Debt. The final maturity date of the Secured Debt
is February 9, 2016, as such date may be extended by agreement of the parties from time to
time.



     Section 2.4 Priority of Lien. The parties hereto agree and acknowledge that this
Mortgage shall be deemed to be prior to the Revolver Mortgage, regardless of whether this
Mortgage is recorded before the Revolver Mortgage.



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ARTICLE 3

WARRANTIES, REPRESENTATIONS AND COVENANTS




          Mortgagor hereby warrants and represents to, and covenants with, Mortgagee as
follows:




     Section 3.1 First Lien Status. Except for Permitted Liens, Mortgagor shall preserve
and protect the first lien and security interest status of this Mortgage against the
Mortgaged Property. If any lien or security interest other than a Permitted Lien is
asserted against the Mortgaged Property, Mortgagor shall as promptly as practical, and at
its expense, take such reasonable action so as to cause it to be released or contest the
same (as determined by Mortgagor) in compliance with the requirements of the Credit
Agreement, the Loan Documents and the other Security Documents.



     Section 3.2 Payment and Performance. Mortgagor shall pay and perform the Secured Debt
in a timely manner, when required, and in compliance with all terms, covenants and
conditions set forth in the Credit Agreement.



     Section 3.3 Inspection. Mortgagor shall permit Mortgagee, and its agents,
representatives and employees, upon reasonable prior notice to the Mortgagor, to inspect
the Mortgaged Property and all books and records of each Mortgagor related thereto, as
provided in the Credit Agreement.



     Section 3.4 Insurance; Condemnation Awards and Insurance Proceeds.



          (a) Insurance. Mortgagor shall maintain or cause to be maintained, with
respect to its Mortgaged Property, insurance against loss or damage as and to the
extent required pursuant to the terms of the Credit Agreement. Other than those
buildings, structures and improvements specified on Schedule D, which buildings,
structures and improvements expressly do not constitute Mortgaged Property subject
to the terms of this Mortgage, if any portion of an enclosed structure now or
hereafter located on the Mortgaged Property is located in an area identified by the
Federal Emergency Management Agency as an area having special flood hazards and in
which flood insurance has been made available under the National Flood Insurance
Act of 1968 (or any amendment or successor act thereto), then Mortgagor shall
maintain, or cause to be maintained, with a financially sound and reputable
insurer, flood insurance in an amount sufficient to comply with all applicable
rules and regulations promulgated pursuant to such Act.




          (b) Condemnation Awards. Subject to the terms of the Credit Agreement
applicable to proceeds payable as the result of any condemnation proceeding,
Mortgagor assigns all Condemnation Awards to Mortgagee and authorizes Mortgagee to
collect and receive such Condemnation Awards and to give proper receipts and
acquittances therefor.




          (c) Insurance Proceeds. Subject to the terms of the Credit Agreement
applicable to proceeds payable as the result of an insured loss or casualty or
other event, Mortgagor assigns to Mortgagee all proceeds of any Insurance policies
insuring against loss or damage or other event with respect to the Mortgaged
Property. Subject to the terms of the Credit Agreement, Mortgagor authorizes
Mortgagee to collect and receive such proceeds and authorizes



8









 






and directs the issuer of each of such Insurance policies to make payment for all such losses
directly to Mortgagee, instead of to Mortgagor and Mortgagee jointly.




     Section 3.5 Impositions. Subject to Section 8.1.2 of the Credit Agreement, before the
date when any fine, late charge or other penalty for late payment may be imposed, Mortgagor
shall pay and discharge or cause to be paid or discharged all taxes of every kind and
nature (including real and personal property taxes on the Mortgaged Property and income,
franchise, withholding, profits and gross receipts taxes if such taxes are required to be
paid in lieu of real or personal property taxes, any tax imposed directly or indirectly on
the Mortgagee with respect to the Mortgaged Property or this Mortgage, the value of the
equity of Mortgagor therein or the indebtedness evidenced by the Notes), all charges for
any easement or agreement maintained for the benefit of any of the Mortgaged Property, all
general and special assessments (including, without limitation, any condominium or planned
unit development assessments, if any), levies, permits, inspection and license fees, all
mortgages and other liens which may be permitted by Mortgagee, all water and sewer rents
and charges and all other charges and liens, even if unforeseen or extraordinary, imposed
upon or assessed against Mortgagor or any of the Mortgaged Property or arising in respect
of the occupancy, use or possession thereof.



ARTICLE 4

LEASEHOLD MORTGAGE PROVISIONS




          Mortgagor hereby represents and warrants to, and covenants with, Mortgagee as
follows:




     Section 4.1 Estoppel Certificates. Mortgagors shall, within thirty (30) days after
written request from Mortgagee, use its reasonable efforts to obtain from each lessor and
deliver to Mortgagee a certificate setting forth the name of the tenant under each
Mortgaged Lease and stating that such Mortgaged Lease is in full force and effect, is
unmodified or, if such Mortgaged Lease has been modified, the date of each modification
(together with copies of each such modification), that no notice of termination thereof has
been served on Mortgagor, stating that no default or event which with notice or lapse of
time (or both) would become a default is existing under such Mortgaged Lease (or if any
such default or event is existing, specifying the nature of such default or event), stating
the date to which rent has been paid, and containing such other statements and
representations as may be reasonably requested by Mortgagee.



     Section 4.2 No Merger. So long as any of the Secured Debt remains unpaid or
unperformed, the fee title to, and the leasehold estate in, the Leased Property subject to
any Mortgaged Lease shall not merge but shall always be kept separate and distinct
notwithstanding the union of such estates in the lessor or in Mortgagor, or in a third
party, by purchase or otherwise. If Mortgagor acquires the fee title or any other estate,
title or interest in the Leased Property, or any part thereof, the lien of this Mortgage
shall attach to, cover and be a lien upon such acquired estate, title or interest and the
same shall thereupon be and become a part of the Mortgaged Property with the same force and
effect as if specifically encumbered herein. Mortgagor agrees to execute all instruments
and documents that Mortgagee may reasonably require to ratify, confirm and further evidence
the lien of this Mortgage on the acquired estate, title or interest. Furthermore, Mortgagor
hereby appoints Mortgagee as its true and lawful attorney-in-fact to execute and deliver,
following an Event of Default, all such instruments and



9









 




documents in the name and on behalf of Mortgagor. This power, being coupled with an interest, shall
be irrevocable until all of the Obligations are indefeasibly paid in full in cash, the Letters of
Credit have expired or are terminated, and the Commitments terminated.




     Section 4.3 No Duties Imposed on Mortgagee. Notwithstanding anything to the contrary
contained herein, Mortgagee shall have no liability or obligation under any Mortgaged Lease
by reason of its acceptance of this Mortgage, except as set forth in the following
sentence. Mortgagee shall be liable for the obligations of the tenant arising out of any
Mortgaged Lease for only that period of time for which Mortgagee is in possession of the
Premises or has acquired, by foreclosure or otherwise, and is holding all of Mortgagor’s
right, title and interest therein, subject, however, in any case to the obligations and
requirements of the Mortgagor and the Loan Parties to indemnify Mortgagee as provided in
the Credit Agreement and any of the other Loan Documents.



     Section 4.4 Bankruptcy Provisions Relating to Mortgaged Leases.



          (a) Election under Section 365(h) of Bankruptcy Code. If any lessor under any
Mortgaged Lease rejects or disaffirms, or seeks or purports to reject or disaffirm,
any such Mortgaged Lease pursuant to any proceeding under Title 11 of the United
States Code (the “Bankruptcy Code”), then Mortgagor shall not exercise an election
under Section 365(h) of the Bankruptcy Code (a “365(h) Election”) except as
otherwise provided in this paragraph. To the extent permitted by Law, Mortgagor
shall not suffer or permit the termination of a Mortgaged Lease by exercise of the
365(h) Election or otherwise without Mortgagee’s consent. Mortgagor acknowledges
that because the Mortgaged Leases are a primary element of Mortgagee’s security for
the Secured Debt, it is not anticipated that Mortgagee would consent to termination
of any Mortgaged Lease. If Mortgagor makes any 365(h) Election in violation of this
Mortgage, then such 365(h) Election shall be void and of no force or effect.




          (b) Assignment to Mortgagee. Mortgagor hereby assigns to Mortgagee the 365(h)
Election with respect to each Mortgaged Lease until the Obligations have been
indefeasibly paid in full in cash, the Letters of Credit have expired or are
terminated, and the Commitments terminated. Mortgagor acknowledges and agrees that
the foregoing assignment of the 365(h) Election and related rights is one of the
rights that Mortgagee may use at any time to protect and preserve Mortgagee’s other
rights and interests under this Mortgage. Mortgagor further acknowledges that
exercise of the 365(h) Election in favor of terminating any Mortgaged Lease would
constitute waste prohibited by this Mortgage.




          (c) Occupancy Rights. Mortgagor acknowledges that if the 365(h) Election is
exercised in favor of such Mortgagor remaining in possession under a Mortgaged
Lease, then Mortgagor’s resulting occupancy rights, as adjusted by the effect of
Section 365 of the Bankruptcy Code, shall then be part of the Mortgaged Property
and shall be subject to the lien of this Mortgage.




          (d) Rejection of Mortgaged Lease by Lessor. If a lessor under any Mortgaged
Lease rejects or disaffirms any such Mortgaged Lease or purports or seeks to
disaffirm any such Mortgaged Lease pursuant to any proceeding under the Bankruptcy
Code, then (1) the Mortgagor shall remain in possession of the Property demised
under any such Mortgaged Lease so rejected



10









 






or disaffirmed and shall perform all acts reasonably necessary for Mortgagor to remain in such
possession for the unexpired term of any such Mortgaged Lease, whether the then existing terms and
provisions of such Mortgaged Lease require such acts or otherwise; and (2) all of the terms and
provisions of this Mortgage and the lien created by this Mortgage shall remain in full force and
effect and shall extend automatically to all of Mortgagor’s rights and remedies arising at any time
under, or pursuant to, Section 365(h) of the Bankruptcy Code, including all of its rights to remain
in possession of the Property.




          (e) Assignment of Claims to Mortgagee. Mortgagor, as promptly as practical
after learning that a lessor under any Mortgaged Lease has failed to perform the
terms and provisions thereunder (including by reason of a rejection or
disaffirmance or purported rejection or disaffirmance of any such Mortgaged Lease
pursuant to any proceeding under the Bankruptcy Code), shall notify Mortgagee of
any such failure to perform. Mortgagor unconditionally assigns, transfers, and sets
over to Mortgagee any and all damage claims thereunder. This assignment constitutes
a present, irrevocable, and unconditional assignment of all damage claims under the
Mortgaged Leases, and shall continue in effect until the Obligations have been
indefeasibly paid in full in cash, the Letters of Credit have expired or are
terminated, and the Commitments terminated. Notwithstanding the foregoing,
Mortgagee grants to the Mortgagor a revocable license to exercise any such
Mortgaged Lease damage claims, which license may only be revoked by Mortgagee upon
the occurrence and during the continuance of any Event of Default.




          (f) New Lease Issued to Mortgagee. If any Mortgaged Lease is for any reason
whatsoever terminated before the expiration of its term and, pursuant to any
provision thereof, Mortgagee or its designee shall acquire from the lessor
thereunder a new lease of the same leased premises, then Mortgagor shall not have
any right, title or interest in or to such new leases or the estates created
thereby.




ARTICLE 5

DEFAULT AND FORECLOSURE




     Section 5.1 Remedies. Upon the occurrence and during the continuance of an Event of
Default, any one or more of the following rights, remedies and recourses may be exercised:



          (a) Acceleration. Subject to the terms of the Credit Agreement, any of the
Obligations or any portion thereof may become immediately due and payable, without
further notice, presentment, protest, notice of intent to accelerate, notice of
acceleration, demand or action of any nature whatsoever (each of which hereby is
expressly waived by Mortgagor). Upon the occurrence of an Event of Default under
Section 9.1.12 of the Credit Agreement, all Obligations shall automatically and
immediately become due and payable without notice or any other act on the part of
Administrative Agent or any other holder of any portion of the Obligations.




          (b) Entry on Mortgaged Property. Subject to applicable Law, Mortgagee may
enter the Mortgaged Property and take exclusive possession thereof and of all
books, records and accounts relating thereto or located thereon. If Mortgagor
remains in possession of the Mortgaged Property following the occurrence and during
the continuance of an Event of Default,



11









 






without Mortgagee’s prior written consent, subject to applicable Law, Mortgagee may invoke any
legal remedies to dispossess Mortgagor.




          (c) Operation of Mortgaged Property. Subject to applicable Law, Mortgagee
may hold, lease, develop, manage, operate or otherwise use the Mortgaged
Property upon such terms and conditions as Mortgagee may deem reasonable
under the circumstances (including making such repairs, alterations,
additions and improvements and taking other actions, from time to time, as
Mortgagee deems necessary, also including the mining and sale of Mineral
Interests on the Mortgaged Property), and apply all Rents, Proceeds and
other amounts collected by Mortgagee in connection therewith in accordance
with the provisions of Section 9.2.4 of the Credit Agreement.




          (d) Foreclosure and Sale. Mortgagee may (i) institute and maintain an action
of mortgage foreclosure against the Mortgaged Property and the interests of the
Mortgagor therein, (ii) institute and maintain an action on any instruments
evidencing the Secured Debt or any portion thereof, and (iii) take such other
action at law or in equity for the enforcement of the Credit Agreement, the Loan
Documents or any of the other Security Documents as the law may allow, and in each
such action Mortgagee shall be entitled to all costs of suit and attorneys’ fees.
Mortgagee may institute proceedings for the complete foreclosure of this Mortgage
by judicial action, in which case the Mortgaged Property may be sold for cash or
credit in one or more parcels. With respect to any notices required or permitted
under the UCC, Mortgagor agrees that ten (10) days’ prior written notice shall be
deemed commercially reasonable. At any such sale by virtue of any judicial
proceedings, or any other legal right, remedy or recourse, the title to and right
of possession of any such property shall pass to the purchaser thereof, and to the
fullest extent permitted by Law, Mortgagor shall be completely and irrevocably
divested of all of its right, title, interest, claim, equity, equity of redemption,
and demand whatsoever, either at law or in equity, in and to the property sold and
such sale shall be a perpetual bar both at law and in equity against Mortgagor, and
against all other Persons claiming or to claim the property sold or any part
thereof, by, through or under Mortgagor. Mortgagee or Administrative Agent (if
different than Mortgagee) may be a purchaser at such sale. If Mortgagee is the
highest bidder, Mortgagee may credit the portion of the purchase price that would
be distributed to the Secured Debt in accordance with the Credit Agreement.




          (e) Receiver. Mortgagee may make application to a court of competent
jurisdiction for, and obtain from such court as a matter of strict right and
without notice to Mortgagor or regard to the adequacy of the Mortgaged Property for
the repayment of the Secured Debt, the appointment of a receiver of the Mortgaged
Property, and Mortgagor irrevocably consents to such appointment. Any such receiver
shall have all the usual powers and duties of receivers in similar cases, including
the full power to rent, maintain and otherwise operate the Mortgaged Property upon
such terms as may be approved by such court, and in a manner consistent with the
terms of any applicable Mortgaged Lease, and shall apply such Rents, Proceeds and
other amounts collected by Mortgagee in accordance with the provisions of Section
9.2.4 of the Credit Agreement.




          (f) Other Remedies. Subject to applicable Law, Mortgagee may exercise all
other rights, remedies and recourses granted to Mortgagee with respect to all or
any portion of



12









 






the Mortgaged Property pursuant to the terms of the Credit Agreement, the Loan Documents or the
Security Documents, or otherwise available at law or in equity.




     Section 5.2 Separate Sales. The Mortgaged Property may be sold in one or more parcels
and in such other manner and order as Mortgagee in its sole discretion may elect. The right
of sale arising out of any Event of Default shall not be exhausted by any one or more
sales.



     Section 5.3 Remedies, Cumulative, Concurrent and Nonexclusive. Mortgagee shall have
all rights, remedies and recourses with respect to the enforcement against all or any
portion of the Mortgaged Property granted pursuant to this Mortgage, under the Credit
Agreement or any of the Loan Documents or the other Security Documents, and available at
law or equity (including the UCC), which rights, (a) shall be cumulative and concurrent,
(b) may be pursued separately, successively or concurrently against Mortgagor or others
obligated for the payment or performance of the Secured Debt or against the Mortgaged
Property, or against any one or more of them, at the sole discretion of Mortgagee, as the
case may be, (c) may be exercised as often as occasion therefor shall arise, and the
exercise or failure to exercise any of them shall not be construed as a waiver or release
thereof or of any other right, remedy or recourse, and (d) are intended to be, and shall
be, nonexclusive. No action by Mortgagee in the enforcement of any rights, remedies or
recourses relating to all or any portion of the Mortgaged Property, or otherwise at law or
equity shall be deemed to cure any Event of Default.



     Section 5.4 Release of and Resort to Collateral. Subject to the terms of the Credit
Agreement, Mortgagee may release, regardless of consideration and without the necessity for
any notice to or consent by the holder of any subordinate lien on the Mortgaged Property,
all or any portion of the Mortgaged Property without, as to the remainder, in any way
impairing, affecting, subordinating or releasing the lien or security interest created in
or evidenced by this Mortgage or its status as a first and prior lien and security interest
in and to the Mortgaged Property. For payment of the Secured Debt, Mortgagee may resort to
any other security in such order and manner as Mortgagee may elect.



     Section 5.5 Waiver of Redemption, Notice and Marshalling of Assets. To the fullest
extent permitted by Law, Mortgagor hereby irrevocably and unconditionally waives and
releases (a) all benefit that might accrue to any Mortgagor by virtue of any present or
future statute of limitations or Law or judicial decision exempting the Mortgaged Property
from attachment, levy or sale on execution or providing for any stay of execution,
exemption from civil process, redemption or extension of time for payment, (b) except as
otherwise expressly set forth herein or in the Credit Agreement, all notices of any Event
of Default or of Mortgagee’s election to exercise or the actual exercise of any right,
remedy or recourse provided for under each Loan Document, including this Mortgage, and (c)
any right to a marshalling of assets or a sale in inverse order of alienation.



     Section 5.6 Discontinuance of Proceedings. If Mortgagee shall have proceeded to invoke
any right, remedy or recourse permitted under the Credit Agreement, this Mortgage or any
other Loan Document or Security Document, and shall thereafter elect to discontinue or
abandon it for any reason, Mortgagee shall have the unqualified right to do so and, in such
an event, Mortgagor and Mortgagee shall be restored to their respective former positions
with respect to the Secured Debt, the Loan Documents, the other Security Documents, the
Mortgaged



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Property and otherwise, and the rights, remedies, recourses and powers of Mortgagee shall continue
as if the right, remedy or recourse had never been invoked, but no such discontinuance or
abandonment shall waive any Event of Default which may then exist, or the right of Mortgagee
thereafter to exercise any right, remedy or recourse under the Credit Agreement, this Mortgage, the
Loan Documents or any Security Document for such Event of Default.




     Section 5.7 No Liability of the Mortgagee in Collecting. The Mortgagee is hereby
absolved from all liability for failure to enforce collection of any Proceeds assigned by
this Mortgage (and no such failure shall be deemed to be waiver of any right of the
Mortgagee under this Article 5) and from all other responsibility in connection therewith,
except the responsibility to account to the Mortgagor for funds actually received, it being
understood and agreed that Mortgagee’s ledger and other relevant records shall, in the
absence of manifest error, be conclusive as the statement of funds so received.



     Section 5.8 Occupancy After Foreclosure. Any sale of the Mortgaged Property or any
part thereof in accordance with Section 5.1 will divest all right, title and interest of
Mortgagor in and to the property sold. Subject to applicable Law, any purchaser at a
foreclosure sale will receive immediate possession of the property purchased. If Mortgagor
retains possession of such property or any part thereof subsequent to such sale, such
Mortgagor will be considered a tenant at sufferance of the purchaser, and will, if
Mortgagor remains in possession after demand to remove, be subject to eviction and removal,
forcible or otherwise, with or without process of law.



     Section 5.9 Additional Advances and Disbursements; Costs of Enforcement.



          (a) Upon the occurrence and during the continuance of any Event of Default,
Mortgagee shall have the right, but not the obligation, to cure such Event of
Default in the name and on behalf of Mortgagor. All sums advanced and expenses
incurred at any time by Mortgagee under this Section 5.9, or otherwise under this
Mortgage, the Credit Agreement, the other Loan Documents or any of the other
Security Documents, or applicable Law, shall bear interest from the date that such
sum is advanced or expense incurred, to and including the date of reimbursement,
computed at the highest rate at which interest is then computed on any portion of
the Secured Debt, and all such sums, together with interest thereon, shall be
secured by this Mortgage.




          (b) Mortgagor shall pay all reasonable expenses (including reasonable
attorneys’ fees and expenses) of or incidental to the perfection and enforcement of
this Mortgage, or the enforcement, compromise or settlement of the Secured Debt or
any claim under this Mortgage and for the curing thereof, or for defending or
asserting the rights and claims of Mortgagee in respect thereof, by litigation or
otherwise.




          Section 5.10 No Mortgagee in Possession. Neither the enforcement of any of the
remedies under this Article 5, the assignment of the Rents and Leases under Article 6, the
security interests under Article 7, nor any other remedies afforded to Mortgagee hereunder
or under the Credit Agreement or under any other Loan Document, or at law or in equity,
shall cause Mortgagee to be deemed or construed to be a mortgagee in possession of the
Mortgaged Property, to obligate Mortgagee to lease the Mortgaged Property or attempt to do
so, or to take



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any action, incur any expense, or perform or discharge any obligation, duty or liability
whatsoever under any of the Leases, Mortgaged Leases, or otherwise.




     Section 5.11 Effect of Sale. Any sale or sales of any portion of the Mortgaged
Property, whether by virtue of foreclosure proceedings or otherwise, shall operate to
divest all right, title, interest, claim and demand whatsoever either at law or in equity,
of Mortgagor of, in and to its interests in the premises and the property sold, and shall
be a perpetual bar, both at law and in equity, against Mortgagor of, in and to the premises
and the property sold, and shall be a perpetual bar, both at law and in equity, against
Mortgagor, and its successors or assigns, and against any and all persons claiming or who
shall thereafter claim all or any of the property sold from, through or under Mortgagor or
its successors or assigns. Nevertheless, Mortgagor, if requested by Mortgagee so to do,
shall join in the execution and delivery of all proper conveyances, assignments and
transfers of the properties so sold.



     Section 5.12 Obligations Survive Judgment.



          (a) All of the Secured Debt then outstanding shall survive the entry of any
judgment for foreclosure of this Mortgage, and shall also survive the entry of any
judgment on the Credit Agreement, the Notes, or any of the other Loan Documents or
Security Documents, or with respect to any of the Secured Debt then outstanding.
Without limiting the generality of the foregoing, despite the entry of any such
judgment, the Mortgagor shall continue to be bound by all of its covenants and
promises contained in the Credit Agreement, the Loan Documents and the other
Security Documents.




          (b) It is the intention of Mortgagor and Mortgagee that none of the Secured
Debt then outstanding shall merge into or be extinguished by any judgment referred
to in the above subsection (a), but that all of such Secured Debt shall continue
in full force and effect notwithstanding the entry of any such judgment, and that
all of such Secured Debt shall continue to be secured by this Mortgage.




          (c) Notwithstanding the entry of any judgment referred to in the above
subsection (a), interest shall continue to accrue after the entry of any such
judgment on all of the Secured Debt then outstanding at the rate or rates provided
for in the Credit Agreement or the applicable Lender Provided Interest Rate Hedge
or Lender Provided Financial Services Product (including any applicable default
rate or post maturity rate) until paid despite any statutory provision with
respect to interest rates on judgments, and all such interest shall continue to be
secured by this Mortgage.




ARTICLE 6

ASSIGNMENT OF RENTS AND LEASES




     Section 6.1 Assignment. In furtherance of and in addition to the grant and assignment
made by Mortgagor in Section 2.1 of this Mortgage, the Mortgagor hereby absolutely and
unconditionally assigns, sells, transfers and conveys to Mortgagee all of its respective
right, title and interest in and to all Leases, whether now existing or hereafter entered
into, and all of its respective right, title and interest in and to all Rents. This
assignment is an absolute assignment and not an assignment for additional security only. So
long as no Event of Default shall have



15









 




occurred and be continuing, the Mortgagor shall have a revocable license from Mortgagee to
exercise all rights extended to the landlord under the Leases, including the right to receive and
collect all Rents. The foregoing license is granted subject to the conditional limitation that no
Event of Default shall have occurred and be continuing. Upon the occurrence and during the
continuance of an Event of Default, whether or not legal proceedings have commenced, and without
regard to waste, adequacy of security for the Secured Debt or solvency of Mortgagor, the license
herein granted shall automatically expire and terminate, without notice to Mortgagor by Mortgagee
(any such notice being hereby expressly waived by Mortgagor to the extent permitted by applicable
Law).




     Section 6.2 Indebtedness Secured. This Assignment is made for the purposes of
securing:



          (a) The payment of the Secured Debt; and




          (b) the performance and discharge of each and every obligation, covenant and
agreement of Mortgagor contained herein and in the Credit Agreement and the other
Loan Documents.




     Section 6.3 Perfection Upon Recordation. Mortgagor acknowledges that Mortgagee has
taken all actions necessary to obtain, and that upon recordation of this Mortgage, and
Mortgagee shall have, to the extent permitted under applicable Law, a valid and fully
perfected, first priority, present assignment of the Rents arising out of the Leases and
all security for such Leases. Mortgagor acknowledges and agrees that upon recordation of
this Mortgage, Mortgagee’s interest in the Rents shall be deemed to be fully perfected,
“choate” and enforced as to Mortgagor and to the extent permitted under applicable Law, all
third parties, including any subsequently appointed trustee in any case under the
Bankruptcy Code, without the necessity of commencing a foreclosure action with respect to
this Mortgage, making formal demand for the Rents, obtaining the appointment of a receiver
or taking any other affirmative action.



     Section 6.4 Bankruptcy Provisions. Without limitation of the absolute nature of the
assignment of the Rents hereunder, Mortgagor and Mortgagee agree that (a) this Mortgage
shall constitute a “security agreement” for purposes of Section 552(b) of the Bankruptcy
Code, (b) the security interest created by this Mortgage extends to property of Mortgagor
acquired before the commencement of a case under the Bankruptcy Code and to all amounts
paid as Rents, and (c) such security interest shall extend to all Rents acquired by the
estate after the commencement of any case under the Bankruptcy Code.



     Section 6.5 Application of Rents. All Rents received by Mortgagee pursuant to this
Article 6 shall be applied and disposed of as provided in the Credit Agreement,
specifically in Section 9.1.4 of the Credit Agreement.



     Section 6.6 No Liability of Mortgagee in Collecting. Mortgagee is hereby absolved from
all liability for failure to enforce collection of any Rents so assigned (and no such
failure shall be deemed to be waiver of any right of Mortgagee under this Article 6) and
from all other responsibility in connection therewith, except the responsibility to account
to Mortgagor for funds actually received.



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     Section 6.7 Assignment Not a Restriction on Mortgagee’s Rights. Nothing herein
contained shall detract from or limit the absolute obligation of the Mortgagor to make
payment of the Secured Debt regardless of whether the Rents assigned by this Article 6 are
sufficient to pay the same, and the rights under this Article 6 shall be in addition to all
other security now or hereafter existing to secure the payment and performance of the
Secured Debt.



ARTICLE 7

SECURITY AGREEMENT AND FIXTURE FILING




     Section 7.1 Security Interest. This Mortgage constitutes a “security agreement” on
personal property within the meaning of the UCC and other applicable Law with respect to
all existing or hereafter acquired “as-extracted collateral”, “Mineral Interests”,
“Improvements”, “Premises”, “Fixtures”, “Leases”, “Rents”, “Personalty”, “Permits”,
“Proceeds”, “Deposit Accounts”, “Tax Refunds”, “Insurance” and “Condemnation Awards”, each
as defined herein. To this end, Mortgagor grants to Mortgagee a first and prior security
interest in all existing or hereafter acquired “as-extracted collateral”, “Mineral
Interests”, “Improvements”, “Premises”, “Fixtures”, “Leases”, “Rents”, “Personalty”,
“Permits”, “Proceeds”, “Deposit Accounts”, “Tax Refunds”, “Insurance” and “Condemnation
Awards”, to secure the payment and performance of the Secured Debt, and agrees that
Mortgagee shall have all the rights and remedies of a secured party under the UCC with
respect to such property. Any notice of sale, disposition or other intended action by
Mortgagee with respect to all existing or hereafter acquired “as-extracted collateral”,
“Mineral Interests”, “Improvements”, “Premises”, “Fixtures”, “Leases”, “Rents”,
“Personalty”, “Permits”, “Proceeds”, “Deposit Accounts”, “Tax Refunds”, “Insurance” and
“Condemnation Awards” or other Mortgaged Property, sent to Mortgagor at least ten (10) days
prior to any action under the UCC shall constitute reasonable notice to Mortgagor.



     Section 7.2 Financing Statements. Each Mortgagor hereby irrevocably authorizes
Mortgagee to cause financing statements (and amendments thereto and continuations thereof),
naming itself, individually, and/or as Administrative Agent for the Lenders, as secured
party, and such Mortgagor as debtor with respect to any of its Mortgaged Property, together
with any further such documents, instruments and assurances to be recorded and filed, at
such times and places as may be required or permitted by Law to so create, perfect and
preserve such security interest. Each Mortgagor specifically also authorizes Mortgagee to
file any such financing statements without such Mortgagor’s execution of any such financing
statements. Mortgagor represents and warrants to Mortgagee that Mortgagor’s jurisdiction of
organization, as set forth in Schedule 1 is correct. After the date of this Mortgage,
Mortgagor shall not change its name, type of organization, organizational identification
number (if any), jurisdiction of organization or location (within the meaning of the UCC)
without giving at least ten (10) days’ prior written notice to Mortgagee.



     Section 7.3 Fixture and “as-extracted collateral” Filing. This Mortgage shall also
constitute a “fixture filing” and an “as-extracted collateral” filing for the purposes of
the UCC against all of the Mortgaged Property which is or is to become “fixtures” or
“as-extracted collateral” related to the Premises. Mortgagor is a “Debtor” and its exact
legal name and mailing address are set forth in the preamble of this Mortgage immediately
preceding Article 1. Mortgagee is the “Secured Party” and its name and mailing address from
which information concerning the security interest granted herein may be obtained are also
set forth in the preamble



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of this Mortgage immediately preceding Article 1. A statement describing the portion of the
Mortgaged Property comprising the Fixtures, and “as-extracted collateral”, hereby secured is set
forth in Section 1.2(m) of this Mortgage. Mortgagor represents and warrants to Mortgagee that
Mortgagor is the record owner of the fee interests or owner of its leasehold interest in the
Mortgaged Property, as the case may be, as set forth on Schedules A, B and C. With respect to
Fixtures and “as-extracted collateral” located on Mortgaged Property in which the Mortgagor has an
unrecorded leasehold interest, Schedule B sets forth the name and address of the record owner of
such Mortgaged Property. The information provided in this Section 7.3 is provided so that this
Mortgage shall comply with the requirements of the UCC for a mortgage instrument to be filed as a
financing statement.




     Section 7.4 Mortgage Also a Security Agreement. This Mortgage shall also constitute a
“security agreement” under the UCC. In the event of any irreconcilable conflict with
respect to the “Collateral” (as such term is defined in any Security Agreement), between
the provisions of this Mortgage and the provisions of such Security Agreement, the
provisions of such Security Agreement shall control.



ARTICLE 8

MISCELLANEOUS




     Section 8.1 Notices. Any notice required or permitted to be given under this Mortgage
shall be given in accordance with Section 11.5 of the Credit Agreement.



     Section 8.2 Effect of Guaranty Agreement. If this Mortgage secures an obligation of
guaranty or suretyship or if this Mortgage is securing the obligation of another person or
entity, then Mortgagor further agrees that:



          (a) Mortgagee may do any of the following without notice to Mortgagor or to
any other party obligated to Mortgagee with respect to any of the Secured Debt,
and without adversely affecting the validity or enforceability of this Mortgage
or any of the Secured Debt: (i) release, surrender, exchange, compromise or
settle the Secured Debt or any part thereof; (ii) change, renew or waive the
terms of the Secured Debt, or any part thereof; (iii) change, renew or waive the
terms of any Loan Document or any other note, instrument or agreement relating
to the Secured Debt, such rights in Mortgagee to include without limitation the
right to change the rate of interest charged with respect to the Secured Debt or
any part thereof (in which event the obligations of Mortgagor shall be deemed
also to include all interest at such changed rate); (iv) grant any extension or
indulgence with respect to the payment or performance of the Secured Debt or any
part thereof; (v) enter into any agreement of forbearance with respect to the
Secured Debt, or any part thereof; (vi) release, surrender, exchange or
compromise any security held by Mortgagee for any of the Secured Debt; (vii)
release any other person who is a guarantor or surety or other obligor of, or
who has agreed to purchase, the Secured Debt or any part thereof; and (viii)
release, surrender, exchange or compromise any security or lien held by
Mortgagee for the Secured Debt or any part thereof. Mortgagor agrees that
Mortgagee may do any of the above as Mortgagee deems necessary or advisable, in
Mortgagee’s sole discretion, without giving any notice to Mortgagor, and that
Mortgagor will remain liable for full payment and performance of the Secured
Debt.






18









 








          (b) Mortgagor waives and agrees not to enforce any of the rights of
Mortgagee against any guarantor or other obligor of any of the Secured Debt, or
obligor of any obligations which the Secured Debt secure, unless and until all
Secured Debt shall have been paid in full to Mortgagee including, but not
limited to: (i) any right of Mortgagor to be subrogated in whole or in part to
any right or claim with respect to any of the Secured Debt or any portion
thereof; and (ii) any right of Mortgagor to require the marshaling of assets
which might otherwise arise from partial payment or performance by Mortgagor to
Mortgagee on account of the Secured Debt or any portion thereof.




     Section 8.3 Covenants Running with the Land. All obligations contained in this
Mortgage are intended by Mortgagor and Mortgagee to be, and shall be construed as,
covenants running with the land. All Persons who may have or acquire an interest in the
Mortgaged Property shall be deemed to have notice of, and be bound by, the terms of this
Mortgage; provided, however, that no such party shall be entitled to any rights hereunder
without the prior written consent of Mortgagee.



     Section 8.4 Mortgagee’s Right to Protect Security. Mortgagee is hereby authorized to
do any one or more of the following, irrespective of whether an Event of Default has
occurred: (a) appear in and defend any action or proceeding purporting to affect the
security hereof or the rights or powers of Mortgagee hereunder; and (b) take such action as
Mortgagee may determine to pay, perform or comply with any insurance or other legal
requirements, to cure any Event of Default and to protect its security in the Mortgaged
Property.



     Section 8.5 Attorney-in-Fact. Upon the occurrence of an Event of Default that has not
been waived, Mortgagor hereby irrevocably appoints Mortgagee as its attorney-in-fact, which
agency is coupled with an interest and with full power of substitution, with full authority
in the place and stead of Mortgagor and in the name of Mortgagor or otherwise, (a) to
execute and/or record any notices of completion, cessation of labor or any other notices
that Mortgagee deems appropriate to protect Mortgagee’s interest, if Mortgagor shall fail
to do so within ten (10) days after written request by Mortgagee, (b) upon the issuance of
a deed pursuant to the foreclosure of this Mortgage or the delivery of a deed in lieu of
foreclosure, to execute all instruments of assignment, conveyance or further assurance with
respect to the “Mineral Interests”, “as-extracted collateral”, “Improvements”, “Premises”,
“Fixtures”, “Leases”, “Rents”, “Personalty”, “Permits”, “Proceeds”, “Deposit Accounts”,
“Tax Refunds”, “Insurance” and “Condemnation Awards” or other Mortgaged Property in favor
of the grantee of any such deed and as may be necessary or desirable for such purpose, (c)
to prepare, execute, and file or record financing statements and continuation statements,
and to prepare, execute and file or record applications for registration and like papers
necessary to create, perfect or preserve Mortgagee’s security interests and rights in or to
any of the Mortgaged Property, and (d) after the occurrence and during the continuance of
any Event of Default, to perform any obligation of Mortgagor hereunder, provided, however,
that (1) Mortgagee shall not under any circumstances be obligated to perform any obligation
of Mortgagor, (2) any sums advanced by Mortgagee in such performance shall be added to and
included in the Secured Debt and shall bear interest at the highest rate at which interest
is then computed on any portion of the Secured Debt, (3) Mortgagee as such attorney-in-fact
shall only be accountable for such funds as are actually received by Mortgagee, and (4)
Mortgagee shall not be liable to Mortgagor or any other person or entity for any failure to
take any action which it is empowered to take under this Section 8.5.



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     Section 8.6 Mortgagee’s Costs and Expenses. If, as the result of an occurrence of an
Event of Default, or the exercise by Mortgagee of any of its rights under this Mortgage,
Mortgagee shall become a party, either as plaintiff or defendant or otherwise, to any suit
or legal proceeding affecting any of the Mortgaged Property or the Secured Debt, or if
review and approval of any document, or any other matter related to any of the Secured
Debt, is required by, or requested of, Mortgagee, Mortgagor shall pay to Mortgagee on
demand its reasonable costs, expenses and attorneys’ fees incurred in connection therewith.
If such amounts are not paid, they shall be added to the principal secured hereby, shall be
included as part of the Secured Debt and shall bear interest at the highest rate at which
interest is then computed on any portion of the Secured Debt from the date of demand.



     Section 8.7 Successors and Assigns. This Mortgage shall be binding upon and inure to
the benefit of Mortgagee and each Mortgagor and their respective successors and assigns.
Each Mortgagor shall not, without the prior written consent of Mortgagee, assign any
rights, duties or obligations hereunder. Each Mortgagor agrees, (i) that nothing herein
shall be deemed to prohibit the assignment or negotiation, with or without recourse, of the
Notes or any future advances, amendments, restatements, supplements, modifications,
extensions, renewals, replacements, substitutions, refinancings, refundings or waivers
thereof, or of the Credit Agreement or any of the other Loan Documents or Security
Documents, or any interest of Mortgagee, the Administrative Agent, or the Lenders therein,
or the assignment of this Mortgage, provided any such assignment or negotiation is
permitted under and in compliance with the Credit Agreement, and (ii) within thirty (30)
days after request by Mortgagee, Mortgagor shall certify to the assignee of this Mortgage,
to Mortgagee and to such other persons as Mortgagee may reasonably request, that this
Mortgage is in full force and effect, and the amount or amounts of the principal balance of
the Loans, and amounts due under any Letters of Credit, the terms of the Notes, and all
such other matters relating to the status of this Mortgage and the Notes, and in such form
as Mortgagee or such assignee may reasonably require.



     Section 8.8 No Waiver. Any failure by Mortgagee to insist upon strict performance of
any of the terms, provisions or conditions of the Credit Agreement or this Mortgage, or of
any other Loan Document, shall not be deemed to be a waiver of same, and Mortgagee shall
have the right at any time to insist upon strict performance of all of such terms,
provisions and conditions thereof.



     Section 8.9 Conflicts Between Documents. In the event of any irreconcilable conflict
between the provisions of this Mortgage and the provisions of the Credit Agreement, the
provisions of the Credit Agreement shall control.



     Section 8.10 Release or Reconveyance. Notwithstanding anything to the contrary
contained in this Mortgage, upon indefeasible payment in full in cash of the Obligations,
termination of the Commitments, expiration or termination of all Letters of Credit, and
payment and performance of all Obligations, or upon a sale or other disposition of the
Mortgaged Property permitted by the Credit Agreement, all obligations of Mortgagor under
this Mortgage shall terminate, and Mortgagee, at Mortgagor’s request and expense, shall
release the liens and security interests created by this Mortgage or reconvey the Mortgaged
Property to the Mortgagor.



20









 





     Section 8.11 Waiver of Stay, Moratorium and Similar Rights. Each Mortgagor agrees, to
the full extent that it may lawfully do so, that it will not at any time insist upon or
plead or in any way take advantage of any stay, marshalling of assets, extension,
redemption or moratorium Law now or hereafter in force and effect so as to prevent or
hinder the enforcement of the provisions of this Mortgage or any other Loan Document or the
Credit Agreement, or any agreement between Mortgagor and Mortgagee or any rights or
remedies of Mortgagee.



     Section 8.12 Applicable Law. The provisions of this Mortgage shall be governed by, and
construed in accordance with, the Laws of the State where the Property is located.



     Section 8.13 Headings. The Article, Section and Subsection titles hereof are inserted
for convenience of reference only and shall in no way alter, modify or define, or be used
in construing, the text of such Articles, Sections or Subsections.



     Section 8.14 Further Assurances. Mortgagor agrees to execute such further assurances,
documents and instruments as may be reasonably requested by Mortgagee for the purposes of
further evidencing, carrying out and/or confirming this Mortgage and for all other purposes
intended by this Mortgage.



     Section 8.15 Severability. If any provision of this Mortgage shall be held by any
court of competent jurisdiction to be unlawful, void or unenforceable for any reason, such
provision shall be deemed severable from and shall in no way affect the enforceability and
validity of the remaining provisions of this Mortgage.



     Section 8.16 Subrogation. If the proceeds of any Loan or other credit extended by
Mortgagee, the repayment of which is hereby secured, is used directly or indirectly to pay
off, discharge or satisfy, in whole or in part, any prior lien or encumbrance upon the
Mortgaged Property or any part thereof, then Mortgagee shall be subrogated to any
additional security held by the holder of such lien or encumbrance.



     Section 8.17 Time of Essence. Time is of the essence as to all of Mortgagor’s
obligations hereunder and under the Credit Agreement, the Loan Documents and the other
Security Documents and under any and all other documents relating in any manner to any of
the Secured Debt.



     Section 8.18 Status of Parties. It is understood and agreed that nothing contained in
this Mortgage, the Credit Agreement, the Loan Documents or the other Security Documents
shall be construed to constitute a partnership, joint venture or co-tenancy between or
among Borrowers, Mortgagor and any of their respective Affiliates, and Mortgagee, the
Administrative Agent and/or any of the Lenders.



     Section 8.19 Entire Agreement. This Mortgage, the Credit Agreement, the Loan Documents
and the other Security Documents embody the entire agreement and understanding between
Mortgagee and Mortgagor relating to the subject matter hereof and thereof and supersede all
prior agreements and understandings between such parties relating to the subject matter
hereof and thereof. Accordingly, such documents may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten
oral agreements between the parties.



21









 





     Section 8.20 Joint and Several Obligations. If there is more than one party identified
in this Mortgage as a “Mortgagor”, then each such party so identified shall be liable,
jointly and severally, for all obligations of any Mortgagor hereunder. As used herein,
“Mortgagor” and “Mortgagors” shall also refer to any subsequent owners or lessees of all or
any portion of the Mortgaged Property.



[Remainder of Page intentionally left blank]



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     Section 8.21 WAIVER OF TRIAL BY JURY.



     MORTGAGOR AND MORTGAGEE EACH WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON OR RELATED TO THE SUBJECT MATTER OF THIS MORTGAGE OR THE CREDIT
AGREEMENT, OR ANY OF THE OTHER LOAN DOCUMENTS OR SECURITY DOCUMENTS TO WHICH MORTGAGOR IS A
PARTY, OR ANY OF THE TRANSACTIONS RELATED TO ANY OF THE SECURED DEBT. THIS WAIVER IS
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY MORTGAGOR AND MORTGAGEE, AND MORTGAGOR AND
MORTGAGEE EACH ACKNOWLEDGE THAT NO ONE OF THE OTHER NOR ANY PERSON ACTING ON BEHALF OF THE
OTHER HAS OR HAVE MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. MORTGAGOR AND MORTGAGEE EACH FURTHER
ACKNOWLEDGE THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN
THE SIGNING OF THIS MORTGAGE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL
SELECTED OF ITS OWN FREE WILL AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER
WITH COUNSEL.



Initials of Western Mineral: ______

Initials of Western Diamond: ______

Initials of Western Land: ______

Initials of Ceralvo: ______

Initials of Armstrong: ______




[EDIT ABOVE LIST AS APPLICABLE]




     Section 8.22 Exempted Transactions. MORTGAGOR AND MORTGAGEE EACH AGREE THAT THE
SECURED DEBT REPRESENTS EXEMPTED TRANSACTIONS UNDER THE TRUTH-IN-LENDING ACT, 15 U.S.C.
SECTION 1601, ET SEQ.



[Remainder of Page intentionally left blank]



23









 





[INSERT PROPERTY HEADER]




     [SIGNATURE PAGE TO MORTGAGE —  COUNTY, KY]



          IN WITNESS WHEREOF, Mortgagor has on the date set forth in the acknowledgement
hereto, effective as of the date first above written, caused this instrument to be
duly EXECUTED AND DELIVERED by authority duly given.




	 	 	 	 	 
	 	MORTGAGOR:



WESTERN MINERAL DEVELOPMENT, LLC, a

Delaware limited liability company

 	 
	 	By:  	 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 
	 
	 	WESTERN DIAMOND LLC, a Nevada limited

liability company

 	 
	 	By:  	 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 
	 
	 	WESTERN LAND COMPANY, LLC, a Kentucky

limited liability company

 	 
	 	By:  	 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 
	 
	 	CERALVO HOLDINGS, LLC, a Delaware limited

liability company

 	 
	 	By:  	 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 
	 
	 	ARMSTRONG COAL COMPANY, INC., a

Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President 	 
	 



[Section 8.21 must be initialed]



 









 





[NOTARY PAGE TO MORTGAGE- ___COUNTY, KY]



	 	 	 	 	 	 	 

	COMMONWEALTH OF PENNSYLVANIA

	 	 	)	 	 	 
	 

	 	 	) ss.:	 	 	
	COUNTY OF ALLEGHENY

	 	 	)	 	 	 






          On this, the 8th day of February, 2011, before me, a notary public, the
undersigned officer, personally appeared Martin D. Wilson, who acknowledged himself
to be the                    of [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, Ceralvo Holdings, LLC, a
Delaware limited liability company, Armstrong Coal Company, Inc., a Delaware
corporation], and that he, in such capacity, being authorized to do so, executed
the foregoing instrument for the purposes therein contain, by signing his name in
such capacity.




          Witness my hand and official seal.




[Notarial Seal]




My Commission Expires:




	 	 	 	 	 
	 	
Notary Public
 	 



 









 






[INSERT PROPERTY HEADER]




SCHEDULE A




OWNED PROPERTY



 









 





[INSERT PROPERTY HEADER]




SCHEDULE B



LEASED PROPERTY



 









 





SCHEDULE C



ARMSTRONG LEASE



 









 





[INSERT PROPERTY HEADER]




SCHEDULE D



CERTAIN BUILDINGS, STRUCTURES AND IMPROVEMENTS


None.






 









 








[INSERT PROPERTY HEADER]




SCHEDULE 1




	 	 	 
	 	 	Jurisdiction of
	Name of Mortgagor	 	Organization
	Western Mineral Development, LLC
	 	Delaware
	Western Diamond LLC
	 	Nevada
	Western Land Company, LLC
	 	Kentucky
	Ceralvo Holdings, LLC
	 	Delaware
	Armstrong Coal Company, Inc.
	 	Delaware







 











 






EXHIBIT 1.1(N)(1)



FORM OF

REVOLVING CREDIT NOTE




	 		
	$             
	 	Pittsburgh, Pennsylvania

February 9, 2011






     FOR VALUE RECEIVED, the undersigned, ARMSTRONG COAL COMPANY, INC., a Delaware
corporation, and ARMSTRONG LAND COMPANY, LLC, a Delaware limited liability company
(together, herein called the “Revolver Borrowers”), hereby unconditionally promises to pay
to the order of                   (the “Revolver Lender”), the lesser of (i) the principal sum of              
          Dollars
(US$              ), or (ii) the aggregate unpaid principal balance of all Revolving Credit Loans made
by the Revolver Lender to the Revolver Borrowers pursuant to Section 2.6.4 [Repayment of
Revolving Credit Loans] of the Credit Agreement, dated as of February 9, 2011, among the
Borrowers, the Guarantors now or hereafter party thereto, the Lenders now or hereafter
party thereto and PNC Bank, National Association, as administrative agent, (hereinafter
referred to in such capacity as the “Administrative Agent”) (as amended, restated,
modified, or supplemented from time to time, the “Credit Agreement”), together with all
outstanding interest thereon on the Expiration Date.



     The Revolver Borrowers shall pay interest on the unpaid principal balance hereof from
time to time outstanding from the date hereof at the rate or rates per annum specified by
the Revolver Borrowers pursuant to, or as otherwise provided in, the Credit Agreement.
Subject to the provisions of the Credit Agreement, interest on this Revolving Credit Note
will be payable pursuant to Section 5.5 [Interest Payment Dates] of, or as otherwise
provided in, the Credit Agreement. If any payment or action to be made or taken hereunder
shall be stated to be or become 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, unless otherwise provided
in the Credit Agreement, and such extension of time shall be included in computing interest
or fees, if any, in connection with such payment or action. Upon the occurrence and during
the continuation of an Event of Default, the Revolver Borrowers shall pay interest on the
entire principal amount of the then outstanding Revolving Credit Loans evidenced by this
Revolving Credit Note and all other obligations due and payable to the Revolver Lender
pursuant to the Credit Agreement and the other Loan Documents at a rate per annum as set
forth in Section 4.3 [Interest After Default] of the Credit Agreement. Such interest rate
will accrue before and after any judgment has been entered.



     Subject to the provisions of the Credit Agreement, payments of both principal and
interest shall be made without setoff, counterclaim or other deduction of any nature at the
office of the Administrative Agent located at 500 First Avenue, Pittsburgh, Pennsylvania
15219 unless otherwise directed in writing by the Administrative Agent, in lawful money of
the United States of America in immediately available funds.



 









 





     This Revolving Credit Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement and the other Loan Documents, including the
representations, warranties, covenants, conditions, security interests and Liens contained
or granted therein. The Credit Agreement among other things contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events and also
for prepayments, in certain circumstances, on account of principal hereof prior to maturity
upon the terms and conditions therein specified. The Revolver Borrowers waive presentment,
demand, notice, protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Revolving Credit Note and the
Credit Agreement.



     This Revolving Credit Note shall bind the Revolver Borrowers and their successors and
assigns, and the benefits hereof shall inure to the benefit of the Revolver Lender and its
successors and assigns. All references herein to the “Revolver Borrowers” and the “Revolver
Lender” shall be deemed to apply to the Revolver Borrowers and the Revolver Lender,
respectively, and their respective successors and assigns as permitted under the Credit
Agreement.



     This Revolving Credit Note and any other documents delivered in connection herewith
and the rights and obligations of the parties hereto and thereto shall for all purposes be
governed, by and construed and enforced in accordance with, the internal laws of the State
of New York without giving effect to its conflicts of law principles.



     All capitalized terms used herein shall, unless otherwise defined herein, have the
same meanings given to such terms in the Credit Agreement and Section 1.2 [Construction] of
the Credit Agreement shall apply to this Revolving Credit Note.



[SIGNATURE PAGE FOLLOWS]






2









 








[SIGNATURE PAGE TO REVOLVING CREDIT NOTE]




     IN WITNESS WHEREOF, and intending to be legally bound hereby, the undersigned has executed this
Revolving Credit Note by its duly authorized officer with the intention that it constitute a sealed
instrument.



	 	 	 	 	 
	 	ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	(SEAL)
 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	(SEAL)
 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 







EXHIBIT 1.1(N)(2)




FORM OF SWING

LOAN NOTE




	 		
	$          
	 	Pittsburgh, Pennsylvania

February 9, 2011






     FOR VALUE RECEIVED, the undersigned, ARMSTRONG COAL COMPANY, INC., a Delaware
corporation, and ARMSTRONG LAND COMPANY, LLC, a Delaware limited liability company
(together, herein called the “Revolver Borrowers”), hereby unconditionally promises to pay
to the order of PNC BANK, NATIONAL ASSOCIATION (the “Swing Loan Lender”), the lesser of (i)
the principal sum of                 
            
Dollars (US$             ), or (ii) the aggregate unpaid principal balance of
all Swing Loans made by the Swing Loan Lender to the Revolver Borrowers pursuant to the
Credit Agreement, dated as of February 9, 2011, among the Borrowers, the Guarantors now or
hereafter party thereto, the Lenders now or hereafter party thereto, and the Swing Loan
Lender, as administrative agent (hereinafter referred to in such capacity as the
“Administrative Agent”) (as amended, restated, modified, or supplemented from time to time,
the “Credit Agreement”), payable with respect to each Swing Loan evidenced hereby on the
earlier of (i) demand by the Swing Loan Lender or (ii) on the Expiration Date.



     The Revolver Borrowers shall pay interest on the unpaid principal balance of each
Swing Loan from time to time outstanding from the date hereof at the rate per annum and on
the date(s) provided in the Credit Agreement. Subject to the provisions of the Credit
Agreement, interest on this Swing Loan Note will be payable pursuant to Section 5.5
[Interest Payment Dates] of, or as otherwise provided in, the Credit Agreement. If any
payment or action to be made or taken hereunder shall be stated to be or become 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, unless otherwise provided in the Credit Agreement, and such
extension of time shall be included in computing interest or fees, if any, in connection
with such payment or action. Upon the occurrence and during the continuation of an Event of
Default, the Revolver Borrowers shall pay interest on the entire principal amount of the
then outstanding Swing Loans evidenced by this Swing Loan Note at a rate per annum as set
forth in Section 4.3 [Interest After Default] of the Credit Agreement. Such interest rate
will accrue before and after any judgment has been entered.



     Subject to the provisions of the Credit Agreement, payments of both principal and
interest shall be made without setoff, counterclaim or other deduction of any nature at the
office of the Administrative Agent located at 500 First Avenue, Pittsburgh, Pennsylvania
15219, unless otherwise directed in writing by the holder hereof, in lawful money of the
United States of America in immediately available funds.



     This Swing Loan Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement and the other Loan Documents, including the
representations, warranties, covenants, conditions, security interests and Liens contained
or granted therein. The Credit



 









 




Agreement among other things contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments, in certain circumstances, on account
of principal hereof prior to maturity upon the terms and conditions therein specified. The Revolver
Borrowers waive presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of this Swing Loan
Note and the Credit Agreement.




     The Revolver Borrowers acknowledge and agree that the Swing Loan Lender may at any
time and in its sole discretion demand payment of all amounts outstanding under this Swing
Loan Note without prior notice to the Revolver Borrowers.



     This Swing Loan Note shall bind the Revolver Borrowers and their successors and
assigns, and the benefits hereof shall inure to the benefit of the Swing Loan Lender and
its successors and assigns. All references herein to the “Revolver Borrowers” and the
“Swing Loan Lender” shall be deemed to apply to the Revolver Borrowers and the Swing Loan
Lenders, respectively, and their respective successors and assigns as permitted under the
Credit Agreement.



     This Swing Loan Note and any other documents delivered in connection herewith and the
rights and obligations of the parties hereto and thereto shall for all purposes be
governed, by and construed and enforced in accordance with, the internal laws of the State
of New York without giving effect to its conflicts of law principles.



     All capitalized terms used herein shall, unless otherwise defined herein, have the
same meanings given to such terms in the Credit Agreement and Section 1.2 [Construction] of
the Credit Agreement shall apply to this Swing Loan Note.



[SIGNATURE PAGE FOLLOWS]






2









 








[SIGNATURE PAGE 1 OF 1 TO SWING LOAN NOTE]




     IN WITNESS WHEREOF, and intending to be legally bound hereby, the undersigned has executed this
Swing Loan Note by its duly authorized officers with the intention that it constitute a sealed
instrument.



	 	 	 	 	 
	 	ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	(SEAL)
 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	(SEAL)
 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



EXHIBIT 1.1(N)(3)




FORM OF

TERM NOTE




	 		
	$          
	 	Pittsburgh, Pennsylvania

February 9, 2011






     FOR VALUE RECEIVED, the undersigned, ARMSTRONG COAL COMPANY, INC., a Delaware
corporation, ELK CREEK, L.P., a Delaware limited partnership, WESTERN MINERAL DEVELOPMENT,
LLC, a Delaware limited liability company, WESTERN DIAMOND LLC, a Nevada limited liability
company, and WESTERN LAND COMPANY, LLC, a Kentucky limited liability company (together,
herein called the “Term Borrowers”), hereby unconditionally promises to pay to the order of   
                        
(the “Term Lender”) the principal sum of                                Dollars (US$          ), pursuant to Section 3.1 [Term
Loan Commitments] of the Credit Agreement dated as of February 9, 2011, among the
Borrowers, the Guarantors now or hereafter party thereto, the Lenders now or hereafter
party thereto, and PNC Bank, National Association, as administrative agent (hereinafter
referred to in such capacity as the “Administrative Agent”), (as amended, restated,
modified or supplemented, from time to time, the “Credit Agreement”), payable to the Term
Lender as follows: quarterly installments of principal in the amounts set forth in Section
3.2 [Nature of Term Lenders’ Obligations with Respect to Term Loans; Repayment Terms] of
the Credit Agreement.



     The Term Borrowers shall pay interest on the unpaid principal balance hereof from time
to time outstanding from the date hereof at the rate or rates per annum specified by the
Term Borrowers pursuant to, or as otherwise provided in, the Credit Agreement. Subject to
the provisions of the Credit Agreement, interest on this Revolving Credit Note will be
payable pursuant to Section 5.5 [Interest Payment Dates] of, or as otherwise provided in,
the Credit Agreement. If any payment or action to be made or taken hereunder shall be
stated to be or become 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, unless otherwise provided in the
Credit Agreement, and such extension of time shall be included in computing interest or
fees, if any, in connection with such payment or action. Upon the occurrence and during the
continuation of an Event of Default, the Term Borrowers shall pay interest on the unpaid
principal balance hereof at a rate per annum as set forth in Section 4.3 [Interest After
Default] of the Credit Agreement. Such interest will accrue before and after any judgment
has been entered.



     Subject to the provisions of the Credit Agreement, payments of both principal and
interest shall be made without setoff, counterclaim or other deduction of any nature at the
office of the Administrative Agent located at 500 First Avenue, Pittsburgh, Pennsylvania
15219 unless otherwise directed in writing by the Administrative Agent, in lawful money of
the United States of America in immediately available funds.



 









 





     This Term Note is one of the Notes referred to in, and is entitled to the benefits of
the Credit Agreement and the other Loan Documents, including the representations,
warranties, covenants, conditions, security interests and Liens contained or granted
therein. The Credit Agreement, among other things, contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events and also for prepayments,
in certain circumstances, on account of principal hereof prior to maturity upon the terms
and conditions therein specified. The Term Borrowers waive presentment, demand, notice,
protest and all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Term Note and the Credit Agreement.



     This Term Note shall bind the Term Borrowers and their successors and assigns, and the
benefits hereof shall inure to the benefit of the Term Lender and its successors and
assigns. All references herein to the “Term Borrowers” and the “Term Lender” shall be
deemed to apply to the Term Borrowers and the Term Lender, respectively, and their
respective successors and assigns as permitted under the Credit Agreement.



     This Term Note and any other documents delivered in connection herewith and the rights
and obligations of the parties hereto and thereto shall for all purposes be governed by and
construed and enforced in accordance with the internal laws of the State of New York
without giving effect to its conflicts of law principles.



     All capitalized terms used herein shall, unless otherwise defined herein, have the
same meanings given to such terms in the Credit Agreement and Section 1.2 [Construction] of
the Credit Agreement shall apply to this Term Note.



[SIGNATURE PAGE FOLLOWS]






2









 








[SIGNATURE PAGE — TERM NOTE]




     IN WITNESS WHEREOF, and intending to be legally bound, the undersigned has executed this Term Note
by its duly authorized officer with the intention that it constitute a sealed instrument.



	 	 	 	 	 
	 	ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	(SEAL)
 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK, L.P.



By: Elk Creek GP, LLC, as General Partner

 	 
	 	By:  	(SEAL)
 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN MINERAL DEVELOPMENT, LLC

 	 
	 	By:  	(SEAL)
 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN DIAMOND LLC

 	 
	 	By:  	(SEAL)
 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN LAND COMPANY, LLC

 	 
	 	By:  	(SEAL)
 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



EXHIBIT 1.1(P)(1)(a)




FORM OF

PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT (REVOLVER)





     This Patent, Trademark and Copyright Security Agreement (Revolver) (the
“Agreement”), dated as of February 9, 2011 is entered into by and among EACH OF THE PERSONS
LISTED ON THE SIGNATURE PAGES HERETO AS A REVOLVER PARTY PLEDGOR AND EACH OF THE OTHER PERSONS
WHICH BECOME REVOLVER PARTY PLEDGORS HEREUNDER FROM TIME TO TIME (each a “Revolver Party Pledgor”
and collectively, the “Revolver Party Pledgors”), EACH OF THE PERSONS LISTED ON THE SIGNATURE PAGES
HERETO AS A TERM PARTY PLEDGOR AND EACH OF THE OTHER PERSONS WHICH BECOME TERM PARTY PLEDGORS
HEREUNDER FROM TIME TO TIME (each a “Term Party Pledgor” and collectively, the “Term Party
Pledgors”) (the Revolver Party Pledgors and the Term Party Pledgors are collectively referred to
herein as the “Pledgors” and each a “Pledgor”) and PNC BANK, NATIONAL ASSOCIATION, as
administrative agent for the Lenders referred to below (the “Administrative Agent”).



     WHEREAS, pursuant to that certain Credit Agreement (as amended, restated, modified or
supplemented from time to time, the “Credit Agreement”) of even date herewith by and among
Armstrong Coal Company, Inc., Armstrong Land Company, LLC, Elk Creek L.P., Western Mineral
Development, LLC, Western Diamond LLC, Western Land Company, LLC (collectively, the “Borrower”), the Guarantors a party thereto (the “Guarantors”), the Lenders
a party thereto (the “Lenders”) and the Administrative Agent, the Administrative Agent and the
Lenders have agreed to provide certain loans to the Borrower, and the Pledgors have agreed, among
other things, to grant a security interest to the Administrative Agent in certain patents,
trademarks, copyrights and other property as security for such loans and other obligations as more
fully described herein.



     NOW, THEREFORE, intending to be legally bound hereby, the parties hereto agree as
follows:



     1. Defined Terms.



     (a) Except as otherwise expressly provided herein, (i) capitalized terms used in this
Agreement shall have the respective meanings assigned to them in the Credit Agreement and
(ii) the rules of construction set forth in Section 1.2 Construction of the Credit
Agreement shall apply to this Agreement. Where applicable and except as otherwise expressly
provided herein, terms used herein (whether or not capitalized) shall have the respective
meanings assigned to them in the Uniform Commercial Code as enacted in New York as amended
from time to time (the “Code”).



     (b) “Patents, Trademarks and Copyrights” shall mean and include all of each Pledgor’s
present and future right, title and interest in and to the following: all trade names,



 









 




patent applications, patents, trademark applications, trademarks and copyrights, whether now owned
or hereafter acquired by each Pledgor, including, without limitation, those listed on Schedule A
hereto, including all proceeds thereof (such as, by way of example, license royalties and proceeds
of infringement suits), the right to sue for past, present and future infringements, all rights
corresponding thereto throughout the world and all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, and the goodwill of the business to which any of the
patents, trademarks and copyrights relate.




     (c) “Patents, Trademarks and Copyrights (Revolver)” shall mean the Patent, Trademarks
and Copyrights of each Revolver Party Pledgor.



     (d) “Patents, Trademarks and Copyrights (Term)” shall mean the Patent, Trademarks
and Copyrights of each Term Party Pledgor.



     (e) “PTC Security Agreement (Term)” shall mean that certain Patent, Trademark and
Security Agreement of even date herewith by and among the Pledgors and the Agent, entered
into as security for the Term Loans.



     (f) “Secured Obligations” shall mean and include the following: (i) all now existing
and hereafter arising Indebtedness and Obligations of each and every Pledgor to the
Administrative Agent, the Revolver Lenders, or any provider of any Lender Provided Interest
Rate Hedge or any provider of any Other Lender Provided Financial Service Product under the
Credit Agreement or any of the other Loan Documents, including all obligations,
liabilities, and indebtedness, whether for principal, interest, fees, expenses or
otherwise, of each and every of the Pledgors to the Administrative Agent, the Revolver
Lenders, or any provider of any Lender Provided Interest Rate Hedge or any provider of any
Other Lender Provided Financial Service Product, now existing or hereafter incurred under
the Credit Agreement or the Notes or the Guaranty Agreement or any of the other Loan
Documents as any of the same or any one or more of them may from time to time be amended,
restated, modified, or supplemented, together with any and all extensions, renewals,
refinancings, and refundings thereof in whole or in part (and including obligations,
liabilities, and indebtedness arising or accruing after the commencement of any bankruptcy,
insolvency, reorganization, or similar proceeding with respect to the Borrower or which
would have arisen or accrued but for the commencement of such proceeding, even if the claim
for such obligation, liability or indebtedness is not enforceable or allowable in such
proceeding, and including all obligations, liabilities and indebtedness arising from any
extensions of credit under or in connection with the Loan Documents from time to time,
regardless whether any such extensions of credit are in excess of the amount committed
under or contemplated by the Loan Documents or are made in circumstances in which any
condition to extension of credit is not satisfied); (ii) all reimbursement obligations of
each and every Pledgor with respect to any one or more Letters of Credit issued by
Administrative Agent or any Revolver Lender; (iii) all indebtedness, loans, obligations,
expenses and liabilities of each and every of the Pledgors to the Administrative Agent or
any of the Revolver Lenders of any obligations incurred in connection with any Lender
Provided Interest Rate Hedge or any Other Lender Provided Financial Service Product
provided by the Administrative Agent or such Revolver Lenders pursuant to the Credit
Agreement; and (iv) any sums advanced by the Administrative Agent or the Revolver Lenders
or which may otherwise become due pursuant to the provisions of the Credit Agreement, the
Notes,



-2-









 




this Agreement, or any other Loan Documents or pursuant to any other document or instrument at
any time delivered to the Administrative Agent in connection therewith, including commitment,
letter of credit, agent or other fees and charges, and indemnification obligations under any such
document or instrument, together with all interest payable on any of the foregoing, whether such
sums are advanced or otherwise become due before or after the entry of any judgment for foreclosure
or any judgment on any Loan Document or with respect to any default under any of the Debt.




     2. Grant of Security Interests.



     (a) To secure the full payment and performance of all Secured Obligations, each
Revolver Party Pledgor hereby grants and conveys a prior security interest to the
Administrative Agent, for itself and the benefit of the Revolver Lenders and their
respective affiliates, in the entire right, title and interest of such Revolver Party
Pledgor in and to all of its Patents, Trademarks and Copyrights (Revolver), subject only to
Permitted Liens.



     (b) To secure the full payment and performance of all Secured Obligations, each Term
Party Pledgor hereby grants and conveys a prior security interest to the Administrative
Agent (subject only to the Term Lenders’ first priority security interest created pursuant
to the PTC Security Agreement (Term)), for itself and the benefit of the Revolver Lenders
and their respective affiliates, in the entire right, title and interest of such Term Party
Pledgor in and to all of its Patents, Trademarks and Copyrights (Term), subject only to
Permitted Liens.



     3. Each Pledgor jointly and severally represents and warrants, and covenants that:



     (a) the Patents, Trademarks and Copyrights are subsisting and have not been
adjudged invalid or unenforceable, in whole or in part;



     (b) to the best of such Pledgor’s knowledge, each of the Patents, Trademarks and
Copyrights is valid and enforceable;



     (c) such Pledgor is the sole and exclusive owner of the entire and unencumbered right,
title and interest in and to each of the Patents, Trademarks and Copyrights, free and clear
of any liens, charges and encumbrances, except as provided in the PTC Security Agreement
(Term) and for Permitted Liens, including pledges, assignments, licenses, shop rights and
covenants by such Pledgor not to sue third persons;



     (d) such Pledgor has the corporate, limited liability company or partnership power and
authority, as applicable, to enter into this Agreement and perform its terms;



     (e) no claim has been made to such Pledgor or, to the knowledge of such Pledgor, any
other person that the use of any of the Patents, Trademarks and Copyrights does or may
violate the rights of any third party;



     (f) such Pledgor has used, and will continue to use for the duration of this
Agreement, consistent standards of quality in its manufacture of products sold under the Patents,
Trademarks and Copyrights;



-3-









 





     (g) such Pledgor has used, and will continue to use for the duration of this
Agreement, proper statutory notice in connection with its use of the Patents, Trademarks
and Copyrights set forth on Schedule A, attached hereto, except for those Patents,
Trademarks and Copyrights that are hereafter allowed to lapse in accordance with Paragraph
11 hereof;



     (h) such Pledgor will not change its state of incorporation, formation or
organization, as applicable without providing thirty (30) days prior written notice the
Administrative Agent;



     (i) such Pledgor will not change its name without providing thirty (30) days prior
written notice to the Administrative Agent; and



     (j) such Pledgor shall, except as permitted by Section 8.2.6 or Section 8.2.7 of
the Credit Agreement, preserve its existence as a corporation, partnership or a
limited liability company, as applicable, and except as permitted by the Credit
Agreement, shall not (1) in one, or a series of related transactions, merge into or
consolidate with any other entity, the survivor of which is not such Pledgor, or
(2) sell all or substantially all of its assets.



     4. Each of the obligations and additional liabilities of each and every Pledgor under
this Agreement are joint and several with the obligations of the other Pledgors, and each
Pledgor hereby waives to the fullest extent permitted by Law any defense it may otherwise
have to the payment and performance of the Obligations that its liability hereunder is
limited and not joint and several. Each Pledgor acknowledges and agrees that the foregoing
waiver serves as a material inducement to the agreement of the Administrative Agent and the
Revolver Lenders to make the Loans, and that the Administrative Agent and the Revolver
Lenders are relying on such waiver in entering into this Agreement. The undertakings of
each Pledgor hereunder secure the obligations of the Borrower, itself and the other
Pledgors. The Administrative Agent and the Revolver Lenders, or any of them, may, in their
sole discretion, elect to enforce this Agreement against any Pledgor without any duty or
responsibility to pursue any other Pledgor and such an election by the Administrative Agent
and the Revolver Lenders, or any of them, shall not be a defense to any action the
Administrative Agent and the Revolver Lenders, or any of them, may elect to take against
any Pledgor. Each of the Revolver Lenders and the Administrative Agent hereby reserves all
rights against each Pledgor.



     5. Each Pledgor agrees that, until all of the Secured Obligations shall have been
indefeasibly paid in full, all Commitments have been terminated and all Letters of Credit
and Lender Provided Interest Rate Hedge or any Other Lender Provided Financial Services
Products have expired or been terminated, it will not enter into any agreement (for
example, a license agreement) which is inconsistent with such Pledgor’s obligations under
this Agreement, without the Administrative Agent’s prior written consent which shall not be
unreasonably withheld except such Pledgor may license technology in the ordinary course of
business without the Administrative Agent’s consent to suppliers and customers to
facilitate the manufacture and use of such Pledgor’s products.



     6. If, before the Secured Obligations shall have been Paid In Full and all
Commitments have been terminated and all Letters of Credit and Lender Provided Interest Rate
Hedge or any Other Lender Provided Financial Services Products have expired or been



-4-









 




terminated, any Pledgor shall own any new trademarks or any new copyrightable or patentable
inventions, or any patent application or patent for any reissue, division, continuation, renewal,
extension, or continuation in part of any Patent, Trademark or Copyright or any improvement on any
Patent, Trademark or Copyright, the provisions of this Agreement shall automatically apply thereto
and such Pledgor shall give to the Administrative Agent prompt notice thereof in writing. Each
Pledgor and the Administrative Agent agree to modify this Agreement by amending Schedule A to
include any future patents, patent applications, trademark applications, trademarks, copyrights or
copyright applications and the provisions of this Agreement shall apply thereto.




     7. Administrative Agent shall have, in addition to all other rights and remedies given
it by this Agreement and those rights and remedies set forth in the Credit Agreement, those
allowed by applicable Law and the rights and remedies of a secured party under the Uniform
Commercial Code as enacted in any jurisdiction in which the Patents, Trademarks and
Copyrights may be located and, without limiting the generality of the foregoing, if an
Event of Default has occurred and is continuing, Administrative Agent may immediately,
without demand of performance and without other notice (except as set forth below) or
demand whatsoever to Pledgors, all of which are hereby expressly waived, and without
advertisement, sell at public or private sale or otherwise realize upon, in a city that the
Administrative Agent shall designate by notice to the Pledgors, in Pittsburgh, Pennsylvania
or elsewhere, the whole or from time to time any part of the Patents, Trademarks and
Copyrights, or any interest which any Pledgor may have therein and, after deducting from
the proceeds of sale or other disposition of the Patents, Trademarks and Copyrights all
expenses (including fees and expenses for brokers and attorneys), shall apply the remainder
of such proceeds in the manner set forth in Section 9.2.4 [Application of Proceeds] of the
Credit Agreement. Notice of any sale or other disposition of the Patents, Trademarks and
Copyrights shall be given to Pledgors at least ten (10) days before the time of any
intended public or private sale or other disposition of the Patents, Trademarks and
Copyrights is to be made, which each Pledgor hereby agrees shall be reasonable notice of
such sale or other disposition. At any such sale or other disposition, Administrative Agent
may, to the extent permissible under applicable Law, purchase the whole or any part of the
Patents, Trademarks and Copyrights sold, free from any right of redemption on the part of
Pledgor, which right is hereby waived and released.



     8. If any Event of Default shall have occurred and be continuing, each Pledgor hereby
authorizes and empowers the Administrative Agent to make, constitute and appoint any
officer or agent of the Administrative Agent, as the Administrative Agent may select in its
exclusive discretion, as such Pledgor’s true and lawful attorney-in-fact, with the power to
endorse such Pledgor’s name on all applications, documents, papers and instruments
necessary for the Administrative Agent to use the Patents, Trademarks and Copyrights, or to
grant or issue, on commercially reasonable terms, any exclusive or nonexclusive license
under the Patents, Trademarks and Copyrights to any third person, or necessary for the
Administrative Agent to assign, pledge, convey or otherwise transfer title in or dispose,
on commercially reasonable terms, of the Patents, Trademarks and Copyrights to any third
Person. Each Pledgor hereby ratifies all that such attorney shall lawfully do or cause to
be done by virtue hereof. This power of attorney, being coupled with an interest, shall be
irrevocable for the life of this Agreement.



-5-









 





     9. At such time as all of the Secured Obligations shall have been Paid In Full and all
Commitments shall have been terminated and all Letters of Credit and Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Products have expired
or been terminated, this Agreement shall terminate and the Administrative Agent shall
execute and deliver to the Pledgors all deeds, assignments and other instruments as may be
necessary or proper to re-vest in the Pledgors full title to the Patents, Trademarks and
Copyrights, subject to any disposition thereof which may have been made by the
Administrative Agent pursuant hereto.



     10. Any and all fees, costs and expenses, of whatever kind or nature, including
reasonable attorneys’ fees and expenses incurred by Administrative Agent in connection with
the preparation of this Agreement and all other documents relating hereto and the
consummation of this transaction, the filing or recording of any documents (including all
taxes in connection therewith) in public offices, the payment or discharge of any taxes,
counsel fees, maintenance fees, encumbrances, the protection, maintenance or preservation
of the Patents, Trademarks and Copyrights, or the defense or prosecution of any actions or
proceedings arising out of or related to the Patents, Trademarks and Copyrights, shall be
borne and paid by the Pledgors within fifteen (15) days of demand by Administrative Agent,
and if not paid within such time, shall be added to the principal amount of the Secured
Obligations and shall bear interest at the highest rate prescribed in the Credit Agreement.



     11. Each Pledgor shall have the duty, through counsel reasonably acceptable to the
Administrative Agent, to prosecute diligently any patent applications of the Patents,
Trademarks and Copyrights pending as of the date of this Agreement if commercially
reasonable or thereafter until the Secured Obligations shall have been indefeasibly paid in
full and the Commitments shall have terminated, and the Letters of Credit and Lender
Provided Interest Rate Hedge or any Other Lender Provided Financial Services Products have
expired or been terminated, to make application on unpatented but patentable inventions
(whenever it is commercially reasonable in the reasonable judgment of such Pledgor to do
so) and to preserve and maintain all rights in patent applications and patents of the
Patents, including the payment of all maintenance fees. Any expenses incurred in connection
with such an application shall be borne by the Pledgors. No Pledgor shall abandon any
Patent, Trademark or Copyright without the consent of the Administrative Agent, which shall
not be unreasonably withheld.



     12. Each Pledgor shall have the right, with the consent of the Administrative Agent,
which shall not be unreasonably withheld, to bring suit, action or other proceeding in its
own name, and to join the Administrative Agent, if necessary, as a party to such suit so
long as the Administrative Agent is satisfied that such joinder will not subject it to any
risk of liability, to enforce the Patents, Trademarks and Copyrights and any licenses
thereunder. Each Pledgor shall promptly, upon demand, reimburse and indemnify the
Administrative Agent for all damages, costs and expenses, including reasonable legal fees,
incurred by the Administrative Agent as a result of such suit or joinder by such Pledgor.



     13. No course of dealing between any Pledgor and the Administrative Agent, nor any
failure to exercise nor any delay in exercising, on the part of the Administrative Agent,
any right, remedy, power or privilege of the Administrative Agent hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder



-6-









 




preclude any other or further exercise thereof or the exercise of any other right, remedy, power or
privilege. No waiver of a single Event of Default shall be deemed a waiver of a subsequent Event of
Default.




     14. All of the Administrative Agent’s rights and remedies with respect to the Patents,
Trademarks and Copyrights, whether established hereby or by the Credit Agreement or by any
other agreements or by Law, shall be cumulative and not exclusive of any rights or remedies
which it may otherwise have under the other Loan Documents, under the Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Products or by Law, and
the Administrative Agent may enforce any one or more remedies hereunder successively or
concurrently at its option.



     15. (a) It is the intention of the parties that this Agreement be enforceable to the
fullest extent permissible under applicable Law, but that the unenforceability (or
modification to conform to such Law) of any provision or provisions hereof shall not render
unenforceable, or impair, the remainder hereof. If any provision in this Agreement shall be
held invalid or unenforceable in whole or in part in any jurisdiction, this Agreement
shall, as to such jurisdiction, be deemed amended to modify or delete, as necessary, the
offending provision or provisions and to alter the bounds thereof in order to render it or
them valid and enforceable to the maximum extent permitted by applicable Law, without in
any manner affecting the validity or enforceability of such provision or provisions in any
other jurisdiction or the remaining provisions hereof in any jurisdiction without
invalidating the remaining provisions hereof.



          (b) Without limitation of the preceding Subsection (a), to the extent that
applicable Law (including applicable Laws pertaining to fraudulent conveyance or
fraudulent or preferential transfer) otherwise would render the full amount of any
Pledgor’s obligations hereunder invalid, voidable, or unenforceable on account of
the amount of a Pledgor’s aggregate liability under this Agreement, then,
notwithstanding any other provision of this Agreement to the contrary, the
aggregate amount of such liability shall, without any further action by the
Administrative Agent or any of the Revolver Lenders or such Pledgor or any other
Person, be automatically limited and reduced to the highest amount which is valid
and enforceable as determined in such action or proceeding, which (without limiting
the generality of the foregoing) may be an amount which is equal to the greater of:




               (i) the fair consideration actually received by such Pledgor under
the terms and as a result of the Loan Documents and the Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services
Products and the value of the benefits described in Paragraph 24 hereof,
including (and to the extent not inconsistent with applicable federal and
state laws affecting the enforceability of guaranties) distributions,
commitments, and advances made to or for the benefit of such Pledgor with
the proceeds of any credit extended under the Loan Documents or the Lender
Provided Interest Rate Hedge or any Other Lender Provided Financial
Services Products, or



               (ii) the excess of (1) the amount of the fair value of the assets of
such Pledgor as of the date of this Agreement as determined in accordance
with applicable federal and state laws governing determinations of the
insolvency of debtors as in effect on the date hereof,



-7-









 




over (2) the amount of all liabilities of such Pledgor as of the date of this Agreement, also
as determined on the basis of applicable federal and state laws governing the insolvency of debtors
as in effect on the date hereof.




          (c) Notwithstanding anything to the contrary in this Section or elsewhere in
this Agreement, this Agreement shall be presumptively valid and enforceable to its
full extent in accordance with its terms, as if this Section (and references
elsewhere in this Agreement to enforceability to the fullest extent permitted by
Law) were not a part of this Agreement, and in any related litigation, the burden
of proof shall be on the party asserting the invalidity or unenforceability of any
provision hereof or asserting any limitation on any Pledgor’s obligations hereunder
as to each element of such assertion.




     16. This Agreement supersedes all prior understandings and agreements, whether written
or oral, between the parties hereto relating to a grant of a security interest in the
Patents, Trademarks and Copyrights by any Pledgor, except for the PTC Security Agreement
(Term). This Agreement is subject to waiver, modification, supplement or amendment only by
a writing signed by the parties, except as provided in Paragraph 6 and Paragraph 25 hereof
with respect to additions and supplements to Schedule A hereto.



     17. The benefits and burdens of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the parties, provided,
however, that no Pledgor may assign or transfer any of its rights or obligations hereunder
or any interest herein, and any such purported assignment or transfer shall be null and
void.



     18. This Agreement shall be governed by, construed, and enforced in accordance with
the internal laws of the State of New York, without regard to its conflict of laws
principles, except to the extent the validity or perfection of the security interests or
the remedies hereunder in respect of any Patents, Trademarks or Copyrights are governed by
the law of a jurisdiction other than the State of New York.



     19. Each Pledgor hereby irrevocably submits to the nonexclusive jurisdiction of any
New York state or federal court sitting in New York County, in any action or proceeding
arising out of or relating to this Agreement, and each Pledgor hereby irrevocably agrees
that all claims in respect of such action or proceeding may be heard and determined in such
New York state or federal court. Each Pledgor hereby waives to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of any such
action or proceeding. Each Pledgor hereby appoints the process agent identified below (the
“Process Agent”) as its agent to receive on behalf of such party and its respective
property service of copies of the summons and complaint and any other process which may be
served in any action or proceeding. Such service may be made by mailing or delivering a
copy of such process to the Pledgor in care of the Process Agent at the Process Agent’s
address, and each Pledgor hereby authorizes and directs the Process Agent to receive such
service on its behalf. Each Pledgor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions (or any political
subdivision thereof) by suit on the judgment or in any other manner provided at law. Each
Pledgor further agrees that it shall, for so long as any commitment or any obligation of
any Loan Party to any Lender remains outstanding, continue to retain Process Agent for the
purposes



-8-









 




set forth in this Section 19. The Process Agent is Armstrong Coal Company, Inc., with an
office on the date hereof as set forth in the Credit Agreement. The Process Agent hereby accepts
the appointment of Process Agent by the Companies and agrees to act as Process Agent on behalf of
the Companies.




     20. This Agreement may be executed by different parties hereto on any number of
separate counterparts, each of which, when so executed and delivered, shall be deemed an
original, and all such counterparts shall together constitute one and the same instrument.
Each Pledgor acknowledges and agrees that a telecopy or electronic transmission to the
Administrative Agent or any Lender of the signature page hereof purporting to be signed on
behalf of such Pledgor shall constitute effective and binding execution and delivery hereof
by such Pledgor.



     21. EACH PLEDGOR HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE PATENTS, TRADEMARKS AND COPYRIGHTS TO THE
FULLEST EXTENT PERMITTED BY LAW.



     22. All notices, statements, requests, demands, directions and other communications
(collectively, “notices”) given to or made upon any party hereto under the provisions of
this Agreement shall be given to the applicable party hereto at the address set forth on a
Schedule 1.1(B) to, or in a Guarantor Joinder given under, the Credit Agreement and in the
manner provided in Section 11.5 [Notices; Effectiveness; Electronic Communication] of the
Credit Agreement. The Administrative Agent and the Lenders may rely on any notice (whether
or not made in the manner contemplated by this Agreement) purportedly made by or on behalf
of any Pledgor, and the Administrative Agent and the Revolver Lenders shall have no duty to
verify the identity or authority of the Person giving such notice.



     23. Each Pledgor acknowledges and agrees that, in addition to the other rights of the
Administrative Agent hereunder and under the other Loan Documents, because the
Administrative Agent’s remedies at law for failure of such Pledgor to comply with the
provisions hereof relating to the Administrative Agent’s rights (i) to inspect the books
and records related to the Patents, Trademarks and Copyrights, (ii) to receive the various
notifications such Pledgor is required to deliver hereunder, (iii) to obtain copies of
agreements and documents as provided herein with respect to the Patents, Trademarks and
Copyrights, (iv) to enforce the provisions hereof pursuant to which such Pledgor has
appointed the Administrative Agent its attorney-in-fact, and (v) to enforce the
Administrative Agent’s remedies hereunder, would be inadequate and that any such failure
would not be adequately compensable in damages, such Pledgor agrees that each such
provision hereof may be specifically enforced.



     24. Each Pledgor hereby acknowledges, represents, and warrants that it receives
synergistic benefits by virtue of its affiliation with the Borrower and/or the other
Pledgors and that it will receive direct and indirect benefits from the financing
arrangements contemplated by the Credit Agreement and that such benefits, together with the
rights of contribution and subrogation that may arise in connection herewith are a
reasonably equivalent exchange of value in return for providing this Agreement.



-9-









 





     25. At any time after the initial execution and delivery of this Agreement to the
Administrative Agent and the Revolver Lenders, additional Persons may become parties to
this Agreement and thereby acquire the duties and rights of being Pledgors hereunder by
executing and delivering to the Administrative Agent and the Revolver Lenders a Guarantor
Joinder pursuant to the Credit Agreement and, in addition, a new Schedule A hereto shall be
provided to the Administrative Agent with respect to such new Pledgor. No notice of the
addition of any Pledgor shall be required to be given to any pre-existing Pledgor and each
Pledgor hereby consents thereto.



[SIGNATURES APPEAR ON FOLLOWING PAGES]




-10-









 







[SIGNATURE PAGE 1 OF 4 TO PATENT, TRADEMARK

AND COPYRIGHT SECURITY AGREEMENT (REVOLVER)] 
 



     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
their respective officers or agents thereunto duly authorized, as of the date first above
written with the intent that it constitutes a sealed instrument.



	 	 	 	 	 
	 	REVOLVER PARTY PLEDGORS



ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ARMSTRONG RESOURCES

HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ELK CREEK GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 2 OF 4 TO PATENT, TRADEMARK

AND COPYRIGHT SECURITY AGREEMENT (REVOLVER)]




	 	 	 	 	 
	 	TERM PARTY PLEDGORS



WESTERN MINERAL

DEVELOPMENT, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	WESTERN LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	WESTERN DIAMOND LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ELK CREEK, L.P.



By: Elk Creek GP, LLC, as General

       Partner

 	 



	 	 	 	 	 
	 	 	By:  	 	 
	 	 	 	Name:  J. Richard Gist 	 
	 	 	 	Title:    Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 3 OF 4 TO PATENT, TRADEMARK

AND COPYRIGHT SECURITY AGREEMENT (REVOLVER)]




	 	 	 	 	 
	 	TERM PARTY PLEDGORS, CONT.



ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ELK CREEK OPERATING, L.P.



By: Elk Creek Operating GP, LLC, as

       General Partner

 	 


	 	 	 	 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	CERALVO HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 4 OF 4 TO PATENT, TRADEMARK

AND COPYRIGHT SECURITY AGREEMENT (REVOLVER)]




	 	 	 	 	 
	 	ADMINISTRATIVE AGENT:



PNC BANK, NATIONAL ASSOCIATION,

as Administrative Agent

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



 









 






	 	 	 	 	 



SCHEDULE A

TO

PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT (REVOLVER)




LIST OF REGISTERED PATENTS, TRADEMARKS,

TRADE NAMES AND COPYRIGHTS (REVOLVER)





	 	1.	 	Registered Patents:
	 
	 	2.	 	Trademarks:
	 
	 	3.	 	Trade Names:
	 
	 	4,	 	 Copyrights:





LIST OF REGISTERED PATENTS, TRADEMARKS,

TRADE NAMES AND COPYRIGHTS (TERM)





	 	1.	 	Registered Patents:
	 
	 	2.	 	Trademarks:
	 
	 	3.	 	Trade Names:
	 
	 	4,	 	 Copyrights:






 











 





EXHIBIT 1.1(P)(1)(b)




FORM OF

PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT (TERM)



     This Patent, Trademark and Copyright Security Agreement (Term) (the “Agreement”),
dated as of February 9, 2011 is entered into by and among EACH OF THE PERSONS LISTED ON THE
SIGNATURE PAGES HERETO AS A TERM PARTY PLEDGOR AND EACH OF THE OTHER PERSONS WHICH BECOME
TERM PARTY
PLEDGORS HEREUNDER FROM TIME TO TIME (each a “Term Party Pledgor” and collectively, the “Term Party
Pledgors”), EACH OF THE PERSONS LISTED ON THE SIGNATURE PAGES HERETO AS A REVOLVER PARTY PLEDGOR
AND EACH OF THE OTHER PERSONS WHICH BECOME REVOLVER PARTY PLEDGORS
HEREUNDER FROM TIME TO TIME (each a “Revolver Party Pledgor” and collectively, the “Revolver Party
Pledgors”) (the Term Party Pledgors and the Revolver Party Pledgors are collectively referred to
herein as the “Pledgors” and each a “Pledgor”) and PNC BANK, NATIONAL ASSOCIATION, as
administrative agent for the Lenders referred to below (the
“Administrative Agent”).



     WHEREAS, pursuant to that certain Credit Agreement (as amended, restated, modified or
supplemented from time to time, the “Credit Agreement”) of even date herewith by and among
Armstrong Coal Company, Inc., Armstrong Land Company, LLC, Elk Creek L.P., Western Mineral
Development, LLC, Western Diamond LLC, Western Land Company, LLC
(collectively, the “Borrower”), the Guarantors a party thereto (the “Guarantors”), the Lenders
a party thereto (the “Lenders”) and the Administrative Agent, the Administrative Agent and the
Lenders have agreed to provide certain loans to the Borrower, and the Pledgors have agreed, among
other things, to grant a security interest to the Administrative Agent in certain patents,
trademarks, copyrights and other property as security for such loans and other obligations as more
fully described herein.



     NOW, THEREFORE, intending to be legally bound hereby, the parties hereto agree as
follows:



     1. Defined Terms.



     (a) Except as otherwise expressly provided herein, (i) capitalized terms used in this
Agreement shall have the respective meanings assigned to them in the Credit Agreement and
(ii) the rules of construction set forth in Section 1.2 Construction of the Credit
Agreement shall apply to this Agreement. Where applicable and except as otherwise expressly
provided herein, terms used herein (whether or not capitalized) shall have the respective
meanings assigned to them in the Uniform Commercial Code as enacted in New York as amended
from time to time (the
“Code”).



     (b) “Patents, Trademarks and Copyrights” shall mean and include all of each Pledgor’s
present and future right, title and interest in and to the following: all trade names,



 









 







patent applications, patents, trademark applications, trademarks and copyrights, whether now owned
or hereafter acquired by each Pledgor, including, without limitation, those listed on Schedule A
hereto, including all proceeds thereof (such as, by way of example, license royalties and proceeds
of infringement suits), the right to sue for past, present and future infringements, all rights
corresponding thereto throughout the world and all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, and the goodwill of the business to which any of the
patents, trademarks and copyrights relate.



     (c) “Patents, Trademarks and Copyrights (Revolver)” shall mean the Patent, Trademarks
and Copyrights of each Revolver Party Pledgor.



     (d) “Patents, Trademarks and Copyrights (Term)” shall mean the Patent, Trademarks
and Copyrights of each Term Party Pledgor.



     (e) “PTC Security Agreement (Term)” shall mean that certain Patent, Trademark and
Security Agreement of even date herewith by and among the Pledgors and the Agent, entered
into as security for the Revolver Loans.



     (f) “Secured Obligations” shall mean and include the following: (i) all now existing
and hereafter arising Indebtedness and Obligations of each and every Pledgor to the
Administrative Agent, the Term Lenders, or any provider of any Lender Provided Interest
Rate Hedge or any provider of any Other Lender Provided Financial Service Product under the
Credit Agreement or any of the other Loan Documents, including all obligations,
liabilities, and indebtedness, whether for principal, interest, fees, expenses or
otherwise, of each and every of the Pledgors to the Administrative Agent, the Term Lenders,
or any provider of any Lender Provided Interest Rate Hedge or any provider of any Other
Lender Provided Financial Service Product, now existing or hereafter incurred under the
Credit Agreement or the Notes or the Guaranty Agreement or any of the other Loan Documents
as any of the same or any one or more of them may from time to time be amended, restated,
modified, or supplemented, together with any and all extensions, renewals, refinancings,
and refundings thereof in whole or in part (and including obligations, liabilities, and
indebtedness arising or accruing after the commencement of any bankruptcy, insolvency,
reorganization, or similar proceeding with respect to the Borrower or which would have
arisen or accrued but for the commencement of such proceeding, even if the claim for such
obligation, liability or indebtedness is not enforceable or allowable in such proceeding,
and including all obligations, liabilities and indebtedness arising from any extensions of
credit under or in connection with the Loan Documents from time to time, regardless whether
any such extensions of credit are in excess of the amount committed under or contemplated
by the Loan Documents or are made in circumstances in which any condition to extension of
credit is not satisfied); (ii) all reimbursement obligations of each and every Pledgor with
respect to any one or more Letters of Credit issued by Administrative Agent or any Term
Lender; (iii) all indebtedness, loans, obligations, expenses and liabilities of each and
every of the Pledgors to the Administrative Agent or any of the Term Lenders of any
obligations incurred in connection with any Lender Provided Interest Rate Hedge or any
Other Lender Provided Financial Service Product provided by the Administrative Agent or
such Term Lenders pursuant to the Credit Agreement; and (iv) any sums advanced by the
Administrative Agent or the Term Lenders or which may otherwise become due pursuant to the
provisions of the Credit Agreement, the Notes,



-2-









 







this Agreement, or any other Loan Documents or pursuant to any other document or instrument at
any time delivered to the Administrative Agent in connection therewith, including commitment,
letter of credit, agent or other fees and charges, and indemnification obligations under any such
document or instrument, together with all interest payable on any of the foregoing, whether such
sums are advanced or otherwise become due before or after the entry of any judgment for foreclosure
or any judgment on any Loan Document or with respect to any default under any of the Debt.



     2. Grant of Security Interests.



     (a) To secure the full payment and performance of all Secured Obligations, each Term
Party Pledgor hereby grants and conveys a prior security interest to the Administrative
Agent, for itself and the benefit of the Term Lenders and their respective affiliates, in
the entire right, title and interest of such Term Party Pledgor in and to all of its
Patents, Trademarks and Copyrights (Term), subject only to Permitted Liens.



     (b) To secure the full payment and performance of all Secured Obligations, each
Revolver Party Pledgor hereby grants and conveys a prior security interest to the
Administrative Agent (subject only to the Revolver Lenders’ first priority security
interest created pursuant to the PTC Security Agreement (Revolver)), for itself and the
benefit of the Term Lenders and their respective affiliates, in the entire right, title and
interest of such Revolver Party Pledgor in and to all of its Patents, Trademarks and
Copyrights (Revolver), subject only to Permitted Liens.



     3. Each Pledgor jointly and severally represents and warrants, and covenants that:



     (a) the Patents, Trademarks and Copyrights are subsisting and have not been
adjudged invalid or unenforceable, in whole or in part;



     (b) to the best of such Pledgor’s knowledge, each of the Patents, Trademarks and
Copyrights is valid and enforceable;



     (c) such Pledgor is the sole and exclusive owner of the entire and unencumbered right,
title and interest in and to each of the Patents, Trademarks and Copyrights, free and clear
of any liens, charges and encumbrances, except as provided in the PTC Security Agreement
(Revolver) and for Permitted Liens, including pledges, assignments, licenses, shop rights
and covenants by such Pledgor not to sue third persons;



     (d) such Pledgor has the corporate, limited liability company or partnership power and
authority, as applicable, to enter into this Agreement and perform its terms;



     (e) no claim has been made to such Pledgor or, to the knowledge of such Pledgor, any
other person that the use of any of the Patents, Trademarks and Copyrights does or may
violate the rights of any third party;



     (f) such Pledgor has used, and will continue to use for the duration of this
Agreement, consistent standards of quality in its manufacture of products sold under the Patents,
Trademarks and Copyrights;



-3-









 





     (g) such Pledgor has used, and will continue to use for the duration of this
Agreement, proper statutory notice in connection with its use of the Patents, Trademarks
and Copyrights set forth on Schedule A, attached hereto, except for those Patents,
Trademarks and Copyrights that are hereafter allowed to lapse in accordance with Paragraph
11 hereof;



     (h) such Pledgor will not change its state of incorporation, formation or
organization, as applicable without providing thirty (30) days prior written notice the
Administrative Agent;



     (i) such Pledgor will not change its name without providing thirty (30) days prior
written notice to the Administrative Agent; and



     (j) such Pledgor shall, except as permitted by Section 8.2.6 or Section 8.2.7 of the
Credit Agreement, preserve its existence as a corporation, partnership or a limited
liability company, as applicable, and except as permitted by the Credit Agreement, shall
not (1) in one, or a series of related transactions, merge into or consolidate with any
other entity, the survivor of which is not such Pledgor, or (2) sell all or substantially
all of its assets.



     4. Each of the obligations and additional liabilities of each and every Pledgor under
this Agreement are joint and several with the obligations of the other Pledgors, and each
Pledgor hereby waives to the fullest extent permitted by Law any defense it may otherwise
have to the payment and performance of the Obligations that its liability hereunder is
limited and not joint and several. Each Pledgor acknowledges and agrees that the foregoing
waiver serves as a material inducement to the agreement of the Administrative Agent and the
Term Lenders to make the Loans, and that the Administrative Agent and the Term Lenders are
relying on such waiver in entering into this Agreement. The undertakings of each Pledgor
hereunder secure the obligations of the Borrower, itself and the other Pledgors. The
Administrative Agent and the Term Lenders, or any of them, may, in their sole discretion,
elect to enforce this Agreement against any Pledgor without any duty or responsibility to
pursue any other Pledgor and such an election by the Administrative Agent and the Term
Lenders, or any of them, shall not be a defense to any action the Administrative Agent and
the Term Lenders, or any of them, may elect to take against any Pledgor. Each of the Term
Lenders and the Administrative Agent hereby reserves all rights against each Pledgor.



     5. Each Pledgor agrees that, until all of the Secured Obligations shall have been
indefeasibly paid in full, all Commitments have been terminated and all Letters of Credit
and Lender Provided Interest Rate Hedge or any Other Lender Provided Financial Services
Products have expired or been terminated, it will not enter into any agreement (for
example, a license agreement) which is inconsistent with such Pledgor’s obligations under
this Agreement, without the Administrative Agent’s prior written consent which shall not be
unreasonably withheld except such Pledgor may license technology in the ordinary course of
business without the Administrative Agent’s consent to suppliers and customers to
facilitate the manufacture and use of such Pledgor’s products.



     6. If, before the Secured Obligations shall have been Paid In Full and all
Commitments have been terminated and all Letters of Credit and Lender Provided Interest Rate
Hedge or any Other Lender Provided Financial Services Products have expired or been



-4-









 







terminated, any Pledgor shall own any new trademarks or any new copyrightable or patentable
inventions, or any patent application or patent for any reissue, division, continuation, renewal,
extension, or continuation in part of any Patent, Trademark or Copyright or any improvement on any
Patent, Trademark or Copyright, the provisions of this Agreement shall automatically apply thereto
and such Pledgor shall give to the Administrative Agent prompt notice thereof in writing. Each
Pledgor and the Administrative Agent agree to modify this Agreement by amending Schedule A to
include any future patents, patent applications, trademark applications, trademarks, copyrights or
copyright applications and the provisions of this Agreement shall apply thereto.



     7. Administrative Agent shall have, in addition to all other rights and remedies given
it by this Agreement and those rights and remedies set forth in the Credit Agreement, those
allowed by applicable Law and the rights and remedies of a secured party under the Uniform
Commercial Code as enacted in any jurisdiction in which the Patents, Trademarks and
Copyrights may be located and, without limiting the generality of the foregoing, if an
Event of Default has occurred and is continuing, Administrative Agent may immediately,
without demand of performance and without other notice (except as set forth below) or
demand whatsoever to Pledgors, all of which are hereby expressly waived, and without
advertisement, sell at public or private sale or otherwise realize upon, in a city that the
Administrative Agent shall designate by notice to the Pledgors, in Pittsburgh, Pennsylvania
or elsewhere, the whole or from time to time any part of the Patents, Trademarks and
Copyrights, or any interest which any Pledgor may have therein and, after deducting from
the proceeds of sale or other disposition of the Patents, Trademarks and Copyrights all
expenses (including fees and expenses for brokers and attorneys), shall apply the remainder
of such proceeds in the manner set forth in Section 9.2.4 [Application of Proceeds] of the
Credit Agreement. Notice of any sale or other disposition of the Patents, Trademarks and
Copyrights shall be given to Pledgors at least ten (10) days before the time of any
intended public or private sale or other disposition of the Patents, Trademarks and
Copyrights is to be made, which each Pledgor hereby agrees shall be reasonable notice of
such sale or other disposition. At any such sale or other disposition, Administrative Agent
may, to the extent permissible under applicable Law, purchase the whole or any part of the
Patents, Trademarks and Copyrights sold, free from any right of redemption on the part of
Pledgor, which right is hereby waived and released.



     8. If any Event of Default shall have occurred and be continuing, each Pledgor hereby
authorizes and empowers the Administrative Agent to make, constitute and appoint any
officer or agent of the Administrative Agent, as the Administrative Agent may select in its
exclusive discretion, as such Pledgor’s true and lawful attorney-in-fact, with the power to
endorse such Pledgor’s name on all applications, documents, papers and instruments
necessary for the Administrative Agent to use the Patents, Trademarks and Copyrights, or to
grant or issue, on commercially reasonable terms, any exclusive or nonexclusive license
under the Patents, Trademarks and Copyrights to any third person, or necessary for the
Administrative Agent to assign, pledge, convey or otherwise transfer title in or dispose,
on commercially reasonable terms, of the Patents, Trademarks and Copyrights to any third
Person. Each Pledgor hereby ratifies all that such attorney shall lawfully do or cause to
be done by virtue hereof. This power of attorney, being coupled with an interest, shall be
irrevocable for the life of this Agreement.



-5-









 





     9. At such time as all of the Secured Obligations shall have been Paid In Full and all
Commitments shall have been terminated and all Letters of Credit and Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Products have expired
or been terminated, this Agreement shall terminate and the Administrative Agent shall
execute and deliver to the Pledgors all deeds, assignments and other instruments as may be
necessary or proper to re-vest in the Pledgors full title to the Patents, Trademarks and
Copyrights, subject to any disposition thereof which may have been made by the
Administrative Agent pursuant hereto.



     10. Any and all fees, costs and expenses, of whatever kind or nature, including
reasonable attorneys’ fees and expenses incurred by Administrative Agent in connection with
the preparation of this Agreement and all other documents relating hereto and the
consummation of this transaction, the filing or recording of any documents (including all
taxes in connection therewith) in public offices, the payment or discharge of any taxes,
counsel fees, maintenance fees, encumbrances, the protection, maintenance or preservation
of the Patents, Trademarks and Copyrights, or the defense or prosecution of any actions or
proceedings arising out of or related to the Patents, Trademarks and Copyrights, shall be
borne and paid by the Pledgors within fifteen (15) days of demand by Administrative Agent,
and if not paid within such time, shall be added to the principal amount of the Secured
Obligations and shall bear interest at the highest rate prescribed in the Credit Agreement.



     11. Each Pledgor shall have the duty, through counsel reasonably acceptable to the
Administrative Agent, to prosecute diligently any patent applications of the Patents,
Trademarks and Copyrights pending as of the date of this Agreement if commercially
reasonable or thereafter until the Secured Obligations shall have been indefeasibly paid in
full and the Commitments shall have terminated, and the Letters of Credit and Lender
Provided Interest Rate Hedge or any Other Lender Provided Financial Services Products have
expired or been terminated, to make application on unpatented but patentable inventions
(whenever it is commercially reasonable in the reasonable judgment of such Pledgor to do
so) and to preserve and maintain all rights in patent applications and patents of the
Patents, including the payment of all maintenance fees. Any expenses incurred in connection
with such an application shall be borne by the Pledgors. No Pledgor shall abandon any
Patent, Trademark or Copyright without the consent of the Administrative Agent, which shall
not be unreasonably withheld.



     12. Each Pledgor shall have the right, with the consent of the Administrative Agent,
which shall not be unreasonably withheld, to bring suit, action or other proceeding in its
own name, and to join the Administrative Agent, if necessary, as a party to such suit so
long as the Administrative Agent is satisfied that such joinder will not subject it to any
risk of liability, to enforce the Patents, Trademarks and Copyrights and any licenses
thereunder. Each Pledgor shall promptly, upon demand, reimburse and indemnify the
Administrative Agent for all damages, costs and expenses, including reasonable legal fees,
incurred by the Administrative Agent as a result of such suit or joinder by such Pledgor.



     13. No course of dealing between any Pledgor and the Administrative Agent, nor any
failure to exercise nor any delay in exercising, on the part of the Administrative Agent,
any right, remedy, power or privilege of the Administrative Agent hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder



-6-









 







preclude any other or further exercise thereof or the exercise of any other right, remedy, power or
privilege. No waiver of a single Event of Default shall be deemed a waiver of a subsequent Event of
Default.



     14. All of the Administrative Agent’s rights and remedies with respect to the Patents,
Trademarks and Copyrights, whether established hereby or by the Credit Agreement or by any
other agreements or by Law, shall be cumulative and not exclusive of any rights or remedies
which it may otherwise have under the other Loan Documents, under the Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Products or by Law, and
the Administrative Agent may enforce any one or more remedies hereunder successively or
concurrently at its option.



     15. (a) It is the intention of the parties that this Agreement be enforceable to the
fullest extent permissible under applicable Law, but that the unenforceability (or
modification to conform to such Law) of any provision or provisions hereof shall not render
unenforceable, or impair, the remainder hereof. If any provision in this Agreement shall be
held invalid or unenforceable in whole or in part in any jurisdiction, this Agreement
shall, as to such jurisdiction, be deemed amended to modify or delete, as necessary, the
offending provision or provisions and to alter the bounds thereof in order to render it or
them valid and enforceable to the maximum extent permitted by applicable Law, without in
any manner affecting the validity or enforceability of such provision or provisions in any
other jurisdiction or the remaining provisions hereof in any jurisdiction without
invalidating the remaining provisions hereof.



          (b) Without limitation of the preceding Subsection (a), to the extent that
applicable Law (including applicable Laws pertaining to fraudulent conveyance or
fraudulent or preferential transfer) otherwise would render the full amount of any
Pledgor’s obligations hereunder invalid, voidable, or unenforceable on account of
the amount of a Pledgor’s aggregate liability under this Agreement, then,
notwithstanding any other provision of this Agreement to the contrary, the
aggregate amount of such liability shall, without any further action by the
Administrative Agent or any of the Term Lenders or such Pledgor or any other
Person, be automatically limited and reduced to the highest amount which is valid
and enforceable as determined in such action or proceeding, which (without
limiting the generality of the foregoing) may be an amount which is equal to the
greater of:




               (i) the fair consideration actually received by such Pledgor under
the terms and as a result of the Loan Documents and the Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services
Products and the value of the benefits described in Paragraph 24 hereof,
including (and to the extent not inconsistent with applicable federal and
state laws affecting the enforceability of guaranties) distributions,
commitments, and advances made to or for the benefit of such Pledgor with
the proceeds of any credit extended under the Loan Documents or the Lender
Provided Interest Rate Hedge or any Other Lender Provided Financial
Services Products, or



               (ii) the excess of (1) the amount of the fair value of the assets of
such Pledgor as of the date of this Agreement as determined in accordance
with applicable federal and state laws governing determinations of the
insolvency of debtors as in effect on the date hereof,



-7-









 







over (2) the amount of all liabilities of such Pledgor as of the date of this Agreement, also
as determined on the basis of applicable federal and state laws governing the insolvency of debtors
as in effect on the date hereof.



          (c) Notwithstanding anything to the contrary in this Section or elsewhere in
this Agreement, this Agreement shall be presumptively valid and enforceable to its
full extent in accordance with its terms, as if this Section (and references
elsewhere in this Agreement to enforceability to the fullest extent permitted by
Law) were not a part of this Agreement, and in any related litigation, the burden
of proof shall be on the party asserting the invalidity or unenforceability of any
provision hereof or asserting any limitation on any Pledgor’s obligations hereunder
as to each element of such assertion.




     16. This Agreement supersedes all prior understandings and agreements, whether written
or oral, between the parties hereto relating to a grant of a security interest in the
Patents, Trademarks and Copyrights by any Pledgor, except for the PTC Security Agreement
(Revolver). This Agreement is subject to waiver, modification, supplement or amendment only
by a writing signed by the parties, except as provided in Paragraph 6 and Paragraph 25
hereof with respect to additions and supplements to Schedule A hereto.



     17. The benefits and burdens of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the parties, provided,
however, that no Pledgor may assign or transfer any of its rights or obligations hereunder
or any interest herein, and any such purported assignment or transfer shall be null and
void.



     18. This Agreement shall be governed by, construed, and enforced in accordance with
the internal laws of the State of New York, without regard to its conflict of laws
principles, except to the extent the validity or perfection of the security interests or
the remedies hereunder in respect of any Patents, Trademarks or Copyrights are governed by
the law of a jurisdiction other than the State of New York.



     19. Each Pledgor hereby irrevocably submits to the nonexclusive jurisdiction of any
New York state or federal court sitting in New York County, in any action or proceeding
arising out of or relating to this Agreement, and each Pledgor hereby irrevocably agrees
that all claims in respect of such action or proceeding may be heard and determined in such
New York state or federal court. Each Pledgor hereby waives to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of any such
action or proceeding. Each Pledgor hereby appoints the process agent identified below (the
“Process Agent”) as its agent to receive on behalf of such party and its respective
property service of copies of the summons and complaint and any other process which may be
served in any action or proceeding. Such service may be made by mailing or delivering a
copy of such process to the Pledgor in care of the Process Agent at the Process Agent’s
address, and each Pledgor hereby authorizes and directs the Process Agent to receive such
service on its behalf. Each Pledgor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions (or any political
subdivision thereof) by suit on the judgment or in any other manner provided at law. Each
Pledgor further agrees that it shall, for so long as any commitment or any obligation of
any Loan Party to any Lender remains outstanding, continue to retain Process Agent for the
purposes



-8-









 







set forth in this Section 19. The Process Agent is Armstrong Coal Company, Inc., with an
office on the date hereof as set forth in the Credit Agreement. The Process Agent hereby accepts
the appointment of Process Agent by the Companies and agrees to act as Process Agent on behalf of
the Companies.



     20. This Agreement may be executed by different parties hereto on any number of
separate counterparts, each of which, when so executed and delivered, shall be deemed an
original, and all such counterparts shall together constitute one and the same instrument.
Each Pledgor acknowledges and agrees that a telecopy or electronic transmission to the
Administrative Agent or any Lender of the signature page hereof purporting to be signed on
behalf of such Pledgor shall constitute effective and binding execution and delivery hereof
by such Pledgor.



     21. EACH PLEDGOR HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE PATENTS, TRADEMARKS AND COPYRIGHTS TO THE
FULLEST EXTENT PERMITTED BY LAW.



     22. All notices, statements, requests, demands, directions and other communications
(collectively, “notices”) given to or made upon any party hereto under the provisions of
this Agreement shall be given to the applicable party hereto at the address set forth on a
Schedule 1.1(B) to, or in a Guarantor Joinder given under, the Credit Agreement and in the
manner provided in Section 11.5 [Notices; Effectiveness; Electronic Communication] of the
Credit Agreement. The Administrative Agent and the Lenders may rely on any notice (whether
or not made in the manner contemplated by this Agreement) purportedly made by or on behalf
of any Pledgor, and the Administrative Agent and the Term Lenders shall have no duty to
verify the identity or authority of the Person giving such notice.



     23. Each Pledgor acknowledges and agrees that, in addition to the other rights of the
Administrative Agent hereunder and under the other Loan Documents, because the
Administrative Agent’s remedies at law for failure of such Pledgor to comply with the
provisions hereof relating to the Administrative Agent’s rights (i) to inspect the books
and records related to the Patents, Trademarks and Copyrights, (ii) to receive the various
notifications such Pledgor is required to deliver hereunder, (iii) to obtain copies of
agreements and documents as provided herein with respect to the Patents, Trademarks and
Copyrights, (iv) to enforce the provisions hereof pursuant to which such Pledgor has
appointed the Administrative Agent its attorney-in-fact, and (v) to enforce the
Administrative Agent’s remedies hereunder, would be inadequate and that any such failure
would not be adequately compensable in damages, such Pledgor agrees that each such
provision hereof may be specifically enforced.



     24. Each Pledgor hereby acknowledges, represents, and warrants that it receives
synergistic benefits by virtue of its affiliation with the Borrower and/or the other
Pledgors and that it will receive direct and indirect benefits from the financing
arrangements contemplated by the Credit Agreement and that such benefits, together with the
rights of contribution and subrogation that may arise in connection herewith are a
reasonably equivalent exchange of value in return for providing this Agreement.



-9-









 





     25. At any time after the initial execution and delivery of this Agreement to the
Administrative Agent and the Term Lenders, additional Persons may become parties to this
Agreement and thereby acquire the duties and rights of being Pledgors hereunder by
executing and delivering to the Administrative Agent and the Term Lenders a Guarantor
Joinder pursuant to the Credit Agreement and, in addition, a new Schedule A hereto shall be
provided to the Administrative Agent with respect to such new Pledgor. No notice of the
addition of any Pledgor shall be required to be given to any pre-existing Pledgor and each
Pledgor hereby consents thereto.



     [SIGNATURES APPEAR ON FOLLOWING PAGES]



-10-









 





[SIGNATURE PAGE 1 OF 4T0 PATENT, TRADEMARK

AND COPYRIGHT SECURITY AGREEMENT (TERM)]




     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
their respective officers or agents thereunto duly authorized, as of the date first above
written with the intent that it constitutes a sealed instrument.



	 	 	 	 	 
	 	REVOLVER PARTY PLEDGORS



ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG RESOURCES

HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 





[SIGNATURE PAGE 2 OF 4 TO PATENT, TRADEMARK

AND COPYRIGHT SECURITY AGREEMENT (TERM)]




	 	 	 	 	 
	 	TERM PARTY PLEDGORS




WESTERN MINERAL

DEVELOPMENT, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN DIAMOND LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK, L.P.

 	 
	 	 	By:  	Elk Creek GP, LLC, as General
Partner
 	 
	 	 	 
	 	 	By:  	
 	 
	 	 	 	Name: J. Richard Gist 	 
	 	 	 	Title:  Authorized Person 	 



 









 






[SIGNATURE PAGE 3 OF 4 TO PATENT, TRADEMARK

AND COPYRIGHT SECURITY AGREEMENT (TERM)]




	 	 	 	 	 
	 	TERM PARTY PLEDGORS, CONT.




ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK OPERATING, L.P.

 	 
	 	 	By:  	Elk Creek Operating GP, LLC, as 
General Partner
 	 
	 	 	 
	 	 	By:  	
 	 
	 	 	 	Name:  J. Richard Gist 	 
	 	 	 	Title:  Authorized Person 	 
	 
	 	CERALVO HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 







[SIGNATURE PAGE 4 OF 4 TO PATENT, TRADEMARK

AND COPYRIGHT SECURITY AGREEMENT (TERM)]




	 	 	 	 	 
	 	ADMINISTRATIVE AGENT:



PNC BANK, NATIONAL ASSOCIATION,

as Administrative Agent

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



 









 








SCHEDULE A

TO

PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT (TERM)




LIST OF REGISTERED PATENTS, TRADEMARKS,

TRADE NAMES AND COPYRIGHTS (REVOLVER)





	 	1.	 	Registered Patents:






	 	2.	 	Trademarks:






	 	3.	 	Trade Names:






	 	4.	 	Copyrights:





LIST OF REGISTERED PATENTS, TRADEMARKS,

TRADE NAMES AND COPYRIGHTS (TERM)





	 	1.	 	Registered Patents:






	 	2.	 	Trademarks:






	 	3.	 	Trade Names:






	 	4.	 	Copyrights:




 









 











EXHIBIT 1.1(P)(2)(a)




FORM OF

PLEDGE AGREEMENT (REVOLVER)



     THIS PLEDGE AGREEMENT (REVOLVER), dated as of February 9, 2011 (as amended, restated,
supplemented or modified from time to time, the “Agreement”), is given, made and entered
into by EACH OF THE PERSONS LISTED ON THE SIGNATURE PAGES HERETO AS A REVOLVER PARTY
PLEDGOR AND EACH OF THE OTHER PERSONS WHICH BECOME REVOLVER PARTY PLEDGORS HEREUNDER FROM
TIME TO TIME (each a “Revolver Party Pledgor” and collectively, the “Revolver Party
Pledgors”), EACH OF THE PERSONS LISTED ON THE SIGNATURE PAGES
HERETO AS A TERM PARTY PLEDGOR AND EACH OF THE OTHER PERSONS WHICH BECOME TERM PARTY PLEDGORS
HEREUNDER FROM TIME TO TIME
(each a “Term Party Pledgor” and collectively, the “Term Party Pledgors”) (the Revolver Party
Pledgors and the Term Party Pledgors are collectively referred to herein as the “Pledgors” and each
a “Pledgor”), each a Pledgor of the corporations, limited liability companies, partnerships or
other entities as set forth on Schedule A hereto (each a “Company” and collectively the
“Companies”), and PNC BANK, NATIONAL ASSOCIATION, as the administrative agent for itself and the
other Revolver Lenders under the Credit Agreement described below (the “Administrative Agent”).



     WHEREAS, pursuant to that certain Credit Agreement (amended, restated, supplemented or
modified from time to time, the “Credit Agreement”) dated as of February 9, 2011, by and
among Armstrong Coal Company, Inc., Armstrong Land Company, LLC, Elk Creek, L.P., Western
Mineral Development, LLC, Western Diamond LLC, Western Land Company, LLC (collectively, the
“Borrower”), each of the Guarantors party thereto, the Lenders party thereto, and the
Administrative Agent, the Administrative Agent and the Lenders have agreed to provide
certain loans and other financial accommodations to the Borrower; and



     WHEREAS, pursuant to and in consideration of the Credit Agreement, certain of the
issued and outstanding capital stock, shares, securities, member interests, partnership
interests and other ownership interests of each of the Companies is to be pledged to the
Administrative Agent in accordance herewith; and



     WHEREAS, each Pledgor owns the outstanding capital stock, shares, securities, member
interests, partnership interests and other ownership interests of the Companies as set
forth on Schedule A hereto.



     NOW, THEREFORE, intending to be legally bound hereby, the parties hereto hereby agree
as follows:



1. Defined Terms.




          (a) Except as otherwise expressly provided herein, capitalized terms used in
this Agreement shall have the respective meanings assigned to them in the Credit
Agreement. Where applicable and except as otherwise expressly provided herein,
terms used herein (whether


 









 







or not capitalized) shall have the respective meanings assigned to them in the Uniform
Commercial Code as enacted in New York as amended from time to time (the “Code”).




          (b) “Company” and “Companies” shall mean one or more of the entities issuing
any of the Collateral which is or should be (in accordance with Section 5(g)
hereto) described on Schedule A hereto.




          (c) “Foreign Company” shall mean one or more of the entities issuing any of
the Pledged Collateral which is not organized under the laws of any state of the
United States of America, which is, or should be, described on Schedule A.




          (d) “Pledge Agreement (Term)” shall mean that certain Pledge Agreement of even
date herewith by and among the Pledgors and the Agent, entered into as security for
the Term Loans.




          (e) “Pledged Collateral” shall mean and include all of each Pledgor’s present
and future right, title and interest in and to the following: (i) all investment
property, capital stock, shares, securities, member interests, partnership
interests, warrants, options, put rights, call rights, similar rights, and all
other ownership or participation interests in any entity or business or in the
revenue, income, or profits thereof, (ii) all property of each Pledgor in the
Administrative Agent’s possession or in transit to or from, under the custody or
control of, or on deposit with, the Administrative Agent or any Affiliate thereof,
including deposit and other accounts, (iii) cash and cash equivalents (collectively
referred to herein as “Investments”), including all Investments listed on Schedule
A attached hereto and made a part hereof, and all rights and privileges pertaining
thereto, including, without limitation, all present and future Investments
receivable in respect of or in exchange for any Investments, and all rights under
shareholder, member, partnership agreements and other similar agreements relating
to any Investments, all rights to subscribe for Investments, whether or not
incidental to or arising from ownership of any Investments, (iv) all Investments
hereafter pledged by any Pledgor to Administrative Agent to secure the Secured
Obligations, (v) together with all cash, interest, stock and other dividends or
distributions paid or payable on any of the foregoing, and all books and records
(whether paper, electronic or any other medium) pertaining to the foregoing,
including, without limitation, all stock record and transfer books, and together
with whatever is received when any of the foregoing is sold, exchanged, replaced or
otherwise disposed of, including all proceeds, as such term is defined in the Code,
and all other investment property and similar assets of any Pledgor; and (v) all
cash and non-cash proceeds (including, without limitation, insurance proceeds) of
any of the foregoing property, all products thereof, and all additions and
accessions thereto, substitutions therefor and replacements thereof.




          (f) “Pledged Collateral (Revolver)” means the Pledged Collateral of each
Revolver Party Pledgor.




          (g) “Pledged Collateral (Term)” means the Pledged Collateral of each Term
Party Pledgor.




          (h) “Secured Obligations” shall mean and include the following: (i) all now
existing and hereafter arising Obligations of each and every Pledgor to the
Administrative Agent,


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the Revolver Lenders, or any obligations in connection with any Lender Provided Interest Rate
Hedge or any Other Lender Provided Financial Services Product under the Credit Agreement or any of
the other Loan Documents, including all obligations, liabilities, and indebtedness, whether for
principal, interest, fees, expenses or otherwise, of each and every of the Pledgors to the
Administrative Agent, the Revolver Lenders, or providers of any Lender Provided Interest Rate Hedge
or any Other Lender Provided Financial Services Product, now existing or hereafter incurred under
the Credit Agreement or the Notes or the Guaranty Agreement or any of the other Loan Documents as
any of the same or any one or more of them may from time to time be amended, restated, modified, or
supplemented, together with any and all extensions, renewals, refinancings, and refundings thereof
in whole or in part (and including obligations, liabilities, and indebtedness arising or accruing
after the commencement of any bankruptcy, insolvency, reorganization, or similar proceeding with
respect to the Borrower or which would have arisen or accrued but for the commencement of such
proceeding, even if the claim for such obligation, liability or indebtedness is not enforceable or
allowable in such proceeding, and including all obligations, liabilities and indebtedness arising
from any extensions of credit under or in connection with the Loan Documents from time to time,
regardless whether any such extensions of credit are in excess of the amount committed under or
contemplated by the Loan Documents or are made in circumstances in which any condition to extension
of credit is not satisfied); (ii) all reimbursement obligations of each and every Pledgor with
respect to any one or more Letters of Credit issued by Administrative Agent or any Revolver Lender;
(iii) all indebtedness, loans, obligations, expenses and liabilities of each and every of the
Pledgors to the Administrative Agent or any of the Revolver Lenders or any obligations incurred in
connection with any Lender Provided Interest Rate Hedge or any Other Lender Provided Financial
Services Product; and (iv) any sums advanced by the Administrative Agent or the Revolver Lenders or
which may otherwise become due pursuant to the provisions of the Credit Agreement, the Notes, this
Agreement, or any other Loan Documents or pursuant to any other document or instrument at any time
delivered to the Administrative Agent in connection therewith, including commitment, letter of
credit, agent or other fees and charges, and indemnification obligations under any such document or
instrument, together with all interest payable on any of the foregoing, whether such sums are
advanced or otherwise become due before or after the entry of any judgment for foreclosure or any
judgment on any Loan Document or with respect to any default under any of the Secured Obligations.




2. Grant of Security Interests.




          (a) To secure on a first priority perfected basis the payment and performance
of all Secured Obligations in full, each Revolver Party Pledgor hereby grants to
the Administrative Agent a continuing first priority security interest under the
Code in and hereby pledges to Administrative Agent, in each case for the benefit of
each of the Revolver Lenders and Administrative Agent and any provider of Lender
Provided Interest Rate Hedge or any Other Lender Provided Financial Services
Product, all of such Revolver Party Pledgor’s now existing and hereafter acquired
or arising right, title and interest in, to, and under the Pledged Collateral
(Revolver) whether now or hereafter existing and wherever located.




          (b) To secure on a second priority perfected basis (subject only to the Term
Lenders’ first priority security interest created pursuant to the Pledge Agreement
(Term)) the payrnent and performance of all Secured Obligations in full, each Term
Party Pledgor hereby


- 3 -









 







grants to the Administrative Agent a continuing second priority security interest (subject
only to the Term Lenders’ first priority security interest created pursuant to the Pledge Agreement
(Term)) under the Code in and hereby pledges to Administrative Agent, in each case for the benefit
of each of the Revolver Lenders and Administrative Agent and any provider of Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Product, all of such Term Party
Pledgor’s now existing and hereafter acquired or arising right, title and interest in, to, and
under the Pledged Collateral (Term) whether now or hereafter existing and wherever located.




          (c) Upon the execution and delivery of this Agreement, each Pledgor shall
deliver to and deposit with the Administrative Agent in pledge, all of such
Pledgor’s certificates, instruments or other documents comprising or evidencing the
Pledged Collateral, together with undated stock powers, instruments or other
documents signed in blank by such Pledgor. In the event that any Pledgor should
ever acquire or receive certificates, securities, instruments or other documents
evidencing the Pledged Collateral, such Pledgor shall deliver to and deposit with
the Administrative Agent in pledge, all such certificates, securities, instruments
or other documents which evidence the Pledged Collateral.




          (d) Notwithstanding anything to the contrary contained in this Agreement, the
Pledged Collateral with respect to any one Foreign Company shall not exceed
sixty-five percent (65%) of the total combined voting power of all classes of
capital stock, shares, securities, member interests, partnership interests and
other ownership interests entitled to vote of such Foreign Company and this
Agreement shall not apply to any such stock, shares, securities, member interests,
partnership interests or ownership interests which are in excess of such sixty five
percent (65%) limitation. To the extent the Administrative Agent receives more than
sixty five percent (65%) of the total combined voting power of all classes of
capital stock, shares, securities, member interests, partnership interests and
other ownership interests entitle to vote of any Foreign Company, Administrative
Agent shall return such excess stock, shares, securities, member interests,
partnership interests and other ownership interests upon the request of a Pledgor.




     3. Additional Actions and Further Assurances.



          (a) Prior to or concurrently with the execution of this Agreement, and
thereafter from time to time without any request or notice by the Secured Party,
Pledgor, at its sole cost and expense, shall execute and deliver to the Secured
Party all filings, notices, registrations for the corporate records, and all such
other documents, and shall take such other action, as may be necessary or advisable
to obtain, preserve, protect, and maintain the Secured Party’s continuing first (in
the case of the Pledged Collateral (Revolver)) or second (in the case of the
Pledged Collateral (Term)) priority perfected security interest in the portion of
the Pledged Collateral that relates to capital stock (or other equity interests) in
any Company.




          (b) Prior to or concurrently with the execution of this Agreement, and
thereafter at any time and from time to time upon reasonable request of the
Administrative Agent, each Pledgor shall execute and deliver to the Administrative
Agent all financing statements, continuation financing statements, assignments,
certificates and documents of title, affidavits, reports, notices, schedules of
account, letters of authority, further pledges, powers of


- 4 -









 







attorney and all other documents (collectively, the “Security Documents”) which the
Administrative Agent may reasonably request, in form reasonably satisfactory to the Administrative
Agent, and take such other action which the Administrative Agent may reasonably request, to perfect
and continue perfected and to create and maintain the first (in the case of the Pledged Collateral
(Revolver)) or second (in the case of the Pledged Collateral (Term)) priority status of the
Administrative Agent’s security interest in the Pledged Collateral and to fully consummate the
transactions contemplated under this Agreement. Each Pledgor hereby irrevocably makes, constitutes
and appoints the Administrative Agent (and any of the Administrative Agent’s officers or employees
or agents designated by the Administrative Agent) as such Pledgor’s true and lawful attorney with
power to sign the name of such Pledgor on all or any of the Security Documents which the
Administrative Agent determines must be executed, filed, recorded or sent in order to perfect or
continue perfected the Administrative Agent’s security interest in the Pledged Collateral in any
jurisdiction. Such power, being coupled with an interest, is irrevocable until all of the Secured
Obligations have been indefeasibly paid in full and the Commitments have terminated.




4. Representations and Warranties.




     Each Pledgor hereby jointly and severally represents and warrants to the
Administrative Agent as follows:



          (a) Such Pledgor, has and will continue to have (or, in the case of
after-acquired Pledged Collateral, at the time such Pledgor acquires rights in such
Pledged Collateral, will have and will continue to have), title to its Pledged
Collateral, free and clear of all Liens other than those in favor of the
Administrative Agent for the Revolver Lenders and the Administrative Agent;




          (b) The capital stock shares, securities, member interests, partnership
interests and other ownership interests constituting the Pledged Collateral have
been duly authorized and validly issued to such Pledgor (as set forth on Schedule A
hereto), are fully paid and nonassessable and the percentage of the issued and
outstanding capital stock, member interest, partnership interests of each of the
Companies is reflected on Schedule A attached hereto;




          (c) The security interests in the Pledged Collateral (Revolver) granted
hereunder are valid, perfected and of first priority, subject to the Lien of no
other Person;




          (d) The security interests in the Pledged Collateral (Term) granted hereunder
are valid, perfected and of second priority, subject to the Lien of no other Person
except the Term Lender pursuant to the Pledge Agreement (Term);




          (e) There are no restrictions upon the transfer of the Pledged Collateral
(Revolver) and such Revolver Party Pledgor has the power and authority and right to
transfer the Pledged Collateral (Revolver) owned by such Revolver Party Pledgor
free of any encumbrances and without obtaining the consent of any other Person;




          (f) Except for any restrictions contained in the Pledge Agreement (Term),
there are no restrictions upon the transfer of the Pledged Collateral (Term) and
such Term Party Pledgor has the power and authority and right to transfer the
Pledged Collateral (Term) owned


- 5 -









 







by such Term Party Pledgor free of any encumbrances and without obtaining the consent of any other
Person;




          (g) Such Pledgor has all necessary power to execute, deliver and perform this
Agreement;




          (h) There are no actions, suits, or proceedings pending or, to such Pledgor’s
best knowledge after due inquiry, threatened against or affecting such Pledgor with
respect to the Pledged Collateral, at law or in equity or before or by any Official
Body, and such Pledgor is not in default with respect to any judgment, writ,
injunction, decree, rule or regulation which could adversely affect such Pledgor’s
performance hereunder;




          (i) This Agreement has been duly executed and delivered and constitutes the
valid and legally binding obligation of such Pledgor, enforceable in accordance
with its terms, except to the extent that enforceability of this Agreement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting the enforceability of creditors’ rights generally or
limiting the right of specific performance;




          (j) Neither the execution and delivery by such Pledgor of this Agreement, nor
the compliance with the terms and provisions hereof, will violate any provision of
any Law or conflict with or result in a breach of any of the terms, conditions or
provisions of any judgment, order, injunction, decree or ruling of any Official
Body to which such Pledgor is subject or any provision of any agreement,
understanding or arrangement to which Pledgor is a party or by which such Pledgor
is bound;




          (k) Such Pledgor’s exact legal name is as set forth on the signature page
hereto;




          (l) The state of incorporation, formation or organization as applicable, of
such Pledgor is as set forth on Schedule A to the Security Agreement;




          (m) Such Pledgor’s chief executive office is as set forth on Schedule A to the
Security Agreement; and




          (n) Except as provided on Schedule B attached hereto, all rights of such
Pledgor in connection with its ownership of each of the Companies are evidenced and
governed solely by the stock certificates, instruments or other documents
evidencing ownership and organizational documents of each of the Companies and no
shareholder or other similar agreements are applicable to any of the Pledged
Collateral, and no such certificate, instrument or other document provides that any
member interest, or partnership interest or other intangible ownership interest
(not including such ownership interests in any Companies which exist as a
corporation), constituting Pledged Collateral, is a “Security” within the meaning
of and subject to Article 8 of the Code; and, the organizational documents of each
Company contain no restrictions on the rights of shareholders, members or partners
other than those that normally would apply to a company organized under the laws of
the jurisdiction of organization of each of the Companies.




5. General Covenants.




- 6 -









 





     Each Pledgor hereby covenants and agrees as follows:



          (a) Such Pledgor shall do all reasonable acts that may be necessary and
appropriate to maintain, preserve and protect the Pledged Collateral; such Pledgor
shall be responsible for the risk of loss of, damage to, or destruction of the
Pledged Collateral owned by such Pledgor, unless such loss is the result of the
gross negligence or willful misconduct of the Administrative Agent.




          (b) The capital stock shares, securities, member interests, partnership
interests and other ownership interests constituting the Pledged Collateral have
been duly authorized and validly issued to such Pledgor (as set forth on Schedule A
hereto), are fully paid and nonassessable and constitute the following (i) the
percentage listed on Schedule A of the issued and outstanding capital stock, member
interests and partnership interests of each of the Companies which are not Foreign
Companies, and (ii) the lesser of (x) sixty five percent (65%) of the issued and
outstanding capital stock, shares, securities, member interests and partnership
interests of each of the Foreign Companies or (y) all of the issued and outstanding
capital stock, member interests and partnership interests owned by Borrower or any
of its Subsidiaries of each Foreign Company.




          (c) The security interests under the Code in the Pledged Collateral (Revolver)
granted hereunder are valid, perfected and of first priority subject to the Lien of
no other Person. Upon the consummation of those actions described in Section 3(c)
hereof, the security interests in the Pledged Collateral (Revolver) granted
hereunder shall be valid, perfected and of first priority subject to the Lien of no
other Person under all applicable Law.




          (d) The security interests under the Code in the Pledged Collateral (Term)
granted hereunder are valid, perfected and of second priority subject to the Lien
of no other Person except as provided in the Pledge Agreement (Term). Upon the
consummation of those actions described in Section 3(c) hereof, the security
interests in the Pledged Collateral (Term) granted hereunder shall be valid,
perfected and of second priority subject to the Lien of no other Person under all
applicable Law, except as provided in the Pledge Agreement (Term).




          (e) Except as provided on Schedule B attached hereto, there are no
restrictions upon the transfer of the Pledged Collateral and such Pledgor has the
power and authority and unencumbered right to transfer the Pledged Collateral owned
by such Pledgor free of any encumbrances and without the necessity of obtaining the
consent of any other Person, other than such consents as have been or will be
obtained as of the date hereof or in connection with Pledged Collateral
subsequently acquired by Pledgor and other than as provided in the Credit Agreement
and the Pledge Agreement (Term).




          (f) Such Pledgor has all necessary power to execute, deliver and perform this
Agreement and all necessary action to authorize the execution, delivery and
performance of this Agreement has been properly taken.




          (g) Such Pledgor shall pay any and all taxes, duties, fees or imposts of any
nature imposed by any Official Body on any of the Pledged Collateral, except to the
extent contested in good faith by appropriate proceedings;






- 7 -









 








          (h) Such Pledgor shall permit the Administrative Agent, its officers,
employees and agents at reasonable times to inspect all books and records related
to the Pledged Collateral;




          (i) Subject to Section 2(d) hereof, to the extent, following the date hereof,
such Pledgor acquires capital stock, shares securities, member interests,
partnership interests and other ownership interests of any of the Companies or any
of the rights, property or securities, shares, capital stock, member interests,
partnership interests or any other ownership interests described in the definition
of Pledged Collateral with respect to any of the Companies, such ownership
interests shall be subject to the terms hereof and, upon such acquisition, shall be
deemed to be hereby pledged to the Administrative Agent; and, such Pledgor
thereupon shall deliver all such securities, shares, capital stock, member
interests, partnership interests and other ownership interests together with an
updated Schedule A hereto, to the Administrative Agent together with all such
control agreements, financing statements, and any other documents necessary to
implement the provisions and purposes of this Agreement as the Administrative Agent
may request;




          (j) Except as permitted by the Credit Agreement, during the term of this
Agreement, such Pledgor shall not sell, assign, replace, retire, transfer
or otherwise dispose of its Pledged Collateral;




          (k) Such Pledgor will not change its state of incorporation, formation or
organization, as applicable without providing thirty (30) days prior written notice
to the Administrative Agent;




          (l) Such Pledgor will not change its name without providing thirty (30) days
prior written notice to the Administrative Agent;




          (m) Except as permitted by Sections 8.26 and 8.27 of the Credit Agreement,
each Pledgor shall preserve its existence as a corporation or a limited liability
company, as applicable, and except as permitted by the Credit Agreement, shall not
(i) in one, or a series of related transactions, merge into or consolidate with any
other entity, the survivor of which is not such Pledgor, or (ii) sell all or
substantially all of its assets; and




          (n) During the term of this Agreement, such Pledgor shall not permit any
Company to treat any uncertificated ownership interests as securities which are
subject to Article 8 of the Code.




6. Other Rights With Respect to Pledged Collateral.




     In addition to the other rights with respect to the Pledged Collateral granted to the
Administrative Agent hereunder, at any time and from time to time, after and during the
continuation of an Event of Default, the Administrative Agent, at its option and at the
expense of the Pledgors, may (a) transfer into its own name, or into the name of its
nominee, all or any part of the Pledged Collateral, thereafter receiving all dividends,
income or other distributions upon the Pledged Collateral; (b) take control of and manage
all or any of the Pledged Collateral; (c) apply to the payment of any of the Secured
Obligations, whether any be due and payable or not, any moneys, including cash dividends
and income from any Pledged Collateral, now or



- 8 -









 







hereafter in the hands of the Administrative Agent or provider of Lender Provided Interest Rate
Hedge or any Other Lender Provided Financial Services Product, on deposit or otherwise, belonging
to any Pledgor, as the Administrative Agent in its sole discretion shall determine; and (d) do
anything which any Pledgor is required but fails to do hereunder.



7. Additional Remedies Upon Event of Default.




     Upon the occurrence of any Event of Default and while such Event of Default shall be
continuing, the Administrative Agent shall have, in addition to all rights and remedies of
a secured party under the Code or other applicable Law, and in addition to its rights under
Section 6 above and under the other Loan Documents, the following rights and remedies:



          (a) The Administrative Agent may, after ten (10) days’ advance notice to the
Pledgor, sell, assign, give an option or options to purchase or otherwise dispose
of such Pledgor’s Pledged Collateral or any part thereof at public or private sale,
at any of the Administrative Agent’s offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as the Administrative Agent may deem
commercially reasonable. Each Pledgor agrees that ten (10) days’ advance notice of
the time and place of any public sale or the time after which any private sale is
to be made shall constitute reasonable notification. The Administrative Agent shall
not be obligated to make any sale of Pledged Collateral regardless of notice of
sale having been given. The Administrative Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. Each Pledgor recognizes that the Administrative Agent may be
compelled to resort to one or more private sales of the Pledged Collateral to a
restricted group of purchasers who will be obliged to agree, among other things, to
acquire such securities, shares, capital stock, member interests, partnership
interests or ownership interests for their own account for investment and not with
a view to the distribution or resale thereof. Pledgor acknowledges and agrees that
any such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agree that
any such private sale shall be deemed to have been made in a commercially
reasonable manner The Secured Party shall be under no obligation to delay sale of
any of the Pledged Collateral for the period of time necessary to permit Pledgor
(or issuer) to register such securities for public sale under the Securities Act of
1933, as amended, or under applicable securities laws, even if Pledgor (or issuer)
would agree to do so




          (b) The proceeds of any collection, sale or other disposition of the Pledged
Collateral, or any part thereof, shall, after the Administrative Agent has made all
deductions of expenses, including but not limited to attorneys’ fees and other
expenses incurred in connection with repossession, collection, sale or disposition
of such Pledged Collateral or in connection with the enforcement of the
Administrative Agent’s rights with respect to the Pledged Collateral, including in
any insolvency, bankruptcy or reorganization proceedings, be applied against the
Secured Obligations, whether or not all the same be then due and payable in the
manner set forth in Section 9.2.4 [Application of Proceeds] of the Credit
Agreement.




8. Administrative Agent’s Duties.




- 9 -









 





     The powers conferred on the Administrative Agent hereunder are solely to protect its
interest in the Pledged Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Pledged Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Administrative Agent shall
have no duty as to any Pledged Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any Pledged
Collateral.



9. Additional Pledgors.




     It is anticipated that additional persons will from time to time become Subsidiaries
of the Borrower or a Guarantor, each of whom will be required to join this Pledge
Agreement. It is acknowledged and agreed that new Subsidiaries of the Borrower or of a
Guarantor will become Pledgors hereunder and will be bound hereby simply by executing and
delivering to Administrative Agent a Guarantor Joinder in the form of Exhibit 1.1(G)(1) to
the Credit Agreement. In addition, a new Schedule A hereto shall be provided to
Administrative Agent showing the pledge of the ownership interest in such new Subsidiary
and any ownership interests that such new Subsidiary owns in any other Person.



10. No Waiver; Cumulative Remedies.




     No failure to exercise, and no delay in exercising, on the part of the Administrative
Agent, any right, power or privilege hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder preclude any
further exercise thereof or the exercise of any other right, power or privilege. The
remedies herein provided are cumulative and not exclusive of any remedies provided under
the other Loan Documents or by Law. Each Pledgor waives any right to require the
Administrative Agent to proceed against any other Person or to exhaust any of the Pledged
Collateral or other security for the Secured Obligations or to pursue any remedy in the
Administrative Agent’s power.



11. No Dischar,te Until Indefeasible Pa ent of the Secured Obli ations.




     The pledge, security interests, and other Liens and the obligations of each Pledgor
hereunder shall not be discharged or impaired or otherwise diminished by any failure,
default, omission, or delay, willful or otherwise, by Administrative Agent, or any other
obligor on any of the Secured 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 such Pledgor or which would otherwise operate as a discharge of such Pledgor as
a matter of law or equity. Without limiting the generality of the foregoing, each Pledgor
hereby consents to, and the pledge, security interests, and other Liens given by such
Pledgor hereunder shall not be diminished, terminated, or otherwise similarly affected by
any of the following at any time and from time to time:



          (a) Any lack of genuineness, legality, validity, enforceability, or
allowability (in a bankruptcy, insolvency, reorganization or similar proceeding, or
otherwise), or any avoidance or subordination, in whole or in part, of any Loan
Document, any obligations in connection with any Lender Provided Interest Rate
Hedge or any Other Lender Provided Financial Services Product or any of the Secured
Obligations and regardless of any law, regulation, or order now or hereafter in
effect in any jurisdiction affecting any of the Secured


- 10 -









 







Obligations, any of the terms of the Loan Documents, or any rights of the Administrative Agent
or any other Person with respect thereto;




          (b) 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 Secured 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 Secured 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,
any Lender Provided Interest Rate Hedge or any Other Lender Provided Financial
Services Product or any of the Secured Obligations;




          (c) Any failure to assert any breach of or default under any Loan Document,
any Lender Provided Interest Rate Hedge or any Other Lender Provided Financial
Services Product or any of the Secured Obligations; any extensions of credit in
excess of the amount committed under or contemplated by the Loan Documents or any
Lender Provided Interest Rate Hedge or any Other Lender Provided Financial Services
Product, 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 such Pledgor or any other
Person under or in connection with any Loan Document or any Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Product or any
of the Secured Obligations; any refusal of payment or performance of any of the
Secured Obligations, whether or not with any reservation of rights against any
Pledgor; or any application of collections (including collections resulting from
realization upon any direct or indirect security for the Secured Obligations) to
other obligations, if any, not entitled to the benefits of this Agreement, in
preference to Secured Obligations or, if any collections are applied to Secured
Obligations, any application to particular Secured Obligations;




          (d) Any taking, exchange, amendment, modification, supplement, termination,
subordination, release, 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 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
Administrative Agent or any other Person in respect of, any direct or indirect
security for any of the Secured Obligations (including the Pledged Collateral). As
used in this Agreement, “direct or indirect security” for the Secured 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 Secured Obligations, made by or on behalf of
any Person;




          (e) 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 Pledgor or the Borrower or any other
Person; any bankruptcy, insolvency, reorganization or similar proceeding with
respect to any Pledgor or the Borrower or


- 11 -









 







any other Person; or any action taken or election (including any election under Section
1111(b)(2) of the United States Bankruptcy Code or any comparable law of any jurisdiction) made by
Administrative Agent or any Pledgor or the Borrower or by any other Person in connection with any
such proceeding;




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




          (g) 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 a guarantor or a surety, including any
Pledgor, excepting only full, strict, and indefeasible payment and performance of
the Secured Obligations in full.




12. Taxes.




          (a) No Deductions. All payments and collections made by or from any Pledgor
under this Agreement shall be made or received free and clear of and without
deduction for any present or future taxes, levies, imposts, deductions, charges, or
withholdings, and all liabilities with respect thereto, excluding Excluded Taxes
(all such non-Excluded Taxes, levies, imposts, deductions, charges, withholdings,
and liabilities being hereinafter referred to as “Taxes”). If any Pledgor shall be
required by law to deduct any Taxes from or in respect of any sum payable or any
collection made under this Agreement, (i) the sum payable or collectable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable or collectable under
this Subsection) Administrative Agent receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Pledgor shall make such
deductions and (iii) such Pledgor shall timely pay the full amount deducted to the
relevant tax authority or other authority in accordance with applicable law;




          (b) Stamp Taxes. In addition, each Pledgor acknowledges that the Pledged
Collateral secures payment of all present and future stamp or documentary taxes and
any other excise or property taxes, charges, or similar levies which arise from any
payment or collection made hereunder or from the execution, delivery, or
registration of, or otherwise with respect to, this Agreement (hereinafter referred
to as “Other Taxes”);




          (c) Indemnification for Taxes Paid by Administrative Agent. Each Pledgor
acknowledges that the Pledged Collateral secures the full amount of Taxes or Other
Taxes (including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 12) paid by Administrative Agent
and any liability (including penalties, interest, and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted;






- 12 -









 








          (d) Certificate. In the event any Pledgor pays any Taxes or Other Taxes,
within 30 days after the date of any such payment, such Pledgor shall furnish to
Administrative Agent, the original or a certified copy of a receipt evidencing
payment thereof;




          (e) Survival. Without prejudice to the survival of any other agreement of any
Pledgor hereunder, the agreements and obligations of each Pledgor contained in
Clauses (a) through (d) directly above shall survive the payment in full of
principal and interest under any Note and the termination of the Credit Agreement.




13. Waivers.




     Each Pledgor hereby waives any and all defenses which any Pledgor may now or hereafter
have based on principles of suretyship, impairment of collateral, or the like and each
Pledgor 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 the immediately
preceding section hereof. Without limiting the generality of the foregoing and to the
fullest extent permitted by applicable law, each Pledgor hereby further waives each of the
following:



          (a) All notices, disclosures and demands of any nature which otherwise might
be required from time to time to preserve intact any rights against such Pledgor,
including the following: any notice of any event or circumstance described in the
immediately preceding section 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 Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Product or any
of the Secured Obligations; any notice of the incurrence of any Secured
Obligations; any notice of any default or any failure on the part of such Pledgor
or the Borrower or any other Person to comply with any Loan Document or Lender
Provided Interest Rate Hedge or any Other Lender Provided Financial Services
Product or any of the Secured Obligations or any requirement pertaining to any
direct or indirect security for any of the Secured Obligations; and any notice or
other information pertaining to the business, operations, condition (financial or
otherwise), or prospects of the Borrower or any other Person;




          (b) Any right to any marshalling of assets, to the filing of any claim against
such Pledgor or the Borrower or any other Person in the event of any bankruptcy,
insolvency, reorganization, or similar proceeding, or to the exercise against such
Pledgor or the Borrower, or any other Person of any other right or remedy under or
in connection with any Loan Document, any Lender Provided Interest Rate Hedge or
any Other Lender Provided Financial Services Product, or any of the Secured
Obligations or any direct or indirect security for any of the Secured Obligations;
any requirement of promptness or diligence on the part of the Administrative Agent
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 Secured Obligations or any direct or indirect security for any of the
Secured 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 Pledgor receive notice of any such acceptance;






- 13 -









 








          (c) 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
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 (including
commencement or completion of any judicial proceeding or nonjudicial sale or other
action in respect of collateral security for any of the Secured Obligations), which
results in denial or impairment of the right of the Administrative Agent to seek a
deficiency against the Borrower or any other Person or which otherwise discharges
or impairs any of the Secured Obligations.




14. Setoff.




          Pledgor hereby waives and releases, and shall not assert, any and all rights
of setoff and any similar claims or actions whatsoever now and hereafter it may
have at any time against the Secured Party or any Revolver Lender, any of the
Secured Party’s or any Revolver Lender’s Affiliates, and any of the respective
successors, assigns, and participants of the Secured Party or any Revolver Lender
or any Affiliate of the Secured Party or any Revolver Lender.




15. Assignment.




     All rights of the Administrative Agent under this Agreement shall inure to the benefit
of its successors and assigns. All obligations of each Pledgor shall bind its successors
and assigns; provided, however, no Pledgor may assign or transfer any of its rights and
obligations hereunder or any interest herein, and any such purported assignment or transfer
shall be null and void.



16. Severability.




     Any provision of this Agreement which shall be held invalid or unenforceable shall be
ineffective without invalidating the remaining provisions hereof.



17. Governing Law.




     This Agreement shall be construed in accordance with and governed by the internal laws
of the State of New York without regard to its conflicts of law principles, except to the
extent the validity or perfection of the security interests or the remedies hereunder in
respect of any Pledged Collateral are governed by the law of a jurisdiction other than the
State of New York.



18. Notices.




     All notices, requests, demands, directions and other communications (collectively,
“notices”) given to or made upon any party hereto under the provisions of this Agreement
shall be as set forth in Section 11.5 [Notices; Effectiveness; Electronic Communication] of
the Credit Agreement.



19. Specific Performance.




- 14 -









 





     Each Pledgor acknowledges and agrees that, in addition to the other rights of the
Administrative Agent hereunder and under the other Loan Documents, because the
Administrative Agent’s remedies at law for failure of such Pledgor to comply with the
provisions hereof relating to the Administrative Agent’s rights (i) to inspect the books and
records related to the Pledged Collateral, (ii) to receive the various notifications such Pledgor
is required to deliver hereunder, (iii) to obtain copies of agreements and documents as provided
herein with respect to the Pledged Collateral, (iv) to enforce the provisions hereof pursuant to
which the such Pledgor has appointed the Administrative Agent its attorney-in-fact, and (v) to
enforce the Administrative Agent’s remedies hereunder, would be inadequate and that any such
failure would not be adequately compensable in damages, such Pledgor agrees that each such
provision hereof may be specifically enforced.



20. Voting Rights in Respect of the Pledged Collateral.



     So long as no Event of Default shall occur and be continuing under the Credit
Agreement, each Pledgor may exercise any and all voting and other consensual rights pertaining
to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of
this Agreement or the other Loan Documents; provided, however, that such Pledgor will not exercise
or will refrain from exercising any such voting and other consensual right pertaining to the
Pledged Collateral, as the case may be, if such action would have a material adverse effect on the
value of the Collateral, taken as a whole. Without limiting the generality of the foregoing and in
addition thereto, the Pledgors shall not vote to enable, or take any other action to permit, any of
the Companies to issue any stock, member interests, partnership interests or other equity
securities, member interests, partnership interests or other ownership interests of any nature or
to issue any other securities, shares, capital stock, member interests, partnership interests or
other ownership interests convertible into or granting the right to purchase or exchange for any
stock, member interests, partnership interests or other equity securities, member interests,
partnership interests or other ownership interests of any nature of any such Company or to enter
into any agreement or undertaking restricting the right or ability of the Pledgor or the
Administrative Agent to sell, assign or transfer any of the Pledged Collateral.



21. Consent to Jurisdiction.




     Each Pledgor hereby irrevocably submits to the nonexclusive jurisdiction of any New
York state or federal court sitting in New York County, in any action or proceeding arising
out of or relating to this Agreement, and each Pledgor hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in such New York
state or federal court. Each Pledgor hereby waives to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of any such action or
proceeding. Each Pledgor hereby appoints the process agent identified below (the “Process
Agent”) as its agent to receive on behalf of such party and its respective property service
of copies of the summons and complaint and any other process which may be served in any
action or proceeding. Such service may be made by mailing or delivering a copy of such
process to the Pledgor in care of the Process Agent at the Process Agent’s address, and
each Pledgor hereby authorizes and directs the Process Agent to receive such service on its
behalf. Each Pledgor agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions (or any political subdivision
thereof) by suit on the judgment or in any other manner provided at



- 15 -









 




law. Each Pledgor further agrees that it shall, for so long as any commitment or any
obligation of any Loan Party to any Revolver Lender remains outstanding, continue to retain Process
Agent for the purposes set forth in this Section 21. The Process Agent is Armstrong Coal Company,
Inc., with an office on the date hereof as set forth in the Credit Agreement. The Process Agent
hereby accepts the appointment of Process Agent by the Companies and agrees to act as Process Agent
on behalf of the Companies.




22. Waiver of Jury Trial.




     EXCEPT AS PROHIBITED BY LAW, EACH PLEDGOR AND EACH OF THE COMPANIES HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY A JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENTS OR
TRANSACTIONS RELATING THERETO.



23. Entire Agreement; Amendments.




     This Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements relating to a grant of a
security interest in the Pledged Collateral by any Pledgor, except for the Pledge Agreement
(Term). This Agreement may not be amended or supplemented except by a writing signed by the
Administrative Agent and the Pledgors.



24. Counterparts; Telecopy Signatures.




     This Agreement may be executed in any number of counterparts, and by different parties
hereto in separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same instrument. Each
Pledgor acknowledges and agrees that a telecopy transmission to the Administrative Agent or
any Revolver Lender of the signature pages hereof purporting to be signed on behalf of any
Pledgor shall constitute effective and binding execution and delivery hereof by such
Pledgor.



25. Construction.




     The rules of construction contained in Section 1.2 of the Credit Agreement apply to
this Agreement.



[Signature page follows.]




- 16 -









 








[SIGNATURE PAGE 1 OF 3 TO

PLEDGE AGREEMENT (REVOLVER)]




     IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have caused
this Agreement to be duly executed as of the date first above written with the intent that
it constitute a sealed instrument.



	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION, as
 Administrative
Agent

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



 









 






	 	 	 	 	 



[SIGNATURE PAGE 2 OF 3 TO

PLEDGE AGREEMENT (REVOLVER)]




	 	 	 	 	 
	 	REVOLVER PARTY PLEDGORS:




ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG RESOURCES

HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 3 OF 3 TO

PLEDGE AGREEMENT (REVOLVER)]




	 	 	 	 	 
	 	TERM PARTY PLEDGORS:




ELK CREEK, L.P.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ELK CREEK OPERATING, L.P.

 	 
	 	 	By:  	Elk Creek Operating GP, LLC, as 
General Partner
 	 
	 	 	 
	 	 	By:  	
 	 
	 	 	 	Name: J. Richard Gist 	 
	 	 	  	Title:  Authorized Person 	 



 









 






	 	 	 	 	 



[TO BE EXECUTED BY EACH COMPANY THAT IS A LLC]




AGREEMENT AND ACKNOWLEDGMENT (LLC)





     THE UNDERSIGNED, jointly and severally, hereby agree, acknowledge and consent to the
execution and delivery to PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the
Revolver Lenders (together with its successors, assigns, and designees for the purposes
hereof, “Administrative Agent”), of the Pledge Agreement (Revolver) to which this Agreement
and Acknowledgment is attached (the “Pledge Agreement”) made by each of the pledgors party
thereto (each a “Pledgor” and collectively, “Pledgors”), as collateral security for the
payment and performance of the Debt described therein, and the assignment and pledge
thereby to Administrative Agent by each Pledgor of all of such Pledgor’s right, title and
interest to the Pledged Collateral and other collateral described therein. All capitalized
terms used herein not otherwise defined herein shall have the meanings ascribed to such
terms in the Pledge Agreement.



     For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned, jointly and severally, hereby represent, warrant, covenant
and agree for the benefit of Administrative Agent and Revolver Lenders as follows:



     1. Representations and Warranties. The undersigned, jointly and severally, represent
and warrant that (a) the execution and delivery of the Pledge Agreement does not violate
any of the undersigned’s Limited Liability Company Agreements, as amended (collectively,
the “Operating Agreement”) or any other agreement to which such undersigned is a party or
by which any of the property of such undersigned is bound, (b) as of the date hereof, there
are no existing and outstanding control agreements perfecting a security interest in any of
the Pledged Collateral in favor of any other party, other than in favor of the
Administrative Agent for the benefit of the Term Lenders, (c) the Pledged Collateral is not
subject to any security interest or lien in favor of any Person other than Administrative
Agent other than in favor of the Administrative Agent for the benefit of the Term Lenders
and has not been pledged, transferred or assigned to, and is not otherwise in the control
of, any Person other than Administrative Agent, (d) the undersigned has no present claim,
right of offset, or counterclaim against any Pledgor under or with respect to the Pledged
Collateral or otherwise under the undersigned’s Operating Agreement, (e) no Pledgor is in
default to the undersigned or otherwise under or in respect of any of its obligations under
undersigneds’ Operating Agreement, and (f) all of the representations and warranties of
each Pledgor made in the Pledge Agreement are true, accurate and complete in all material
respects.



     2. Covenants and Agreements.



     2.1 Books and Records. The undersigned (i) shall cause all of its respective books and
records to reflect the pledge of the Pledged Collateral to Administrative Agent and agrees
not to consent to or to permit any transfer thereof or any other action that may be taken
by any Pledgor that might constitute an Event of Default so long as any of the Obligations
remain outstanding, (ii) agrees that Administrative Agent and/or its representatives may,
upon



 









 







reasonable advance notice and at any reasonable time during normal business hours, inspect the
books, records and properties of such undersigned.



     2.2 UCC Matters. The undersigned confirms, agrees and acknowledges that (i) the
Pledgors own all of the issued and outstanding limited liability company interests of the
undersigned, (ii) notwithstanding any provisions in the Operating Agreement, each Pledgor
is hereby authorized and permitted to pledge, assign and grant a security interest in the
Pledged Collateral in favor of Administrative Agent pursuant to the Pledge Agreement, and
(iii) this Agreement and Acknowledgment is intended to, and shall, provide Administrative
Agent with “control” over the Pledged Collateral within the meaning of Articles 8 and 9 of
the UCC.



     2.3 Operating Agreement. Except as permitted by the Credit Agreement, the undersigned
shall not suffer or permit its Operating Agreement to be amended or modified without the
prior written consent of Administrative Agent.



     2.4 Notices; Defaults. The undersigned shall give Administrative Agent a copy of all
notices, reports or communications received or given pursuant to its Operating Agreement
promptly after the same shall have been received or contemporaneously with the giving
thereof, as the case may be. The undersigned shall permit Administrative Agent the right to
cure any default by any Pledgor under the Operating Agreement; provided, however, in no
event shall Administrative Agent be obligated to cure such default.



     2.5 The undersigned will be bound by the terms of the Pledge Agreement and will comply
with such terms insofar as such terms are applicable to the undersigned.



     2.6 The undersigned will notify Secured Party promptly in writing of the occurrence of
any of the events described in Section 5(i) of the Pledge Agreement.



     2.7 The terms of Section 3 of the Pledge Agreement shall apply to the undersigned,
mutatis mutandis, with respect to all actions that may facilitate, in the reasonable
judgment of Secured Party, the carrying out of Section 3 of the Pledge Agreement.



     2.8 To the extent that the undersigned has or hereafter may acquire any immunity from
the jurisdiction of any court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution, or otherwise) with
respect to itself or its property, the undersigned hereby irrevocably waives such immunity
in respect of its obligations under the Pledge Agreement and any other document or
agreement executed in connection therewith, and the undersigned agrees that it will not
raise or claim any such immunity at or in respect of any such action or proceeding.



     2.9 The undersigned acknowledges and agrees that any notices sent to Pledgors
regarding any of the Pledged Collateral shall also be sent to Secured Party in the manner
and at the address of Secured Party as indicated in Section 11.5 [Notices] of the Credit
Agreement.



     3. Enforcement Event; Sales of Collateral. The undersigned hereby agrees that during
the continuance of an Event of Default, (a) all distributions permitted under the Loan
Documents will be made directly to Administrative Agent, (b) Administrative Agent shall
have the sole and exclusive right to exercise all voting, consensual and other powers of
ownership



 









 







pertaining to the Pledged Collateral, (c) Administrative Agent may take any reasonable action
which Administrative Agent may deem necessary for the maintenance, preservation and protection of
any of the Pledged Collateral or Administrative Agent’s security interests therein, including,
without limitation, the right to declare any or all of the Debt to be immediately due and payable
without demand or notice and the right to transfer any of the Pledged Collateral into
Administrative Agent’s name or the name of any designee or nominee of Administrative Agent, (d)
Administrative Agent may dispose of the Pledged Collateral in accordance with Articles 8 and 9 of
the Code and the provisions of the Pledge Agreement, in which case, notwithstanding anything to the
contrary in the Operating Agreement, (i) Administrative Agent, or its designee or assign, shall
automatically be admitted as a member of the undersigned and shall be entitled to receive all
benefits and exercise all rights in connection therewith pursuant to the Operating Agreement, and
(ii) the undersigned shall recognize Administrative Agent (or its designee or assign) as the
successor in interest to Pledgor.



     4. No Liability. Notwithstanding the security interests of Administrative Agent in the
Pledged Collateral or any of its rights hereunder, (a) Administrative Agent shall have no
obligation or liability whatsoever for matters in connection with the Pledged Collateral
arising or occurring, directly or indirectly, prior to Administrative Agent’s (or its
designee’s, successor’s or assign’s) becoming a member of the undersigned, and Pledgor
shall have no liability for matters in connection with the Pledged Collateral first
occurring or arising after Administrative Agent’s (or its designee’s, successor’s or
assign’s) acquisition through foreclosure of the Pledged Collateral, and (b) Administrative
Agent shall not be obligated to perform any of the obligations or duties of any Pledgor
under the undersigned’s Operating Agreement, or to take any action to collect or enforce
any claim for payment due Pledgor arising thereunder.



     5. Transfers. The undersigned acknowledges that, subject to the terms and conditions
set forth in the undersigned’s Operating Agreement, the security interest of Administrative
Agent in the Pledged Collateral and all of Administrative Agent’s rights and remedies under
the Pledge Agreement may be freely transferred or assigned by Administrative Agent. In the
event of any such transfer or assignment, all of the provisions of this Agreement and
Acknowledgment shall inure to the benefit of the transferees, successors, and/or assigns of
Administrative Agent. The provisions of this Agreement and Acknowledgment shall likewise be
binding upon any and all permitted transferees, successors and assigns of the undersigned.



     6. Further Assurances. The undersigned shall, from time to time, promptly execute and
deliver such further instruments, documents and agreements, and perform such further acts
as may be reasonably necessary or proper to carry out and effect the terms of the Pledge
Agreement and this Agreement and Acknowledgment.



     7. Reliance. This Agreement and Acknowledgment is being given to induce Administrative
Agent to accept the Pledge Agreement and with the understanding that Administrative Agent
will rely hereon.



     8. Counterparts. This Agreement and Acknowledgment may be executed in counterparts.




	[The remainder of this page is intentionally left blank.]




 









 











[SIGNATURE PAGE TO AGREEMENT AND ACKNOWLEDGMENT (LLC)]




	 	 	 	 	 
	 	ARMSTRONG RESOURCES HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person
 	 
	 	
Address for Notices:

 	 
	 
	 	Fax: 	  	
 	 
	 
	 	ELK CREEK GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person
 	 
	 	
Address for Notices:

 	 
	 
	 	Fax: 	  	
 	 
	 
	 	ARMSTRONG TECHNOLOGY SERVICES, LLC

 	 
	 	By:  	Armstrong Land Company, LLC, as 
Manager
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager





 	 
	 	Address for Notices: 	 
	 	 	 
	 	 	 
	 	Fax: 	 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO AGREEMENT AND ACKNOWLEDGMENT (LLC)]




	 	 	 	 	 
	 	ARMSTRONG LOGISTICS SERVICES, LLC

 	 
	 	 	By:  	Armstrong Energy, Inc., as Sole Member
 	 
	 	 	 
	 	 	By:  	
 	 
	 	 	 	Name: Martin D. Wilson 	 
	 	 	 	Title:  President

 	 
	 	
Address for Notices:

 	 
	 
	 	Fax: 	  	
 	 
	 
	 	WESTERN DIAMOND LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person






 	 
	 	
Address for Notices:

 	 
	 
	 	Fax: 	  	
 	 
	 
	 	WESTERN LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person






 	 
	 	
Address for Notices:

 	 
	 
	 	Fax: 	  	
 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO AGREEMENT AND ACKNOWLEDGMENT (LLC)]




	 	 	 	 	 
	 	WESTERN MINERAL DEVELOPMENT, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person






 	 
	 	
Address for Notices:

 	 
	 
	 	Fax: 	  	
 	 
	 
	 	CERALVO HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person






 	 
	 	
Address for Notices:

 	 
	 
	 	Fax: 	  	
 	 
	 
	 	ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person






 	 
	 	
Address for Notices:

 	 
	 
	 	Fax: 	  	
 	 



 









 






	 	 	 	 	 



[TO BE EXECUTED BY EACH COMPANY THAT IS A CORPORATION OR

PARTNERSHIP]




AGREEMENT AND ACKNOWLEDGMENT (CORPORATIONS AND

PARTNERSHIPS)





     THE UNDERSIGNED, jointly and severally, hereby agree, acknowledge and consent to the
execution and delivery to PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the
Revolver Lenders (together with its successors, assigns, and designees for the purposes
hereof, “Administrative Agent”), of the Pledge Agreement (Revolver) to which this Agreement
and Acknowledgment is attached (the “Pledge Agreement”) made by each of the pledgors party
thereto (each a “Pledgor” and collectively, “Pledgors”), as collateral security for the
payment and performance of the Debt described therein, and the assignment and pledge
thereby to Administrative Agent by each Pledgor of all of such Pledgor’s right, title and
interest to the Pledged Collateral and other collateral described therein. All capitalized
terms used herein not otherwise defined herein shall have the meanings ascribed to such
terms in the Pledge Agreement.



     For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned, jointly and severally hereby represent, warrant, covenant
and agree for the benefit of Administrative Agent and Revolver Lenders as follows:



     1. Representations and Warranties. The undersigned, jointly and severally, represents
and warrants that (a) the execution and delivery of the Pledge Agreement does not violate
the undersigned’s charter, by-laws, certificate of partnership, partnership agreement or
other organizational documents (the “Organizational Documents”) or any other agreement to
which such undersigned is a party or by which any of the property of such undersigned is
bound, (b) ) as of the date hereof, there are no existing and outstanding control
agreements perfecting a security interest in any of the Pledged Collateral in favor of any
other party, other than in favor of the Administrative Agent for the benefit of the Term
Lenders, (c) the Pledged Collateral is not subject to any security interest or lien in
favor of any Person other than Administrative Agent and other than in favor of the
Administrative Agent for the benefit of the Term Lenders and has not been pledged,
transferred or assigned to, and is not otherwise in the control of, any Person other than
Administrative Agent, (d) the undersigned has no present claim, right of offset, or
counterclaim against any Pledgor under or with respect to the Pledged Collateral or
otherwise under the undersigned’s Organizational Documents, (e) no Pledgor is in default to
the undersigned or otherwise under or in respect of any of its obligations under
undersigneds’ Organizational Documents, and (f) all of the representations and warranties
of each Pledgor made in the Pledge Agreement are true, accurate and complete in all
material respects.



     2. Covenants and Agreements.



     2.1 Books and Records. The undersigned (i) shall cause all of its respective books and
records to reflect the pledge of the Pledged Collateral to Administrative Agent and agrees
not to consent to or to permit any transfer thereof or any other action that may be taken
by any Pledgor that might constitute an Event of Default so long as any of the Debt remains
outstanding, (ii) agrees that Administrative Agent and/or its representatives may, upon
reasonable advance



 









 







notice and at any reasonable time during normal business hours, inspect the books, records and
properties of such undersigned.



     2.2 UCC Matters. The undersigned confirms, agrees and acknowledges that (i) the
Pledgors own all of the issued and outstanding shares of the undersigned, (ii)
notwithstanding any provisions in the Organizational Documents, each Pledgor is hereby
authorized and permitted to pledge, assign and grant a security interest in the Pledged
Collateral in favor of Administrative Agent pursuant to the Pledge Agreement, and (iii)
this Agreement and Acknowledgment is intended to, and shall, provide Administrative Agent
with “control” over the Pledged Collateral within the meaning of Articles 8 and 9 of the
UCC.



     2.3 Organizational Documents. Except as permitted in the Credit Agreement, the
undersigned shall not suffer or permit its Organizational Documents to be amended or
modified without the prior written consent of Administrative Agent.



     2.4 Notices; Defaults. The undersigned shall give Administrative Agent a copy of all
notices, reports or communications received or given pursuant to its Organizational
Documents promptly after the same shall have been received or contemporaneously with the
giving thereof, as the case may be. The undersigned shall permit Administrative Agent the
right to cure any default by any Pledgor under the Organizational Documents; provided,
however, in no event shall Administrative Agent be obligated to cure such default.



     2.5 The undersigned will be bound by the terms of the Pledge Agreement and will comply
with such terms insofar as such terms are applicable to the undersigned.



     2.6 The undersigned will notify Secured Party promptly in writing of the occurrence of
any of the events described in Section 5(i) of the Pledge Agreement.



     2.7 The terms of Section 3 of the Pledge Agreement shall apply to the undersigned,
mutatis mutandis, with respect to all actions that may facilitate, in the reasonable
judgment of Secured Party, the carrying out of Section 3 of the Pledge Agreement.



     2.8 To the extent that the undersigned has or hereafter may acquire any immunity from
the jurisdiction of any court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution, or otherwise) with
respect to itself or its property, the undersigned hereby irrevocably waives such immunity
in respect of its obligations under the Pledge Agreement and any other document or
agreement executed in connection therewith, and the undersigned agrees that it will not
raise or claim any such immunity at or in respect of any such action or proceeding.



     2.9 The undersigned acknowledges and agrees that any notices sent to Pledgors
regarding any of the Pledged Collateral shall also be sent to Secured Party in the manner
and at the address of Secured Party as indicated in Section 11.5 [Notices] of the Credit
Agreement.



     3. Enforcement Event; Sales of Collateral. The undersigned hereby agrees that during
the continuance of an Event of Default, (a) all distributions permitted under the Loan
Documents will be made directly to Administrative Agent, (b) Administrative Agent shall
have the sole and exclusive right to exercise all voting, consensual and other powers of
ownership



 









 




pertaining to the Pledged Collateral, (c) Administrative Agent may take any reasonable action which
Administrative Agent may deem necessary for the maintenance, preservation and protection of any of
the Pledged Collateral or Administrative Agent’s security interests therein, including, without
limitation, the right to declare any or all of the Debt to be immediately due and payable without
demand or notice and the right to transfer any of the Pledged Collateral into Administrative
Agent’s name or the name of any designee or nominee of Administrative Agent, (d) Administrative
Agent may dispose of the Pledged Collateral in accordance with Articles 8 and 9 of the Code and the
provisions of the Pledge Agreement, in which case, notwithstanding anything to the contrary in the
Organizational Documents, (i) Administrative Agent, or its designee or assign, shall be entitled to
receive all benefits and exercise all rights in connection therewith pursuant to the Organizational
Documents, and (ii) the undersigned shall recognize Administrative Agent (or its designee or
assign) as the successor in interest to Pledgor.




     4. No Liability. Notwithstanding the security interests of Administrative Agent in the
Pledged Collateral or any of its rights hereunder, (a) Administrative Agent shall have no
obligation or liability whatsoever for matters in connection with the Pledged Collateral
arising or occurring, directly or indirectly, prior to Administrative Agent’s (or its
designee’s, successor’s or assign’s) becoming a shareholder of the undersigned, and Pledgor
shall have no liability for matters in connection with the Pledged Collateral first
occurring or arising after Administrative Agent’s (or its designee’s, successor’s or
assign’s) acquisition through foreclosure of the Pledged Collateral, and (b) Administrative
Agent shall not be obligated to perform any of the obligations or duties of any Pledgor
under the undersigned’s Organizational Documents, or to take any action to collect or
enforce any claim for payment due Pledgor arising thereunder.



     5. Transfers. The undersigned acknowledges that, subject to the terms and conditions
set forth in the undersigned’s Organizational Documents, the security interest of
Administrative Agent in the Pledged Collateral and all of Administrative Agent’s rights and
remedies under the Pledge Agreement may be freely transferred or assigned by Administrative
Agent. In the event of any such transfer or assignment, all of the provisions of this
Agreement and Acknowledgment shall inure to the benefit of the transferees, successors,
and/or assigns of Administrative Agent. The provisions of this Agreement and Acknowledgment
shall likewise be binding upon any and all permitted transferees, successors and assigns of
the undersigned.



     6. Further Assurances. The undersigned shall, from time to time, promptly execute and
deliver such further instruments, documents and agreements, and perform such further acts
as may be reasonably necessary or proper to carry out and effect the terms of the Pledge
Agreement and this Agreement and Acknowledgment.



     7. Reliance. This Agreement and Acknowledgment is being given to induce Administrative
Agent to accept the Pledge Agreement and with the understanding that Administrative Agent
will rely hereon.



     8. Counterparts. This Agreement and Acknowledgment may be executed in counterparts.



[The remainder of this page is intentionally left blank.]






 









 








[SIGNATURE PAGE TO AGREEMENT AND ACKNOWLEDGMENT

(CORPORATIONS AND PARTNERSHIPS)]




	 	 	 	 	 
	 	ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person






 	 
	 	
Address for Notices:

 	 
	 
	 	Fax: 	  	
 	 
	 
	 	ARMSTRONG FABRICATORS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President






 	 
	 	
Address for Notices:

 	 
	 
	 	Fax: 	  	
 	 
	 
	 	ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person






 	 
	 	
Address for Notices:

 	 
	 
	 	Fax: 	  	
 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO AGREEMENT AND ACKNOWLEDGMENT

(CORPORATIONS AND PARTNERSHIPS)]




	 	 	 	 	 
	 	ELK CREEK OPERATING, L.P.

 	 
	 	By:  	Elk Creek GP, LLC, as General Partner
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person






 	 
	 	
Address for Notices:

 	 
	 
	 	Fax: 	  	
 	 



 









 






	 	 	 	 	 



SCHEDULE A

TO

PLEDGE AGREEMENT (REVOLVER)




Description of Pledged Collateral




See Attached






 









 








SCHEDULE B

TO

PLEDGE AGREEMENT (REVOLVER)




Restrictions Related to Pledged Collateral




See Attached





 











 





EXHIBIT 1.1(P)(2)(b)




FORM OF

PLEDGE AGREEMENT (TERM)



     THIS PLEDGE AGREEMENT (TERM), dated as of February 9, 2011 (as amended, restated,
supplemented or modified from time to time, the “Agreement”), is given, made and entered
into by EACH OF THE PERSONS LISTED ON THE SIGNATURE PAGES HERETO AS A TERM PARTY PLEDGOR
AND EACH OF THE OTHER PERSONS WHICH BECOME TERM PARTY PLEDGORS HEREUNDER FROM TIME TO TIME
(each a “Term Party Pledgor” and collectively, the “Term Party Pledgors”), EACH OF THE
PERSONS LISTED ON THE SIGNATURE PAGES HERETO AS A REVOLVER PARTY PLEDGOR AND EACH OF THE
OTHER PERSONS WHICH BECOME REVOLVER PARTY PLEDGORS HEREUNDER FROM TIME TO TIME (each a
“Revolver Party Pledgor” and collectively, the “Revolver Party Pledgors”) (the Term Party
Pledgors and the Revolver Party Pledgors are collectively referred to herein as the
“Pledgors” and each a “Pledgor”), each a Pledgor of the corporations, limited liability
companies, partnerships or other entities as set forth on Schedule A hereto (each a
“Company” and collectively the “Companies”), and PNC BANK, NATIONAL ASSOCIATION, as the
administrative agent for itself and the other Term Lenders under the Credit Agreement
described below (the “Administrative Agent”).



     WHEREAS, pursuant to that certain Credit Agreement (amended, restated, supplemented or
modified from time to time, the “Credit Agreement”) dated as of February 9, 2011, by and
among Armstrong Coal Company, Inc., Armstrong Land Company, LLC, Elk Creek, L.P., Western
Mineral Development, LLC, Western Diamond LLC, Western Land Company, LLC (collectively, the
“Borrower”), each of the Guarantors party thereto, the Lenders party thereto, and the
Administrative Agent, the Administrative Agent and the Lenders have agreed to provide
certain loans and other financial accommodations to the Borrower; and



     WHEREAS, pursuant to and in consideration of the Credit Agreement, certain of the
issued and outstanding capital stock, shares, securities, member interests, partnership
interests and other ownership interests of each of the Companies is to be pledged to the
Administrative Agent in accordance herewith; and



     WHEREAS, each Pledgor owns the outstanding capital stock, shares, securities, member
interests, partnership interests and other ownership interests of the Companies as set
forth on Schedule A hereto.



     NOW, THEREFORE, intending to be legally bound hereby, the parties hereto hereby agree
as follows:


1. Defined Terms.




          (a) Except as otherwise expressly provided herein, capitalized terms used in
this Agreement shall have the respective meanings assigned to them in the Credit
Agreement. Where applicable and except as otherwise expressly provided herein,
terms used herein (whether













 






or not capitalized) shall have the respective meanings assigned to them in the Uniform
Commercial Code as enacted in New York as amended from time to time (the “Code”).




          (b) “Company” and “Companies” shall mean one or more of the entities issuing
any of the Collateral which is or should be (in accordance with Section 5(g)
hereto) described on Schedule A hereto.




          (c) “Foreign Company” shall mean one or more of the entities issuing any of
the Pledged Collateral which is not organized under the laws of any state of the
United States of America, which is, or should be, described on Schedule A.




          (d) “Pledge Agreement (Revolver)” shall mean that certain Pledge
Agreement (Revolver) of even date herewith by and among the Pledgors and the Agent, entered into as
security for the Revolver Loans.




          (e) “Pledged Collateral” shall mean and include all of each Pledgor’s present
and future right, title and interest in and to the following: (i) all investment
property, capital stock, shares, securities, member interests, partnership
interests, warrants, options, put rights, call rights, similar rights, and all
other ownership or participation interests in any entity or business or in the
revenue, income, or profits thereof, (ii) all property of each Pledgor in the
Administrative Agent’s possession or in transit to or from, under the custody or
control of, or on deposit with, the Administrative Agent or any Affiliate thereof,
including deposit and other accounts, (iii) cash and cash equivalents (collectively
referred to herein as “Investments”), including all Investments listed on
Schedule A attached hereto and made a part hereof, and all rights and
privileges pertaining thereto, including, without limitation, all present and
future Investments receivable in respect of or in exchange for any Investments, and
all rights under shareholder, member, partnership agreements and other similar
agreements relating to any Investments, all rights to subscribe for Investments,
whether or not incidental to or arising from ownership of any Investments, (iv) all
Investments hereafter pledged by any Pledgor to Administrative Agent to secure the
Secured Obligations, (v) together with all cash, interest, stock and other
dividends or distributions paid or payable on any of the foregoing, and all books
and records (whether paper, electronic or any other medium) pertaining to the
foregoing, including, without limitation, all stock record and transfer books, and
together with whatever is received when any of the foregoing is sold, exchanged,
replaced or otherwise disposed of, including all proceeds, as such term is defined
in the Code, and all other investment property and similar assets of any Pledgor;
and (v) all cash and non-cash proceeds (including, without limitation, insurance
proceeds) of any of the foregoing property, all products thereof, and all additions
and accessions thereto, substitutions therefor and replacements thereof.




          (f) “Pledged Collateral (Revolver)” means the Pledged Collateral of each
Revolver Party Pledgor.




          (g) “Pledged Collateral (Term)” means the Pledged Collateral of each Term
Party Pledgor.




          (h) “Secured Obligations” shall mean and include the following: (i) all now
existing and hereafter arising Obligations of each and every Pledgor to the
Administrative Agent,




- 2 -









 







the Term Lenders, or any obligations in connection with any Lender Provided Interest Rate
Hedge or any Other Lender Provided Financial Services Product under the Credit Agreement or any of
the other Loan Documents, including all obligations, liabilities, and indebtedness, whether for
principal, interest, fees, expenses or otherwise, of each and every of the Pledgors to the
Administrative Agent, the Term Lenders, or providers of any Lender Provided Interest Rate Hedge or
any Other Lender Provided Financial Services Product, now existing or hereafter incurred under the
Credit Agreement or the Notes or the Guaranty Agreement or any of the other Loan Documents as any
of the same or any one or more of them may from time to time be amended, restated, modified, or
supplemented, together with any and all extensions, renewals, refinancings, and refundings thereof
in whole or in part (and including obligations, liabilities, and indebtedness arising or accruing
after the commencement of any bankruptcy, insolvency, reorganization, or similar proceeding with
respect to the Borrower or which would have arisen or accrued but for the commencement of such
proceeding, even if the claim for such obligation, liability or indebtedness is not enforceable or
allowable in such proceeding, and including all obligations, liabilities and indebtedness arising
from any extensions of credit under or in connection with the Loan Documents from time to time,
regardless whether any such extensions of credit are in excess of the amount committed under or
contemplated by the Loan Documents or are made in circumstances in which any condition to extension
of credit is not satisfied); (ii) all reimbursement obligations of each and every Pledgor with
respect to any one or more Letters of Credit issued by Administrative Agent or any Term Lender;
(iii) all indebtedness, loans, obligations, expenses and liabilities of each and every of the
Pledgors to the Administrative Agent or any of the Term Lenders or any obligations incurred in
connection with any Lender Provided Interest Rate Hedge or any Other Lender Provided Financial
Services Product; and (iv) any sums advanced by the Administrative Agent or the Term Lenders or
which may otherwise become due pursuant to the provisions of the Credit Agreement, the Notes, this
Agreement, or any other Loan Documents or pursuant to any other document or instrument at any time
delivered to the Administrative Agent in connection therewith, including commitment, letter of
credit, agent or other fees and charges, and indemnification obligations under any such document or
instrument, together with all interest payable on any of the foregoing, whether such sums are
advanced or otherwise become due before or after the entry of any judgment for foreclosure or any
judgment on any Loan Document or with respect to any default under any of the Secured Obligations.



2. Grant of Security Interests.




          (a) To secure on a first priority perfected basis the payment and performance
of all Secured Obligations in full, each Term Party Pledgor hereby grants to the
Administrative Agent a continuing first priority security interest under the Code
in and hereby pledges to Administrative Agent, in each case for the benefit of each
of the Term Lenders and Administrative Agent and any provider of Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Product, all of
such Term Party Pledgor’s now existing and hereafter acquired or arising right,
title and interest in, to, and under the Pledged Collateral (Term) whether now or
hereafter existing and wherever located.




          (b) To secure on a second priority perfected basis (subject only to the
Revolver Lenders’ first priority security interest created pursuant to the Pledge
Agreement (Revolver)) the payment and performance of all Secured Obligations in
full, each Revolver Party



- 3 -









 






Pledgor hereby grants to the Administrative Agent a continuing second priority security
interest (subject only to the Revolver Lenders’ first priority security interest created pursuant
to the Pledge Agreement (Revolver)) under the Code in and hereby pledges to Administrative Agent,
in each case for the benefit of each of the Term Lenders and Administrative Agent and any provider
of Lender Provided Interest Rate Hedge or any Other Lender Provided Financial Services Product, all
of such Revolver Party Pledgor’s now existing and hereafter acquired or arising right, title and
interest in, to, and under the Pledged Collateral (Revolver) whether now or hereafter existing and
wherever located.




          (c) Upon the execution and delivery of this Agreement, each Pledgor shall
deliver to and deposit with the Administrative Agent in pledge, all of such
Pledgor’s certificates, instruments or other documents comprising or evidencing the
Pledged Collateral, together with undated stock powers, instruments or other
documents signed in blank by such Pledgor. In the event that any Pledgor should
ever acquire or receive certificates, securities, instruments or other documents
evidencing the Pledged Collateral, such Pledgor shall deliver to and deposit with
the Administrative Agent in pledge, all such certificates, securities, instruments
or other documents which evidence the Pledged Collateral.




          (d) Notwithstanding anything to the contrary contained in this Agreement, the
Pledged Collateral with respect to any one Foreign Company shall not exceed
sixty-five percent (65%) of the total combined voting power of all classes of
capital stock, shares, securities, member interests, partnership interests and
other ownership interests entitled to vote of such Foreign Company and this
Agreement shall not apply to any such stock, shares, securities, member interests,
partnership interests or ownership interests which are in excess of such sixty five
percent (65%) limitation. To the extent the Administrative Agent receives more than
sixty five percent (65%) of the total combined voting power of all classes of
capital stock, shares, securities, member interests, partnership interests and
other ownership interests entitle to vote of any Foreign Company, Administrative
Agent shall return such excess stock, shares, securities, member interests,
partnership interests and other ownership interests upon the request of a Pledgor.




     3. Additional Actions and Further Assurances.



          (a) Prior to or concurrently with the execution of this Agreement, and
thereafter from time to time without any request or notice by the Secured Party,
Pledgor, at its sole cost and expense, shall execute and deliver to the Secured
Party all filings, notices, registrations for the corporate records, and all such
other documents, and shall take such other action, as may be necessary or advisable
to obtain, preserve, protect, and maintain the Secured Party’s continuing first (in
the case of the Pledged Collateral (Term)) or second (in the case of the Pledged
Collateral (Revolver)) priority perfected security interest in the portion of the
Pledged Collateral that relates to capital stock (or other equity interests) in any
Company.




          (b) Prior to or concurrently with the execution of this Agreement, and
thereafter at any time and from time to time upon reasonable request of the
Administrative Agent, each Pledgor shall execute and deliver to the Administrative
Agent all financing statements, continuation financing statements, assignments,
certificates and documents of title, affidavits, reports, notices, schedules of
account, letters of authority, further pledges, powers of




- 4 -









 







attorney and all other documents (collectively, the “Security Documents”) which the
Administrative Agent may reasonably request, in form reasonably satisfactory to the Administrative
Agent, and take such other action which the Administrative Agent may reasonably request, to perfect
and continue perfected and to create and maintain the first (in the case of the Pledged Collateral
(Term)) or second (in the case of the Pledged Collateral (Revolver)) priority status of the
Administrative Agent’s security interest in the Pledged Collateral and to fully consummate the
transactions contemplated under this Agreement. Each Pledgor hereby irrevocably makes, constitutes
and appoints the Administrative Agent (and any of the Administrative Agent’s officers or employees
or agents designated by the Administrative Agent) as such Pledgor’s true and lawful attorney with
power to sign the name of such Pledgor on all or any of the Security Documents which the
Administrative Agent determines must be ‘ executed, filed, recorded or sent in order to perfect or
continue perfected the Administrative Agent’s security interest in the Pledged Collateral in any
jurisdiction. Such power, being coupled with an interest, is irrevocable until all of the Secured
Obligations have been indefeasibly paid in full and the Commitments have terminated.



4. Representations and Warranties.




     Each Pledgor hereby jointly and severally represents and warrants to the
Administrative Agent as follows:



          (a) Such Pledgor, has and will continue to have (or, in the case of
after-acquired Pledged Collateral, at the time such Pledgor acquires rights in
such Pledged Collateral, will have and will continue to have), title to its
Pledged Collateral, free and clear of all Liens other than those in favor of the
Administrative Agent for the Term Lenders and the Administrative Agent;




          (b) The capital stock shares, securities, member interests, partnership
interests and other ownership interests constituting the Pledged Collateral have
been duly authorized and validly issued to such Pledgor (as set forth on
Schedule A hereto), are fully paid and nonassessable and the percentage of
the issued and outstanding capital stock, member interest, partnership interests
of each of the Companies is reflected on Schedule A attached hereto;




          (c) The security interests in the Pledged Collateral (Term) granted hereunder
are valid, perfected and of first priority, subject to the Lien of no other
Person;




          (d) The security interests in the Pledged Collateral (Revolver) granted
hereunder are valid, perfected and of second priority, subject to the Lien of no
other Person except the Revolver Lender pursuant to the Pledge Agreement
(Revolver);




          (e) There are no restrictions upon the transfer of the Pledged Collateral
(Term) and such Term Party Pledgor has the power and authority and right to
transfer the Pledged Collateral (Term) owned by such Term Party Pledgor free of
any encumbrances and without obtaining the consent of any other Person;




          (f) Except for any restrictions contained in the Pledge Agreement (Revolver),
there are no restrictions upon the transfer of the Pledged Collateral (Revolver)
and such Revolver Party Pledgor has the power and authority and right to transfer
the Pledged Collateral (Revolver)




- 5 -









 







owned by such Revolver Party Pledgor free of any encumbrances and without obtaining the consent of
any other Person;




          (g) Such Pledgor has all necessary power to execute, deliver and perform this
Agreement;




          (h) There are no actions, suits, or proceedings pending or, to such Pledgor’s
best knowledge after due inquiry, threatened against or affecting such Pledgor with
respect to the Pledged Collateral, at law or in equity or before or by any Official
Body, and such Pledgor is not in default with respect to any judgment, writ,
injunction, decree, rule or regulation which could adversely affect such Pledgor’s
performance hereunder;




          (i) This Agreement has been duly executed and delivered and constitutes the
valid and legally binding obligation of such Pledgor, enforceable in accordance
with its terms, except to the extent that enforceability of this Agreement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting the enforceability of creditors’ rights generally or
limiting the right of specific performance;




          (j) Neither the execution and delivery by such Pledgor of this Agreement, nor
the compliance with the terms and provisions hereof, will violate any provision of
any Law or conflict with or result in a breach of any of the terms, conditions or
provisions of any judgment, order, injunction, decree or ruling of any Official
Body to which such Pledgor is subject or any provision of any agreement,
understanding or arrangement to which Pledgor is a party or by which such Pledgor
is bound;




          (k) Such Pledgor’s exact legal name is as set forth on the signature page
hereto;




          (1) The state of incorporation, formation or organization as applicable, of
such Pledgor is as set forth on Schedule A to the Security Agreement;




          (m) Such Pledgor’s chief executive office is as set forth on Schedule
A to the Security Agreement; and




          (n) Except as provided on Schedule B attached hereto, all rights of
such Pledgor in connection with its ownership of each of the Companies are
evidenced and governed solely by the stock certificates, instruments or other
documents evidencing ownership and organizational documents of each of the
Companies and no shareholder or other similar agreements are applicable to any of
the Pledged Collateral, and no such certificate, instrument or other document
provides that any member interest, or partnership interest or other intangible
ownership interest (not including such ownership interests in any Companies which
exist as a corporation), constituting Pledged Collateral, is a “Security” within
the meaning of and subject to Article 8 of the Code; and, the organizational
documents of each Company contain no restrictions on the rights of shareholders,
members or partners other than those that normally would apply to a company
organized under the laws of the jurisdiction of organization of each of the
Companies.




- 6 -









 







5. General Covenants.




     Each Pledgor hereby covenants and agrees as follows:



          (a) Such Pledgor shall do all reasonable acts that may be necessary and
appropriate to maintain, preserve and protect the Pledged Collateral; such Pledgor
shall be responsible for the risk of loss of, damage to, or destruction of the
Pledged Collateral owned by such Pledgor, unless such loss is the result of the
gross negligence or willful misconduct of the Administrative Agent.




          (b) The capital stock shares, securities, member interests, partnership
interests and other ownership interests constituting the Pledged Collateral have
been duly authorized and validly issued to such Pledgor (as set forth on
Schedule A hereto), are fully paid and nonassessable and constitute the
following (i) the percentage listed on Schedule A of the issued and
outstanding capital stock, member interests and partnership interests of each of
the Companies which are not Foreign Companies, and (ii) the lesser of (x) sixty
five percent (65%) of the issued and outstanding capital stock, shares, securities,
member interests and partnership interests of each of the Foreign Companies or (y)
all of the issued and outstanding capital stock, member interests and partnership
interests owned by Borrower or any of its Subsidiaries of each Foreign Company.




          (c) The security interests under the Code in the Pledged Collateral (Term)
granted hereunder are valid, perfected and of first priority subject to the Lien of
no other Person. Upon the consummation of those actions described in Section 3(c)
hereof, the security interests in the Pledged Collateral (Term) granted hereunder
shall be valid, perfected and of first priority subject to the Lien of no other
Person under all applicable Law.




          (d) The security interests under the Code in the Pledged Collateral (Revolver)
granted hereunder are valid, perfected and of second priority subject to the Lien
of no other Person except as provided in the Pledge Agreement (Revolver). Upon the
consummation of those actions described in Section 3(c) hereof, the security
interests in the Pledged Collateral (Revolver) granted hereunder shall be valid,
perfected and of second priority subject to the Lien of no other Person under all
applicable Law, except as provided in the Pledge Agreement (Revolver).




          (e) Except as provided on Schedule B attached hereto, there are no
restrictions upon the transfer of the Pledged Collateral and such Pledgor has the
power and authority and unencumbered right to transfer the Pledged Collateral owned
by such Pledgor free of any encumbrances and without the necessity of obtaining the
consent of any other Person, other than such consents as have been or will be
obtained as of the date hereof or in connection with Pledged Collateral
subsequently acquired by Pledgor and other than as provided in the Credit Agreement
and the Pledge Agreement (Revolver).




          (f) Such Pledgor has all necessary power to execute, deliver and perform this
Agreement and all necessary action to authorize the execution, delivery and
performance of this Agreement has been properly taken.






- 7 -









 








          (g) Such Pledgor shall pay any and all taxes, duties, fees or imposts of any
nature imposed by any Official Body on any of the Pledged Collateral, except to the
extent contested in good faith by appropriate proceedings;




          (h) Such Pledgor shall permit the Administrative Agent, its officers,
employees and agents at reasonable times to inspect all books and records related
to the Pledged Collateral;




          (i) Subject to Section 2(d) hereof, to the extent, following the date
hereof, such Pledgor acquires capital stock, shares securities, member
interests, partnership interests and other ownership interests of any of
the Companies or any of the rights, property or securities, shares,
capital stock, member interests, partnership interests or any other
ownership interests described in the definition of Pledged Collateral with
respect to any of the Companies, such ownership interests shall be subject
to the terms hereof and, upon such acquisition, shall be deemed to be
hereby pledged to the Administrative Agent; and, such Pledgor thereupon
shall deliver all such securities, shares, capital stock, member
interests, partnership interests and other ownership interests together
with an updated Schedule A hereto, to the Administrative Agent
together with all such control agreements, financing statements, and any
other documents necessary to implement the provisions and purposes of this
Agreement as the Administrative Agent may request;




          (j) Except as permitted by the Credit Agreement, during the term of this
Agreement, such Pledgor shall not sell, assign, replace, retire, transfer or
otherwise dispose of its Pledged Collateral;




          (k) Such Pledgor will not change its state of incorporation, formation or
organization, as applicable without providing thirty (30) days prior written notice
to the Administrative Agent;




          (1) Such Pledgor will not change its name without providing thirty (30) days
prior written notice to the Administrative Agent;




          (m) Except as permitted by Sections 8.26 and 8.27 of the Credit Agreement,
each Pledgor shall preserve its existence as a corporation or a limited liability
company, as applicable, and except as permitted by the Credit Agreement, shall not
(i) in one, or a series of related transactions, merge into or consolidate with any
other entity, the survivor of which is not such Pledgor, or (ii) sell all or
substantially all of its assets; and




          (n) During the term of this Agreement, such Pledgor shall not permit any
Company to treat any uncertificated ownership interests as securities which are
subject to Article 8 of the Code.



6. Other Rights With Respect to Pledged Collateral.




     In addition to the other rights with respect to the Pledged Collateral granted to the
Administrative Agent hereunder, at any time and from time to time, after and during the
continuation of an Event of Default, the Administrative Agent, at its option and at the
expense of the Pledgors, may (a) transfer into its own name, or into the name of its
nominee, all or any part



- 8 -









 




of the Pledged Collateral, thereafter receiving all dividends, income or other distributions
upon the Pledged Collateral; (b) take control of and manage all or any of the Pledged Collateral;
(c) apply to the payment of any of the Secured Obligations, whether any be due and payable or not,
any moneys, including cash dividends and income from any Pledged Collateral, now or hereafter in
the hands of the Administrative Agent or provider of Lender Provided Interest Rate Hedge or any
Other Lender Provided Financial Services Product, on deposit or otherwise, belonging to any
Pledgor, as the Administrative Agent in its sole discretion shall determine; and (d) do anything
which any Pledgor is required but fails to do hereunder.



7. Additional Remedies Upon Event of Default.




     Upon the occurrence of any Event of Default and while such Event of Default shall be
continuing, the Administrative Agent shall have, in addition to all rights and remedies of
a secured party under the Code or other applicable Law, and in addition to its rights under
Section 6 above and under the other Loan Documents, the following rights and remedies:



          (a) The Administrative Agent may, after ten (10) days’ advance notice to the
Pledgor, sell, assign, give an option or options to purchase or otherwise dispose
of such Pledgor’s Pledged Collateral or any part thereof at public or private sale,
at any of the Administrative Agent’s offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as the Administrative Agent may deem
commercially reasonable. Each Pledgor agrees that ten (10) days’ advance notice of
the time and place of any public sale or the time after which any private sale is
to be made shall constitute reasonable notification. The Administrative Agent shall
not be obligated to make any sale of Pledged Collateral regardless of notice of
sale having been given. The Administrative Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. Each Pledgor recognizes that the Administrative Agent may be
compelled to resort to one or more private sales of the Pledged Collateral to a
restricted group of purchasers who will be obliged to agree, among other things, to
acquire such securities, shares, capital stock, member interests, partnership
interests or ownership interests for their own account for investment and not with
a view to the distribution or resale thereof. Pledgor acknowledges and agrees that
any such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agree that
any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Secured Party shall be under no obligation to delay sale of
any of the Pledged Collateral for the period of time necessary to permit Pledgor
(or issuer) to register such securities for public sale under the Securities Act of
1933, as amended, or under applicable securities laws, even if Pledgor (or issuer)
would agree to do so




          (b) The proceeds of any collection, sale or other disposition of the Pledged
Collateral, or any part thereof, shall, after the Administrative Agent has made all
deductions of expenses, including but not limited to attorneys’ fees and other
expenses incurred in connection with repossession, collection, sale or disposition
of such Pledged Collateral or in connection with the enforcement of the
Administrative Agent’s rights with respect to the Pledged Collateral, including in
any insolvency, bankruptcy or reorganization proceedings, be applied against the
Secured Obligations, whether or not all the same be then due and payable in the
manner set forth in Section 9.2.4 [Application of Proceeds] of the Credit
Agreement.






- 9 -









 







8. Administrative Agent’s Duties.




     The powers conferred on the Administrative Agent hereunder are solely to protect its
interest in the Pledged Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Pledged Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Administrative Agent shall
have no duty as to any Pledged Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any Pledged
Collateral.


9. Additional Pledgors.




     It is anticipated that additional persons will from time to time become Subsidiaries
of the Borrower or a Guarantor, each of whom will be required to join this Pledge
Agreement. It is acknowledged and agreed that new Subsidiaries of the Borrower or of a
Guarantor will become Pledgors hereunder and will be bound hereby simply by executing and
delivering to Administrative Agent a Guarantor Joinder in the form of Exhibit 1.1(G)(1) to
the Credit Agreement. In addition, a new Schedule A hereto shall be provided to
Administrative Agent showing the pledge of the ownership interest in such new Subsidiary
and any ownership interests that such new Subsidiary owns in any other Person.


10. No Waiver; Cumulative Remedies.




     No failure to exercise, and no delay in exercising, on the part of the Administrative
Agent, any right, power or privilege hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder preclude any
further exercise thereof or the exercise of any other right, power or privilege. The
remedies herein provided are cumulative and not exclusive of any remedies provided under
the other Loan Documents or by Law. Each Pledgor waives any right to require the
Administrative Agent to proceed against any other Person or to exhaust any of the Pledged
Collateral or other security for the Secured Obligations or to pursue any remedy in the
Administrative Agent’s power.


11. No Discharge Until Indefeasible Payment of the Secured Obligations.




     The pledge, security interests, and other Liens and the obligations of each Pledgor
hereunder shall not be discharged or impaired or otherwise diminished by any failure,
default, omission, or delay, willful or otherwise, by Administrative Agent, or any other
obligor on any of the Secured 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 such Pledgor or which would otherwise operate as a discharge of such Pledgor as
a matter of law or equity. Without limiting the generality of the foregoing, each Pledgor
hereby consents to, and the pledge, security interests, and other Liens given by such
Pledgor hereunder shall not be diminished, terminated, or otherwise similarly affected by
any of the following at any time and from time to time:



          (a) Any lack of genuineness, legality, validity, enforceability, or
allowability (in a bankruptcy, insolvency, reorganization or similar proceeding, or
otherwise), or any avoidance or subordination, in whole or in part, of any Loan
Document, any obligations in connection with any Lender Provided Interest Rate
Hedge or any Other Lender Provided Financial Services Product or any of the Secured
Obligations and regardless of any law,




- 10 -









 







regulation, or order now or hereafter in effect in any jurisdiction affecting any of the Secured
Obligations, any of the terms of the Loan Documents, or any rights of the Administrative Agent or
any other Person with respect thereto;




          (b) 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 Secured 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 Secured
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, any Lender Provided Interest Rate Hedge or any Other Lender Provided
Financial Services Product or any of the Secured Obligations;




          (c) Any failure to assert any breach of or default under any Loan Document,
any Lender Provided Interest Rate Hedge or any Other Lender Provided Financial
Services Product or any of the Secured Obligations; any extensions of credit in
excess of the amount committed under or contemplated by the Loan Documents or any
Lender Provided Interest Rate Hedge or any Other Lender Provided Financial Services
Product, 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 such Pledgor or any other
Person under or in connection with any Loan Document or any Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Product or any
of the Secured Obligations; any refusal of payment or performance of any of the
Secured Obligations, whether or not with any reservation of rights against any
Pledgor; or any application of collections (including collections resulting from
realization upon any direct or indirect security for the Secured Obligations) to
other obligations, if any, not entitled to the benefits of this Agreement, in
preference to Secured Obligations or, if any collections are applied to Secured
Obligations, any application to particular Secured Obligations;




          (d) Any taking, exchange, amendment, modification, supplement, termination,
subordination, release, 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 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
Administrative Agent or any other Person in respect of, any direct or indirect
security for any of the Secured Obligations (including the Pledged Collateral). As
used in this Agreement, “direct or indirect security” for the Secured 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 Secured Obligations, made by or on behalf of
any Person;




          (e) 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 Pledgor or the Borrower or any other
Person; any bankruptcy,




- 11 -









 







insolvency, reorganization or similar proceeding with respect to any Pledgor or the Borrower
or any other Person; or any action taken or election (including any election under Section
1111(b)(2) of the United States Bankruptcy Code or any comparable law of any jurisdiction) made by
Administrative Agent or any Pledgor or the Borrower or by any other Person in connection with any
such proceeding;




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




          (g) 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 a guarantor or a surety, including any
Pledgor, excepting only full, strict, and indefeasible payment and performance of
the Secured Obligations in full.



12. Taxes.




          (a) No Deductions. All payments and collections made by or from any
Pledgor under this Agreement shall be made or received free and clear of and
without deduction for any present or future taxes, levies, imposts, deductions,
charges, or withholdings, and all liabilities with respect thereto, excluding
Excluded Taxes (all such non-Excluded Taxes, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as “Taxes”). If any
Pledgor shall be required by law to deduct any Taxes from or in respect of any sum
payable or any collection made under this Agreement, (i) the sum payable or
collectable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable or
collectable under this Subsection) Administrative Agent receives an amount equal to
the sum it would have received had no such deductions been made, (ii) such Pledgor
shall make such deductions and (iii) such Pledgor shall timely pay the full amount
deducted to the relevant tax authority or other authority in accordance with
applicable law;




          (b) Stamp Taxes. In addition, each Pledgor acknowledges that the
Pledged Collateral secures payment of all present and future stamp or documentary
taxes and any other excise or property taxes, charges, or similar levies which
arise from any payment or collection made hereunder or from the execution,
delivery, or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as “Other Taxes”);




          (c) Indemnification for Taxes Paid by Administrative Agent. Each
Pledgor acknowledges that the Pledged Collateral secures the full amount of Taxes
or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 12) paid by Administrative
Agent and any liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted;






- 12 -









 








          (d) Certificate. In the event any Pledgor pays any Taxes or Other
Taxes, within 30 days after the date of any such payment, such Pledgor shall
furnish to Administrative Agent, the original or a certified copy of a receipt
evidencing payment thereof;




          (e) Survival. Without prejudice to the survival of any other agreement
of any Pledgor hereunder, the agreements and obligations of each Pledgor contained
in Clauses (a) through (d) directly above shall survive the payment in full of
principal and interest under any Note and the termination of the Credit Agreement.




13. Waivers.




     Each Pledgor hereby waives any and all defenses which any Pledgor may now or hereafter
have based on principles of suretyship, impairment of collateral, or the like and each
Pledgor 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 the immediately
preceding section hereof. Without limiting the generality of the foregoing and to the
fullest extent permitted by applicable law, each Pledgor hereby further waives each of the
following:



          (a) All notices, disclosures and demands of any nature which otherwise might
be required from time to time to preserve intact any rights against such Pledgor,
including the following: any notice of any event or circumstance described in the
immediately preceding section 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 Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Product or any
of the Secured Obligations; any notice of the incurrence of any Secured
Obligations; any notice of any default or any failure on the part of such Pledgor
or the Borrower or any other Person to comply with any Loan Document or Lender
Provided Interest Rate Hedge or any Other Lender Provided Financial Services
Product or any of the Secured Obligations or any requirement pertaining to any
direct or indirect security for any of the Secured Obligations; and any notice or
other information pertaining to the business, operations, condition (financial or
otherwise), or prospects of the Borrower or any other Person;




          (b) Any right to any marshalling of assets, to the filing of any claim against
such Pledgor or the Borrower or any other Person in the event of any bankruptcy,
insolvency, reorganization, or similar proceeding, or to the exercise against such
Pledgor or the Borrower, or any other Person of any other right or remedy under or
in connection with any Loan Document, any Lender Provided Interest Rate Hedge or
any Other Lender Provided Financial Services Product, or any of the Secured
Obligations or any direct or indirect security for any of the Secured Obligations;
any requirement of promptness or diligence on the part of the Administrative Agent
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 Secured Obligations or any direct or indirect security for any of the
Secured 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 Pledgor receive notice of any such acceptance;






- 13 -









 








          (c) 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
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 (including
commencement or completion of any judicial proceeding or nonjudicial sale or other
action in respect of collateral security for any of the Secured Obligations), which
results in denial or impairment of the right of the Administrative Agent to seek a
deficiency against the Borrower or any other Person or which otherwise discharges
or impairs any of the Secured Obligations.



14. Setoff.




          Pledgor hereby waives and releases, and shall not assert, any and all rights
of setoff and any similar claims or actions whatsoever now and hereafter it may
have at any time against the Secured Party or any Term Lender, any of the Secured
Party’s or any Term Lender’s Affiliates, and any of the respective successors,
assigns, and participants of the Secured Party or any Term Lender or any Affiliate
of the Secured Party or any Term Lender.



15. Assignment.




     All rights of the Administrative Agent under this Agreement shall inure to the benefit
of its successors and assigns. All obligations of each Pledgor shall bind its successors
and assigns; provided, however, no Pledgor may assign or transfer any of its rights and
obligations hereunder or any interest herein, and any such purported assignment or transfer
shall be null and void.


16. Severability.




     Any provision of this Agreement which shall be held invalid or unenforceable shall be
ineffective without invalidating the remaining provisions hereof.


17. Governing Law.




     This Agreement shall be construed in accordance with and governed by the internal laws
of the State of New York without regard to its conflicts of law principles, except to the
extent the validity or perfection of the security interests or the remedies hereunder in
respect of any Pledged Collateral are governed by the law of a jurisdiction other than the
State of New York.


18. Notices.




     All notices, requests, demands, directions and other communications (collectively,
“notices”) given to or made upon any party hereto under the provisions of this Agreement
shall be as set forth in Section 11.5 [Notices; Effectiveness; Electronic Communication] of
the Credit Agreement.



- 14 -









 




19. Specific Performance.




     Each Pledgor acknowledges and agrees that, in addition to the other rights of the
Administrative Agent hereunder and under the other Loan Documents, because the
Administrative Agent’s remedies at law for failure of such Pledgor to comply with the
provisions hereof relating to the Administrative Agent’s rights (i) to inspect the books and
records related to the Pledged Collateral, (ii) to receive the various notifications such Pledgor
is required to deliver hereunder, (iii) to obtain copies of agreements and documents as provided
herein with respect to the Pledged Collateral, (iv) to enforce the provisions hereof pursuant to
which the such Pledgor has appointed the Administrative Agent its attorney-in-fact, and (v) to
enforce the Administrative Agent’s remedies hereunder, would be inadequate and that any such
failure would not be adequately compensable in damages, such Pledgor agrees that each such
provision hereof may be specifically enforced.


20. Voting Rights in Respect of the Pledged Collateral.




     So long as no Event of Default shall occur and be continuing under the Credit
Agreement, each Pledgor may exercise any and all voting and other consensual rights pertaining
to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of
this Agreement or the other Loan Documents; provided, however, that such Pledgor
will not exercise or will refrain from exercising any such voting and other consensual right
pertaining to the Pledged Collateral, as the case may be, if such action would have a material
adverse effect on the value of the Collateral, taken as a whole. Without limiting the generality of
the foregoing and in addition thereto, the Pledgors shall not vote to enable, or take any other
action to permit, any of the Companies to issue any stock, member interests, partnership interests
or other equity securities, member interests, partnership interests or other ownership interests of
any nature or to issue any other securities, shares, capital stock, member interests, partnership
interests or other ownership interests convertible into or granting the right to purchase or
exchange for any stock, member interests, partnership interests or other equity securities, member
interests, partnership interests or other ownership interests of any nature of any such Company or
to enter into any agreement or undertaking restricting the right or ability of the Pledgor or the
Administrative Agent to sell, assign or transfer any of the Pledged Collateral.


21. Consent to Jurisdiction.




     Each Pledgor hereby irrevocably submits to the nonexclusive jurisdiction of any New
York state or federal court sitting in New York County, in any action or proceeding arising
out of or relating to this Agreement, and each Pledgor hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in such New York
state or federal court. Each Pledgor hereby waives to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of any such action or
proceeding. Each Pledgor hereby appoints the process agent identified below (the “Process
Agent”) as its agent to receive on behalf of such party and its respective property service
of copies of the summons and complaint and any other process which may be served in any
action or proceeding. Such service may be made by mailing or delivering a copy of such
process to the Pledgor in care of the Process Agent at the Process Agent’s address, and
each Pledgor hereby authorizes and directs the Process Agent to receive such service on its
behalf. Each Pledgor agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions (or any political subdivision
thereof) by suit on the judgment or in any other manner provided at



- 15 -









 




law. Each Pledgor further agrees that it shall, for so long as any commitment or any
obligation of any Loan Party to any Term Lender remains outstanding, continue to retain Process
Agent for the purposes set forth in this Section 21. The Process Agent is Armstrong Coal Company,
Inc., with an office on the date hereof as set forth in the Credit Agreement. The Process Agent
hereby accepts the appointment of Process Agent by the Companies and agrees to act as Process Agent
on behalf of the Companies.



22. Waiver of Jury Trial.




     EXCEPT AS PROHIBITED BY LAW, EACH PLEDGOR AND EACH OF THE COMPANIES HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY A JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENTS OR
TRANSACTIONS RELATING THERETO.


23. Entire Agreement; Amendments.




     This Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements relating to a grant of a
security interest in the Pledged Collateral by any Pledgor, except for the Pledge Agreement
(Revolver). This Agreement may not be amended or supplemented except by a writing signed by
the Administrative Agent and the Pledgors.


24. Counterparts; Telecopy Signatures.




     This Agreement may be executed in any number of counterparts, and by different parties
hereto in separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same instrument. Each
Pledgor acknowledges and agrees that a telecopy transmission to the Administrative Agent or
any Term Lender of the signature pages hereof purporting to be signed on behalf of any
Pledgor shall constitute effective and binding execution and delivery hereof by such
Pledgor.


25. Construction.




     The rules of construction contained in Section 1.2 of the Credit Agreement apply to
this Agreement.



[Signature page follows.]





- 16 -









 








[SIGNATURE PAGE 1 OF 3 TO

PLEDGE AGREEMENT (TERM)]




     IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have caused
this Agreement to be duly executed as of the date first above written with the intent that
it constitute a sealed instrument.



	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent

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



 









 






	 	 	 	 	 



[SIGNATURE PAGE 2 OF 3 TO

PLEDGE AGREEMENT (TERM)]




	 	 	 	 	 
	 	REVOLVER PARTY PLEDGORS



ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG RESOURCES HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






[SIGNATURE PAGE 3 OF 3 TO

PLEDGE AGREEMENT (TERM)]




	 	 	 	 	 
	 	TERM PARTY PLEDGORS



ELK CREEK, L.P.

 	 
	 	      	By: Elk Creek GP, LLC, as General Partner
 	 
	 	 	 
	 	 	By:  	
 	 
	 	 	  	Name: J. Richard Gist 	 
	 	 	 	Title:  Authorized Person 	 
	 



	 	 	 	 	 
	 	ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ELK CREEK OPERATING, L.P.

 	 
	 	By:  	Elk Creek Operating GP, LLC, as  General Partner
 	 
	 	By: 	 	 
	 	 	Name:  	
 J. Richard Gist
	 
	 	 	Title:   	

Authorized Person 	 



 









 






	 	 	 	 	 



[TO BE EXECUTED BY EACH COMPANY THAT IS A LLC]




AGREEMENT AND ACKNOWLEDGMENT (LLC)





     THE UNDERSIGNED, jointly and severally, hereby agree, acknowledge and consent to the
execution and delivery to PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the
Term Lenders (together with its successors, assigns, and designees for the purposes hereof,
“Administrative Agent”), of the Pledge Agreement (Term) to which this Agreement and
Acknowledgment is attached (the “Pledge Agreement”) made by each of the pledgors
party thereto (each a “Pledgor” and collectively, “Pledgors”), as
collateral security for the payment and performance of the Debt described therein, and the
assignment and pledge thereby to Administrative Agent by each Pledgor of all of such
Pledgor’s right, title and interest to the Pledged Collateral and other collateral
described therein. All capitalized terms used herein not otherwise defined herein shall
have the meanings ascribed to such terms in the Pledge Agreement.



     For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned, jointly and severally, hereby represent, warrant, covenant
and agree for the benefit of Administrative Agent and Revolver Lenders as follows:



     1. Representations and Warranties. The undersigned, jointly and severally,
represent and warrant that (a) the execution and delivery of the Pledge Agreement does not
violate any of the undersigned’s Limited Liability Company Agreements, as amended
(collectively, the “Operating Agreement”) or any other agreement to which such
undersigned is a party or by which any of the property of such undersigned is bound, (b) as
of the date hereof, there are no existing and outstanding control agreements perfecting a
security interest in any of the Pledged Collateral in favor of any other party, other than
in favor of the Administrative Agent for the benefit of the Revolver Lenders, (c) the
Pledged Collateral is not subject to any security interest or lien in favor of any Person
other than Administrative Agent other than in favor of the Administrative Agent for the
benefit of the Revolver Lenders and has not been pledged, transferred or assigned to, and
is not otherwise in the control of, any Person other than Administrative Agent, (d) the
undersigned has no present claim, right of offset, or counterclaim against any Pledgor
under or with respect to the Pledged Collateral or otherwise under the undersigned’s
Operating Agreement, (e) no Pledgor is in default to the undersigned or otherwise under or
in respect of any of its obligations under undersigneds’ Operating Agreement, and (f) all
of the representations and warranties of each Pledgor made in the Pledge Agreement are
true, accurate and complete in all material respects.



     2. Covenants and Agreements.



     2.1 Books and Records. The undersigned (i) shall cause all of its respective
books and records to reflect the pledge of the Pledged Collateral to Administrative Agent
and agrees not to consent to or to permit any transfer thereof or any other action that may
be taken by any Pledgor that might constitute an Event of Default so long as any of the
Obligations remain outstanding, (ii) agrees that Administrative Agent and/or its
representatives may, upon



 









 




reasonable advance notice and at any reasonable time during normal business hours, inspect the
books, records and properties of such undersigned.




     2.2 UCC Matters. The undersigned confirms, agrees and acknowledges that (i)
the Pledgors own all of the issued and outstanding limited liability company interests of
the undersigned, (ii) notwithstanding any provisions in the Operating Agreement, each
Pledgor is hereby authorized and permitted to pledge, assign and grant a security interest
in the Pledged Collateral in favor of Administrative Agent pursuant to the Pledge
Agreement, and (iii) this Agreement and Acknowledgment is intended to, and shall, provide
Administrative Agent with “control” over the Pledged Collateral within the meaning of
Articles 8 and 9 of the UCC.



     2.3 Operating Agreement. Except as permitted by the Credit Agreement, the
undersigned shall not suffer or permit its Operating Agreement to be amended or modified
without the prior written consent of Administrative Agent.



     2.4 Notices; Defaults. The undersigned shall give Administrative Agent a copy
of all notices, reports or communications received or given pursuant to its Operating
Agreement promptly after the same shall have been received or contemporaneously with the
giving thereof, as the case may be. The undersigned shall permit Administrative Agent the
right to cure any default by any Pledgor under the Operating Agreement; provided,
however, in no event shall Administrative Agent be obligated to cure such default.



     2.5 The undersigned will be bound by the terms of the Pledge Agreement and will comply
with such terms insofar as such terms are applicable to the undersigned.



     2.6 The undersigned will notify Secured Party promptly in writing of the occurrence of
any of the events described in Section 5(i) of the Pledge Agreement.



     2.7 The terms of Section 3 of the Pledge Agreement shall apply to the undersigned,
mutatis mutandis, with respect to all actions that may facilitate, in the reasonable
judgment of Secured Party, the carrying out of Section 3 of the Pledge Agreement.



     2.8 To the extent that the undersigned has or hereafter may acquire any immunity from
the jurisdiction of any court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution, or otherwise) with
respect to itself or its property, the undersigned hereby irrevocably waives such immunity
in respect of its obligations under the Pledge Agreement and any other document or
agreement executed in connection therewith, and the undersigned agrees that it will not
raise or claim any such immunity at or in respect of any such action or proceeding.



     2.9 The undersigned acknowledges and agrees that any notices sent to Pledgors
regarding any of the Pledged Collateral shall also be sent to Secured Party in the manner
and at the address of Secured Party as indicated in Section 11.5 [Notices] of the Credit
Agreement.



     3. Enforcement Event; Sales of Collateral. The undersigned hereby agrees that
during the continuance of an Event of Default, (a) all distributions permitted under the
Loan Documents will be made directly to Administrative Agent, (b) Administrative Agent
shall have the sole and exclusive right to exercise all voting, consensual and other powers
of ownership



 









 




pertaining to the Pledged Collateral, (c) Administrative Agent may take any reasonable action which
Administrative Agent may deem necessary for the maintenance, preservation and protection of any of
the Pledged Collateral or Administrative Agent’s security interests therein, including, without
limitation, the right to declare any or all of the Debt to be immediately due and payable without
demand or notice and the right to transfer any of the Pledged Collateral into Administrative
Agent’s name or the name of any designee or nominee of Administrative Agent, (d) Administrative
Agent may dispose of the Pledged Collateral in accordance with Articles 8 and 9 of the Code and the
provisions of the Pledge Agreement, in which case, notwithstanding anything to the contrary in the
Operating Agreement, (i) Administrative Agent, or its designee or assign, shall automatically be
admitted as a member of the undersigned and shall be entitled to receive all benefits and exercise
all rights in connection therewith pursuant to the Operating Agreement, and (ii) the undersigned
shall recognize Administrative Agent (or its designee or assign) as the successor in interest to
Pledgor.




     4. No Liability. Notwithstanding the security interests of Administrative
Agent in the Pledged Collateral or any of its rights hereunder, (a) Administrative Agent
shall have no obligation or liability whatsoever for matters in connection with the Pledged
Collateral arising or occurring, directly or indirectly, prior to Administrative Agent’s
(or its designee’s, successor’s or assign’s) becoming a member of the undersigned, and
Pledgor shall have no liability for matters in connection with the Pledged Collateral first
occurring or arising after Administrative Agent’s (or its designee’s, successor’s or
assign’s) acquisition through foreclosure of the Pledged Collateral, and (b) Administrative
Agent shall not be obligated to perform any of the obligations or duties of any Pledgor
under the undersigned’s Operating Agreement, or to take any action to collect or enforce
any claim for payment due Pledgor arising thereunder.



     5. Transfers. The undersigned acknowledges that, subject to the terms and
conditions set forth in the undersigned’s Operating Agreement, the security interest of
Administrative Agent in the Pledged Collateral and all of Administrative Agent’s rights and
remedies under the Pledge Agreement may be freely transferred or assigned by Administrative
Agent. In the event of any such transfer or assignment, all of the provisions of this
Agreement and Acknowledgment shall inure to the benefit of the transferees, successors,
and/or assigns of Administrative Agent. The provisions of this Agreement and Acknowledgment
shall likewise be binding upon any and all permitted transferees, successors and assigns of
the undersigned.



     6. Further Assurances. The undersigned shall, from time to time, promptly
execute and deliver such further instruments, documents and agreements, and perform such
further acts as may be reasonably necessary or proper to carry out and effect the terms of
the Pledge Agreement and this Agreement and Acknowledgment.



     7. Reliance. This Agreement and Acknowledgment is being given to induce
Administrative Agent to accept the Pledge Agreement and with the understanding that
Administrative Agent will rely hereon.



     8. Counterparts. This Agreement and Acknowledgment may be executed in
counterparts.



[The remainder of this page is intentionally left blank.]






 









 








[SIGNATURE PAGE TO AGREEMENT AND ACKNOWLEDGMENT (LLC)]




	 	 	 	 	 
	 	ARMSTRONG RESOURCES HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	Address for Notices:


                                                            


                                                            


Fax:                                               

 	 
	 
	 	ELK CREEK GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	Address for Notices:


                                                            


                                                            


Fax:                                                      




ARMSTRONG TECHNOLOGY SERVICES, LLC

 	 
	 	By:  	Armstrong Land Company, LLC, as Manager
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	Manager 	 
	 
	 	Address for Notices:


                                                            


                                                            


Fax:                                                      
 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO AGREEMENT AND ACKNOWLEDGMENT (LLC)]




	 	 	 	 	 
	 	ARMSTRONG LOGISTICS SERVICES, LLC

 	 
	 	By:  	Armstrong Energy, Inc, as Sole Member
 	 



	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President 	 
	 



	 	 	 	 	 
	 	Address for Notices:


                                                            


                                                            


Fax:                                                      



WESTERN DIAMOND LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	Address for Notices:	 
	 	
                                                            


                                                            


Fax:                                                      



WESTERN LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person
	 
	 	 	Address for Notices:  	 
	 	


                                                            

                                                            


Fax:                                                       	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO AGREEMENT AND ACKNOWLEDGMENT (LLC)]




	 	 	 	 	 
	 	WESTERN MINERAL DEVELOPMENT, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	Address for Notices:


                                                            


                                                            


Fax:                                                      



CERALVO HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	Address for Notices:


                                                            


                                                            


Fax:                                                      





ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person

	 
	 	



Address for Notices:	 
	 	


                                                            


                                                            


Fax:                                                       	 



 









 






	 	 	 	 	 



[TO BE EXECUTED BY EACH COMPANY THAT IS A CORPORATION OR PARTNERSHIP]




AGREEMENT AND ACKNOWLEDGMENT (CORPORATIONS AND PARTNERSHIPS)




     THE UNDERSIGNED, jointly and severally, hereby agree, acknowledge and consent to the
execution and delivery to PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the
Term Lenders (together with its successors, assigns, and designees for the purposes hereof,
“Administrative Agent”), of the Pledge Agreement (Term) to which this Agreement and
Acknowledgment is attached (the “Pledge Agreement”) made by each of the pledgors
party thereto (each a “Pledgor” and collectively, “Pledgors”), as
collateral security for the payment and performance of the Debt described therein, and the
assignment and pledge thereby to Administrative Agent by each Pledgor of all of such
Pledgor’s right, title and interest to the Pledged Collateral and other collateral
described therein. All capitalized terms used herein not otherwise defined herein shall
have the meanings ascribed to such terms in the Pledge Agreement.



     For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned, jointly and severally hereby represent, warrant, covenant
and agree for the benefit of Administrative Agent and Revolver Lenders as follows:



     1. Representations and Warranties. The undersigned, jointly and severally,
represents and warrants that (a) the execution and delivery of the Pledge Agreement does
not violate the undersigned’s charter, by-laws, certificate of partnership, partnership
agreement or other organizational documents (the “Organizational Documents”) or any
other agreement to which such undersigned is a party or by which any of the property of
such undersigned is bound, (b) ) as of the date hereof, there are no existing and
outstanding control agreements perfecting a security interest in any of the Pledged
Collateral in favor of any other party, other than in favor of the Administrative Agent for
the benefit of the Revolver Lenders, (c) the Pledged Collateral is not subject to any
security interest or lien in favor of any Person other than Administrative Agent and other
than in favor of the Administrative Agent for the benefit of the Revolver Lenders and has
not been pledged, transferred or assigned to, and is not otherwise in the control of, any
Person other than Administrative Agent, (d) the undersigned has no present claim, right of
offset, or counterclaim against any Pledgor under or with respect to the Pledged Collateral
or otherwise under the undersigned’s Organizational Documents, (e) no Pledgor is in default
to the undersigned or otherwise under or in respect of any of its obligations under
undersigneds’ Organizational Documents, and (f) all of the representations and warranties
of each Pledgor made in the Pledge Agreement are true, accurate and complete in all
material respects.



     2. Covenants and Agreements.



     2.1 Books and Records. The undersigned (i) shall cause all of its respective
books and records to reflect the pledge of the Pledged Collateral to Administrative Agent
and agrees not to consent to or to permit any transfer thereof or any other action that may
be taken by any Pledgor that might constitute an Event of Default so long as any of the
Debt remains outstanding,



 









 




(ii) agrees that Administrative Agent and/or its representatives may, upon reasonable advance
notice and at any reasonable time during normal business hours, inspect the books, records and
properties of such undersigned.




     2.2 UCC Matters. The undersigned confirms, agrees and acknowledges that (i)
the Pledgors own all of the issued and outstanding shares of the undersigned, (ii)
notwithstanding any provisions in the Organizational Documents, each Pledgor is hereby
authorized and permitted to pledge, assign and grant a security interest in the Pledged
Collateral in favor of Administrative Agent pursuant to the Pledge Agreement, and (iii)
this Agreement and Acknowledgment is intended to, and shall, provide Administrative Agent
with “control” over the Pledged Collateral within the meaning of Articles 8 and 9 of the
UCC.



     2.3 Organizational Documents. Except as permitted in the Credit Agreement, the
undersigned shall not suffer or permit its Organizational Documents to be amended or
modified without the prior written consent of Administrative Agent.



     2.4 Notices; Defaults. The undersigned shall give Administrative Agent a copy
of all notices, reports or communications received or given pursuant to its Organizational
Documents promptly after the same shall have been received or contemporaneously with the
giving thereof, as the case may be. The undersigned shall permit Administrative Agent the
right to cure any default by any Pledgor under the Organizational Documents;
provided, however, in no event shall Administrative Agent be obligated to
cure such default.



     2.5 The undersigned will be bound by the terms of the Pledge Agreement and will comply
with such terms insofar as such terms are applicable to the undersigned.



     2.6 The undersigned will notify Secured Party promptly in writing of the occurrence of
any of the events described in Section 5(i) of the Pledge Agreement.



     2.7 The terms of Section 3 of the Pledge Agreement shall apply to the undersigned,
mutatis mutandis, with respect to all actions that may facilitate, in the reasonable
judgment of Secured Party, the carrying out of Section 3 of the Pledge Agreement.



     2.8 To the extent that the undersigned has or hereafter may acquire any immunity from
the jurisdiction of any court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution, or otherwise) with
respect to itself or its property, the undersigned hereby irrevocably waives such immunity
in respect of its obligations under the Pledge Agreement and any other document or
agreement executed in connection therewith, and the undersigned agrees that it will not
raise or claim any such immunity at or in respect of any such action or proceeding.



     2.9 The undersigned acknowledges and agrees that any notices sent to Pledgors
regarding any of the Pledged Collateral shall also be sent to Secured Party in the manner
and at the address of Secured Party as indicated in Section 11.5 [Notices] of the Credit
Agreement.



     3. Enforcement Event; Sales of Collateral. The undersigned hereby agrees that
during the continuance of an Event of Default, (a) all distributions permitted under the
Loan Documents will be made directly to Administrative Agent, (b) Administrative Agent
shall have



 









 




the sole and exclusive right to exercise all voting, consensual and other powers of ownership
pertaining to the Pledged Collateral, (c) Administrative Agent may take any reasonable action which
Administrative Agent may deem necessary for the maintenance, preservation and protection of any of
the Pledged Collateral or Administrative Agent’s security interests therein, including, without
limitation, the right to declare any or all of the Debt to be immediately due and payable without
demand or notice and the right to transfer any of the Pledged Collateral into Administrative
Agent’s name or the name of any designee or nominee of Administrative Agent, (d) Administrative
Agent may dispose of the Pledged Collateral in accordance with Articles 8 and 9 of the Code and the
provisions of the Pledge Agreement, in which case, notwithstanding anything to the contrary in the
Organizational Documents, (i) Administrative Agent, or its designee or assign, shall be entitled to
receive all benefits and exercise all rights in connection therewith pursuant to the Organizational
Documents, and (ii) the undersigned shall recognize Administrative Agent (or its designee or
assign) as the successor in interest to Pledgor.




     4. No Liability. Notwithstanding the security interests of Administrative
Agent in the Pledged Collateral or any of its rights hereunder, (a) Administrative Agent
shall have no obligation or liability whatsoever for matters in connection with the Pledged
Collateral arising or occurring, directly or indirectly, prior to Administrative Agent’s
(or its designee’s, successor’s or assign’s) becoming a shareholder of the undersigned, and
Pledgor shall have no liability for matters in connection with the Pledged Collateral first
occurring or arising after Administrative Agent’s (or its designee’s, successor’s or
assign’s) acquisition through foreclosure of the Pledged Collateral, and (b) Administrative
Agent shall not be obligated to perform any of the obligations or duties of any Pledgor
under the undersigned’s Organizational Documents, or to take any action to collect or
enforce any claim for payment due Pledgor arising thereunder.



     5. Transfers. The undersigned acknowledges that, subject to the terms and
conditions set forth in the undersigned’s Organizational Documents, the security interest
of Administrative Agent in the Pledged Collateral and all of Administrative Agent’s rights
and remedies under the Pledge Agreement may be freely transferred or assigned by
Administrative Agent. In the event of any such transfer or assignment, all of the
provisions of this Agreement and Acknowledgment shall inure to the benefit of the
transferees, successors, and/or assigns of Administrative Agent. The provisions of this
Agreement and Acknowledgment shall likewise be binding upon any and all permitted
transferees, successors and assigns of the undersigned.



     6. Further Assurances. The undersigned shall, from time to time, promptly
execute and deliver such further instruments, documents and agreements, and perform such
further acts as may be reasonably necessary or proper to carry out and effect the terms of
the Pledge Agreement and this Agreement and Acknowledgment.



     7. Reliance. This Agreement and Acknowledgment is being given to induce
Administrative Agent to accept the Pledge Agreement and with the understanding that
Administrative Agent will rely hereon.



     8. Counterparts. This Agreement and Acknowledgment may be executed in
counterparts.



[The remainder of this page is intentionally left blank.]






 









 








[SIGNATURE PAGE TO AGREEMENT AND ACKNOWLEDGMENT

(CORPORATIONS AND PARTNERSHIPS)]




	 	 	 	 	 
	 	ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	Address for Notices:


                                                            


                                                            


Fax:                                                      



ARMSTRONG FABRICATORS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Martin D. Wilson 	 
	 	 	Title:  	President 	 
	 
	 	Address for Notices:


                                                            


                                                            


Fax:                                                      



ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person
	 
	 	

 

Address for Notices:	 
	 	


                                                            


                                                            


Fax:                                                       	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO AGREEMENT AND ACKNOWLEDGMENT

(CORPORATIONS AND PARTNERSHIPS)]




	 	 	 	 	 
	 	ELK CREEK OPERATING, L.P.

 	 
	 	By:  	Elk Creek GP, LLC, as General Partner
 	 



	 	 	 	 	 
	 	By:  	
 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person

	 
	 	




Address for Notices:	 
	 	


                                                            



                                                            


Fax:                                                       	 



 









 






	 	 	 	 	 



SCHEDULE A

 TO




PLEDGE AGREEMENT (TERM)




Description of Pledged Collateral




See Attached






 









 








SCHEDULE B

 TO




PLEDGE AGREEMENT (TERM)




Restrictions Related to Pledged Collateral




See Attached





 











 





EXHIBIT 1.1(S)(1)




FORM OF

SECURITY AGREEMENT (REVOLVER)



     THIS SECURITY AGREEMENT (REVOLVER) (this “Agreement”), dated as of February 9, 2011,
is entered into by and among EACH OF THE PERSONS LISTED ON THE SIGNATURE PAGES HERETO AS A
REVOLVER PARTY DEBTOR AND EACH OF THE OTHER PERSONS WHICH BECOME REVOLVER PARTY DEBTORS
HEREUNDER FROM TIME TO TIME (each a “Revolver Party Debtor” and collectively, the “Revolver Party
Debtors”), EACH OF THE PERSONS LISTED ON THE SIGNATURE PAGES HERETO AS A TERM PARTY DEBTOR AND EACH OF THE OTHER PERSONS WHICH BECOME TERM
PARTY DEBTORS HEREUNDER FROM TIME TO TIME (each a “Term Party Debtor” and collectively, the “Term
Party Debtors”) (the Revolver Party Debtors and the Term Party Debtors are collectively referred to
herein as the “Debtors” and each a “Debtor”), and PNC BANK, NATIONAL
ASSOCIATION, a national banking association, as administrative agent (the “Administrative Agent”)
for the Revolver Lenders (as defined in the Credit Agreement, defined below);



WITNESSETH THAT:




     WHEREAS, the Debtors are (or will be with respect to after-acquired property) the
legal and beneficial owner and the holder of the Collateral (as defined in Section 1
hereof); and



     WHEREAS, pursuant to that certain Credit Agreement (as it may hereafter from time to
time be restated, amended, modified or supplemented, the “Credit Agreement”) of even date
herewith by and among Armstrong Coal Company, Inc., Armstrong Land Company, LLC, Elk Creek
L.P., Western Mineral Development, LLC, Western Diamond LLC, Western Land Company, LLC
(collectively, the “Borrower”), the Administrative Agent, the Lenders now or hereafter
party thereto (the “Lenders”) and the Guarantors now or hereafter party thereto (the
“Guarantors”), the Administrative Agent and the Lenders have agreed to make certain loans
to the Borrower; and



     WHEREAS, the obligation of the Administrative Agent and the Revolver Lenders to make
loans under the Credit Agreement is subject to the condition, among others, that the Loan
Parties secure the Obligations to the Administrative Agent and the Lenders under the Credit
Agreement, the other Loan Documents and otherwise as more fully described herein in the
manner set forth herein.



     NOW, THEREFORE, intending to be legally bound hereby, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:



     1. Terms which are defined in the Credit Agreement and not otherwise defined herein
are used herein as defined therein and the rules of construction set forth in Section 1.2
[Construction] of the Credit Agreement shall apply to this Agreement. The following words
and



 









 





terms shall have the following meanings, respectively, unless the context hereof otherwise clearly
requires:




     (a) “Code” means the Uniform Commercial Code as in effect in the State of New York on
the date hereof and as amended from time to time except to the extent that the conflict of
law rules of such Uniform Commercial Code shall apply the Uniform Commercial Code as in
effect from time to time in any other state to specific property or other matters.



     (b) “Collateral” means all of each Debtor’s right, title and interest in, to and under
the following described property of such Debtor (each capitalized term used in this Section
1(b) shall have in this Agreement the meaning given to it by the Code):




     (i) all now existing and hereafter acquired or arising Accounts, Goods, Health
Care Insurance Receivables, General Intangibles, Payment Intangibles, Deposit
Accounts, Chattel Paper (including, without limitation, Electronic Chattel Paper),
Documents, Instruments, Software, Investment Property, Letters of Credit, Letter of
Credit Rights, advices of credit, money, Commercial Tort Claims as listed on
Schedule B hereto (as such Schedule is amended or supplemented from time to time),
Equipment, As-Extracted Collateral (including As-Extracted Collateral from the
Debtor’s present and future operations regardless of whether such interests are
presently owned or hereafter acquired by the Debtor), Inventory, Fixtures, and
Supporting Obligations, together with all products of and Accessions to any of the
foregoing and all Proceeds of any of the foregoing (including, without limitation,
all insurance policies and proceeds thereof);




     (ii) to the extent, if any, not included in clause (i) above, the Debtor’s
present and future contracts, agreements, arrangements, or understandings (A) for
the sale, supply, transportation, provision or disposition of any coal or other
minerals by the Debtor, or any one or more of its agents, representatives,
successors, or assigns, to any purchaser or acquirer thereof, and all products,
replacements, and proceeds thereof (including without limitation all coal sales
contracts) and (B) relating to the mining, drilling or recovery of any mineral
reserves for the benefit of or on behalf of the Debtor or any of its agents,
representatives, successors, or assigns (including without limitation all contract
mining, drilling or recovery agreements and arrangements), and all products and
Proceeds thereof and payments thereunder, together with all products and Proceeds
(including all insurance proceeds) of and any Accessions to any of the foregoing;




     (iii) to the extent, if any, not included in clauses (i) and (ii) above, all
coal and other minerals severed or extracted from the ground (specifically
including all As-Extracted Collateral of the Debtor and all severed or extracted
coal purchased, acquired or obtained from other parties), and all Accounts, General
Intangibles and products and Proceeds thereof or related thereto, regardless of
whether any such coal or other minerals are in raw form or processed for sale and
regardless whether or not the Debtor had an interest in the coal or other minerals
before extraction or severance;




     (iv) to the extent, if any, not included in clause (i) above, each and every
other item of personal property and fixtures, whether now existing or hereafter
arising or acquired, including, without limitation, all licenses, contracts and
agreements, and all



2









 






collateral for the payment or performance of any contract or agreement, together with
all products and Proceeds (including all insurance policies and proceeds) of any Accessions
to any of the foregoing; and




     (v) all present and future business records and information, including
computer tapes and other storage media containing the same and computer programs
and software (including, without limitation, source code, object code and related
manuals and documentation and all licenses to use such software) for accessing and
manipulating such information.



     (c) “Collateral (Revolver)” means the Collateral of each Revolver Party Debtor.



     (d) “Collateral (Term)” means the Collateral of each Term Party Debtor.



     (e) “Receivables” means all of the Collateral, except Equipment, Inventory and
Fixtures.



     (f) “Secured Obligations” shall mean and include the following: (i) all now existing
and hereafter arising Obligations of the Debtors to the Administrative Agent, the Revolver
Lenders, or any provider of any Lender Provided Interest Rate Hedge or any provider of any
Other Lender Provided Financial Services Product under the Credit Agreement or any of the
other Loan Documents, including all obligations, liabilities, and indebtedness, whether for
principal, interest, fees, expenses or otherwise, of the Debtors to the Administrative
Agent, the Revolver Lenders, or any obligation in connection with any Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Product, now existing
or hereafter incurred under the Credit Agreement, the Notes, the Guaranty Agreement or any
of the other Loan Documents as any of the same or any one or more of them may from time to
time be amended, restated, modified, or supplemented, together with any and all extensions,
renewals, refinancings, and refundings thereof in whole or in part (and including
obligations, liabilities, and indebtedness arising or accruing after the commencement of
any bankruptcy, insolvency, reorganization, or similar proceeding with respect to the
Debtors or which would have arisen or accrued but for the commencement of such proceeding,
even if the claim for such obligation, liability or indebtedness is not enforceable or
allowable in such proceeding, and including all obligations, liabilities and indebtedness
arising from any extensions of credit under or in connection with the Loan Documents from
time to time, regardless whether any such extensions of credit are in excess of the amount
committed under or contemplated by the Loan Documents or are made in circumstances in which
any condition to extension of credit is not satisfied); (ii) all reimbursement obligations
of the Debtors with respect to any one or more Letters of Credit issued by Administrative
Agent; (iii) all indebtedness, loans, obligations, expenses and liabilities of the Debtors
to the Administrative Agent or any of the Revolver Lenders, or any obligations incurred in
connection with any Lender Provided Interest Rate Hedge or any Other Lender Provided
Financial Services Product; and (iv) any sums advanced by the Administrative Agent or the
Revolver Lenders or which may otherwise become due pursuant to the provisions of the Credit
Agreement, the Notes, this Agreement, or any other Loan Documents or pursuant to any other
document or instrument at any time delivered to the Administrative Agent in connection
therewith, including commitment, letter of credit, agent or other fees and charges, and
indemnification obligations under any such document or instrument, together with all



3









 




interest payable on any of the foregoing, whether such sums are advanced or otherwise become due
before or after the entry of any judgment for foreclosure or any judgment on any Loan Document or
with respect to any default under any of the Secured Obligations.




     (g) “Security Agreement (Term)” shall mean that certain Security Agreement of even
date herewith by and among the Debtors and the Agent, entered into as security for the Term
Loans.



     2. As security for the due and punctual payment and performance of the Secured
Obligations in full:



     (a) Each Revolver Party Debtor hereby agrees that the Administrative Agent and the
Revolver Lenders and any provider of any Lender Provided Interest Rate Hedge or any Other
Lender Provided Financial Services Product shall have, and each Revolver Party Debtor
hereby grants to and creates in favor of the Administrative Agent for the benefit of
itself, the Revolver Lenders and any provider of any Lender Provided Interest Rate Hedge or
any Other Lender Provided Financial Services Product, a continuing prior lien on and
security interest under the Code in and to the Collateral (Revolver) subject only to
Permitted Liens. Without limiting the generality of Section 4 below, each Revolver Party
Debtor further agrees that with respect to each item of the Collateral (Revolver) as to
which (i) the creation of a valid and enforceable security interest is not governed
exclusively by the Code, or (ii) the perfection of a valid and enforceable first priority
security interest therein under the Code cannot be accomplished either by the
Administrative Agent taking possession thereof or by the filing in appropriate locations of
appropriate Code financing statements executed by such Revolver Party Debtor, such Revolver
Party Debtor will at its expense execute and deliver to the Administrative Agent and hereby
does authorize the Administrative Agent to execute and file such documents, agreements,
notices, assignments and instruments and take such further actions as may be requested by
the Administrative Agent from time to time for the purpose of creating a valid and
perfected first priority Lien on such item, subject only to Permitted Liens, enforceable
against such Revolver Party Debtor and all third parties to secure the Secured Obligations;
provided, however, notwithstanding the foregoing, the Debtors shall not be required to
perfect the Lender’s security interest in titled vehicles.



     (b) Each Term Party Debtor hereby agrees that the Administrative Agent and the
Revolver Lenders and any provider of any Lender Provided Interest Rate Hedge or any Other
Lender Provided Financial Services Product shall have, and each Term Party Debtor hereby
grants to and creates in favor of the Administrative Agent for the benefit of itself, the
Revolver Lenders and any provider of any Lender Provided Interest Rate Hedge or any Other
Lender Provided Financial Services Product, a continuing prior lien on and security
interest under the Code in and to the Collateral (Term) subject only to the Term Lenders’
lien on and security interest under the Code in and to the Collateral (Term) pursuant to
the Security Agreement (Term), and to the Permitted Liens. Without limiting the generality
of Section 4 below, each Term Party Debtor further agrees that with respect to each item of
the Collateral (Term) as to which (i) the creation of a valid and enforceable security
interest is not governed exclusively by the Code, or (ii) the perfection of a valid and
enforceable second priority security interest therein under the Code cannot be accomplished
either by the Administrative Agent taking possession thereof or by the filing in
appropriate locations of appropriate Code financing statements



4









 




executed by such Term Party Debtor, such Term Party Debtor will at its expense execute and
deliver to the Administrative Agent and hereby does authorize the Administrative Agent to execute
and file such documents, agreements, notices, assignments and instruments and take such further
actions as may be requested by the Administrative Agent from time to time for the purpose of
creating a valid and perfected second priority Lien on such item, subject only to the Term Lenders’
Lien on such item, and to the Permitted Liens, enforceable against such Term Party Debtor and all
third parties to secure the Secured Obligations; provided, however, notwithstanding the foregoing,
the Debtors shall not be required to perfect the Lender’s security interest in titled vehicles.




     3. Each Debtor represents and warrants to the Administrative Agent and the
Revolver Lenders that (a) the Debtors have good and marketable title to the Collateral, (b)
except for the security interest granted to and created (i) in favor of the Administrative Agent
for the benefit of itself and the Revolver Lenders hereunder, and (ii) under the Security Agreement
(Term), and Permitted Liens, all the Collateral (Revolver) is free and clear of any Lien, (c) the
Debtors will defend the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein, (d) each Account is genuine and enforceable in
accordance with its terms and the Debtors will defend the same against all claims, demands,
recoupment, setoffs, and counterclaims at any time asserted, (e) at the time any Account becomes
subject to this Agreement, each such Account will be a good and valid Account representing a bona
fide sale of goods or services by the Debtors and such goods will have been shipped to the
respective account debtors or the services will have been performed for the respective account
debtors (or for those on behalf of whom the account debtors are obligated on the Accounts), and no
such Account will at such time be subject to any claim for credit, allowance, setoff, recoupment,
defense, counterclaim or adjustment by any account debtor or otherwise, except such items arising
in the ordinary course of business that do not result in a Material Adverse Change, (f) the exact
legal name of each Debtor is as set forth on the signature page hereto, and (g) the state of
incorporation, formation or organization as applicable, of each Debtor is as set forth on Schedule
A hereto, (h) the address (including county and state) of each mining operation of such Debtor is
set forth on Schedule A hereto. Each Debtor also represents and warrants that it has provided the
Administrative Agent with a real estate description sufficient to enable the Administrative Agent
to record a financing statement in the county records sufficient to perfect a security interest in
all As-Extracted Collateral arising from such Debtor’s mining activities. Further, such Debtor
represents and warrants that (i) this Agreement creates a valid security interest in favor of the
Administrative Agent, for the benefit of itself, the Revolver Lenders hereunder and any provider of
any Lender Provided Interest Rate Hedge or any Other Lender Provided Financial Services Product, in
the Collateral, except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and by general principles of
equity and (ii) the security interests granted hereunder in favor of the Administrative Agent, for
the benefit of itself, the Revolver Lenders hereunder and any provider of any Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Product, will constitute a
prior security interest (subject only to Permitted Liens) as to the Collateral (Revolver), and a
prior security interest (subject only to the Term Lenders’ lien on and security interest under the
Code in and to the Collateral (Term) pursuant to the Security Agreement (Term), and to Permitted
Liens) as to the Collateral (Term) and will be perfected, to the extent such liens and security
interests can be perfected under the Code by filing financing statements, (A) with respect to the
Collateral (other



5









 




than As-Extracted Collateral) of such Debtor, upon the proper filing of the financing statements in
the jurisdiction of the state of formation of such Debtor as indicated on Schedule A hereto, and
(B) with respect to the As-Extracted Collateral of such Debtor, upon the proper filing of the
financing statements in the county’s real estate records in the county identified on Schedule A
hereto as the location of “Locations of Real Property” with respect to such Debtor; provided that
for the avoidance of doubt, the Revolver Lenders acknowledge that no Debtor has, and will not,
absent a request from the Administrative Agent, perfect the Lien in favor of the Administrative
Agent for the benefit of the Revolver Lenders, in any titled vehicles constituting Collateral.




     4. Each Debtor will faithfully preserve and protect the Administrative Agent’s
security interest in the Collateral as a prior perfected security interest under the Code,
superior and prior to the rights of all third Persons, except for holders of Permitted
Liens; provided, however, notwithstanding the foregoing, the Debtors shall not be required
to perfect the Revolver Lender’s security interest in titled vehicles, and will do all such
other acts and things and will, upon request therefor by the Administrative Agent, execute,
deliver, file and record, and each Debtor hereby authorizes the Administrative Agent to so
file, all such other documents and instruments, including, without limitation, financing
statements, security agreements, assignments and documents and powers of attorney with
respect to the Collateral, and pay all filing fees and taxes related thereto, as the
Administrative Agent in its reasonable discretion may deem necessary or advisable from time
to time in order to attach, continue, preserve, perfect, and protect said security interest
(including the filing at any time or times after the date hereof of financing statements
under, and in the locations advisable pursuant to, the Code); and, upon the occurrence of
an Event of Default that has not been waived, each Debtor hereby irrevocably appoints the
Administrative Agent, its officers, employees and agents, or any of them, as
attorneys-in-fact for each Debtor to execute, deliver, file and record such items for such
Debtor and in the Debtor’s name, place and stead to preserve, continue, perfect and protect
said security interest. This power of attorney, being coupled with an interest, shall be
irrevocable for the life of this Agreement.



     5. Except as each Debtor may be permitted under the Credit Agreement, including,
without limitation, actions taken by such Debtor with respect to a Permitted Joint Venture,
each Debtor covenants and agrees that:



     (a) it will defend the Administrative Agent’s and the Revolver Lenders’ right, title
and lien on and security interest in and to the Collateral and the Proceeds thereof against
the claims and demands of all Persons whomsoever, other than any Person claiming a right in
the Collateral pursuant to an agreement between such Person and the Administrative Agent,
or pursuant to a Permitted Lien;



     (b) it will not suffer or permit to exist on any Collateral any Lien except for
Permitted Liens;



     (c) it will not take or omit to take any action, the taking or the omission of which
might result in a material alteration (except as permitted by the Credit Agreement) or
impairment of the Collateral or of the Administrative Agent’s rights under this Agreement;



6









 





     (d) it will not sell, assign or otherwise dispose of any portion of the Collateral
except as permitted in Section 8.2.7 [Disposition of Assets or Subsidiaries] of the Credit
Agreement;



     (e) it will (i) except for such Collateral delivered to the Administrative Agent
pursuant to this Section or otherwise now or hereafter under the control of the
Administrative Agent, obtain and maintain sole and exclusive possession of the Collateral,
except Collateral in transit or that is temporarily stored or located off-site in the
ordinary course of business, (ii) maintain its chief executive office and keep the
Collateral (except titled vehicles) and all records pertaining thereto at the locations
specified on the Security Interest Data Summary attached as Schedule A hereto, unless it
shall have given the Administrative Agent prior notice and taken any action reasonably
requested by the Administrative Agent to maintain its security interest therein, (iii)
notify the Administrative Agent if an Account becomes evidenced or secured by an Instrument
or Chattel Paper and deliver to the Administrative Agent upon the Administrative Agent’s
request therefor all Collateral consisting of Instruments and Chattel Paper immediately
upon the Debtor’s receipt of a request therefor, (iv) deliver to the Administrative Agent
possession of all Collateral the possession of which is required to perfect the
Administrative Agent’s Lien thereon or security interest therein or the possession of which
grants priority over a Person filing a financing statement with respect thereto, (v)
execute control agreements and cause other Persons to execute acknowledgments in form and
substance reasonably satisfactory to the Administrative Agent evidencing the Administrative
Agent’s control with respect to all Collateral the control or acknowledgment of which
perfects the Administrative Agent’s security interest therein, including Letters of Credit,
Letter of Credit Rights, Electronic Chattel Paper, Deposit Accounts and Investment
Property, and (vi) keep materially accurate and complete books and records concerning the
Collateral and such other books and records as the Administrative Agent may from time to
time reasonably require;



     (f) it will promptly furnish to the Administrative Agent such information and
documents relating to the Collateral as the Administrative Agent may reasonably request,
including, without limitation, all invoices, Documents, contracts, Chattel Paper,
Instruments and other writings pertaining to such Debtor’s contracts or the performance
thereof, all of the foregoing to be certified upon request of the Administrative Agent by
an authorized officer of such Debtor;



     (g) it shall immediately notify the Administrative Agent if any Account arises out of
contracts with the United States or any department, agency or instrumentality thereof or
any one or more of the states of the United States or any department, agency, or
instrumentality thereof, and will execute any instruments and take any steps required by
the Administrative Agent so that all monies due and to become due under such contract shall
be assigned to the Administrative Agent and notice of the assignment given to and
acknowledged by the appropriate government agency or authority under the Federal Assignment
of Claims Act;



     (h) it will not change its state of incorporation, formation or organization, as
applicable without providing thirty (30) days prior written notice to the Administrative
Agent;



     (i) it will not change its name without providing thirty (30) days prior written
notice to the Administrative Agent;



7









 





     (j) it shall, except as permitted by Section 8.2.6 or Section 8.2.7 of the Credit
Agreement, preserve its current existence as a corporation, partnership or a
limited liability company, as applicable, and shall not (i) in one, or a series of
related transactions, merge into or consolidate with any other entity, the survivor
of which is not a Debtor, or (ii) sell all or substantially all or its assets;



     (k) if such Debtor shall at any time acquire a commercial tort claim, as defined in
the Code, the Debtor shall immediately notify the Administrative Agent in a writing signed
by such Debtor of the details thereof and grant to the Administrative Agent for the benefit
of itself, the Revolver Lenders and any provider of any Lender Provided Interest Rate Hedge
or any Other Lender Provided Financial Services Product in such writing a security interest
therein and in the Proceeds thereof, with such writing to be in form and substance
reasonably satisfactory to the Administrative Agent and such writing shall constitute a
supplement to Schedule B hereto;



     (1) it hereby authorizes the Administrative Agent to, at any time and from time to
time, file in any one or more jurisdictions financing statements that describe the
Collateral, together with continuation statements thereof and amendments thereto, without
the signature of such Debtor and which contain any information required by the Code or any
other applicable statute applicable to such jurisdiction for the sufficiency or filing
office acceptance of any financing statements, continuation statements, or amendments. Each
Debtor agrees to furnish any such information to the Administrative Agent promptly upon
request. Any such financing statements, continuation statements, or amendments may be
signed by Administrative Agent on behalf of such Debtor if the Administrative Agent so
elects and may be filed at any time in any jurisdiction; and



     (m) it shall at any time and from time to time take such steps as the Administrative
Agent may reasonably request as are necessary for the Administrative Agent to insure the
continued perfection of the Administrative Agent’s and the Revolver Lenders’ security
interest in the Collateral with the same priority required hereby and the preservation of
its rights therein; provided, however, notwithstanding the foregoing, the Debtors shall not
be required to perfect the Lender’s security interest in titled vehicles.



     6. Each Debtor assumes full responsibility for taking any and all necessary steps to
preserve the Administrative Agent’s and the Revolver Lenders’ rights with respect to the
Collateral against all Persons other than anyone asserting rights in respect of a Permitted
Lien. The Administrative Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Administrative Agent
takes such action for that purpose as the Debtor shall request in writing; provided that
such requested action will not, in the judgment of the Administrative Agent, impair the
security interest in the Collateral created hereby or the Administrative Agent’s and the
Revolver Lenders’ rights in, or the value of, the Collateral; provided, further, that such
written request is received by the Administrative Agent in sufficient time to permit the
Administrative Agent to take the requested action; provided further, however, the Debtors
shall not be required to perfect the Lender’s security interest in titled vehicles.



     7. The pledge, security interests and other Liens and the Obligation of each Debtor
hereunder shall not be discharged until Payment in Full of the Securecl Obligations, or as



8









 




otherwise occurring upon the sale of inventory in the ordinary course of business. The pledge,
security interests, and other Liens and the Obligations of each Debtor hereunder shall not be
discharged or impaired or otherwise diminished by any failure, default, omission, or delay, willful
or otherwise, by Administrative Agent, or any other obligor on any of the Secured 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 such Debtor or which would otherwise operate as a
discharge of the Debtor as a matter of law or equity. Without limiting the generality of the
foregoing, each Debtor hereby consents to, and the pledge, security interests, and other Liens
given by such Debtor hereunder shall not be diminished, terminated, or otherwise similarly affected
by any of the following at any time and from time to time:




     (a) Any lack of genuineness, legality, validity, enforceability, or allowability (in a
bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any
avoidance or subordination, in whole or in part, of any Loan Document or any of the Secured
Obligations and regardless of any law, regulation, or order now or hereafter in effect in
any jurisdiction affecting any of the Secured Obligations, any of the terms of the Loan
Documents, or any rights of the Administrative Agent or any other Person with respect
thereto;



     (b) Any increase, decrease, or change in the amount, nature, type or purpose of any of
the Secured 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 Secured 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 Secured Obligations;



     (c) Any failure to assert any breach of or default under any Loan Document or any of
the Secured 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 Debtor or any other Person
under or in connection with any Loan Document or any of the Secured Obligations; any
refusal of payment or performance of any of the Secured Obligations, whether or not with
any reservation of rights against any Debtor; or any application of collections (including
collections resulting from realization upon any direct or indirect security for the Secured
Obligations) to other Obligations, if any, not entitled to the benefits of this Agreement,
in preference to Secured Obligations or, if any collections are applied to Secured
Obligations, any application to particular Secured Obligations;



     (d) Any taking, exchange, amendment, modification, supplement, termination,
subordination, release, 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 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 Administrative Agent or any other Person in
respect of, any direct or indirect security for any of the Secured Obligations (including
the Collateral). As used in this Agreement, “direct



9









 




or indirect security” for the Secured 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 Secured Obligations, made by or on behalf of any
Person;




     (e) Any merger, consolidation, liquidation, dissolution, winding-up, charter
revocation, or forfeiture, or other change in, restructuring or termination of the existing
structure or existence of, any Debtor or any other Person; any bankruptcy, insolvency,
reorganization or similar proceeding with respect to any Debtor or any other Person; or any
action taken or election (including any election under Section 1111(b)(2) of the United
States Bankruptcy Code or any comparable law of any jurisdiction) made by Administrative
Agent or the Debtor or by any other Person in connection with any such proceeding;



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



     (g) 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 a guarantor or a surety, including each Debtor, excepting only full,
strict, and indefeasible payment and performance of the Secured Obligations in full.



     8. Each Debtor hereby waives any and all defenses which such Debtor may now or
hereafter have based on principles of suretyship, impairment of collateral, or the like and
each Debtor 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 the
immediately preceding section hereof. Without limiting the generality of the foregoing and
to the fullest extent permitted by applicable law, each Debtor hereby further waives each
of the following:



     (a) All notices, disclosures and demands of any nature which otherwise might be
required from time to time to preserve intact any rights against such Debtor, including the
following: any notice of any event or circumstance described in the immediately preceding
section 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 Secured Obligations; any notice of the incurrence of
any Secured Obligations; any notice of any default or any failure on the part of the
Debtors or any other Person to comply with any Loan Document or any of the Secured
Obligations or any requirement pertaining to any direct or indirect security for any of the
Secured Obligations; and any notice or other information pertaining to the business,
operations, condition (financial or otherwise), or prospects of the Debtors or any other
Person;



     (b) Any right to any marshalling of assets, to the filing of any claim against such
Debtor or any other Person in the event of any bankruptcy, insolvency, reorganization, or
similar proceeding, or to the exercise against such Debtor or any other Person of any other
right or



10









 




remedy under or in connection with any Loan Document or any of the Secured Obligations or any
direct or indirect security for any of the Secured Obligations; any requirement of promptness or
diligence on the part of the Administrative Agent 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 Secured Obligations or any direct or indirect security for any of
the Secured 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 such Debtor
receive notice of any such acceptance; and




     (c) 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 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 (including commencement or completion of any judicial
proceeding or nonjudicial sale or other action in respect of the Collateral for any of the
Secured Obligations), which results in denial or impairment of the right of the
Administrative Agent to seek a deficiency against such Debtor or any other Person or which
otherwise discharges or impairs any of the Secured Obligations.



     9. (a) At any time and from time to time whether or not an Event of Default then
exists and without prior notice to or consent of any Debtor, the Administrative Agent may
at its option take such actions as the Administrative Agent deems appropriate (i) to
attach, perfect, continue, preserve and protect the Administrative Agent’s and the Revolver
Lenders’ security interest in or Lien on the Collateral, (ii) to inspect, audit and verify
the Collateral, including reviewing all of each Debtor’s books and records and copying and
making excerpts therefrom; provided that prior to an Event of Default or a Potential
Default, the same is done with advance notice during normal business hours to the extent
access to such Debtor’s premises is required, and (iii) to add all liabilities,
obligations, costs and expenses reasonably incurred in connection with the foregoing
clauses (i) and (ii) to the Secured Obligations, to be paid by the Debtors to the
Administrative Agent for the benefit of the Administrative Agent and the Revolver Lenders
within ten (10) days after demand; provided further, however, the Debtors shall not be
required to perfect the Lender’s security interest in titled vehicles;



     (b) At any time and from time to time after an Event of Default exists and is
continuing and without prior notice to or consent of any Debtor, the Administrative Agent
may at its option take such action as the Administrative Agent deems appropriate (i) to
maintain, repair, protect and insure the Collateral, (ii) to perform, keep, observe and
render true and correct any and all covenants, agreements, representations and warranties
of the Debtors hereunder, and (iii) to add all liabilities, obligations, costs and expenses
reasonably incurred in connection with the foregoing clauses (i) and (ii) to the Secured
Obligations, to be paid by the Debtors to the Administrative Agent for the benefit of the
Administrative Agent and the Revolver Lenders within ten (10) days after demand.



     10. After there exists any Event of Default under the Credit Agreement:



     (a) The Administrative Agent shall have and may exercise all the rights and remedies
available to a secured party under the Code in effect at the time, and such other rights
and remedies as may be provided at Law and as set forth below, including, without
limitation, to take



11









 




over and collect all of any Debtor’s Receivables and all other Collateral, and to this end
each Debtors hereby appoints the Administrative Agent, its officers, employees and agents, as its
irrevocable, true and lawful attorneys-in-fact with all necessary power and authority to (i) take
possession immediately, with or without notice, demand, or legal process, of any of or all of the
Collateral wherever found, and for such purposes, enter upon any premises upon which the Collateral
may be found and remove the Collateral therefrom, (ii) require any Debtor to assemble the
Collateral and deliver it to the Administrative Agent or to any place designated by the
Administrative Agent at the Debtors’ expense, (iii) receive, open and dispose of all mail addressed
to any Debtor and notify postal authorities to change the address for delivery thereof to such
address as the Administrative Agent may designate, (iv) demand payment of the Receivables, (v)
enforce payment of the Receivables by legal proceedings or otherwise, (vi) exercise all of any
Debtor’s rights and remedies with respect to the collection of the Receivables, (vii) settle,
adjust, compromise, extend or renew the Receivables, (viii) settle, adjust or compromise any legal
proceedings brought to collect the Receivables, (ix) to the extent permitted by applicable Law,
sell or assign the Receivables upon such terms, for such amounts and at such time or times as the
Administrative Agent deems advisable, (x) discharge and release the Receivables, (xi) take control,
in any manner, of any item of payment or Proceeds from any account debtor, (xii) prepare, file and
sign any Debtor’s name on any proof of claim in Relief Proceeding or similar document against any
account debtor, (xiii) prepare, file and sign any Debtor’s name on any notice of Lien, assignment
or satisfaction of Lien or similar document in connection with the Receivables, (xiv) do all acts
and things necessary, in the Administrative Agent’s sole discretion, to fulfill each Debtor’s
obligations to the Administrative Agent or the Revolver Lenders under the Credit Agreement, Loan
Documents or otherwise, (xv) endorse the name of any Debtor upon any check, Chattel Paper,
Document, Instrument, invoice, freight bill, bill of lading or similar document or agreement
relating to the Receivables or Inventory, (xvi) use any Debtor’s stationery and sign such Debtor’s
name to verifications of the Receivables and notices thereof to account debtors, (xvii) access and
use the information recorded on or contained in any data processing equipment or computer hardware
or software relating to the Receivables, Inventory, or other Collateral or proceeds thereof to
which any Debtor has access, (xviii) demand, sue for, collect, compromise and give acquittances for
any and all Collateral, (xix) prosecute, defend or compromise any action, claim or proceeding with
respect to any of the Collateral, and (xx) take such other action as the Administrative Agent may
deem appropriate, including extending or modifying the terms of payment of any Debtor’s debtors.
This power of attorney, being coupled with an interest, shall be irrevocable for the life of this
Agreement. To the extent permitted by Law, each Debtor hereby waives all claims of damages due to
or arising from or connected with any of the rights or remedies exercised by the Administrative
Agent pursuant to this Agreement, except claims for physical damage to the Collateral arising from
gross negligence or willful misconduct by the Administrative Agent.




     (b) The Administrative Agent shall have the right to lease, sell or otherwise dispose
of all or any of the Collateral at public or private sale or sales for cash, credit or any
combination thereof, with such notice as may be required by Law (it being agreed by the
Debtors that, in the absence of any contrary requirement of Law, ten (10) days’ prior
notice of a public or private sale of Collateral shall be deemed reasonable notice), in
lots or in bulk, for cash or on credit, all as the Administrative Agent, in its sole
discretion, may deem advisable. Such sales may be adjourned from time to time with or
without notice. The Administrative Agent shall have the right to conduct such sales on any
Debtor’s premises or elsewhere and shall have the right to use any



12









 




Debtor’s premises without charge for such sales for such time or times as the Administrative
Agent may see fit. The Administrative Agent may purchase all or any part of the Collateral at
public or, if permitted by Law, private sale and, in lieu of actual payment of such purchase price,
may set off the amount of such price against the Secured Obligations.




     (c) Each Debtor, at its cost and expense (including the cost and expense of any of the
following referenced consents, approvals, etc.), will promptly execute and deliver or cause
the execution and delivery of all applications, certificates, instruments, registration
statements, and all other documents and papers the Administrative Agent may request in
connection with the obtaining of any consent, approval, registration, qualification,
permit, license, accreditation, or authorization of any other Official Body or other Person
necessary or appropriate for the effective exercise of any rights hereunder or under the
other Loan Documents. Without limiting the generality of the foregoing, each Debtor agrees
that in the event the Administrative Agent on behalf of itself and/or the Revolver Lenders
shall exercise its rights hereunder or pursuant to the other Loan Documents, to sell,
transfer, or otherwise dispose of, or vote, consent, operate, or take any other action in
connection with any of the Collateral, each Debtor shall execute and deliver (or cause to
be executed and delivered) all applications, certificates, assignments and other documents
that the Administrative Agent requests to facilitate such actions and shall otherwise
promptly, fully, and diligently cooperate with the Administrative Agent and any other
Persons in making any application for the prior consent or approval of any Official Body or
any other Person to the exercise by the Administrative Agent on behalf of itself and/or the
Revolver Lenders or any such rights relating to all or any of the Collateral. Furthermore,
because each Debtor agrees that the remedies at law, of the Administrative Agent on behalf
of itself and/or the Revolver Lenders, for failure of such Debtor to comply with this
subsection (c) would be inadequate, and that any such failure would not be adequately
compensable in damages, each Debtor agrees that this Subsection (c) may be specifically
enforced.



     (d) The Administrative Agent may request, without limiting the rights and remedies of
the Administrative Agent on behalf of itself and the Revolver Lenders otherwise provided
hereunder and under the other Loan Documents, that each Debtor do any of the following: (i)
give the Administrative Agent on behalf of itself and the Revolver Lenders specific
assignments of the accounts receivable of the Debtors after such accounts receivable come
into existence, and schedules of such accounts receivable, the form and content of such
assignment and schedules to be reasonably satisfactory to Administrative Agent, and (ii) in
order to better secure the Administrative Agent on behalf of itself and the Revolver
Lenders, to the extent permitted by Law, enter into such lockbox agreements and establish
such lockbox accounts as the Administrative Agent may require, all at the sole expense of
the Debtors and shall direct all payments from all payors due to each Debtor, to such
lockbox accounts.



     11. The Lien on and security interest in the Collateral granted to and created in
favor of the Administrative Agent by this Agreement shall be for the benefit of the
Administrative Agent and the Revolver Lenders and any provider of any Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Product. Each of the
rights, privileges, and remedies provided to the Administrative Agent hereunder or
otherwise by Law with respect to the Collateral shall be exercised by the Administrative
Agent only for its own benefit and the benefit of the Revolver Lenders and for the benefit
of any provider of any Lender Provided Interest Rate Hedge or any Other Lender Provided
Financial Services Product, and any of the



13









 




Collateral or Proceeds thereof held or realized upon at any time by the Administrative Agent
shall be applied as set forth in Section 9.2.4 [Application of Proceeds] of the Credit Agreement.
Each Debtor shall remain liable to the Administrative Agent and the Revolver Lenders and any
provider of any Lender Provided Interest Rate Hedge or any Other Lender Provided Financial Services
Product for and shall pay to the Administrative Agent for the benefit of itself and the Revolver
Lenders and any provider of any Lender Provided Interest Rate Hedge or any Other Lender Provided
Financial Services Product any deficiency which may remain after such sale or collection.




     12. If the Administrative Agent repossesses or seeks to repossess any of the
Collateral pursuant to the terms hereof because of the occurrence of an Event of Default,
then to the extent it is commercially reasonable for the Administrative Agent to store any
Collateral on any premises of any Debtor, such Debtor hereby agrees to lease to the
Administrative Agent on a month-to-month tenancy for a period not to exceed ninety (90)
days at the Administrative Agent’s election, at a rental rate equal to One Dollar ($1.00)
per month (if such Debtor owns the premises), and at the current rental rate per month (if
such Debtor leases the premises), the premises on which the Collateral is located; provided
it is located on premises owned or leased by such Debtor.



     13. Upon Payment in Full of the Secured Obligations, the expiration of all

Commitments and Letters of Credit, and termination of the Credit Agreement, this Agreement
shall terminate and be of no further force and effect, and the Administrative Agent shall thereupon
promptly return to such Debtor such of the Collateral and such other documents delivered by the
Debtor or obtained by the Administrative Agent hereunder as may then be in the Administrative
Agent’s possession, subject to the rights of third parties. Until such time, however, this
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.



     14. No failure or delay on the part of the Administrative Agent in exercising any
right, remedy, power or privilege hereunder shall operate as a waiver thereof or of any
other right, remedy, power or privilege of the Administrative Agent hereunder; nor shall
any single or partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy, power or
privilege. No waiver of a single Event of Default shall be deemed a waiver of a subsequent
Event of Default. All waivers under this Agreement must be in writing. The rights and
remedies of the Administrative Agent under this Agreement are cumulative and in addition to
any rights or remedies which it may otherwise have, and the Administrative Agent may
enforce any one or more remedies hereunder successively or concurrently at its option.



     15. All notices, statements, requests and demands given to or made upon either party
hereto in accordance with the provisions of this Agreement shall be given or made as
provided in Section 11.5 [Notices; Effectiveness; Electronic Communication] of the Credit
Agreement.



     16. Each Debtor agrees that as of the date hereof, all information contained on the
Security Interest Data Summary attached hereto as Schedule A is accurate and complete and
contains no material omission or misrepresentation. Each Debtor shall promptly notify the
Administrative Agent of any changes in the information set forth thereon.



14









 





     17. Each Debtor acknowledges that the provisions hereof giving the Administrative
Agent rights of access to books, records and information concerning the Collateral and such
Debtor’s operations and providing the Administrative Agent access to such Debtor’s premises
are intended to afford the Administrative Agent with immediate access to current
information concerning the Debtor and its activities, including without limitation, the
value, nature and location of the Collateral so that the Administrative Agent can, among
other things, make an appropriate determination after the occurrence of an Event of
Default, whether and when to exercise its other remedies hereunder and at Law, including,
without limitation, instituting a replevin action should the Debtor refuse to turn over any
Collateral to the Administrative Agent. Each Debtor further acknowledges that should such
Debtor at any time fail to promptly provide such information and access to the
Administrative Agent, such Debtor acknowledges that the Administrative Agent would have no
adequate remedy at Law to promptly obtain the same. Each Debtor agrees that the provisions
hereof may be specifically enforced by the Administrative Agent and waives any claim or
defense in any such action or proceeding that the Administrative Agent has an adequate
remedy at Law.



     18. This Agreement shall be binding upon, and inure to the benefit of, the
 Administrative Agent, the Revolver Lenders and their respective successors and assigns, and
the Debtor and each of its respective successors and assigns, except that the Debtors may not
assign or transfer its obligations hereunder or any interest herein.



     19. This Agreement shall be deemed to be a contract under the laws of the State of New
York and for all purposes shall be governed by, and construed in accordance with, the laws
of said State excluding its rules relating to conflicts of law.



     20. Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.



     21. Each Debtor hereby irrevocably submits to the nonexclusive jurisdiction of any New
York state or federal court sitting in New York County, in any action or proceeding arising
out of or relating to this Agreement, and each Debtor hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in such New York
state or federal court. Each Debtor hereby waives to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of any such action or
proceeding. Each Debtor hereby appoints the process agent identified below (the “Process
Agent”) as its agent to receive on behalf of such party and its respective property service
of copies of the summons and complaint and any other process which may be served in any
action or proceeding. Such service may be made by mailing or delivering a copy of such
process to the Debtor in care of the Process Agent at the Process Agent’s address, and each
Debtor hereby authorizes and directs the Process Agent to receive such service on its
behalf. Each Debtor agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions (or any political subdivision
thereof) by suit on the judgment or in any other manner provided at law. Each Debtor
further agrees that it shall, for so long as any commitment or any obligation of any Loan
Party to any Lender remains outstanding, continue to retain Process Agent for the purposes
set forth in this Section 21. The Process Agent is the Borrower, with an office on the date
hereof



15









 




as set forth in the Credit Agreement. The Process Agent hereby accepts the appointment of
Process Agent by the Companies and agrees to act as Process Agent on behalf of the Companies.




     22. EXCEPT AS PROHIBITED BY LAW, EACH DEBTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY A JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OTHER DOCUMENTS OR TRANSACTIONS RELATING THERETO.



     23. This Agreement may be executed in any number of counterparts, and by different
parties hereto in separate counterparts, each of which, when so executed, shall be deemed
an original, but all such counterparts shall constitute one and the same instrument. Each
Debtor acknowledges and agrees that a telecopy transmission to the Administrative Agent or
any Revolver Lender of the signature pages hereof purporting to be signed on behalf of the
Debtor shall constitute effective and binding execution and delivery hereof by such Debtor.



[SIGNATURE PAGES FOLLOW]




16









 








[SIGNATURE PAGE 1 OF 5 TO SECURITY AGREEMENT (REVOLVER)]




     IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized,
have executed and delivered this Agreement as of the day and year first above set forth
with the intention that this Agreement constitutes a sealed instrument.



	 	 	 	 	 
	           REVOLVER PARTY DEBTORS

 	 
	 	

ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	ARMSTRONG RESOURCES

HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 2 OF 5 TO SECURITY AGREEMENT (REVOLVER)]




	 	 	 	 	 
	 	REVOLVER PARTY DEBTORS, CONT.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 





[SIGNATURE PAGE 3 OF 5 TO SECURITY AGREEMENT (REVOLVER)]




	 	 	 	 	 
	 	TERM PARTY DEBTORS



ELK CREEK, L.P.

 	 
	 	 	By: 	
Elk Creek GP, LLC, as General

Partner

 	 
	 	 	By:  	 	 
	 	 		Name:  J. Richard Gist 	 
	 	 		Title:    Authorized Person 	 
	 


	 	 	 	 	 
	 	ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 


	 	 	 	 	 
	 	ELK CREEK OPERATING, L.P.


 	 
	 	 	By: 	
Elk Creek Operating GP, LLC, as

General Partner

 	 
	 	 	By:  	 	 
	 	 		Name:  J. Richard Gist 	 
	 	 		Title:    Authorized Person 	 
	 


	 	 	 	 	 
	 	CERALVO HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 







[SIGNATURE PAGE 4 OF 5 TO SECURITY AGREEMENT (REVOLVER)]




	 	 	 	 	 
	                 
              TERM PARTY DEBTORS, CONT.

 	 
	 	WESTERN DIAMOND LLC


 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	WESTERN MINERAL

DEVELOPMENT, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 5 OF 5 TO SECURITY AGREEMENT (REVOLVER)]




	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION, as

Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	Richard S. Munsick 	 
	 	 	Title:  	Senior Vice President 	 



 









 






	 	 	 	 	 



SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Armstrong Coal Company, Inc. (the “Debtor”) is
located at: 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Armstrong Coal Company, Inc.
 The Debtor uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: corporation.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4254343.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County,
Union County and/or Webster County, Kentucky, or at the mine office located at 407 Brown
Road, Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties:




     Muhlenberg County, Kentucky

     Ohio County, Kentucky
      Union
County, Kentucky
      Webster County,
Kentucky



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary



     1. The chief executive office of Armstrong Energy, Inc. (the “Debtor”) is located at:
7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Armstrong Energy, Inc. The Debtor
uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: corporation.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4259165.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County,
Union County and/or Webster County, Kentucky, or at the mine office located at 407 Brown
Road, Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.




 











 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Armstrong Land Company, LLC (the “Debtor”) is located
at: 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Armstrong Land Company, LLC.



The Debtor uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization lD # (if any exists) is as follows: 4222070.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County,
Union County and/or Webster County, Kentucky, or at the mine office located at 407 Brown
Road, Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Armstrong Resources Holdings, LLC (the “Debtor”) is
located at: 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Armstrong Resources Holdings, LLC.
The Debtor uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4225013.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County, Union
County and/or Webster County, Kentucky, or at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Ceralvo Holdings, LLC (the “Debtor”) is located at:
7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Ceralvo Holdings, LLC. The Debtor
uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4523736.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County,
Union County and/or Webster County, Kentucky, or at the mine office located at 407 Brown
Road, Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following county: Ohio County,
Kentucky



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Elk Creek GP, LLC (the “Debtor”) is located at: 7733
Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Elk Creek GP, LLC. The Debtor uses
no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4523724.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County,
Union County and/or Webster County, Kentucky, or at the mine office located at 407 Brown
Road, Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Elk Creek Operating GP, LLC (the “Debtor”) is located
at: 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Elk Creek Operating GP, LLC. The
Debtor uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization lD # (if any exists) is as follows: 4523731.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County, Union
County and/or Webster County, Kentucky, or at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Elk Creek, L.P. (the “Debtor”) is located at: 7733
Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Elk Creek, L.P. The Debtor uses no
trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited partnership.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization lD # (if any exists) is as follows: 4523728.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County, Union
County and/or Webster County, Kentucky, or at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Elk Creek Operating, L.P. (the “Debtor”) is located
at: 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Elk Creek Operating, L.P. The Debtor
uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited partnership.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4523733.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County, Union
County and/or Webster County, Kentucky, or at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Western Diamond LLC (the “Debtor”) is located at:
7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Western Diamond LLC. The Debtor uses
no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Nevada.



     5. The Debtor’s organization ID # (if any exists) is as follows: E05802920064.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County,
Union County and/or Webster County, Kentucky, or at the mine office located at 407 Brown
Road, Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties:




Muhlenberg County, Kentucky 

Ohio
County, Kentucky



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Western Land Company, LLC (the “Debtor”) is located
at: 407 Brown Road, Madisonville, Kentucky 42431.



     2. The Debtor’s true and full name is as follows: Western Land Company, LLC. The
Debtor uses no trade names or fictitious names



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Kentucky.



     5. The Debtor’s organization ID # (if any exists) is as follows: 0648177.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County, Union
County and/or Webster County, Kentucky, or at the corporate office located at 7733 Forsyth
Boulevard, Suite 1625, St. Louis, Missouri 63105.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the corporate office located at 7733 Forsyth
Boulevard, Suite 1625, St. Louis, Missouri 63105.



     8. All of the Debtor’s real property is located in the following counties:




Muhlenberg County, Kentucky 

Ohio
County, Kentucky



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Western Mineral Development, LLC (the “Debtor”) is
located at:



     2. The Debtor’s true and full name is as follows:



     3. The Debtor’s form of organization is as follows:



     4. The Debtor’s state of organization is as follows:



     5. The Debtor’s organization rD # (if any exists) is as follows:



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:



     8. All of the Debtor’s real property is located in the following counties:



 









 





SCHEDULE B

TO

SECURITY AGREEMENT (REVOLVER)




Commercial Tort Claims




 









 








EXHIBIT 1.1(S)(2)



FORM OF

SECURITY AGREEMENT (TERM)




     THIS SECURITY AGREEMENT (TERM) (this “Agreement”), dated as of February 9, 2011, is
entered into by and among EACH OF THE PERSONS LISTED ON THE
SIGNATURE PAGES HERETO AS A TERM PARTY DEBTOR AND EACH OF THE OTHER PERSONS WHICH BECOME TERM
PARTY DEBTORS HEREUNDER FROM TIME TO TIME (each a “Term Party Debtor” and collectively, the “Term
Party Debtors”), EACH OF THE PERSONS LISTED ON THE SIGNATURE PAGES HERETO AS A REVOLVER PARTY
DEBTOR AND EACH OF THE OTHER PERSONS WHICH BECOME REVOLVER PARTY DEBTORS HEREUNDER FROM TIME TO
TIME (each a “Revolver Party Debtor” and collectively, the “Revolver Party Debtors”) (the Term
Party Debtors and the Revolver Party Debtors are collectively referred to herein as the “Debtors”
and each a “Debtor”), and PNC BANK, NATIONAL ASSOCIATION, a national banking association, as
administrative agent (the “Administrative Agent”) for the Term Lenders (as defined in the Credit
Agreement, defined below);



WITNESSETH THAT:




     WHEREAS, the Debtors are (or will be with respect to after-acquired property) the
legal and beneficial owner and the holder of the Collateral (as defined in Section 1
hereof); and



     WHEREAS, pursuant to that certain Credit Agreement (as it may hereafter from time to
time be restated, amended, modified or supplemented, the “Credit Agreement”) of even date
herewith by and among Armstrong Coal Company, Inc., Armstrong Land Company, LLC, Elk Creek
L.P., Western Mineral Development, LLC, Western Diamond LLC, Western Land Company, LLC
(collectively, the “Borrower”), the Administrative Agent, the Lenders now or hereafter
party thereto (the “Lenders”) and the Guarantors now or hereafter party thereto (the
“Guarantors”), the Administrative Agent and the Lenders have agreed to make certain loans
to the Borrower; and



     WHEREAS, the obligation of the Administrative Agent and the Term Lenders to make loans
under the Credit Agreement is subject to the condition, among others, that the Loan Parties
secure the Obligations to the Administrative Agent and the Lenders under the Credit
Agreement, the other Loan Documents and otherwise as more fully described herein in the
manner set forth herein.



     NOW, THEREFORE, intending to be legally bound hereby, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:



     1. Terms which are defined in the Credit Agreement and not otherwise defined herein
are used herein as defined therein and the rules of construction set forth in Section 1.2
[Construction] of the Credit Agreement shall apply to this Agreement. The following words
and



 









 







terms shall have the following meanings, respectively, unless the context hereof otherwise clearly
requires:



     (a) “Code” means the Uniform Commercial Code as in effect in the State of New York on
the date hereof and as amended from time to time except to the extent that the conflict of
law rules of such Uniform Commercial Code shall apply the Uniform Commercial Code as in
effect from time to time in any other state to specific property or other matters.



     (b) “Collateral” means all of each Debtor’s right, title and interest in, to and under
the following described property of such Debtor (each capitalized term used in this Section
1(b) shall have in this Agreement the meaning given to it by the Code):




     (i) all now existing and hereafter acquired or arising Accounts, Goods, Health
Care Insurance Receivables, General Intangibles, Payment Intangibles, Deposit
Accounts, Chattel Paper (including, without limitation, Electronic Chattel Paper),
Documents, Instruments, Software, Investment Property, Letters of Credit, Letter of
Credit Rights, advices of credit, money, Commercial Tort Claims as listed on
Schedule B hereto (as such Schedule is amended or supplemented from time to time),
Equipment, As-Extracted Collateral (including As-Extracted Collateral from the
Debtor’s present and future operations regardless of whether such interests are
presently owned or hereafter acquired by the Debtor), Inventory, Fixtures, and
Supporting Obligations, together with all products of and Accessions to any of the
foregoing and all Proceeds of any of the foregoing (including, without limitation,
all insurance policies and proceeds thereof);




     (ii) to the extent, if any, not included in clause (i) above, the Debtor’s
present and future contracts, agreements, arrangements, or understandings (A) for
the sale, supply, transportation, provision or disposition of any coal or other
minerals by the Debtor, or any one or more of its agents, representatives,
successors, or assigns, to any purchaser or acquirer thereof, and all products,
replacements, and proceeds thereof (including without limitation all coal sales
contracts) and (B) relating to the mining, drilling or recovery of any mineral
reserves for the benefit of or on behalf of the Debtor or any of its agents,
representatives, successors, or assigns (including without limitation all contract
mining, drilling or recovery agreements and arrangements), and all products and
Proceeds thereof and payments thereunder, together with all products and Proceeds
(including all insurance proceeds) of and any Accessions to any of the foregoing;




     (iii) to the extent, if any, not included in clauses (i) and (ii) above, all
coal and other minerals severed or extracted from the ground (specifically
including all As-Extracted Collateral of the Debtor and all severed or extracted
coal purchased, acquired or obtained from other parties), and all Accounts, General
Intangibles and products and Proceeds thereof or related thereto, regardless of
whether any such coal or other minerals are in raw form or processed for sale and
regardless whether or not the Debtor had an interest in the coal or other minerals
before extraction or severance;




     (iv) to the extent, if any, not included in clause (i) above, each and every
other item of personal property and fixtures, whether now existing or hereafter
arising or acquired, including, without limitation, all licenses, contracts and
agreements, and all



2









 







collateral for the payment or performance of any contract or agreement, together with
all products and Proceeds (including all insurance policies and proceeds) of any Accessions
to any of the foregoing; and




     (v) all present and future business records and information, including
computer tapes and other storage media containing the same and computer programs
and software (including, without limitation, source code, object code and related
manuals and documentation and all licenses to use such software) for accessing and
manipulating such information.



     (c) “Collateral (Revolver)” means the Collateral of each Revolver Party Debtor.



     (d) “Collateral (Term)” means the Collateral of each Term Party Debtor.



     (e) “Receivables” means all of the Collateral, except Equipment, Inventory and
Fixtures.



     (f) “Secured Obligations” shall mean and include the following: (i) all now existing
and hereafter arising Obligations of the Debtors to the Administrative Agent, the Term
Lenders, or any provider of any Lender Provided Interest Rate Hedge or any provider of any
Other Lender Provided Financial Services Product under the Credit Agreement or any of the
other Loan Documents, including all obligations, liabilities, and indebtedness, whether for
principal, interest, fees, expenses or otherwise, of the Debtors to the Administrative
Agent, the Term Lenders, or any obligation in connection with any Lender Provided Interest
Rate Hedge or any Other Lender Provided Financial Services Product, now existing or
hereafter incurred under the Credit Agreement, the Notes, the Guaranty Agreement or any of
the other Loan Documents as any of the same or any one or more of them may from time to
time be amended, restated, modified, or supplemented, together with any and all extensions,
renewals, refinancings, and refundings thereof in whole or in part (and including
obligations, liabilities, and indebtedness arising or accruing after the commencement of
any bankruptcy, insolvency, reorganization, or similar proceeding with respect to the
Debtors or which would have arisen or accrued but for the commencement of such proceeding,
even if the claim for such obligation, liability or indebtedness is not enforceable or
allowable in such proceeding, and including all obligations, liabilities and indebtedness
arising from any extensions of credit under or in connection with the Loan Documents from
time to time, regardless whether any such extensions of credit are in excess of the amount
committed under or contemplated by the Loan Documents or are made in circumstances in which
any condition to extension of credit is not satisfied); (ii) all reimbursement obligations
of the Debtors with respect to any one or more Letters of Credit issued by Administrative
Agent; (iii) all indebtedness, loans, obligations, expenses and liabilities of the Debtors
to the Administrative Agent or any of the Term Lenders, or any obligations incurred in
connection with any Lender Provided Interest Rate Hedge or any Other Lender Provided
Financial Services Product; and (iv) any sums advanced by the Administrative Agent or the
Term Lenders or which may otherwise become due pursuant to the provisions of the Credit
Agreement, the Notes, this Agreement, or any other Loan Documents or pursuant to any other
document or instrument at any time delivered to the Administrative Agent in connection
therewith, including commitment, letter of credit, agent or other fees and charges, and
indemnification obligations under any such document or instrument, together with all
interest



3









 







payable on any of the foregoing, whether such sums are advanced or otherwise become due before
or after the entry of any judgment for foreclosure or any judgment on any Loan Document or with
respect to any default under any of the Secured Obligations.



     (g) “Security Agreement (Revolver)” shall mean that certain Security Agreement
(Revolver) of even date herewith by and among the Debtors and the Agent, entered into as
security for the Revolver Loans.



     2. As security for the due and punctual payment and performance of the Secured
Obligations in full:



     (a) Each Term Party Debtor hereby agrees that the Administrative Agent and the Term
Lenders and any provider of any Lender Provided Interest Rate Hedge or any Other Lender
Provided Financial Services Product shall have, and each Term Party Debtor hereby grants to
and creates in favor of the Administrative Agent for the benefit of itself, the Term
Lenders and any provider of any Lender Provided Interest Rate Hedge or any Other Lender
Provided Financial Services Product, a continuing prior lien on and security interest under
the Code in and to the Collateral (Term) subject only to Permitted Liens. Without limiting
the generality of Section 4 below, each Term Party Debtor further agrees that with respect
to each item of the Collateral (Term) as to which (i) the creation of a valid and
enforceable security interest is not governed exclusively by the Code, or (ii) the
perfection of a valid and enforceable first priority security interest therein under the
Code cannot be accomplished either by the Administrative Agent taking possession thereof or
by the filing in appropriate locations of appropriate Code financing statements executed by
such Term Party Debtor, such Term Party Debtor will at its expense execute and deliver to
the Administrative Agent and hereby does authorize the Administrative Agent to execute and
file such documents, agreements, notices, assignments and instruments and take such further
actions as may be requested by the Administrative Agent from time to time for the purpose
of creating a valid and perfected first priority Lien on such item, subject only to
Permitted Liens, enforceable against such Term Party Debtor and all third parties to secure
the Secured Obligations; provided, however, notwithstanding the foregoing, the Debtors
shall not be required to perfect the Lender’s security interest in titled vehicles.



     (b) Each Revolver Party Debtor hereby agrees that the Administrative Agent and the
Term Lenders and any provider of any Lender Provided Interest Rate Hedge or any Other
Lender Provided Financial Services Product shall have, and each Revolver Party Debtor
hereby grants to and creates in favor of the Administrative Agent for the benefit of
itself, the Term Lenders and any provider of any Lender Provided Interest Rate Hedge or any
Other Lender Provided Financial Services Product, a continuing prior lien on and security
interest under the Code in and to the Collateral (Revolver) subject only to the Revolver
Lenders’ lien on and security interest under the Code in and to the Collateral (Revolver)
pursuant to the Security Agreement (Revolver), and to the Permitted Liens. Without limiting
the generality of Section 4 below, each Revolver Party Debtor further agrees that with
respect to each item of the Collateral (Revolver) as to which (i) the creation of a valid
and enforceable security interest is not governed exclusively by the Code, or (ii) the
perfection of a valid and enforceable second priority security interest therein under the
Code cannot be accomplished either by the Administrative Agent taking possession thereof or
by the filing in appropriate locations of appropriate Code financing statements executed by
such Revolver Party Debtor, such Revolver Party Debtor will at its



4









 







expense execute and deliver to the Administrative Agent and hereby does authorize the
Administrative Agent to execute and file such documents, agreements, notices, assignments and
instruments and take such further actions as may be requested by the Administrative Agent from time
to time for the purpose of creating a valid and perfected second priority Lien on such item,
subject only to the Revolver Lenders’ Lien on such item, and to the Permitted Liens, enforceable
against such Revolver Party Debtor and all third parties to secure the Secured Obligations;
provided, however, notwithstanding the foregoing, the Debtors shall not be required to perfect the
Lender’s security interest in titled vehicles.



     3. Each Debtor represents and warrants to the Administrative Agent and the Term
Lenders that (a) the Debtors have good and marketable title to the Collateral, (b) except
for the security interest granted to and created (i) in favor of the Administrative Agent
for the benefit of itself and the Term Lenders hereunder, and (ii) under the Security
Agreement (Revolver), and Permitted Liens, all the Collateral (Term) is free and clear of
any Lien, (c) the Debtors will defend the Collateral against all claims and demands of all
persons at any time claiming the same or any interest therein, (d) each Account is genuine
and enforceable in accordance with its terms and the Debtors will defend the same against
all claims, demands, recoupment, setoffs, and counterclaims at any time asserted, (e) at
the time any Account becomes subject to this Agreement, each such Account will be a good
and valid Account representing a bona fide sale of goods or services by the Debtors and
such goods will have been shipped to the respective account debtors or the services will
have been performed for the respective account debtors (or for those on behalf of whom the
account debtors are obligated on the Accounts), and no such Account will at such time be
subject to any claim for credit, allowance, setoff, recoupment, defense, counterclaim or
adjustment by any account debtor or otherwise, except such items arising in the ordinary
course of business that do not result in a Material Adverse Change, (f) the exact legal
name of each Debtor is as set forth on the signature page hereto, and (g) the state of
incorporation, formation or organization as applicable, of each Debtor is as set forth on
Schedule A hereto, (h) the address (including county and state) of each mining operation
of such Debtor is set forth on Schedule A hereto. Each Debtor also represents and warrants
that it has provided the Administrative Agent with a real estate description sufficient to
enable the Administrative Agent to record a financing statement in the county records
sufficient to perfect a security interest in all As-Extracted Collateral arising from such
Debtor’s mining activities. Further, such Debtor represents and warrants that (i) this
Agreement creates a valid security interest in favor of the Administrative Agent, for the
benefit of itself, the Term Lenders hereunder and any provider of any Lender Provided
Interest Rate Hedge or any Other Lender Provided Financial Services Product, in the
Collateral, except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and by general
principles of equity and (ii) the security interests granted hereunder in favor of the
Administrative Agent, for the benefit of itself, the Term Lenders hereunder and any
provider of any Lender Provided Interest Rate Hedge or any Other Lender Provided Financial
Services Product, will constitute a prior security interest (subject only to Permitted
Liens) as to the Collateral (Term), and a prior security interest (subject only to the
Revolver Lenders’ lien on and security interest under the Code in and to the Collateral
(Revolver) pursuant to the Security Agreement (Revolver), and to Permitted Liens) as to the
Collateral (Revolver) and will be perfected, to the extent such liens and security
interests can be perfected under the Code by filing financing statements, (A) with respect
to the Collateral (other than As-Extracted Collateral) of such Debtor, upon the proper
filing of the financing statements in the jurisdiction of the state of



5









 







formation of such Debtor as indicated on Schedule A hereto, and (B) with respect to the
As-Extracted Collateral of such Debtor, upon the proper filing of the financing statements in the
county’s real estate records in the county identified on Schedule A hereto as the location of
“Locations of Real Property” with respect to such Debtor; provided that for the avoidance of doubt,
the Term Lenders acknowledge that no Debtor has, and will not, absent a request from the
Administrative Agent, perfect the Lien in favor of the Administrative Agent for the benefit of the
Term Lenders, in any titled vehicles constituting Collateral.



     4. Each Debtor will faithfully preserve and protect the Administrative Agent’s
security interest in the Collateral as a prior perfected security interest under the Code,
superior and prior to the rights of all third Persons, except for holders of Permitted
Liens; provided, however, notwithstanding the foregoing, the Debtors shall not be required
to perfect the Term Lender’s security interest in titled vehicles, and will do all such
other acts and things and will, upon request therefor by the Administrative Agent, execute,
deliver, file and record, and each Debtor hereby authorizes the Administrative Agent to so
file, all such other documents and instruments, including, without limitation, financing
statements, security agreements, assignments and documents and powers of attorney with
respect to the Collateral, and pay all filing fees and taxes related thereto, as the
Administrative Agent in its reasonable discretion may deem necessary or advisable from time
to time in order to attach, continue, preserve, perfect, and protect said security interest
(including the filing at any time or times after the date hereof of financing statements
under, and in the locations advisable pursuant to, the Code); and, upon the occurrence of
an Event of Default that has not been waived, each Debtor hereby irrevocably appoints the
Administrative Agent, its officers, employees and agents, or any of them, as
attorneys-in-fact for each Debtor to execute, deliver, file and record such items for such
Debtor and in the Debtor’s name, place and stead to preserve, continue, perfect and protect
said security interest. This power of attorney, being coupled with an interest, shall be
irrevocable for the life of this Agreement.



     5. Except as each Debtor may be permitted under the Credit Agreement, including,
without limitation, actions taken by such Debtor with respect to a Permitted Joint Venture,
each Debtor covenants and agrees that:



     (a) it will defend the Administrative Agent’s and the Term Lenders’ right, title and
lien on and security interest in and to the Collateral and the Proceeds thereof against the
claims and demands of all Persons whomsoever, other than any Person claiming a right in the
Collateral pursuant to an agreement between such Person and the Administrative Agent, or
pursuant to a Permitted Lien;



     (b) it will not suffer or permit to exist on any Collateral any Lien except for
Permitted Liens;



     (c) it will not take or omit to take any action, the taking or the omission of which
might result in a material alteration (except as permitted by the Credit Agreement) or
impairment of the Collateral or of the Administrative Agent’s rights under this Agreement;



     (d) it will not sell, assign or otherwise dispose of any portion of the Collateral
except as permitted in Section 8.2.7 [Disposition of Assets or Subsidiaries] of the Credit
Agreement;



6









 





     (e) it will (i) except for such Collateral delivered to the Administrative Agent
pursuant to this Section or otherwise now or hereafter under the control of the
Administrative Agent, obtain and maintain sole and exclusive possession of the Collateral,
except Collateral in transit or that is temporarily stored or located off-site in the
ordinary course of business, (ii) maintain its chief executive office and keep the
Collateral (except titled vehicles) and all records pertaining thereto at the locations
specified on the Security Interest Data Summary attached as Schedule A hereto, unless it
shall have given the Administrative Agent prior notice and taken any action reasonably
requested by the Administrative Agent to maintain its security interest therein, (iii)
notify the Administrative Agent if an Account becomes evidenced or secured by an Instrument
or Chattel Paper and deliver to the Administrative Agent upon the Administrative Agent’s
request therefor all Collateral consisting of Instruments and Chattel Paper immediately
upon the Debtor’s receipt of a request therefor, (iv) deliver to the Administrative Agent
possession of all Collateral the possession of which is required to perfect the
Administrative Agent’s Lien thereon or security interest therein or the possession of which
grants priority over a Person filing a financing statement with respect thereto, (v)
execute control agreements and cause other Persons to execute acknowledgments in form and
substance reasonably satisfactory to the Administrative Agent evidencing the Administrative
Agent’s control with respect to all Collateral the control or acknowledgment of which
perfects the Administrative Agent’s security interest therein, including Letters of Credit,
Letter of Credit Rights, Electronic Chattel Paper, Deposit Accounts and Investment
Property, and (vi) keep materially accurate and complete books and records concerning the
Collateral and such other books and records as the Administrative Agent may from time to
time reasonably require;



     (f) it will promptly furnish to the Administrative Agent such information and
documents relating to the Collateral as the Administrative Agent may reasonably request,
including, without limitation, all invoices, Documents, contracts, Chattel Paper,
Instruments and other writings pertaining to such Debtor’s contracts or the performance
thereof, all of the foregoing to be certified upon request of the Administrative Agent by
an authorized officer of such Debtor;



     (g) it shall immediately notify the Administrative Agent if any Account arises out of
contracts with the United States or any department, agency or instrumentality thereof or
any one or more of the states of the United States or any department, agency, or
instrumentality thereof, and will execute any instruments and take any steps required by
the Administrative Agent so that all monies due and to become due under such contract shall
be assigned to the Administrative Agent and notice of the assignment given to and
acknowledged by the appropriate government agency or authority under the Federal Assignment
of Claims Act;



     (h) it will not change its state of incorporation, formation or organization, as
applicable without providing thirty (30) days prior written notice to the Administrative
Agent;



     (i) it will not change its name without providing thirty (30) days prior written
notice to the Administrative Agent;



     (j) it shall, except as permitted by Section 8.2.6 or Section 8.2.7 of the Credit
Agreement, preserve its current existence as a corporation, partnership or a limited
liability company, as applicable, and shall not (i) in one, or a series of related
transactions, merge into or



7









 







consolidate with any other entity, the survivor of which is not a Debtor, or (ii) sell all or
substantially all or its assets;



     (k) if such Debtor shall at any time acquire a commercial tort claim, as defined in
the Code, the Debtor shall immediately notify the Administrative Agent in a writing signed
by such Debtor of the details thereof and grant to the Administrative Agent for the benefit
of itself, the Revolver Lenders and any provider of any Lender Provided Interest Rate Hedge
or any Other Lender Provided Financial Services Product in such writing a security interest
therein and in the Proceeds thereof, with such writing to be in form and substance
reasonably satisfactory to the Administrative Agent and such writing shall constitute a
supplement to Schedule B hereto;



     (1) it hereby authorizes the Administrative Agent to, at any time and from time to
time, file in any one or more jurisdictions financing statements that describe the
Collateral, together with continuation statements thereof and amendments thereto, without
the signature of such Debtor and which contain any information required by the Code or any
other applicable statute applicable to such jurisdiction for the sufficiency or filing
office acceptance of any financing statements, continuation statements, or amendments. Each
Debtor agrees to furnish any such information to the Administrative Agent promptly upon
request. Any such financing statements, continuation statements, or amendments may be
signed by Administrative Agent on behalf of such Debtor if the Administrative Agent so
elects and may be filed at any time in any jurisdiction; and



     (m) it shall at any time and from time to time take such steps as the Administrative
Agent may reasonably request as are necessary for the Administrative Agent to insure the
continued perfection of the Administrative Agent’s and the Term Lenders’ security interest
in the Collateral with the same priority required hereby and the preservation of its rights
therein; provided, however, notwithstanding the foregoing, the Debtors shall not be
required to perfect the Lender’s security interest in titled vehicles.



     6. Each Debtor assumes full responsibility for taking any and all necessary steps to
preserve the Administrative Agent’s and the Term Lenders’ rights with respect to the
Collateral against all Persons other than anyone asserting rights in respect of a Permitted
Lien. The Administrative Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Administrative Agent
takes such action for that purpose as the Debtor shall request in writing; provided that
such requested action will not, in the judgment of the Administrative Agent, impair the
security interest in the Collateral created hereby or the Administrative Agent’s and the
Term Lenders’ rights in, or the value of, the Collateral; provided, further, that such
written request is received by the Administrative Agent in sufficient time to permit the
Administrative Agent to take the requested action; provided further, however, the Debtors
shall not be required to perfect the Lender’s security interest in titled vehicles.



     7. The pledge, security interests and other Liens and the Obligation of each Debtor
hereunder shall not be discharged until Payment in Full of the Secured Obligations, or as
otherwise occurring upon the sale of inventory in the ordinary course of business. The
pledge, security interests, and other Liens and the Obligations of each Debtor hereunder
shall not be discharged or impaired or otherwise diminished by any failure, default,
omission, or delay,



8









 







willful or otherwise, by Administrative Agent, or any other obligor on any of the Secured
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 such Debtor or which would otherwise
operate as a discharge of the Debtor as a matter of law or equity. Without limiting the generality
of the foregoing, each Debtor hereby consents to, and the pledge, security interests, and other
Liens given by such Debtor hereunder shall not be diminished, terminated, or otherwise similarly
affected by any of the following at any time and from time to time:



     (a) Any lack of genuineness, legality, validity, enforceability, or allowability (in a
bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any
avoidance or subordination, in whole or in part, of any Loan Document or any of the Secured
Obligations and regardless of any law, regulation, or order now or hereafter in effect in
any jurisdiction affecting any of the Secured Obligations, any of the terms of the Loan
Documents, or any rights of the Administrative Agent or any other Person with respect
thereto;



     (b) Any increase, decrease, or change in the amount, nature, type or purpose of any of
the Secured 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 Secured 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 Secured Obligations;



     (c) Any failure to assert any breach of or default under any Loan Document or any of
the Secured 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 Debtor or any other Person
under or in connection with any Loan Document or any of the Secured Obligations; any
refusal of payment or performance of any of the Secured Obligations, whether or not with
any reservation of rights against any Debtor; or any application of collections (including
collections resulting from realization upon any direct or indirect security for the Secured
Obligations) to other Obligations, if any, not entitled to the benefits of this Agreement,
in preference to Secured Obligations or, if any collections are applied to Secured
Obligations, any application to particular Secured Obligations;



     (d) Any taking, exchange, amendment, modification, supplement, termination,
subordination, release, 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 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 Administrative Agent or any other Person in
respect of, any direct or indirect security for any of the Secured Obligations (including
the Collateral). As used in this Agreement, “direct or indirect security” for the Secured
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



9









 







assurance of payment or performance of any of the Secured Obligations, made by or on behalf of any
Person;



     (e) Any merger, consolidation, liquidation, dissolution, winding-up, charter
revocation, or forfeiture, or other change in, restructuring or termination of the existing
structure or existence of, any Debtor or any other Person; any bankruptcy, insolvency,
reorganization or similar proceeding with respect to any Debtor or any other Person; or any
action taken or election (including any election under Section 1111(b)(2) of the United
States Bankruptcy Code or any comparable law of any jurisdiction) made by Administrative
Agent or the Debtor or by any other Person in connection with any such proceeding;



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



     (g) 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 a guarantor or a surety, including each Debtor, excepting only full,
strict, and indefeasible payment and performance of the Secured Obligations in full.



     8. Each Debtor hereby waives any and all defenses which such Debtor may now or
hereafter have based on principles of suretyship, impairment of collateral, or the like and
each Debtor 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 the
immediately preceding section hereof. Without limiting the generality of the foregoing and
to the fullest extent permitted by applicable law, each Debtor hereby further waives each
of the following:



     (a) All notices, disclosures and demands of any nature which otherwise might be
required from time to time to preserve intact any rights against such Debtor, including the
following: any notice of any event or circumstance described in the immediately preceding
section 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 Secured Obligations; any notice of the incurrence of
any Secured Obligations; any notice of any default or any failure on the part of the
Debtors or any other Person to comply with any Loan Document or any of the Secured
Obligations or any requirement pertaining to any direct or indirect security for any of the
Secured Obligations; and any notice or other information pertaining to the business,
operations, condition (financial or otherwise), or prospects of the Debtors or any other
Person;



     (b) Any right to any marshalling of assets, to the filing of any claim against such
Debtor or any other Person in the event of any bankruptcy, insolvency, reorganization, or
similar proceeding, or to the exercise against such Debtor or any other Person of any other
right or remedy under or in connection with any Loan Document or any of the Secured
Obligations or any direct or indirect security for any of the Secured Obligations; any
requirement of promptness or diligence on the part of the Administrative Agent or any other
Person; any requirement to



10









 







exhaust any remedies under or in connection with, or to mitigate the damages resulting from
default under, any Loan Document or any of the Secured Obligations or any direct or indirect
security for any of the Secured 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
such Debtor receive notice of any such acceptance; and



     (c) 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 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 (including commencement or completion of any judicial
proceeding or nonjudicial sale or other action in respect of the Collateral for any of the
Secured Obligations), which results in denial or impairment of the right of the
Administrative Agent to seek a deficiency against such Debtor or any other Person or which
otherwise discharges or impairs any of the Secured Obligations.



     9. (a) At any time and from time to time whether or not an Event of Default then
exists and without prior notice to or consent of any Debtor, the Administrative Agent may
at its option take such actions as the Administrative Agent deems appropriate (i) to
attach, perfect, continue, preserve and protect the Administrative Agent’s and the Term
Lenders’ security interest in or Lien on the Collateral, (ii) to inspect, audit and verify
the Collateral, including reviewing all of each Debtor’s books and records and copying and
making excerpts therefrom; provided that prior to an Event of Default or a Potential
Default, the same is done with advance notice during normal business hours to the extent
access to such Debtor’s premises is required, and (iii) to add all liabilities,
obligations, costs and expenses reasonably incurred in connection with the foregoing
clauses (i) and (ii) to the Secured Obligations, to be paid by the Debtors to the
Administrative Agent for the benefit of the Administrative Agent and the Term Lenders
within ten (10) days after demand; provided further, however, the Debtors shall not be
required to perfect the Lender’s security interest in titled vehicles;



     (b) At any time and from time to time after an Event of Default exists and is
continuing and without prior notice to or consent of any Debtor, the Administrative Agent
may at its option take such action as the Administrative Agent deems appropriate (i) to
maintain, repair, protect and insure the Collateral, (ii) to perform, keep, observe and
render true and correct any and all covenants, agreements, representations and warranties
of the Debtors hereunder, and (iii) to add all liabilities, obligations, costs and expenses
reasonably incurred in connection with the foregoing clauses (i) and (ii) to the Secured
Obligations, to be paid by the Debtors to the Administrative Agent for the benefit of the
Administrative Agent and the Term Lenders within ten (10) days after demand.



     10. After there exists any Event of Default under the Credit Agreement:



     (a) The Administrative Agent shall have and may exercise all the rights and remedies
available to a secured party under the Code in effect at the time, and such other rights
and remedies as may be provided at Law and as set forth below, including, without
limitation, to take over and collect all of any Debtor’s Receivables and all other
Collateral, and to this end each Debtors hereby appoints the Administrative Agent, its
officers, employees and agents, as its irrevocable, true and lawful attorneys-in-fact with
all necessary power and authority to (i) take



11









 







possession immediately, with or without notice, demand, or legal process, of any of or all of
the Collateral wherever found, and for such purposes, enter upon any premises upon which the
Collateral may be found and remove the Collateral therefrom, (ii) require any Debtor to assemble
the Collateral and deliver it to the Administrative Agent or to any place designated by the
Administrative Agent at the Debtors’ expense, (iii) receive, open and dispose of all mail addressed
to any Debtor and notify postal authorities to change the address for delivery thereof to such
address as the Administrative Agent may designate, (iv) demand payment of the Receivables, (v)
enforce payment of the Receivables by legal proceedings or otherwise, (vi) exercise all of any
Debtor’s rights and remedies with respect to the collection of the Receivables, (vii) settle,
adjust, compromise, extend or renew the Receivables, (viii) settle, adjust or compromise any legal
proceedings brought to collect the Receivables, (ix) to the extent permitted by applicable Law,
sell or assign the Receivables upon such terms, for such amounts and at such time or times as the
Administrative Agent deems advisable, (x) discharge and release the Receivables, (xi) take control,
in any manner, of any item of payment or Proceeds from any account debtor, (xii) prepare, file and
sign any Debtor’s name on any proof of claim in Relief Proceeding or similar document against any
account debtor, (xiii) prepare, file and sign any Debtor’s name on any notice of Lien, assignment
or satisfaction of Lien or similar document in connection with the Receivables, (xiv) do all acts
and things necessary, in the Administrative Agent’s sole discretion, to fulfill each Debtor’s
obligations to the Administrative Agent or the Revolver Lenders under the Credit Agreement, Loan
Documents or otherwise, (xv) endorse the name of any Debtor upon any check, Chattel Paper,
Document, Instrument, invoice, freight bill, bill of lading or similar document or agreement
relating to the Receivables or Inventory, (xvi) use any Debtor’s stationery and sign such Debtor’s
name to verifications of the Receivables and notices thereof to account debtors, (xvii) access and
use the information recorded on or contained in any data processing equipment or computer hardware
or software relating to the Receivables, Inventory, or other Collateral or proceeds thereof to
which any Debtor has access, (xviii) demand, sue for, collect, compromise and give acquittances for
any and all Collateral, (xix) prosecute, defend or compromise any action, claim or proceeding with
respect to any of the Collateral, and (xx) take such other action as the Administrative Agent may
deem appropriate, including extending or modifying the terms of payment of any Debtor’s debtors.
This power of attorney, being coupled with an interest, shall be irrevocable for the life of this
Agreement. To the extent permitted by Law, each Debtor hereby waives all claims of damages due to
or arising from or connected with any of the rights or remedies exercised by the Administrative
Agent pursuant to this Agreement, except claims for physical damage to the Collateral arising from
gross negligence or willful misconduct by the Administrative Agent.



     (b) The Administrative Agent shall have the right to lease, sell or otherwise dispose
of all or any of the Collateral at public or private sale or sales for cash, credit or any
combination thereof, with such notice as may be required by Law (it being agreed by the
Debtors that, in the absence of any contrary requirement of Law, ten (10) days’ prior
notice of a public or private sale of Collateral shall be deemed reasonable notice), in
lots or in bulk, for cash or on credit, all as the Administrative Agent, in its sole
discretion, may deem advisable. Such sales may be adjourned from time to time with or
without notice. The Administrative Agent shall have the right to conduct such sales on any
Debtor’s premises or elsewhere and shall have the right to use any Debtor’s premises
without charge for such sales for such time or times as the Administrative Agent may see
fit. The Administrative Agent may purchase all or any part of the Collateral at



12









 







public or, if permitted by Law, private sale and, in lieu of actual payment of such purchase price,
may set off the amount of such price against the Secured Obligations.



     (c) Each Debtor, at its cost and expense (including the cost and expense of any of the
following referenced consents, approvals, etc.), will promptly execute and deliver or cause
the execution and delivery of all applications, certificates, instruments, registration
statements, and all other documents and papers the Administrative Agent may request in
connection with the obtaining of any consent, approval, registration, qualification,
permit, license, accreditation, or authorization of any other Official Body or other Person
necessary or appropriate for the effective exercise of any rights hereunder or under the
other Loan Documents. Without limiting the generality of the foregoing, each Debtor agrees
that in the event the Administrative Agent on behalf of itself and/or the Term Lenders
shall exercise its rights hereunder or pursuant to the other Loan Documents, to sell,
transfer, or otherwise dispose of, or vote, consent, operate, or take any other action in
connection with any of the Collateral, each Debtor shall execute and deliver (or cause to
be executed and delivered) all applications, certificates, assignments and other documents
that the Administrative Agent requests to facilitate such actions and shall otherwise
promptly, fully, and diligently cooperate with the Administrative Agent and any other
Persons in making any application for the prior consent or approval of any Official Body or
any other Person to the exercise by the Administrative Agent on behalf of itself and/or the
Term Lenders or any such rights relating to all or any of the Collateral. Furthermore,
because each Debtor agrees that the remedies at law, of the Administrative Agent on behalf
of itself and/or the Term Lenders, for failure of such Debtor to comply with this
subsection (c) would be inadequate, and that any such failure would not be adequately
compensable in damages, each Debtor agrees that this Subsection (c) may be specifically
enforced.



     (d) The Administrative Agent may request, without limiting the rights and remedies of
the Administrative Agent on behalf of itself and the Term Lenders otherwise provided
hereunder and under the other Loan Documents, that each Debtor do any of the following: (i)
give the Administrative Agent on behalf of itself and the Term Lenders specific assignments
of the accounts receivable of the Debtors after such accounts receivable come into
existence, and schedules of such accounts receivable, the form and content of such
assignment and schedules to be reasonably satisfactory to Administrative Agent, and (ii) in
order to better secure the Administrative Agent on behalf of itself and the Term Lenders,
to the extent permitted by Law, enter into such lockbox agreements and establish such
lockbox accounts as the Administrative Agent may require, all at the sole expense of the
Debtors and shall direct all payments from all payors due to each Debtor, to such lockbox
accounts.



     11. The Lien on and security interest in the Collateral granted to and created in
favor of the Administrative Agent by this Agreement shall be for the benefit of the
Administrative Agent and the Term Lenders and any provider of any Lender Provided Interest
Rate Hedge or any Other Lender Provided Financial Services Product. Each of the rights,
privileges, and remedies provided to the Administrative Agent hereunder or otherwise by Law
with respect to the Collateral shall be exercised by the Administrative Agent only for its
own benefit and the benefit of the Term Lenders and for the benefit of any provider of any
Lender Provided Interest Rate Hedge or any Other Lender Provided Financial Services
Product, and any of the Collateral or Proceeds thereof held or realized upon at any time by
the Administrative Agent shall be applied as set forth in Section 9.2.4 [Application of
Proceeds] of the Credit Agreement. Each



13









 







Debtor shall remain liable to the Administrative Agent and the Term Lenders and any provider of any
Lender Provided Interest Rate Hedge or any Other Lender Provided Financial Services Product for and
shall pay to the Administrative Agent for the benefit of itself and the Term Lenders and any
provider of any Lender Provided Interest Rate Hedge or any Other Lender Provided Financial Services
Product any deficiency which may remain after such sale or collection.



     12. If the Administrative Agent repossesses or seeks to repossess any of the
Collateral pursuant to the terms hereof because of the occurrence of an Event of Default,
then to the extent it is commercially reasonable for the Administrative Agent to store any
Collateral on any premises of any Debtor, such Debtor hereby agrees to lease to the
Administrative Agent on a month-to-month tenancy for a period not to exceed ninety (90)
days at the Administrative Agent’s election, at a rental rate equal to One Dollar ($1.00)
per month (if such Debtor owns the premises), and at the current rental rate per month (if
such Debtor leases the premises), the premises on which the Collateral is located; provided
it is located on premises owned or leased by such Debtor.



     13. Upon Payment in Full of the Secured Obligations, the expiration of all
Commitments and Letters of Credit, and termination of the Credit Agreement, this Agreement
shall terminate and be of no further force and effect, and the Administrative Agent shall thereupon
promptly return to such Debtor such of the Collateral and such other documents delivered by the
Debtor or obtained by the Administrative Agent hereunder as may then be in the Administrative
Agent’s possession, subject to the rights of third parties. Until such time, however, this
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.



     14. No failure or delay on the part of the Administrative Agent in exercising any
right, remedy, power or privilege hereunder shall operate as a waiver thereof or of any
other right, remedy, power or privilege of the Administrative Agent hereunder; nor shall
any single or partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy, power or
privilege. No waiver of a single Event of Default shall be deemed a waiver of a subsequent
Event of Default. All waivers under this Agreement must be in writing. The rights and
remedies of the Administrative Agent under this Agreement are cumulative and in addition to
any rights or remedies which it may otherwise have, and the Administrative Agent may
enforce any one or more remedies hereunder successively or concurrently at its option.



     15. All notices, statements, requests and demands given to or made upon either party
hereto in accordance with the provisions of this Agreement shall be given or made as
provided in Section 11.5 [Notices; Effectiveness; Electronic Communication] of the Credit
Agreement.



     16. Each Debtor agrees that as of the date hereof, all information contained on the
Security Interest Data Summary attached hereto as Schedule A is accurate and complete and
contains no material omission or misrepresentation. Each Debtor shall promptly notify the
Administrative Agent of any changes in the information set forth thereon.



14









 





     17. Each Debtor acknowledges that the provisions hereof giving the Administrative
Agent rights of access to books, records and information concerning the Collateral and such
Debtor’s operations and providing the Administrative Agent access to such Debtor’s premises
are intended to afford the Administrative Agent with immediate access to current
information concerning the Debtor and its activities, including without limitation, the
value, nature and location of the Collateral so that the Administrative Agent can, among
other things, make an appropriate determination after the occurrence of an Event of
Default, whether and when to exercise its other remedies hereunder and at Law, including,
without limitation, instituting a replevin action should the Debtor refuse to turn over any
Collateral to the Administrative Agent. Each Debtor further acknowledges that should such
Debtor at any time fail to promptly provide such information and access to the
Administrative Agent, such Debtor acknowledges that the Administrative Agent would have no
adequate remedy at Law to promptly obtain the same. Each Debtor agrees that the provisions
hereof may be specifically enforced by the Administrative Agent and waives any claim or
defense in any such action or proceeding that the Administrative Agent has an adequate
remedy at Law.



     18. This Agreement shall be binding upon, and inure to the benefit of, the
Administrative Agent, the Term Lenders and their respective successors and assigns, and the
Debtors and each of their respective successors and assigns, except that the Debtors may
not assign or transfer their obligations hereunder or any interest herein.



     19. This Agreement shall be deemed to be a contract under the laws of the State of New
York and for all purposes shall be governed by, and construed in accordance with, the laws
of said State excluding its rules relating to conflicts of law.



     20. Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.



     21. Each Debtor hereby irrevocably submits to the nonexclusive jurisdiction of any New
York state or federal court sitting in New York County, in any action or proceeding arising
out of or relating to this Agreement, and each Debtor hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in such New York
state or federal court. Each Debtor hereby waives to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of any such action or
proceeding. Each Debtor hereby appoints the process agent identified below (the “Process
Agent”) as its agent to reCeive on behalf of such party and its respective property service
of copies of the summons and complaint and any other process which may be served in any
action or proceeding. Such service may be made by mailing or delivering a copy of such
process to the Debtor in care of the Process Agent at the Process Agent’s address, and each
Debtor hereby authorizes and directs the Process Agent to receive such service on its
behalf. Each Debtor agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions (or any political subdivision
thereof) by suit on the judgment or in any other manner provided at law. Each Debtor
further agrees that it shall, for so long as any commitment or any obligation of any Loan
Party to any Lender remains outstanding, continue to retain Process Agent for the purposes
set forth in this Section 21. The Process Agent is the Armstrong Land Company, LLC, with an



15









 







office on the date hereof as set forth in the Credit Agreement. The Process Agent hereby
accepts the appointment of Process Agent by the Companies and agrees to act as Process Agent on
behalf of the Companies.



     22. EXCEPT AS PROHIBITED BY LAW, EACH DEBTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY A JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OTHER DOCUMENTS OR TRANSACTIONS RELATING THERETO.



     23. This Agreement may be executed in any number of counterparts, and by different
parties hereto in separate counterparts, each of which, when so executed, shall be deemed
an original, but all such counterparts shall constitute one and the same instrument. Each
Debtor acknowledges and agrees that a telecopy transmission to the Administrative Agent or
any Term Lender of the signature pages hereof purporting to be signed on behalf of the
Debtor shall constitute effective and binding execution and delivery hereof by such Debtor.



[SIGNATURE PAGES FOLLOW]





16











 





[SIGNATURE PAGE 1 OF 5 TO SECURITY AGREEMENT (TERM)]




     IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized,
have executed and delivered this Agreement as of the day and year first above set forth
with the intention that this Agreement constitutes a sealed instrument.



     REVOLVER PARTY DEBTORS


	 	 	 	 	 
	 	

ARMSTRONG COAL COMPANY, INC.
 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ARMSTRONG ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ARMSTRONG RESOURCES

HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






[SIGNATURE PAGE 2 OF 5 TO SECURITY AGREEMENT (TERM)]




	 	 	 	 	 
	 	REVOLVER PARTY DEBTORS,
CONT.



ELK CREEK GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 
	 	[SIGNATURE PAGE 3 OF 5 TO SECURITY AGREEMENT (TERM)]
 



	 	 	 	 	 
	 	TERM PARTY DEBTORS



        ELK CREEK, L.P.



        By: Elk Creek GP, LLC, as General

               Partner

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ELK CREEK OPERATING GP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	ELK CREEK OPERATING, L.P.



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

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	CERALVO HOLDINGS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	WESTERN LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 4 OF 5 TO SECURITY AGREEMENT (TERM)]


         TERM PARTY DEBTORS, CONT.


	 	 	 	 	 
	 	

WESTERN DIAMOND LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 
	 



	 	 	 	 	 
	 	WESTERN MINERAL


DEVELOPMENT, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	J. Richard Gist 	 
	 	 	Title:  	Authorized Person 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE 5 OF 5 TO SECURITY AGREEMENT (TERM)]




	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION, as

Administrative Agent

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



 









 






	 	 	 	 	 



SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary





     1. The chief executive office of Armstrong Coal Company, Inc. (the “Debtor”) is
located at: 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Armstrong Coal Company, Inc.



     The Debtor uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: corporation.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4254343.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County,
Union County and/or Webster County, Kentucky, or at the mine office located at 407 Brown
Road, Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:



     Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties:


Muhlenberg County, Kentucky

Ohio County, Kentucky

Union County, Kentucky

Webster County, Kentucky






 









 








SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Armstrong Energy, Inc. (the “Debtor”) is located at:
7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Armstrong Energy, Inc. The Debtor
uses no trade names or fictitious names



     3. The Debtor’s form of organization is as follows: corporation.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4259165.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County, Union
County and/or Webster County, Kentucky, or at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Armstrong Land Company, LLC (the “Debtor”) is located
at: 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Armstrong Land Company, LLC.



     The Debtor uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization lD # (if any exists) is as follows: 4222070.



     6. All of the Debtor’s personal property which has not been delivered to the Administrative
Agent pursuant to the terms of this Agreement or the Credit Agreement is now, and will be at all
future times, located at the Debtor’s chief executive office as described in Paragraph 1 above,
except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County,
Union County and/or Webster County, Kentucky, or at the mine office located at 407 Brown
Road, Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Armstrong Resources Holdings, LLC (the “Debtor”) is
located at: 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Armstrong Resources Holdings, LLC.
The Debtor uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4225013.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County, Union
County and/or Webster County, Kentucky, or at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.





 









 








SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Ceralvo Holdings, LLC (the “Debtor”) is located at:
7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Ceralvo Holdings, LLC. The Debtor
uses no trade names or fictitious names



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4523736.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County,
Union County and/or Webster County, Kentucky, or at the mine office located at 407 Brown
Road, Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following county:





Ohio County, Kentucky




 









 





SCHEDULE A

to

SECURITY AGREEMENT




 Security Interest Data Summary




     1. The chief executive office of Elk Creek GP, LLC (the “Debtor”) is located at: 7733
Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Elk Creek GP, LLC. The Debtor uses
no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4523724.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County, Union
County and/or Webster County, Kentucky, or at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Elk Creek Operating GP, LLC (the “Debtor”) is located
at: 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Elk Creek Operating GP, LLC. The
Debtor uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4523731.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County,
Union County and/or Webster County, Kentucky, or at the mine office located at 407 Brown
Road, Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.



 









 





SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Elk Creek, L.P. (the “Debtor”) is located at: 7733
Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Elk Creek, L.P. The Debtor uses no
trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited partnership.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization ID # (if any exists) is as follows: 4523728.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County, Union
County and/or Webster County, Kentucky, or at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.




 









 








SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Elk Creek Operating, L.P. (the “Debtor”) is located
at: 7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Elk Creek Operating, L.P. The Debtor
uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited partnership.



     4. The Debtor’s state of organization is as follows: Delaware.



     5. The Debtor’s organization JD # (if any exists) is as follows: 4523733.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County, Union
County and/or Webster County, Kentucky, or at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties: N/A.




 









 








SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Western Diamond LLC (the “Debtor”) is located at:
7733 Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     2. The Debtor’s true and full name is as follows: Western Diamond LLC. The Debtor uses
no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Nevada.



     5. The Debtor’s organization ID # (if any exists) is as follows: E05802920064.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County, Union
County and/or Webster County, Kentucky, or at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the mine office located at 407 Brown Road,
Madisonville, Kentucky 42431.



     8. All of the Debtor’s real property is located in the following counties:


Muhlenberg County, Kentucky Ohio

County, Kentucky






 









 








SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Western Land Company, LLC (the “Debtor”) is located
at: 407 Brown Road, Madisonville, Kentucky 42431.



     2. The Debtor’s true and full name is as follows: Western Land Company, LLC. The
Debtor uses no trade names or fictitious names.



     3. The Debtor’s form of organization is as follows: limited liability company.



     4. The Debtor’s state of organization is as follows: Kentucky.



     5. The Debtor’s organization ID # (if any exists) is as follows: 0648177.



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:




Property that is located at the mining operations in Muhlenberg County, Ohio County,
Union County and/or Webster County, Kentucky, or at the corporate office located at 7733
Forsyth Boulevard, Suite 1625, St. Louis, Missouri 63105.



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:




Books and records that are located at the corporate office located at 7733 Forsyth
Boulevard, Suite 1625, St. Louis, Missouri 63105.



     8. All of the Debtor’s real property is located in the following counties:


Muhlenberg County, Kentucky 
Ohio
County, Kentucky






 









 








SCHEDULE A

to

SECURITY AGREEMENT




Security Interest Data Summary




     1. The chief executive office of Western Mineral Development, LLC (the “Debtor”) is
located at:



     2. The Debtor’s true and full name is as follows:



     3. The Debtor’s form of organization is as follows:



     4. The Debtor’s state of organization is as follows:



     5. The Debtor’s organization ID # (if any exists) is as follows:



     6. All of the Debtor’s personal property which has not been delivered to the
Administrative Agent pursuant to the terms of this Agreement or the Credit Agreement is
now, and will be at all future times, located at the Debtor’s chief executive office as
described in Paragraph 1 above, except as specified below:



     7. All of the Debtor’s books and records, including those relating to accounts payable
and accounts receivable, are kept at the Debtor’s chief executive office as described in
Paragraph 1 above, except as specified below:



     8. All of the Debtor’s real property is located in the following counties:



 









 





SCHEDULE B

TO

SECURITY AGREEMENT (TERM)




Commercial Tort Claims





 











 





EXHIBIT 2.5.1




FORM OF

LOAN REQUEST



	 	 	 

	TO:

	 	PNC Bank, National Association, as Administrative Agent
	 

	 	249 Fifth Avenue
	 

	 	Pittsburgh, PA 15222
	 

	 	Telephone No. : (412) 762-7638
	 

	 	Telecopier No.: (412) 762-8672
	 

	 	Attention: Rini Davis
	 
	 	 
	FROM:

	 	Armstrong Coal Company, Inc., a
Delaware corporation (the “Borrowing Agent”).
	 
	 	 
	RE:

	 	Credit Agreement (as it may be
amended, restated, modified or supplemented, the “Credit
Agreement”), dated as of February 9, 2011, by and among
the Borrowing Agent, Armstrong Land Company, LLC, Elk Creek, L.P.,
Western Mineral Development, LLC, Western Diamond LLC, Western Land
Company, LLC, the Guarantors party thereto, the Lenders party thereto and PNC Bank, National
Association, as administrative agent for the Lenders (the
“Administrative Agent”).





Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to
them by the Credit Agreement.





	A.	 	Pursuant to Section 2.5.1 [Revolving Credit Loan Requests] or Section 4.1.2 [Term Loan Interest
Rate Options], as the case may be, of the Credit Agreement, the undersigned Borrowing Agent
irrevocably requests [check one line under 1. (a) and 1. (b) below, as applicable, and fill in
blank space next to the line as appropriate]





	 	 	 	 	 

	1(a)

	 	                    
	 	A new Revolving Credit Loan, OR
	 
	 	 	 	 
	 

	 	                    
	 	Renewal of the LIBOR Rate Option applicable to an outstanding                                          Revolving Credit
Loan originally made on                     ,20       , OR
	 
	 	 	 	 
	 

	 	                    
	 	Conversion of the Base Rate Option applicable to an outstanding                                          Revolving
Credit Loan originally made on
                    , 20        to a Loan to which the LIBOR Rate Option
applies, OR
	 
	 	 	 	 
	 

	 	                    
	 	Conversion of the LIBOR Rate Option applicable to an outstanding                                          Revolving Credit
Loan originally made on
                            , 20        to a Loan to which the Base Rate Option applies.






 









 






	 	 	 	 	 

	1(b)

	 	                    
	 	Renewal of the LIBOR Rate Option applicable to an outstanding                                          Term Loan originally
made on                      , 20__, OR
	 
	 	 	 	 
	 

	 	                    
	 	Conversion of the Base Rate Option applicable to an outstanding                                          Term Loan
originally made on                     , 20__ to a Loan to which the LIBOR Rate Option applies, OR
	 
	 	 	 	 
	 

	 	                    
	 	Conversion of the LIBOR Rate Option applicable to an outstanding                                          Term Loan
originally made on                      __20__ to a Loan to which the Base Rate Option applies





SUCH NEW, RENEWED OR CONVERTED LOAN SHALL BEAR INTEREST:



[Check one line under 1.(c) below and fill in blank spaces in line next to line] :




	 	 	 	 	 

	1(c)(i)

	 	                    
	 	Under the Base Rate Option. Such Loan shall have a Borrowing Date of                     , 20__ (which
date shall be the same Business Day of receipt by the Administrative Agent by 11:00 a.m.
eastern time of this Loan Request for making a new Revolving Credit Loan to which the Base
Rate Option applies, or (ii) the last day of the preceding Interest Period if a Loan to which
the LIBOR Rate Option applies is being converted to a Loan to which the Base Rate Option
applies).
	 
	 	 	 	 
	 

	 	 	 	OR
	 
	 	 	 	 
	(ii)

	 	                    
	 	Under the LIBOR Rate Option. Such Loan shall have a Borrowing Date of                     , 20__ (which date
shall be (i) three (3) Business Days subsequent to the Business Day of receipt by the
Administrative Agent by 11:00 a.m. eastern time of this Loan Request for making a new Revolving
Credit Loan to which the LIBOR Rate Option applies, renewing a Loan to which the LIBOR Rate
Option applies, or converting a Loan to which the Base Rate Option applies to a Loan to which
the LIBOR Rate Option applies).







	2	 	Such Loan is in the principal amount of U.S. $                     or the principal amount to be renewed or
converted is U.S. $                    
	 
	 	 	[for Loans under Section 2.5.1 not to be less than $1,000,000 and in increments of
$500, 000 for each Borrowing Tranche under the LIBOR Rate Option and not to be less than
the lesser of $100,000 or the maximum amount available for each Borrowing Tranche under
the Base Rate Option.]




2









 






	 	3	 	[Complete blank below if the Borrowing Agent is selecting the LIBOR Rate Option] :
	 
	 	 	 	Such Loan shall have an Interest Period of one, two, three, or six Month(s):




	B	 	 As of the date hereof and the date of making the above-requested Loan (and after giving effect
thereto): the Loan Parties and the other Guarantors have performed and complied with all covenants
and conditions of such Persons under the Credit Agreement and the other Loan Documents; all of the
representations and warranties contained in Section 6 of the Credit Agreement and in the other Loan
Documents are true and correct in all material respects (unless any such representation or warranty
is qualified to materiality, in which case such representation or warranty is true and correct in
all respects), except for representations and warranties made as of a specified date (which were
true and correct in all material respects, as applicable, as of such date); no Event of Default or
Potential Default has occurred and is continuing or exists; the making of such Loan shall not
contravene any Law applicable to the Borrowing Agent, any other Loan Party, any Subsidiary of the
Borrowing Agent or of any other Loan Party or any other Guarantor, or any Lender; the making of
such Loan shall not cause the Revolving Facility Usage to exceed the Revolving Credit Commitments.
	 
	C	 	 Each of the undersigned hereby irrevocably requests [check one line below and fill in blank
spaces next to the line as appropriate] :





	 	 	 	 	 

	 	1

	                    
	 	Funds to be deposited into a PNC Bank bank account per our current standing instructions.
Complete amount of deposit if not full loan advance amount: U.S. $                    
	 
	 	 	 	 
	 	2

	                    
	 	Funds to be wired per the following wire instructions:
	 
	 	 	 	 
	 

	 	 	 	U.S. $                                         Amount of Wire Transfer
	 

	 	 	 	Bank Name:                                         
	 

	 	 	 	ABA:                                                    
	 

	 	 	 	Account Number:                               
	 

	 	 	 	Account Name:                                   
	 

	 	 	 	Reference:                                            
	 
	 	 	 	 
	 	3

	                    
	 	Funds to be wired per the attached Funds Flow (multiple wire transfers).






[SIGNATURE PAGE FOLLOWS]




3









 








[SIGNATURE PAGE 1 OF 1 TO LOAN REQUEST]




     The Borrowing Agent certifies to the Administrative Agent for the benefit of the Lenders as
to the accuracy of the foregoing on ______, 20 __.



	 	 	 	 	 
	 	BORROWING AGENT:



ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	,	 
	 	Name:  	,	 
	 	Title:  	,	 
	 




 











 





EXHIBIT 2.5.2




FORM OF

SWING LOAN REQUEST



	 	 	 

	TO:
	 	PNC Bank, National Association, as Administrative Agent

	 	 	249 Fifth Avenue

	 	 	Pittsburgh, PA 15222

	 	 	Telephone No.: (412) 762-7638

	 	 	Telecopier No.: (412) 762-8672

	 	 	Attention: Rini Davis

	 	 	 

	FROM:
	 	Armstrong Coal Company, Inc., a Delaware corporation (the “Borrowing Agent”)

	 	 	 

	RE:
	 	Credit Agreement (as it may be amended, restated, modified or supplemented, the
“Credit Agreement”), dated as February 9, 2011, by and among Borrowing Agent,
Armstrong Land Company, LLC, Elk Creek, L.P., Western Mineral Development,
LLC, Western Diamond LLC, Western Land Company, LLC, the Guarantors party
thereto, the Lenders party thereto and PNC Bank, National Association, as
administrative agent for the Lenders, (the “Administrative Agent”).







Capitalized terms not otherwise defined herein shall have the respective meanings
given to them by the Agreement.



Pursuant to Section 2.5.2 of the Agreement, the Borrowing Agent hereby makes the
following Swing Loan Request:



	 	 	 	 	 	 	 

	 	1.	 	 	Aggregate principal amount of such Swing
Loan (may not be less than $(100,000 or the
maximum amount available))

	 	U.S. $                    
	 	 	 	 	 
	 	 
	 	2.	 	 	Proposed Borrowing Date
	 	 
	 	 	 	 	(which date shall be on or after the date on
which the Administrative Agent receives this
Swing Loan Request, with such Swing Loan
Request to be received no later than 12:00
noon eastern time on the Borrowing Date)

	 	                    






 









 






	 	 	 	 	 	 	 

	3.	 	As of the date hereof and the date of making the above-requested Swing Loan
(and after giving effect thereto): the Loan Parties and the other Guarantors have
performed and complied with all covenants and conditions of such Persons under
the Credit Agreement and the other Loan Documents; all of the representations
and warranties contained in Section 6 of the Credit Agreement and in the other
Loan Documents are true and correct in all material respects (unless any such
representation or warranty is qualified to materiality, in which case such
representation or warranty is true and correct in all respects), except for
representations and warranties made as of a specified date (which were true and
correct in all material respects, as applicable, as of such date); no Event of Default
or Potential Default has occurred and is continuing or exists; the making of such
Loan shall not contravene any Law applicable to the Borrowing Agent, any other
Loan Party, any Subsidiary of the Borrowing Agent or of any other Loan Party or
any other Guarantor, or any Lender; the making of such Loan shall not exceed the
Swing Loan Commitment or cause the Revolving Facility Usage to exceed the
Revolving Credit Commitments.
	 
	 	 	 	 	 	 
	4.

	 	Each
 of the undersigned hereby irrevocably requests  [check one line below and fill
in blank spaces next to the line as appropriate] :
	 
	 	 	 	 	 	 
	 

	 	A
	 	                    
	 	Funds to be deposited into a PNC Bank bank account per our
current standing instructions. Complete amount of deposit if
not full loan advance amount: U.S. $                    .
	 
	 	 	 	 	 	 
	 

	 	B
	 	                    
	 	Funds to be wired per the following wire instructions:
	 

	 	 	 	 	 	U.S. $                     Amount of Wire Transfer
	 

	 	 	 	 	 	Bank Name:                               
	 

	 	 	 	 	 	ABA:                                           
	 

	 	 	 	 	 	Account Number:                     
	 

	 	 	 	 	 	Account Name:                          
	 

	 	 	 	 	 	Reference:                                  
	 
	 	 	 	 	 	 
	 

	 	C
	 	                    
	 	Funds to be wired per the attached Funds Flow (multiple wire
transfers).






[SIGNATURE PAGE FOLLOWS]



2









 





[SIGNATURE PAGE — SWING LOAN REQUEST]




     The Borrowing Agent certifies to the Administrative Agent for the benefit of the Lenders as to the
accuracy of the foregoing on                     , 20             .



	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	BORROWING AGENT:



	 
	 	 	 	 	ARMSTRONG COAL COMPANY, INC.	 
	 	 	 	By: 	 	, 
	 	 	 	 	Name: 	 	, 
	 	 	 	 	Title:	 	, 






 









 






EXHIBIT 8.3.3




QUARTERLY COMPLIANCE CERTIFICATE



     This certificate is delivered pursuant to Section 8.3.3 of that certain Credit
Agreement dated as of February 9, 2011 (the “Credit Agreement”) 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”), the Lenders party thereto (the
“Lenders”), the Guarantors party thereto (the “Guarantors”) and PNC Bank, National
Association, as Administrative Agent for the Lenders (the “Administrative Agent”). Unless
otherwise defined herein, terms defined in the Credit Agreement are used herein with the
same meanings.



     The undersigned officer,                                          , the                     
 [Chief Executive Officer, President, Chief Financial
Officer, Manager or Controller] of the Borrowers, in such capacity does hereby certify on
behalf of the Borrower as of the quarter/year ended                                          , 20 (the “Report Date”), as follows:




	(1)	 	Minimum Fixed Charge Coverage Ratio (Section 8.2.14). As of the Report Date (and commencing as
of the fiscal quarter ending March 31, 2012), the Fixed Charge Coverage Ratio of the Loan Parties
and their Subsidiaries is            
            [(insert ratio from Item(1)(C) below)], which ratio is greater than or equal to 1.25 to 1.00.







	 	 	The Fixed Charge Coverage Ratio shall be computed as follows:






	 	(A)	 	Consolidated EBITDA less the sum of capital expenditures of the
Loan Parties and their Subsidiaries, as of the Report Date for the
four fiscal quarters then ended, calculated and consolidated in
accordance with GAAP as follows:






	 	(i)	 	Consolidated EBITDA, calculated as follows:





	 	 	 	 	 	 	 	 	 

	 
	 	(a)	 	net income	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(b)	 	depreciation	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(c)	 	depletion	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(d)	 	amortization	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(e)	 	minority interest	 	 	 	 






 









 






PNC Bank, National Association, Agent

Page 2




	 	 	 	 	 

	(f) other non-recurring, non-cash charges to
net income
	 	$	                     	 
	 
	 	 	 	 
	(g) interest expense
	 	$	                     	 
	 
	 	 	 	 
	(h) non-cash loss on derivative items
(SFAS No. 133 and its successors)
	 	$	                     	 
	 
	 	 	 	 
	(i) income tax expense
	 	$	                     	 
	 
	 	 	 	 
	(j) the sum of Items (1)(A)(i)(a) through
(1)(A)(i)(i)
	 	$	                     	 
	 
	 	 	 	 
	(k) non-cash gains on derivative items
(SFAS No. 133 and its successors)
	 	$	                     	 
	 
	 	 	 	 
	(1) non-recurring, non-cash credits to net
income
	 	$	                     	 
	 
	 	 	 	 
	(m) the sum of Items (1)(A)(i)(k) and
(1) (A)(i)(1)
	 	$	                     	 
	 
	 	 	 	 
	(n) 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
	 	$	                     	 
	 
	 	 	 	 
	(o) Consolidated EBITDA related to
Permitted Acquisitions calculated on a proforma basis, using historical numbers, in
accordance with GAAP as if the Permitted
Acquisition had been consummated at the
beginning of such period
	 	$	                     	 
	 
	 	 	 	 
	(p) Consolidated EBITDA for any business
or assets liquidated, sold or disposed of by the Loan Parties pursuant to Section 8.2.6 or
Section 8.2.7 of the Credit Agreement, calculated on a pro forma basis, using historical numbers, in accordance with GAAP, as if such liquidation, sale or disposition had been consummated at the beginning of such period
	 	$	                     	 
	 
	 	 	 	 
	(q) pro-forma Consolidated EBITDA
related to Permitted Joint Ventures
	 	$	                     	 
	 
	 	 	 	 
	(r) cash dividends paid by any Permitted
Joint Venture to any Loan Party
	 	$	                     	 
	 
	 	 	 	 
	(s) the sum of Items (1)(A)(i)(j),
(1)(A)(i)(n), (1)(A)(i)(o) and (1)(A)(i)(r) minus Items (1)(A)(i)(m), (1)(A)(i)(p) and
(1)(A)(i)(q) equals Consolidated EBITDA
	 	$	                     	 






 









 






PNC Bank, National Association, Agent

 Page 3




	 	 	 	 

	(ii)
	 	capital expenditures


	$                     
	 	 	 
	 
	(iii)
	 	the numerator of the Fixed Charge Coverage
Ratio, which is equal to Item (1)(A)(i)(s) minus
Item (1)(A)(ii)
	$                     







	(B)	 	Fixed Charges of the Loan Parties and their
Subsidiaries, as of the Report Date for the four fiscal
quarters then ended, calculated and consolidated in
accordance with GAAP as follows:





	 	 	 	 	 	 	 	 	 

	 	(i)	 	cash interest expense
	 	$	                     	 
	 	 	 	 	 
	 	 	 	 
	(ii)	 	cash income taxes
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	(iii)	 	dividends and distributions (including Permitted Tax Distributions)
	 	$	                     	 
	 	 	 	 	 
	 	 	 	 
	(iv)	 	scheduled principal installments on Indebtedness (as adjusted for prepayments)
	 	$	                     	 
	 	 	 	 	 
	 	 	 	 
	 	(v)	 	the denominator of the Fixed Charge Coverage Ratio, which is equal to the sum of Items
(1)(B)(i) through (1)(B)(iv)
	 	$	                     	 






	 	 	 	 	 	 	 	 	 

	 	(C	)	 	Item (1)(A)(iii) divided by Item (1)(B)(v) equals the
	 	     to 1.00
	 	 	 	 	Fixed Charge Coverage Ratio for the four fiscal
quarters then ended, which ratio is greater than or equal
to 1.25 to 1.00
	 	 	 	 







	(2)	 	Maximum Leverage Ratio (Section 8.2.15). As of the Report Date, the Leverage Ratio of the Loan
Parties and their Subsidiaries is                      [(insert ratio from Item (2)(C) below)], which ratio is not
greater than                     [(insert applicable ratio from Table 1 below)].






	 	 	The Leverage Ratio shall be computed as follows:





	 	 	 

	(A)
	 	Consolidated Funded Debt of the Loan Parties and
their Subsidiaries, as of the Report Date calculated and
consolidated in accordance with GAAP as follows:







	 	 	 	 	 

	 	(i	)	 	Indebtedness representing borrowed money,
including both the current and long-term $
portion thereof:







 









 






PNC Bank, National Association, Agent

Page 4




	 	 	 	 	 	 	 

	(ii)
	 	capitalized lease obligations

	 	$	 
	 	 	 
	 	 	 
	(iii)
	 	contingent and guaranty obligations with
respect to Items (2)(A)(i) and (2)(A)(ii)

	 	$	 
	 	 	 
	 	 	 
	(iv)
	 	Consolidated Funded Debt equals the sum of
Items (2)(A)(i) through (2)(A)(iii)

	 	$	 






	 	 	 	 	 	 	 	 	 

	 	(B	)	 	Consolidated EBITDA of the Loan Parties and their
	 	$	 	 
	 	 	 	 	Subsidiaries, as of the Report Date for the four fiscal
quarters then ended, calculated and consolidated in
accordance with GAAP as follows as determined in
Item (1)(A)(i)(s)
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	(C	)	 	Item (2)(A)(iv) divided by Item (2)(B) equals the
	 	to 1.00
	 	 	 	 	Leverage Ratio for the four fiscal quarters then ended
	 	 	 	 






TABLE 1



MAXIMUM LEVERAGE RATIO



	 	 	 	 	 
	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







	(3)	 	Minimum Consolidated EBITDA (Section 8.2.16). As of the Report Date, the
Consolidated EBITDA of the Loan Parties and their Subsidiaries is
$                ,
[(insert amount from Item (1)(A)(i)(r) above)] which amount is greater than or
equal to $                   
 [(insert applicable amount from Table 2)].




 









 







PNC Bank, National Association, Agent

Page 5




TABLE 2




MINIMUM CONSOLIDATED EBITDA




	 	 	 	 	 
	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	 







	(4)	 	Capital Expenditures and Leases (Section 8.2.17). As of the Report Date, the Loan Parties and
their Subsidiaries (other than any Permitted Joint Ventures) have made payments with respect to
capital expenditures and capitalized leases during the applicable fiscal year in the aggregate
amount of $                   , which amount is less than or equal to $80,000,000 for the 2011 fiscal year and
$50,000,000 for each fiscal year thereafter.
	 
	(5)	 	Survant Joint Venture (Section 8.2.4). As of the Report Date, the Loan Parties and their
Subsidiaries have made loans, investments, advances and/or contributions of assets to the Survant
Joint Venture (other than those set forth on Schedule 8.2.4) in the aggregate amount of $ , which
amount is less than or equal to $35,000,000 and at the time of such loans, investments, advances
and/or contributions, the Revolver Borrowers had the ability to borrower additional Revolving
Credit Loans of note less than $15,000,000.
	 
	(6)	 	Representations, Warranties and Covenants. The representations and warranties contained in
Section 6 of the Credit Agreement and in the other Loan Documents are true and correct on and as of
the date of this certificate with the same effect as though such representations and warranties had
been made on the date hereof (except representations and warranties which expressly relate solely
to an earlier date or time), and the Borrowers have performed and complied with all covenants and
conditions of the Credit Agreement.
	 
	(7)	 	Event of Default or Potential Default. No Event of Default or Potential Default exists as of
the date hereof.





[SIGNATURE PAGE FOLLOWS]



 









 





SIGNATURE PAGE 1 OF 1 TO

QUARTERLY COMPLIANCE CERTIFICATE



IN WITNESS WHEREOF, the undersigned has executed this Certificate this                     
day of                     , 20                    .




	 	 	 	 	 
	 	

ARMSTRONG COAL COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WESTERN MINERAL

DEVELOPMENT, LLC



By:

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WESTERN DIAMOND LLC



By:

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE 2 OF 2 TO

QUARTERLY COMPLIANCE CERTIFICATE




	 	 	 	 	 
	 	WESTERN LAND COMPANY, LLC



By:

 	 
	 	By:  	
 	 
	 	 	Name:  	      	 
	 	 	Title:  	

  	 
	 
	 	ELK CREEK L.P.



By:

 	 
	 	By:  	
 	 
	 	 	Name:  	  	 
	 	 	Title: