Document:

exv10w3

EXHIBIT 10.3

EXECUTION COPY

	 	 	 

	MORGAN STANLEY SENIOR FUNDING, INC.
	 	PNC BANK, NATIONAL ASSOCIATION
	1585 Broadway
	 	PNC CAPITAL MARKETS LLC
	New York, New York 10036
	 	Three PNC Plaza
	 
	 	225 Fifth Avenue
	 
	 	Pittsburgh, PA 15222

May 1, 2011

Arch Coal Inc.

One City Place Drive

Suite 300

St. Louis, MO 63141

Attention: John Drexler, Chief Financial Officer

Project Touchstone

Commitment Letter

$760 Million Senior Secured Revolving Credit Facility

$3,800 Million Senior Unsecured Bridge Facility

Ladies and Gentlemen:

          Arch Coal Inc. (“you” or the “Borrower”) has advised Morgan Stanley Senior Funding, Inc.
(“MSSF”), PNC Bank, National Association (“PNC Bank”) and PNC Capital Markets LLC (“PNC Capital
Markets” and, together with MSSF, PNC Bank, “we”, “us” or the “Commitment Parties” and each
individually a “Commitment Party”), that you intend to acquire (the “Acquisition”) all of the
outstanding capital stock of International Coal Group, Inc. (the “Target”) described in Exhibit A
hereto (the “Acquisition Summary”). Unless otherwise defined herein, capitalized terms used herein
and defined in the Acquisition Summary are used herein as therein defined. All references to
“dollars” or “$” in this Commitment Letter (as defined below) are references to United States
dollars.

          We understand that the funding required to effect the Acquisition, to repay and redeem certain
existing indebtedness of the Target and its subsidiaries, to repay or refinance certain of your
existing indebtedness, to pay the fees and expenses incurred in connection therewith shall be
$3,800 million and shall be provided from:

          (a) the issuance (either by private placement or an underwritten public sale) by the Borrower
of unsecured senior notes (the “Notes”) or, if and to the extent that the Borrower is unable to
issue the Notes, the incurrence of unsecured senior bridge loans (the “Bridge Loans”) under a
senior unsecured bridge facility (the “Bridge Facility”), as described in the summary of terms and
conditions attached hereto as Exhibit B (the “Bridge Term Sheet”);

 

 

          (b) the incurrence by the Borrower of a senior secured revolving credit facility
(the “Revolving Facility”, together with the Bridge Facility, the “Facilities”) as described in the
summary of terms and conditions attached hereto as Exhibit C (the “Bank Term Sheet”); and

          (c) at the option of the Borrower, cash proceeds from the issuance by the Borrower of shares
of its common stock or equity-linked securities.

          In addition, we understand that in order to provide for additional flexibility after giving
effect to the Acquisition at the Borrower’s option, the Borrower may either (i) amend, or amend and
restate, its existing credit facility, dated as of December 22, 2004, among the Borrower, the
lenders from time to time party thereto, PNC Bank, as administrative agent and the other agents
party thereto (as amended, supplemented or otherwise modified from time to time, the “Existing
Credit Facility”) to, among other things, allow for certain modifications to accommodate the
operational needs of the surviving entity and to the conform the conditionality to that which is
set forth herein (the “Amendment”) or (ii) if the Amendment has not been obtained within seven
business days following the date hereof, may enter into the $760 million under the Revolving
Facility that the Commitment Parties agree to provide on the terms set forth herein.

          The Acquisition, the entering into of this Commitment Letter (as defined below), the issuance
of the Notes or the borrowings under the Bridge Facility, the Amendment (if applicable), the
Revolving Facility, the Convertible Senior Notes Refinancing, the Senior Notes Refinancing (each,
as defined below) and the related transactions contemplated by the foregoing, as well as the
payment of fees, commissions and expenses in connection with each of the foregoing, are
collectively referred to as the “Transactions.”

          1. Commitments. Each Commitment Party is pleased to severally (and not jointly) (i)
commit to provide, in the case of MSSF, 70%, and in the case of PNC Bank, 30%, of the Bridge
Facility and (ii) commit to provide, in the case of MSSF, 50%, and in the case of PNC Bank, 50%, of
the $760 million Revolving Facility (it being understood that such Revolving Facility commitments
shall terminate if the Amendment is obtained within 7 business days of the execution of this
Commitment Letter on terms reasonably satisfactory to the Borrower and the Commitment Parties). It
is agreed, in connection with the Bridge Facility, that MSSF and PNC Capital Markets shall act as
joint lead arrangers, joint bookrunners and joint syndication agent (in such capacity, the “Bridge
Lead Arrangers”) and MSSF as administrative agent (in such capacity, the “Bridge Administrative
Agent”). It is agreed that MSSF shall have “left” placement in any and all marketing materials or
other documentation used in connection with the Bridge Facility and shall hold the leading role and
responsibilities customarily associated with such “left” placement, including maintaining sole
“physical books” in respect of the Bridge Facility. It is further agreed that no additional
advisors, agents, co-agents, arrangers or bookmanagers will be appointed and no Lender (as defined
below) will receive compensation with respect to the Bridge Facility outside the terms contained in
this Commitment Letter and the fee letter (as amended, supplemented, restated, replaced or
otherwise modified from time to time, the “Fee Letter”) executed simultaneously herewith in order
to obtain its commitment to participate in the Bridge Facility, in each case unless you and we so
agree. It is agreed, in connection with the Revolving Facility, that PNC Capital Markets and MSSF
shall act as joint lead arrangers, joint bookrunners, joint syndication agents (in such capacity,
the “Bank Lead Arrangers” and together with the Bridge Lead Arrangers, the “Lead Arrangers”) and
PNC Bank shall act as administrative agent (in such capacity, the “Bank Administrative Agent” and
together with Bridge Administrative Agent, “Administrative Agent”). It is agreed that PNC Capital
Markets shall have “left” placement in any and all marketing materials or other documentation used
in connection with the Revolving Facility and shall hold the leading role and responsibilities
customarily associated with such “left” placement in respect of the Revolving Facility.

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          All commitments set forth Section 1(a) and 1(b) shall be subject to and on the terms and
conditions set forth herein and in the Bridge Term Sheet, the Bank Term Sheet and the additional
conditions attached as Exhibit D (the “Conditions Term Sheet” and together with the Bridge Term
Sheet, the Bank Term Sheet and this agreement (as defined below), the “Commitment Letter”).

          The commitment and other obligations of the Commitment Parties hereunder are subject only to
the satisfaction (or waiver) of the following conditions:

     (a) the execution and delivery of definitive loan documentation for the Bridge Facility
(the “Bridge Documentation”) by the Borrower and the Guarantors (as defined in the Bridge
Term Sheet), including without limitation a credit agreement, guaranties and other
documentation reflecting, among other things, the terms and conditions set forth herein and
in the Bridge Term Sheet and otherwise substantially consistent with the Borrower’s Existing
Notes (as defined below), taking into account the operational and strategic requirements of
the Borrower and its subsidiaries after giving effect to the Acquisition in light of their
size, industries, businesses and business practices (including, without limitation, any
items disclosed in the schedules to the Merger Agreement), with such modifications as are
appropriate, customary and/or usual for bridge facilities of this type and those that may be
required by the Lead Arrangers (in consultation with the Borrower) as necessary in light of
the then prevailing market conditions to ensure a Successful Syndication (as defined in the
Fee Letter) of the Bridge Facility; it being understood that the Bridge Documentation will
contain only those conditions to borrowing as are expressly set forth herein (the principles
and requirements referred to above are referred to herein as the “Bridge Documentation
Principles”);

     (b) the execution and delivery of definitive loan documentation for the Revolving
Facility (collectively, the “Bank Documentation”) by the Borrower and the Guarantors (as
defined in the Bank Term Sheet), including without limitation a credit agreement, guaranties
and other documentation reflecting the terms and conditions set forth herein and in Exhibit
C and otherwise substantially consistent with the Borrower’s Existing Credit Facility,
taking into account the operational and strategic requirements of the Borrower and its
subsidiaries after giving effect to the Acquisition in light of their size, industries,
businesses and business practices (including, without limitation, any items disclosed in the
schedules to the Merger Agreement), with such modifications as are appropriate for similar
facilities and those that may be required by the Lead Arrangers (in consultation with the
Borrower) as necessary in light of the then prevailing market conditions to ensure a
Successful Syndication of the Revolving Facility; it being understood that the Bank
Documentation will contain only those conditions to borrowing as are expressly set forth
herein (the principles and requirements referred to above are referred to herein as the
“Bank Documentation Principles”);

     (c) the absence of a “Material Adverse Effect” (as defined below) since December 31,
2010;

     (d) the Borrower shall have engaged one or more investment banks (collectively, the
“Investment Banks”) satisfactory to the Commitment Parties to publicly sell or privately
place the Notes under an engagement letter (the “Engagement Letter”);

     (e) the Tender Offer Closing Date shall not occur less than 20 days (provided that such
period shall not include (w) any day from and including June 30, 2011 through and including
July 4, 2011 and (x) any day from and including August 23, 2011 through and including
September 5, 2011 (each such period, a “Blackout Period”)) after delivery to the Lead
Arrangers of the final confidential information memorandum referred to herein;

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     (f) prior to and until the earlier of (w) the date that is 60 days following the Tender
Offer Closing Date and (x) the completion of a Successful Syndication, there shall be no
competing issues of debt securities or commercial bank or other debt facilities or
securitizations (including any renewals or refinancing thereof) by the Borrower or any of
its subsidiaries being offered, placed or arranged (other than the Notes, the Amendment, the
transactions contemplated in Exhibit A hereof, any transactions involving any of the
Investment Banks or their affiliates), if such offering, placement or arrangement could
reasonably be expected to materially impair the achievement of a Successful Syndication
without the consent of the Commitment Parties; and

     (g) satisfaction of the other conditions set forth in the Conditions Term Sheet.

          Notwithstanding anything in this Commitment Letter, the Fee Letter or any other letter
agreement or other undertaking concerning the financing of the Transactions to the contrary, (i)
the only conditions to the availability of the Facilities on the Tender Offer Closing Date shall be
the conditions set forth in clauses (a) through (h) above, (ii) the only representations relating
to the Borrower, the Target and their respective subsidiaries and businesses the accuracy of which
shall be a condition to the availability of the Facilities on the Tender Offer Closing Date or any
date thereafter upon which a funding is requested thereunder (the date of the initial funding
thereunder, the “Tender Offer Funding Date”) shall be (A) such of the representations made by the
Target in the Merger Agreement that are material to the interests of the Lenders, but only to the
extent that you have the right to terminate your obligations under the Merger Agreement as a result
of a breach of such representations in the Merger Agreement (the “Merger Agreement
Representations”) and (B) the Specified Representations (as defined below), (iii) the terms of the
Bridge Documentation and the Bank Documentation shall be in a form such that it does not impair the
availability of any Facility on the Tender Offer Closing Date if the conditions set forth in this
Commitment Letter are satisfied, and (iv) to the extent any security interest in any Collateral (as
defined in the Bank Term Sheet) is not or cannot be provided and/or perfected on the Tender Offer
Closing Date (other assets pursuant to which a lien may be perfected by the filing of a financing
statement under the Uniform Commercial Code) after your use of commercially reasonable efforts to
do so or without undue burden or expense, then the provision and/or perfection of a security
interest in such Collateral shall not constitute a condition precedent to the availability of the
Facilities on the Tender Offer Closing Date, but instead shall be required to be delivered after
the Tender Offer Closing Date pursuant to arrangements and timing to be mutually agreed by the Bank
Administrative Agent and the Borrower acting reasonably. For purposes hereof, “Specified
Representations” means the representations and warranties relating as to due organization,
corporate power and authority, the due authorization, execution, delivery and enforceability of the
Bridge Documentation and Bank Documentation, the Bridge Documentation and the Bank Documentation
not conflicting with charter documents, solvency of the Borrower on a consolidated basis, Federal
Reserve margin regulations, Investment Company Act, Patriot Act and status of the Facilities as
senior debt and “designated senior debt.” This paragraph, and the provisions herein, shall be
referred to as the “Certain Funds Provision”.

          As used herein, the term “Material Adverse Effect” means any changes, effects, events,
circumstances, states of facts, occurrences or developments that, individually or taken together,
materially adversely affect, or would reasonably be expected to materially adversely affect, the
business, assets, properties, liabilities, financial condition or results of operations of the
Target and its subsidiaries, taken as a whole, excluding any change, effect, event, circumstance,
state of facts, occurrence or development to the extent that it results from or arises in
connection with (i) changes or conditions generally affecting the coal industry, (ii) general
economic or regulatory, legislative or political conditions or securities, credit, financial or
other capital markets conditions (including prevailing interest rates, access to capital and
commodity prices), in each case in the United States or any foreign jurisdiction, (iii) any
failure, in and of itself, by such party to meet any internal or published projections, forecasts,
estimates or predictions in

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respect of revenues, earnings or other financial or operating metrics for any period (it being
understood that the facts or occurrences giving rise to or contributing to such failure may be
deemed to constitute, or be taken into account in determining whether there has been or will be, a
Material Adverse Effect or Material Adverse Effect on the Target), (iv) the execution and delivery
of the Merger Agreement or the public announcement or pendency of the Tender Offer and the Merger,
(v) any change, in and of itself, in the market price or trading volume of such party’s securities
(it being understood that the facts or occurrences giving rise to or contributing to such change
may be deemed to constitute, or be taken into account in determining whether there has been or will
be, a Material Adverse Effect or Material Adverse Effect on the Target), (vi) any change in
applicable Law, regulation or GAAP (or authoritative interpretation thereof), (vii) geopolitical
conditions, the outbreak of a pandemic or other widespread health crisis, the outbreak or
escalation of hostilities, any acts of war, sabotage or terrorism, or any escalation or worsening
of any such acts of war, sabotage or terrorism threatened or underway as of the date of the Merger
Agreement, (viii) any hurricane, tornado, flood, earthquake, volcano eruption or natural disaster,
or (ix) relating to the outcome of any litigation or other proceeding described in the Company
Disclosure Letter (as defined in the Merger Agreement) or the Company SEC Documents (as defined in
the Merger Agreement) to the extent the outcome of such litigation or proceeding can reasonably be
expected based on the factual description of such litigation or other proceeding in the Company
Disclosure Letter or the Company SEC Documents (but excluding any forward-looking disclosures set
forth in any risk factor section, any disclosures in any section relating to forward looking
statements and any other similar disclosures included therein to the extent that they are
predictive or forward-looking in nature), except, in the case of clauses (i), (ii), (vi), (vii) and
(viii), only to the extent such changes, effects, events, circumstances, states of facts,
occurrences or developments affect the Target and its subsidiaries, taken as a whole, to a
disproportionate degree relative to other competitors in the coal industry.

          2. Syndication. The Lead Arrangers reserve the right, prior to or after execution of
the definitive credit documentation for each Facility, to syndicate all or part of the Commitment
Parties’ commitments for such (a) Bridge Facility to one or more financial institutions or
institutional lenders in consultation with you (provided that (a) we agree not to syndicate our
commitments to certain competitors of the Borrower and its subsidiaries that have been specified to
us by you in writing prior to the date hereof (“Disqualified Lenders”)) and (b) Revolving Facility
to one or more financial institutions or institutional lenders reasonably acceptable to you.
Notwithstanding the Lead Arrangers’ right to syndicate the Facilities and receive commitments with
respect thereto, (i) the Commitment Parties will not be relieved, released or novated from all or
any portion of their respective commitments hereunder prior to the Merger Closing Date, (ii) no
assignment or novation by any Commitment Party shall become effective as between you and the
Commitment Parties with respect to all or any portion of any Commitment Party’s commitments in
respect of the Facilities until the Merger Closing Date and (iii) unless you otherwise agree in
writing, each Commitment Party shall retain exclusive control over all rights and obligations with
respect to its commitments in respect of the Facilities, including all rights with respect to
consents, modifications, supplements, waivers and amendments, until the Merger Closing Date has
occurred.

          The Lead Arrangers intend to commence syndication efforts promptly after the execution of this
Commitment Letter by you and you agree to actively assist the Lead Arrangers in achieving a
syndication in respect of each Facility that is reasonably satisfactory to the Lead Arrangers.
Such syndication will be accomplished by a variety of means, including direct contact during the
syndication for a Facility between senior management and advisors of you and the Target and its
advisors (for which you shall use commercially reasonable efforts to ensure such contact) and the
proposed syndicate members for such Facility (such members in respect of the Revolving Facility
being referred to as the “Bank Lenders” and such members in respect of the Bridge Facility being
referred to as the “Bridge Lenders” and, collectively, the “Lenders”). The Lead Arrangers will
exclusively manage, in

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consultation with you, all aspects of the syndication, including the timing, scope and
identity of potential lenders, any agency or other title designations or roles awarded to any
potential lender, any compensation provided to each potential lender from the amount paid to the
Lead Arrangers pursuant to this Commitment Letter and the Fee Letter and the final allocation of
the commitments in respect of the Facilities among the Lenders.

     To assist the Lead Arrangers in their syndication efforts, you hereby covenant and agree:

     (a) to provide and cause your advisors to provide, and use your commercially reasonable
efforts to cause the Target, its subsidiaries and its advisors to provide, the Lead
Arrangers upon our request with all information reasonably requested by the Lead Arrangers
on your behalf or at your direction, which is deemed customary and reasonably necessary by
the Lead Arrangers to achieve Successful Syndication, including but not limited to the
Projections (as defined below) and financial and other information, reports, memoranda and
evaluations prepared by, on behalf or at the direction of you, the Target or its
subsidiaries or your or their respective advisors;

     (b) to assist us in the preparation of a customary confidential information memoranda
(including public and private versions thereof) and other customary marketing materials, in
each case in form and substance customary for transactions of this type and otherwise
satisfactory to the Lead Arrangers, to be used in connection with the syndication of the
Facilities and to use commercially reasonable efforts to deliver to the Lead Arrangers such
confidential information memorandum;

     (c) to use your commercially reasonable efforts to ensure that the syndication efforts
of the Lead Arrangers benefit from your existing lending and banking relationships and the
existing lending and banking relationships of the Target and its subsidiaries;

     (d) to use commercially reasonable efforts to ensure that, until the earlier of (w) the
date that is 60 days following the Tender Offer Closing Date and (x) the completion of a
Successful Syndication, there shall be no competing issues of debt securities or commercial
bank or other debt facilities or securitizations (including any renewals or refinancing
thereof) by the Target or any of its subsidiaries being offered, placed or arranged (other
than the Notes, the Amendment, the transactions contemplated in Exhibit A hereof, any
transactions involving any of the Investment Banks or their affiliates and any indebtedness
otherwise permitted by the Merger Agreement), if such offering, placement or arrangement
could reasonably be expected to materially impair the achievement of a Successful
Syndication without the consent of the Commitment Parties;

     (e) to use commercially reasonable efforts to obtain monitored public corporate credit
or family ratings of the Borrower after giving effect to the Transactions and ratings for
each of the Revolving Facility and the Notes, in each case, from Moody’s Investors Service,
Inc. (“Moody’s”) and Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc. (“S&P”) (collectively, the “Ratings”); and

     (f) to use commercially reasonable efforts to otherwise assist the Lead Arrangers in
their syndication efforts, including by making available your and the Target’s officers,
representatives and advisors, in each case from time to time and to attend and make
presentations regarding the business and prospects of the Borrower at one or more meetings
of Lenders.

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Without limiting your obligations to assist with the syndication efforts as set forth
above, it is understood and agreed that neither the syndication of the Facilities nor the
receipt of the Ratings is a condition to the funding of the Facilities.

          3. Information. You represent and warrant that (a) (i) with respect to Information
and Projections relating to the Target and its subsidiaries, to your knowledge all written
information, and (ii) with respect to Information and Projections relating to the Borrower and its
subsidiaries, all information, in each case, other than the Projections referred to below or
forward looking information and information of a general economic or industry specific nature, that
has been or will hereafter be made available by or on behalf of you, the Borrower, the Target or by
any of your or their respective agents or representatives in connection with the Transactions (the
“Information”) to the Commitment Parties or any of their affiliates, agents or representatives,
when taken as a whole, is or will be, when furnished, true, complete and correct in all material
respects and does not and will not, when furnished, contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements contained therein not
materially misleading in the light of the circumstances under which such statements were or are
made (after giving effect to all supplements and updates thereto) and (b) all financial projections
(the “Projections”), if any, that have been or will be prepared by you or on your behalf or by any
of your representatives and made available to the Commitment Parties or any of their affiliates,
agents or representatives in connection with the Transactions have been or will be prepared in good
faith based assumptions believed to be reasonable at the time made (it being understood that such
projections are subject to significant uncertainties and contingencies and that no assurance can be
given that any particular projections will be realized). You agree that, if at any time prior to
the Tender Offer Closing Date and, if requested by us, for a reasonable period (not to exceed 60
days) thereafter as is necessary to complete a Successful Syndication of the Facilities, any of the
representations or warranties in the preceding sentence would be incorrect if the Information or
Projections were being furnished, and such representations and warranties were being made, at such
time, then you will promptly supplement, or cause to be supplemented, the Information and
Projections so that such representations and warranties will be correct at such time. You agree
that, in issuing the commitments hereunder and in arranging and syndicating the Facilities, we will
be entitled to use and rely on the Information and the Projections furnished by you or on your
behalf or on behalf of the Target without independent verification thereof.

          You agree that the Lead Arrangers may make available any Information and Projections
(collectively, the “Company Materials”) to potential Lenders by posting the Company Materials on
IntraLinks, the Internet or another similar electronic system. You further agree to assist, at the
request of the Lead Arrangers, in the preparation of a version of a confidential information
memorandum and other marketing materials and presentations to be used in connection with the
syndication of the Facilities, consisting exclusively of information or documentation that is
either (i) publicly available (or contained in the prospectus or other offering memorandum for the
Notes) or (ii) not material with respect to the Borrower, the Target or their respective
subsidiaries or any of their respective securities for purposes of foreign, United States federal
and state securities laws (all such information and documentation being “Public Lender
Information”). Any information and documentation that is not Public Lender Information is referred
to herein as “Private Lender Information.” You further agree that each document to be disseminated
by the Lead Arrangers to any Lender or potential Lender in connection with the syndication of the
Facilities will be identified by you as either (i) containing Private Lender Information or (ii)
containing solely Public Lender Information. Unless you advise the Lead Arrangers in writing
(including by email) within a reasonable time prior to their intended distributions that such
material should only be distributed to prospective Private Lenders, you acknowledge that the
following documents will contain solely Public Lender Information: (i) drafts and final definitive
documentation with respect to the Facilities; (ii) administrative materials prepared by the Lead
Arrangers for potential

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Lenders (e.g. a lender meeting invitation, allocation and/or funding and closing memoranda);
and (iii) notification of changes in the terms of the Facilities.

          4. Costs, Expenses and Fees. You agree, if this Commitment Letter is executed, to pay
or reimburse the Lead Arrangers, the Administrative Agent and the Commitment Parties for all
reasonable out-of-pocket costs and expenses incurred by the Lead Arrangers, the Administrative
Agent and the Commitment Parties or their affiliates (whether incurred before or after the date
hereof) in connection with the Facilities and the preparation, negotiation, execution and delivery
of this Commitment Letter and Fee Letter, the Bridge Documentation, the Bank Documentation.
including without limitation, (i) the reasonable and invoiced fees, disbursements and other charges
of Shearman & Sterling LLP as counsel to the Commitment Parties in connection with this Commitment
Letter and the Fee Letter; (ii) the reasonable and invoiced fees, disbursements and other charges
of one transaction counsel to the Lenders and the Administrative Agents retained by the Lead
Arrangers, of Buchanan Ingersoll & Rooney PC, as special counsel to the Bank Administrative Agent,
and of any other special and any local counsel (but not more than one per relevant jurisdiction);
and (iii) reasonable due diligence expenses, regardless of whether any of the Transactions is
consummated. You further agree to pay all costs and expenses of the Lead Arrangers, the
Administrative Agent and the Commitment Parties and their affiliates (including, without
limitation, fees and disbursements of counsel) incurred in connection with the enforcement of any
of its rights and remedies hereunder. In addition, you hereby agree to pay when and as due the
fees described in the Fee Letter. Once paid, such fees shall not be refundable under any
circumstances (except as expressly set forth in the Fee Letter).

          5. Indemnity. You agree to indemnify and hold harmless each of the Lead Arranger, the
Administrative Agent and Lenders and their respective affiliates (including, without limitation,
controlling persons) and each director, officer, employee, advisor, agent, affiliate, successor,
partner, representative and assign of each of the forgoing (each an “Indemnified Person”) from and
against any and all actions, suits, investigation, inquiry, claims, losses, damages, liabilities,
expenses or proceedings of any kind or nature whatsoever which may be incurred by or asserted
against or involve any such Indemnified Person as a result of or arising out of or in any way
related to or resulting from any proceeding relating to or resulting from this Commitment Letter,
the Fee Letter, the Facilities, the use of proceeds thereof, the Transactions or the other
transactions contemplated thereby (regardless of whether any such Indemnified Person is a party
thereto and regardless of whether such matter is initiated by a third party or otherwise) (any of
the foregoing, a “Proceeding”), and you agree to reimburse each Indemnified Person upon demand for
any legal or other out-of-pocket expenses incurred in connection with investigating, defending,
preparing to defend or participating in any such Proceeding; provided, however, that no Indemnified
Person will be indemnified for any such cost, expense or liability to the extent determined by a
final, nonappealable judgment of a court of competent jurisdiction to have resulted solely from (i)
the gross negligence, (ii) willful misconduct or (iii) a material breach of the obligations under
this Commitment Letter, the Fee Letter or the definitive documentation in respect of the Facilities
of such Indemnified Person. In the case of any Proceeding to which the indemnity in this paragraph
applies, such indemnity and reimbursement obligations shall be effective, whether or not such
Proceeding is brought by you, the Borrower, the Target, any of your or their respective
securityholders or creditors, an Indemnified Person or any other person, or an Indemnified Person
is otherwise a party thereto and whether or not any aspect of the Commitment Letter, the Fee
Letter, the Facilities or any of the Transactions is consummated. Notwithstanding any other
provision of this Commitment Letter, (i) no Indemnified Person shall be responsible or liable for
damages arising from the unauthorized use by others of information or other materials obtained
through internet, electronic, telecommunications or other information transmission and (ii) no
Indemnified Person shall have any liability (whether direct or indirect, in contract, tort or
otherwise) to you, the Borrower, the Target, or any of your or their respective securityholders or
creditors arising out of, related to or in connection with the Commitment Letter, the

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Fee Letter, the Facilities or any of the Transactions or the other transactions contemplated
thereby, except to the extent of direct (as opposed to special, indirect, consequential or
punitive) damages determined in a final, nonappealable judgment by a court of competent
jurisdiction to have resulted solely from such Indemnified Person’s gross negligence or willful
misconduct, and it is further agreed that the Commitment Parties shall have liability only to you
(as opposed to any other person).

          You will not, without the prior written consent of the Indemnified Person, settle, compromise,
consent to the entry of any judgment in or otherwise seek to terminate any Proceeding in respect of
which indemnification may be sought hereunder (whether or not any Indemnified Person is a party
thereto) unless such settlement, compromise, consent or termination (i) includes an unconditional
release of each Indemnified Person from all liability arising out of such Proceeding and (ii) does
not include a statement as to, or an admission of, fault, culpability, or a failure to act by or on
behalf of such Indemnified Person.

          6. Confidentiality. This Commitment Letter is furnished solely for your benefit, and
may not be relied upon or enforced by any other person or entity other than the parties hereto, the
Lenders and the Indemnified Persons. This Commitment Letter is delivered to you on the condition
that neither the existence of this Commitment Letter nor the Fee Letter nor any of their contents
shall be disclosed, directly or indirectly, to any other person or entity except (i) to your
directors, officers, employees and advisors, in each case on a “need-to-know” basis and only in
connection with the evaluation of the Transactions, (ii) as may be compelled in a judicial or
administrative proceeding or as otherwise required by law or requested by a governmental authority
(in which case you agree to the extent permitted under applicable law to inform us promptly
thereof), (iii) this Commitment Letter (but not the Fee Letter or the contents thereof) may be
disclosed to the Target and its officers, directors, employees, accountants, attorneys, agents and
advisors who are directly involved in the consideration of this matter on a confidential and
need-to-know basis, (iii) after your acceptance of this Commitment Letter and the Fee Letter, you
may disclose the Commitment Letter, but not the Fee Letter, in such filings as the Borrower may
determine is advisable to comply with the requirements of the U.S. Securities and Exchange
Commission (“SEC”) and other applicable regulatory authorities, (iv) you may disclose the Bank Term
Sheet and the Bridge Term Sheet and the contents thereof, to potential Lenders and to rating
agencies in connection with obtaining ratings for the Borrower and the Facilities, (v) you may
disclose the aggregate fee amount contained in the Fee Letter as part of Projections, pro forma
information or a generic disclosure of aggregate sources and uses related to fee amounts related to
the Transactions to the extent customary or required in offering and marketing materials for the
Facilities or in any public filing relating to the Transactions and (vi) to the extent portions
thereof have been redacted in a manner to be reasonably agreed by us (including the portions
thereof addressing fees payable to the Commitments Parties and/or the Lenders), you may disclose
the Fee Letter and the contents thereof (provided that the Fee Letter is redacted in a manner
reasonably satisfactory to the Lead Arrangers) to the Target and its respective subsidiaries and
their respective officers, directors, agents, employees, attorneys, accountants, advisors or equity
holders, on a confidential and need-to-know basis.

          We shall use all nonpublic information received by us in connection with the Transactions
solely for the purposes of providing the services that are the subject of this Commitment Letter
and shall treat confidentially all such information; provided, however, that nothing herein shall
prevent us from disclosing any such information (a) to rating agencies, (b) to any Lenders or
participants or prospective Lenders or participants, (c) in any legal, judicial, administrative
proceeding or other compulsory process or otherwise as required by applicable law or regulations
(in which case we shall use commercially reasonable efforts to promptly notify you, in advance, to
the extent permitted by law), (d) upon the request or demand of any regulatory authority having
jurisdiction over us or our affiliates (in which case we shall use commercially reasonable efforts
to, except with respect to any audit or

-9-

 

examination conducted by bank accountants or any governmental bank regulatory authority exercising
examination or regulatory authority, promptly notify you, in advance, to the extent lawfully
permitted to do so), (e) to our directors, officers, advisors, employees, legal counsel,
independent auditors, professionals and other experts or agents (collectively, “Representatives”)
who are informed of the confidential nature of such information and are or have been advised of
their obligation to keep information of this type confidential, (f) to any of our respective
affiliates (provided that any such affiliate is advised of its obligation to retain such
information as confidential) solely in connection with the Facilities and the Transactions, (g) to
the extent any such information becomes publicly available other than by reason of disclosure by
us, our affiliates or Representatives in breach of this Commitment Letter and (h) for purposes of
establishing a “due diligence” defense; provided that the disclosure of any such information to any
Lenders or prospective Lenders or participants or prospective participants referred to above shall
be made subject to the acknowledgment and acceptance by such Lender or prospective Lender or
participant or prospective participant that such information is being disseminated on a
confidential basis in accordance with the standard syndication processes of the Lead Arrangers or
customary market standards for dissemination of such type of information.

          7. Patriot Act. We hereby notify you that pursuant to the requirements of the USA
Patriot Act, Title III of Pub. L. 107-56 (October 26, 2001) (as amended, the “Patriot Act”), we and
the other Lenders are required to obtain, verify and record information that identifies the
Borrower and the Target and its subsidiaries, which information includes the name, address, tax
identification number and other information regarding them that will allow any of us or such Lender
to identify the Borrower and the Target in accordance with the Patriot Act. This notice is given
in accordance with the requirements of the Patriot Act and is effective on behalf of the Commitment
Parties and each other Lender.

          8. Governing Law etc. This Commitment Letter and the Fee Letter shall be governed by,
and construed in accordance with the laws of the State of New York without regard to principles of
conflicts of law to the extent that the application of the laws of another jurisdiction will be
required thereby; provided, however, that the interpretation of any provision of either the Merger
Agreement referred to in this Commitment Letter including the determination of the accuracy of any
representation or the satisfaction of any condition set forth therein shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws. Any right to trial by jury with
respect to any claim, action, suit or proceeding arising out of or contemplated by this Commitment
Letter and/or the related Fee Letter is hereby waived. The parties hereto hereby irrevocably and
unconditionally submit to the exclusive jurisdiction of the federal and New York State courts
located in the City of New York, Borough of Manhattan (and appellate courts thereof) in connection
with any dispute related to this Commitment Letter or the Fee Letter or any matters contemplated
hereby or thereby and agree that any service of process, summons, notice or document by registered
mail addressed to you shall be effective service of process for any suit, action or proceeding
relating to any such dispute. The parties hereto irrevocably and unconditionally waive any
objection to the laying of venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding has been brought in an inconvenient forum.
A final judgment in any such suit, action or proceeding may be enforced in any jurisdiction by suit
on the judgment or in any other manner provided by law. Nothing herein will affect the right of
each Lead Arranger or Administrative Agent or any Commitment Party to serve legal process in any
other manner permitted by law or affect the Lead Arrangers’ or Administrative Agent’s or any
Commitment Party’s right to bring any suit, action or proceeding against the Borrower or their
respective subsidiaries or its or their property in the courts of other jurisdictions.

-10-

 

          9. Other Activities; No Fiduciary Relationship; Other Terms. As you know, Morgan
Stanley & Co. Incorporated (“Morgan Stanley”), an affiliate of MSSF, and PNC Capital Markets, an
affiliate of PNC Bank, are full service securities firms engaged, either directly or indirectly
through their respective affiliates in various activities, including securities trading, investment
management, financing and brokerage activities and financial planning and benefits counseling for
both companies and individuals. In the ordinary course of these activities, Morgan Stanley, PNC
and their respective affiliates may actively trade the debt and equity securities (or related
derivative securities) of the Borrower or other companies which may be the subject of the
arrangements contemplated by this Commitment Letter for their own account and for the accounts of
their customers and may at any time hold long and short positions in such securities. Morgan
Stanley, PNC and their respective affiliates may also co-invest with, make direct investments in,
and invest or co-invest client monies in or with funds or other investment vehicles managed by
other parties, and such funds or other investment vehicles may trade or make investments in
securities or other debt obligations of the Borrower or other companies which may be the subject of
the arrangements contemplated by this Commitment Letter.

          The Lead Arrangers, the Administrative Agent and the Commitment Parties and their respective
affiliates may have economic interests that conflict with those of Target or the Borrower and may
provide financing or other services to parties whose interests conflict with yours. You agree that
the Lead Arrangers, the Administrative Agent and the Commitment Parties will act under this
agreement as independent contractors and that nothing in this Commitment Letter or the Fee Letter
or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or
other implied duty between the Lead Arrangers, the Administrative Agent and the Commitment Parties
on the one hand and Target or the Borrower, or their respective management, stockholders or
affiliates on the other hand. You acknowledge and agree that (i) the transactions contemplated by
this Commitment Letter and the Fee Letter are arm’s-length commercial transactions between the Lead
Arrangers, the Administrative Agent and the Commitment Parties, on the one hand, and you and the
Borrower, on the other, (ii) in connection therewith and with the process leading to such
transaction each of the Commitment Parties is acting solely as a principal and not as a fiduciary
of you or the Borrower, its management, stockholders, creditors or any other person, (iii) the Lead
Arrangers, the Administrative Agent and the Commitment Parties have not assumed an advisory or
fiduciary responsibility in favor of you or the Borrower with respect to the Transactions or the
process leading thereto (other than Morgan Stanley’s role as financial advisor pursuant to that
certain engagement letter between Morgan Stanley and you, irrespective of whether the Lead
Arrangers, the Administrative Agent or the Commitment Parties or any of their respective affiliates
had advised or is currently advising you or the Borrower on other matters) or any other obligation
to you or the Borrower except the obligations expressly set forth in this Commitment Letter and the
Fee Letter and (iv) you and the Borrower have consulted your and its own legal and financial
advisors to the extent you or it deemed appropriate.

          You further acknowledge and agree that you, the Borrower and your respective subsidiaries are
responsible for making your and their own independent judgment with respect to the Transactions and
the process leading thereto. In addition, please note that the Lead Arrangers, the Administrative
Agent and the Commitment Parties and their respective affiliates do not provide accounting, tax or
legal advice. You, the Borrower and your respective subsidiaries agree that you or they will not
claim that the Lead Arrangers, the Administrative Agent or the Commitment Parties or any of their
respective affiliates has rendered advisory services or any nature or respect, or owes a fiduciary
or similar duty to you, the Borrower or your or their respective subsidiaries, in connection with
the Transactions or the process leading thereto.

          Each Commitment Party reserves the right to employ the services of one or more of our
affiliates in providing services contemplated by this Commitment Letter and to allocate, in whole
or in

-11-

 

part, to such affiliates certain fees payable to us in such manner as we and such affiliates
may agree in our sole discretion. You also agree that each Commitment Party may at any time and
from time to time assign all or any portion of its respective commitments hereunder to one or more
of its respective affiliates. You acknowledge that each Commitment Party may share with any of its
affiliates, and such affiliates may share with such Commitment Party, any information related to
the Transactions, you, the Target, any of your or their subsidiaries or any of the matters
contemplated hereby in connection with the Transactions. Each Commitment Party agrees to treat,
and cause any of its affiliates to treat, all non-public information provided to us by you as
confidential information in accordance with customary banking industry practices.

          10. Acceptance, Termination, Amendment, etc. Please indicate your acceptance of the
terms of this Commitment Letter and the Fee Letter by returning to each Commitment Party executed
counterparts hereof and thereof by no later than 5:00 p.m., New York time, on May 4, 2011.
Thereafter, the commitments and other obligations of the Commitment Parties set forth in this
Commitment Letter shall automatically terminate unless each of the Commitment Parties shall in
their discretion agree to an extension, upon the earliest to occur of (i) the execution and
delivery of Bridge Documentation and the Bank Documentation by all of the parties thereto, the
initial funding of the Facilities thereunder (or the issuance of the Notes in lieu thereof) and the
consummation of the Acquisition; and (ii) 180 days following the date of this Commitment Letter, if
the Bridge Documentation shall not have been executed and delivered by all such parties thereto;
(iii) the date of termination of the Merger Agreement.

          This Commitment Letter and the Fee Letter constitute the entire agreement and understanding
between you and your subsidiaries and affiliates and the Commitment Parties with respect to the
Facilities and supersedes all prior written or oral agreements and understandings relating to the
specific matters hereof. No individual has been authorized by the Commitment Parties or any of
their respective affiliates to make any oral or written statements that are inconsistent with this
Commitment Letter or the Fee Letter.

          Headings are for convenience of reference only and shall not affect the construction of, or be
taken into consideration when interpreting, this Commitment Letter. Delivery of an executed
counterpart of a signature page to this Commitment Letter and the Fee Letter by facsimile or
electronic .pdf shall be effective as delivery of a manually executed counterpart of this
Commitment Letter and the Fee Letter. This Commitment Letter and the Fee Letter may be executed in
any number of counterparts, and by the different parties hereto on separate counterparts, each of
which counterpart shall be an original, but all of which shall together constitute one and the same
instrument. The provisions of Section 1 (clause (i) only), 2, 3, 4, 5, 6, 8, 9 and this Section 10
shall survive termination of this Commitment Letter, provided that Sections 2 and 3 shall survive
only if the Tender Offer Closing Date occurs. This Commitment Letter may not be amended or any
provision hereof waived or modified except by an instrument in writing signed by the parties
hereto. This Commitment Letter shall not be assignable by you without our prior written consent
and any purported assignment without such consent shall be null and void. This Commitment Letter
is intended to be solely for the benefit of the parties hereto and is not intended to confer any
benefits upon, or create any rights in favor of, any person other than the parties hereto (and any
Indemnified Persons).

          Each of the parties hereto agrees that (i) this Commitment Letter is a binding and enforceable
agreement with respect to the subject matter contained herein, notwithstanding that the
availability and funding of the Facilities is subject to conditions precedent, including the good
faith negotiation of the Bank Documentation and Bridge Documentation by the parties hereto in a
manner

-12-

 

consistent with this Commitment Letter and (ii) the Fee Letter is a legally valid and binding
agreement of the parties thereto with respect to the subject matter set forth therein.

          BY SIGNING THIS COMMITMENT LETTER, EACH OF THE PARTIES HERETO HEREBY ACKNOWLEDGES AND AGREES
THAT EACH COMMITMENT PARTY IS OFFERING TO PROVIDE ITS RESPECTIVE PORTION OF THE BRIDGE FACILITY
SEPARATE AND APART FROM THE OFFER BY SUCH COMMITMENT PARTY TO PROVIDE ITS PORTION OF THE BANK
FACILITIES.

[Remainder of page intentionally left blank]

-13-

 

          We are pleased to have been given the opportunity to assist you in connection with the
financing for the Transactions.

	 	 	 	 	 
	 	Very truly yours,

MORGAN STANLEY SENIOR FUNDING, INC.

 	 
	 	By:  	/s/ Kevin D. Emerson
 	 
	 	 	Name:  	Kevin D. Emerson 	 
	 	 	Title:  	Authorized Signatory 	 
	 
	 	PNC BANK, NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Dale A. Stein
 	 
	 	 	Name:  	Dale A. Stein 	 
	 	 	Title:  	Authorized Signatory 	 
	 
	 	PNC CAPITAL MARKETS LLC

 	 
	 	By:  	/s/ Peter M. Hilton
 	 
	 	 	Name:  	Peter M. Hilton 	 
	 	 	Title:  	Authorized Signatory 	 
	 

	 	 	 	 	 
	 	Agreed to and accepted as of
the date first written above:

ARCH COAL INC.

 	 
	 	By:  	/s/ John T. Drexler
 	 
	 	 	Name:  	John T. Drexler 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 
	 

-14-

 

EXHIBIT A

ACQUISITION SUMMARY

          Capitalized terms used but not defined in this Exhibit A shall have the meanings set forth in
the Commitment Letter to which this Exhibit A is attached, including all Exhibits thereto
(collectively, the “Commitment Letter”).

          Borrower and/or one or more of its affiliates (“you” or the “Borrower”) intends to acquire
substantially all of the outstanding Shares (as defined below) of International Coal Group, Inc.
(the “Target”) not owned by the Borrower on the date of the Commitment Letter.

          In connection with the foregoing:

          (i.) The Borrower formed a wholly-owned direct or indirect subsidiary, incorporated under
Delaware law(“Mergersub”), and intends to acquire the outstanding Shares pursuant to the Tender
Offer and subsequent Merger (each as defined below).

          (ii.) Mergersub intends to commence a tender offer, as such tender offer may be amended,
supplemented or otherwise modified from time to time (the “Tender Offer”), for all of the
outstanding shares of common stock (the “Shares”) of the Target, including any Shares that may
become outstanding upon the exercise of options or other rights to acquire Shares after the
commencement of the Tender Offer but before the commencement of the Merger, for a purchase price
consisting of cash consideration set forth in the Offer to Purchase, the Letter of Transmittal and
the Tender Offer Statement on Schedule TO relating to the Tender Offer (such documents, including
all exhibits thereto and as they may be amended, supplemented or otherwise modified from time to
time, are collectively referred to herein as the “Tender Offer Documents”), which Tender Offer
shall be conditioned upon, inter alia, (x) Target shareholders having validly tendered and not
withdrawn prior to the expiration date of the Tender Offer (as the same may be extended in
accordance with the terms of the Tender Offer) at least that number of Shares that shall constitute
a majority of the then-outstanding Shares on a fully-diluted basis and (y) the entering into a
definitive merger agreement (the “Merger Agreement”) among you, Mergersub and Target. The date on
which Shares are initially accepted for payment under the Tender Offer is referred to as the
“Tender Offer Closing Date.”

          (iii.) Following the Tender Offer Closing Date, so long as permitted under applicable law, at
any time prior to the consummation of the Merger, Mergersub may make one or more additional
purchases (such purchases, “Top-Off Purchases”) of Shares of Target (such additional Shares,
“Top-Off Shares”) with the intent that (x) Mergersub shall own Shares representing at least 90% of
the then outstanding shares and (y) a “short form” merger may be effected under applicable law and
without any approval by the shareholders of Target (as used herein, “90% Condition” shall mean the
satisfaction of the conditions described in preceding clauses (x) and (y), whether satisfied on the
Tender Offer Closing Date or at any time thereafter (as a result of Top-Off Purchases or otherwise)
on or prior to the Merger Closing Date (as defined below)).

          (iv.) If the 90% Condition shall have been met (either on the Tender Offer Closing Date or at
any time thereafter (prior to the consummation of the Merger)), Mergersub shall, as soon as
practicable (but no later than 35 days) thereafter, merge with and into Target by way of a “short
form” merger under Delaware law (a “Short Form Merger”), with Target surviving such Short-Form
Merger as a direct or indirect wholly-owned subsidiary of the Borrower.

A-1

 

          (v.) Notwithstanding anything to the contrary contained above or elsewhere in the Commitment
Letter, if the Tender Offer Closing Date occurs, Mergersub shall, as soon as practicable cause the
Merger (the “Merger”) of Mergersub with and into Target, in accordance with the Merger Agreement
and applicable law (whether a Short Form Merger or a “long form” merger (a “Long Form Merger”)), to
be consummated, with Target surviving the Merger as an indirect wholly-owned subsidiary of the
Borrower. As used herein, (A) the term “Acquisition” shall mean the collective reference to the
Tender Offer (and all purchases of Shares pursuant thereto), any purchase of Top-Off Shares (if
applicable) and the Merger and (B) the term “Target” shall include, after the consummation of the
Merger, Target as the surviving corporation thereof. Merger Closing Date shall mean the date of
the consummation of the Merger.

          (vi.) On or prior to the Tender Offer Closing Date, the Target shall be required to issue an
irrevocable notice of redemption for all the Target’s then outstanding 9.125% Senior Secured
Second-Priority Notes due 2018 (the “2018 Senior Notes”) in accordance with the requirements of the
Indenture relating thereto (the “2018 Senior Notes Indenture”) and shall at such time deposit with
the trustee pursuant to the 2018 Senior Notes Indenture cash in the aggregate amount needed to
effect such redemption (including amounts needed for accrued interest and any applicable make whole
premiums) such that the 2018 Senior Notes Indenture shall be satisfied and discharged as of the
Tender Offer Closing Date. As used herein, “Senior Notes Refinancing” shall mean the repayment in
full of the 2018 Senior Notes (and any deposit of funds as contemplated above in connection
therewith), whether pursuant to this clause or otherwise.

          (vii.) On the Tender Offer Closing Date, the Target shall be required to comply with the
necessary notice provisions contained in the Target’s then outstanding 4.00% Convertible Senior
Notes due 2017 (the “2017 Convertible Senior Notes”) and the then outstanding 9.00% Convertible
Senior Notes Due 2012 (the “2012 Convertible Senior Notes” and together with the 2017 Convertible
Senior Notes, the “Convertible Senior Notes”) and shall, upon the consummation of the Merger, issue
make-whole fundamental change notices to holders of the Convertible Senior Notes to redeem the then
outstanding notes. So long as the actions required by the immediately preceding sentence are taken
substantially concurrently with the Merger Closing Date, then the Convertible Senior Notes may
continue to remain issued and outstanding until all holders have converted in exchange for cash.
As used herein, “Convertible Senior Notes Refinancing” shall mean the repayments in full of the
Convertible Senior Notes, whether pursuant to this clause or otherwise.

          (viii.) At the Borrower’s option, the Borrower may attempt obtain the Amendment. If the
Amendment is not obtained within seven business days, the Borrower shall enter into the Revolving
Facility in an amount equal to at least $760 million on the terms set forth in Exhibit C.

          (ix.) The sources of funds needed to finance the Acquisition, the Senior Notes Refinancing,
the Convertible Senior Notes Refinancing and to pay all fees and expenses incurred in connection
with the Transactions shall be provided solely from the sources described in the second paragraph
of the Commitment Letter.

          (x.) Financing of the Acquisition is expected to occur prior to the Tender Offer Closing Date,
and proceeds from such financings shall be deposited, pending the occurrence of the Tender Offer
Closing Date, pursuant to escrow arrangements reasonably satisfactory to the Lead Arrangers.

A-2

 

EXHIBIT B

$3,800 MILLION SENIOR UNSECURED BRIDGE FACILITY

SUMMARY OF TERMS AND CONDITIONS

	 	 	 

	Borrower:

	 	Arch Coal Inc. or a wholly owned subsidiary
thereof (the “Borrower”). The Borrower will,
directly or indirectly, own all of the capital
stock of the Target on the Merger Closing Date.
	 
	 	 
	Joint Lead Arrangers;
Joint Book Runners; and
Administrative Agent:

	 	Morgan Stanley Senior Funding, Inc. (“MSSF”) and
PNC Capital Markets LLC (“PNC Capital Markets”,
and together with MSSF, the “Lead Arrangers”)
	 
	 	 
	Administrative Agent:

	 	MSSF (the “Administrative Agent”).
	 
	 	 
	Bridge Lenders:

	 	MSSF, PNC Bank and a syndicate of financial
institutions and institutional lenders arranged
by the Lead Arrangers and reasonably acceptable
to the Borrower.
	 
	 	 
	Ranking:

	 	The Bridge Loans will rank senior to all
subordinated indebtedness of the Borrower and
will rank pari passu to all senior debt of the
Borrower.
	 
	 	 
	Guarantors:

	 	The Bridge Facility will be guaranteed on a
senior basis by each of the Borrower’s
subsidiaries that guarantee the Revolving
Facility. The guarantees will rank senior to all
subordinated indebtedness of a Guarantor and
will rank pari passu to all other senior
indebtedness of such Guarantor.
	 
	 	 
	Bridge Facility:

	 	A $3,800 million senior unsecured increasing
rate bridge facility (the “Bridge Facility”).
	 
	 	 
	Purpose and Availability:

	 	The Bridge Facility will be available pursuant
to one or more borrowings on and after the
Tender Offer Closing Date and on or prior to the
Merger Closing Date and shall be utilized (a) to
finance the Acquisition, the Transactions, the
Senior Notes Refinancing and the Convertible
Senior Notes Refinancing and (b) to pay fees and
expenses in connection with the Transactions.
The loans made under the Bridge Facility on the
Tender Offer Closing Date or thereafter and/or
prior to the Merger Closing Date are herein
referred to as the “Initial Bridge Loans.” Once
repaid, no amount of Initial Bridge Loans may be
reborrowed.
	 
	 	 
	Security:

	 	None.

B-1

 

	 	 	 

	Conversion to Extended
Term Loans:

	 	If any Initial Bridge Loan has not been repaid
in full on or prior to the first anniversary of
the Tender Offer Closing Date (the “Rollover
Date”) and unless the Borrower or any
significant subsidiary thereof is subject to a
bankruptcy or other insolvency proceeding, the
Initial Bridge Loans shall automatically be
converted into term loans (each, an “Extended
Term Loan”) maturing on the eighth anniversary
of the Tender Offer Closing Date (the “Bridge
Final Maturity Date”), subject to the Bridge
Lenders’ rights to convert Initial Bridge Loans
into Exchange Notes as set forth below. Any
Initial Bridge Loan not converted into an
Extended Term Loan on the Rollover Date shall
mature on the Rollover Date.
	 
	 	 
	Exchange into Exchange 

Notes:

	 	Each Bridge Lender of a Initial Bridge Loan or
Extended Term Loan that is (or will immediately
transfer its Exchange Notes to) an Eligible
Holder (as defined in Annex I) will have the
option, at any time on or after the Rollover
Date, to receive notes (the “Exchange Notes”) in
exchange for such Initial Bridge Loans or
Extended Term Loans having the terms set forth
in the term sheet attached hereto as Annex I;
provided that the Borrower may defer the first
issuance of Exchange Notes until such time as
the Borrower shall have received requests to
issue an aggregate of at least $100 million in
aggregate principal amount of Exchange Notes.
In connection with each such exchange, or at any
time prior thereto if requested by any Bridge
Lender that is a Bridge Lender as of the Tender
Offer Closing Date (each, an “Initial Bridge
Lender”), the Borrower shall (i) deliver to the
Bridge Lender that is receiving Exchange Notes,
and to such other Bridge Lenders as such Initial
Bridge Lender requests, an offering memorandum
of the type customarily utilized in a Rule 144A
offering of high yield securities covering the
resale of such Exchange Notes by such Bridge
Lenders, in such form and substance as
reasonably acceptable to the Borrower and such
Initial Bridge Lender, and keep such offering
memorandum updated in a manner as would be
required pursuant to a customary Rule 144A
securities purchase agreement, (ii) execute an
exchange agreement containing provisions
customary in Rule 144A securities purchase
agreements (including indemnification
provisions) and a registration rights agreement
customary in Rule 144A offerings, in each case,
if requested by such Initial Bridge Lender,
(iii) deliver or cause to be delivered such
opinions and accountants’ comfort letters
addressed to the Initial Bridge Lender and such
certificates as the Initial Bridge Lender may
request as would be customary in Rule 144A
offerings and otherwise in form and substance
satisfactory to the Initial Bridge Lender and
(iv) take such other actions, and cause its
advisors, auditors and counsel to take such
actions, as reasonably requested by the Initial
Bridge Lender in connection with

B-2

 

	 	 	 

	 

	 	issuances or resales of Exchange Notes, including providing such information
regarding the business and operations of the Borrower and its subsidiaries as
is reasonably requested by any prospective holder of Exchange Notes and
customarily provided in due diligence investigations in connection with
purchases or resales of securities.
	 
	 	 
	Interest Rate:

	 	Interest for the first three-month period
commencing on the Tender Offer Closing Date
shall be payable at the London interbank offered
rate (“LIBOR”) for U.S. dollars plus 600 basis
points (the “Initial Margin”). Interest for
each subsequent three-month period shall be
payable at prevailing LIBOR for the interest
period plus the Initial Margin plus 50 basis
points. The Senior Bridge Facility shall have a
LIBOR floor equal to 1.25% per annum.
	 
	 	 
	 

	 	Interest on the Initial Bridge Loans will be
payable in arrears at the end of each
three-month period and at the Rollover Date.
Interest on the Initial Bridge Loans shall not
exceed the Total Cap (as defined in the Fee
Letter).
	 
	 	 
	 

	 	Extended Term Loans will accrue interest at the
Total Cap (as defined in the Fee Letter).
Calculation of interest shall be on the basis of
actual days elapsed in a year of 360 days.
	 
	 	 
	Default Interest:

	 	Notwithstanding the Total Cap, upon the
occurrence and during the continuance of a
payment event of default, interest will accrue
on the overdue amount of any loan or other
overdue amount outstanding under the Bridge
Facility at a rate of 2.00% per annum plus the
rate otherwise applicable to the loans under the
Bridge Facility and will be payable on demand.
	 
	 	 
	Mandatory Prepayment:

	 	The Borrower will be required to prepay Initial
Bridge Loans and Extended Term Loans, on a pro
rata basis, at par plus accrued and unpaid
interest, in an amount equal to (i) 100% of the
net proceeds received by the Borrower or any of
its subsidiaries from the issuance of the debt
or preferred stock after the Tender Offer
Closing Date, other than exceptions to be agreed
and (ii) 100% of the net proceeds received from
the issuance of equity by, or equity
contributions to, the Borrower after the Tender
Offer Closing Date, in each case, subject to
certain exceptions to be agreed. The foregoing
prepayment obligation (other than the obligation
to prepay pursuant to clause (i) with proceeds
from issuance of Notes or other Qualifying
Senior Debt (to be defined in the Bridge
Documentation)) shall be subject to prior
prepayment of the Bank Facilities if required
thereunder.

B-3

 

	 	 	 

	 

	 	In addition, upon the occurrence of a change of
control of the Borrower (to be defined in a
mutually acceptable manner), the Borrower will
be required to prepay Initial Bridge Loans and
Extended Term Loans, on a pro rata basis, at a
price of 100% of the principal amount thereof,
plus accrued and unpaid interest, to the date of
prepayment.
	 
	 	 
	Optional Prepayments:

	 	The Initial Bridge Loans may be prepaid, in
whole or in part, at the option of the Borrower,
at any time with prior notice, at par plus
accrued and unpaid interest and breakage costs.
	 
	 	 
	 

	 	On or before the fourth anniversary of the Tender Offer
Closing Date, prepayment of the Exchange Notes will be
subject to a customary “make-whole” premium calculated using
a discount rate equal to the yield on comparable Treasury
securities plus 50 basis points. Thereafter, Exchange Notes
will be prepayable at the option of the Borrower at a premium
equal to 50% of the coupon on the Extended Term Loans,
declining ratably to par on the date which is two years prior
to the Bridge Final Maturity Date.
	 
	 	 
	 

	 	In addition, Exchange Notes will be prepayable at the option
of the Borrower prior to the third anniversary of the Tender
Offer Closing Date with the net cash proceeds of qualified
equity offerings of the Borrower at a premium equal to the
coupon on Extended Term Loans; provided that after giving
effect to such prepayment at least 65% of the aggregate
principal amount of such Exchange Notes shall remain
outstanding.
	 
	 	 
	Conditions Precedent to
Funding on Tender Offer
Funding Date:

	 	Conditions precedent to borrowing under
the Bridge Facilities shall be limited to
those set forth in Section 1 of the
Commitment Letter and in Exhibit D to the
Commitment Letter and the accuracy of the
Merger Agreement Representations and the
Specified Representations.
	 
	 	 
	Conditions Precedent to
Funding After Tender Offer
Funding Date:

	 	Conditions precedent loans under the
Bridge Facility after the Tender Offer
Funding Date shall be limited to the
following: (a) the initial borrowing shall
have occurred pursuant to the Bridge
Facility and the relevant conditions
precedent to such borrowing (as referenced
above) shall have been satisfied and (b)
the relevant conditions in Section 4 or 5
of Exhibit D, as applicable, shall have
been satisfied.

B-4

 

	 	 	 

	Representations and
Warranties:

	 	The Bridge Facility shall contain such
representations and warranties by the
Borrower and its subsidiaries as are
consistent with the Bridge Documentation
Principles.
	 
	 	 
	Covenants:

	 	The Bridge Facility shall contain such
affirmative and negative applicable to the
Borrower and its restricted subsidiaries
as are consistent with the Bridge
Documentation Principles.
	 
	 	 
	Events of Default:

	 	The Bridge Facility shall include such
events of default as are consistent with
the Bridge Documentation Principles.
	 
	 	 
	Financial Covenants:

	 	None.
	 
	 	 
	Expenses and Indemnity:

	 	The Borrower shall pay or reimburse all
reasonable out-of-pocket costs and
expenses incurred in connection with the
syndication of the Bridge Facility and
with the preparation, negotiation,
execution and delivery of the Bridge
Documentation in connection therewith,
including without limitation, the
reasonable fees and disbursements of not
more than one counsel. You further agree
to pay all reasonable out-of-pocket costs
and expenses of the Administrative Agent,
the Lenders and their respective
affiliates (including, without limitation,
reasonable fees and disbursements of
counsel and field auditors) incurred in
connection with the administration
(including the conducting of field
examinations), amendment, waiver or
modification (including proposed
amendments, waivers or modifications) of,
and enforcement of any of its rights and
remedies under, the Bridge Documentation.
	 
	 	 
	 

	 	The Borrower will indemnify the Lenders,
the Commitment Parties, the Lead
Arrangers, the Administrative Agent and
their respective affiliates, and hold them
harmless from and against all reasonable
out-of-pocket costs, expenses (including
but not limited to legal fees and
expenses) and liabilities arising out of
or relating to any action, litigation,
proceeding or investigations or otherwise
relating to the Transactions and any
actual or proposed use of the proceeds of
any loans made under the Bridge Facility;
provided, however, that no such person
will be indemnified for costs, expenses or
liabilities to the extent determined by a
final, non-appealable judgment of a court
of competent jurisdiction to have been
incurred solely from the gross negligence,
willful misconduct or a material breach of
the obligations of such person.
	 
	 	 
	Waivers and Amendments:

	 	Amendments and waivers of the provisions
of the Bridge Documentation shall require
the approval of Lenders holding not less
than a majority of the aggregate principal
amount of the loans and commitments under
the Bridge Facility; provided that (a) the
consent of each affected Lender shall be
required with respect to (i) increases in
the commitment of such Lender; (ii)

B-5

 

	 	 	 

	 

	 	reductions of principal, interest or fees; and (iii) extensions of the final
maturity date; and (b) the consent of all of the Lenders shall be required with
respect to modification of the voting percentages (or any of the applicable
definitions related thereto).
	 
	 	 
	Assignments and
Participations:

	 	Each Lender may assign all or, subject to
minimum amounts to be agreed, a portion of
its loans and commitments under the Bridge
Facility (other than to Disqualified
Lenders). Assignments will require
payment of an administrative fee to the
Administrative Agent and, except for an
assignment to an existing Lender or an
affiliate of an existing Lender, the
consent of the Administrative Agent;
provided that, for the six month period
commencing on the Tender Offer Closing
Date and so long as no payment or
bankruptcy event of default exists, the
consent of the Borrower (not to be
unreasonably withheld) shall be required
with respect to any assignment that would
result in the Initial Bridge Lenders
collectively holding less than 50.1% of
the aggregate outstanding principal amount
of the Bridge Loans. In addition, each
Lender may sell participations in all or a
portion of its loans and commitments under
the Bridge Facility (except to a
Disqualified Lender); provided that no
purchaser of a participation shall have
the right to exercise or to cause the
selling Lender to exercise voting rights
in respect of the Bridge Facility (except
as to certain basic issues).
	 
	 	 
	 

	 	If an Initial Bridge Lender makes an
assignment of Initial Bridge Loans at a
price less than par, the assignment
agreement may provide that, upon any
repayment or prepayment of such Initial
Bridge Loans with the proceeds of an
issuance of securities of the Borrower or
any of its subsidiaries in which the
Initial Bridge Lender or an affiliate
thereof acted as underwriter or initial
purchaser (an “Applicable Offering”), (i)
the Borrower shall pay the holder of such
Initial Bridge Loans the price set forth
in the assignment agreement as the price
(which may be the price at which such
Initial Bridge Lender assigned such
Initial Bridge Loans but in any event may
not be greater than par) at which the
holder of such Initial Bridge Loans will
be repaid by the Borrower with the
proceeds of an Applicable Offering (the
“Agreed Price”) and (ii) the Borrower
shall pay such Initial Bridge Lender the
difference between par and the Agreed
Price. Such payments by the Borrower
shall be in full satisfaction of such
Initial Bridge Loans in the case of a
repayment or prepayment with proceeds of
an Applicable Offering. For the avoidance
of doubt, the provisions of this paragraph
do not apply to any repayments or
prepayments other than with proceeds of an
Applicable Offering.
	 
	 	 
	Yield Protection, Taxes and
Other Deductions:

	 	The Bridge Documentation will contain
customary provisions for facilities of
this kind including, without limitation,
in respect

B-6

 

	 	 	 

	 

	 	of breakage and redeployment costs, increased costs, funding losses, capital
adequacy, illegality and requirements of law. All payments shall be free and
clear of any present or future taxes, withholdings or other deductions
whatsoever, subject to certain customary exceptions including those relating to
income taxes in the jurisdiction of a Lender’s applicable lending office.
	 
	 	 
	Governing Law:

	 	The State of New York. Each party to the
Bridge Documentation will waive the right
to trial by jury and will consent to the
exclusive jurisdiction of the state and
federal courts located in The Borough of
Manhattan, The City of New York.
	 
	 	 
	Counsel to the Lead
Arranger and
Administrative Agent:

	 	Shearman & Sterling LLP.

B-7

 

ANNEX I

SENIOR EXCHANGE NOTES

SUMMARY OF TERMS AND CONDITIONS

	 	 	 

	Issuer:

	 	The Borrower will issue Exchange Notes under
an indenture which complies with the Trust
Indenture Act (the “Senior Indenture”). The
Borrower in its capacity as issuer of the
Exchange Notes is referred to as the
“Issuer.”
	 
	 	 
	Guarantors:

	 	Same as Bridge Loans.
	 
	 	 
	Principal Amount:

	 	The Exchange Notes will be available only in
exchange for (i) the Initial Bridge Loans on
the Rollover Date or (ii) the Extended Term
Loans at any time. The principal amount of
any Exchange Note will equal 100% of the
aggregate principal amount of the Initial
Bridge Loans or the Extended Term Loans for
which it is exchanged.
	 
	 	 
	Maturity:

	 	The Exchange Notes will mature on the Bridge
Final Maturity Date.
	 
	 	 
	Interest Rate:

	 	The Exchange Notes will bear interest at a
rate equal to the Total Cap and will be
payable semi-annually in arrears.

Calculation of interest shall be on the basis
of the actual number of days elapsed in a
year of twelve 30-day months.
	 
	 	 
	Default Interest:

	 	In the event of a payment default on the
Exchange Notes, interest on the Exchange
Notes will accrue at a rate of 2.0% per annum
in excess of the rate otherwise applicable to
the Exchange Notes, and will be payable in
accordance with the provisions described
above under the heading “Interest Rate.”
	 
	 	 
	Ranking:

	 	Same as Initial Bridge Loans.
	 
	 	 
	Mandatory Offer to Purchase:

	 	The Issuer will be required to offer to
purchase the Exchange Notes upon a change of
control (to be defined in a mutually
acceptable manner) at 101% of the principal
amount thereof plus accrued interest to the
date of purchase. The Issuer will also be
required to offer to purchase Exchange Notes
with the proceeds of non-ordinary course
asset sales at 100% of the principal amount
thereof plus accrued interest to the date of
purchase, subject to certain reinvestment
rights and other exceptions to be agreed
consistent with the Bridge Documentation
Principles.
	 
	 	 
	Optional Redemption:

	 	On or before the fourth anniversary of the
Tender Offer Closing Date, the Exchange Notes
will be redeemable at a customary
“make-whole” premium calculated using a
discount rate equal to

B-I-1

 

	 	 	 

	 

	 	the yield on comparable U.S. Treasury securities plus 50 basis points.
Thereafter, the Exchange Notes will be redeemable at the option of the Issuer
at a premium equal to 50% of the coupon on the Exchange Notes, declining
ratably to par on the date which is two years prior to the Bridge Final
Maturity Date.
	 
	 	 
	 

	 	In addition, Exchange Notes will be redeemable at the
option of the Issuer prior to the third anniversary
of the Tender Offer Closing Date with the net cash
proceeds of qualified equity offerings of the
Borrower that are contributed to the Issuer at a
premium equal to the coupon on the Exchange Notes;
provided that after giving effect to such redemption
at least 65% of the aggregate principal amount of
Exchange Notes originally issued shall remain
outstanding.
	 
	 	 
	Registration Rights:

	 	The Issuer will be required to:

	 	•	 	use commercially reasonable efforts within 120 days
after the first issuance of Exchange Notes, file a
registration statement for an offer to exchange the
Exchange Notes for publicly registered notes with
identical terms;
	 
	 	•	 	use its commercially reasonable efforts to cause the
registration statement to become effective under the
Securities Act of 1933, as amended (the “Securities
Act”) as soon as practicable after such date;
	 
	 	•	 	complete the exchange offer within 270 days after
such date; and
	 
	 	•	 	file a shelf registration statement for the resale of
the Exchange Notes if it cannot complete an exchange
offer within those time periods listed above and in
certain other circumstances.

	 	 	 

	 

	 	If the Issuer does not comply with these
obligations (a “Bridge Registration
Default”), the Issuer shall pay
liquidated damages to each holder of
Exchange Notes with respect to the first
90-day period immediately following the
occurrence of the first Bridge
Registration Default in an amount equal
to 0.25% per annum on the principal
amount of Exchange Notes held by such
holder. The amount of the liquidated
damages will increase by an additional
0.25% per annum on the principal amount
of Exchange Notes with respect to each
subsequent 90-day period until all
Bridge Registration Defaults have been
cured, up to a maximum amount of
liquidated damages for all Bridge
Registration Defaults of 1.00% per
annum.
	 
	 	 
	 

	 	In addition, unless and until the Issuer
has consummated the exchange offer and,
if required, caused the shelf
registration statement to become
effective, the holders of the Exchange
Notes will have the right to
“piggy-back” the Exchange Notes in

B-I-2

 

	 	 	 

	 

	 	the registration of any debt securities (subject to customary scale-back
provisions) that are registered by the Issuer (other than on a Form S-4) unless
all the Exchange Notes will be redeemed or repaid from the proceeds of such
securities.
	 
	 	 
	Right to Transfer Exchange Notes:

	 	Each holder of Exchange Notes shall have
the right to transfer its Exchange Notes
in whole or in part, at any time to an
Eligible Holder (as defined below) and,
after the Exchange Notes are registered
pursuant to the provisions described
under “Registration Rights,” to any
person or entity; provided that if the
Issuer or any of its affiliates holds
Exchange Notes, such Exchange Notes
shall be disregarded in any voting.
“Eligible Holder” will mean (a) an
institutional “accredited investor”
within the meaning of Rule 501 under the
Securities Act, (b) a “qualified
institutional buyer” within the meaning
of Rule 144A under the Securities Act,
(c) a person acquiring the Exchange
Notes pursuant to an offer and sale
occurring outside of the United States
within the meaning of Regulation S under
the Securities Act or (d) a person
acquiring the Exchange Notes in a
transaction that is, in the opinion of
counsel acceptable to the Issuer, exempt
from the registration requirements of
the Securities Act; provided that in
each case such Eligible Holder
represents that it is acquiring the
Exchange Notes for its own account and
that it is not acquiring such Exchange
Notes with a view to, or for offer or
sale in connection with, any
distribution thereof (within the meaning
of the Securities Act) that would be in
violation of the securities laws of the
United States or any state thereof.
	 
	 	 
	Covenants:

	 	Those typical for an indenture governing
a high yield note issue and
substantially consistent with the
Borrower’s 7.25% Senior Notes due 2020
(the “Borrower’s 2020 Notes”), with
changes as are consistent with the
Bridge Documentation Principles.
	 
	 	 
	Events of Default:

	 	Those typical for an indenture governing
a high yield note issue and
substantially consistent with the
Borrower’s 2020 Notes, with changes as
are consistent with the Bridge
Documentation Principles.
	 
	 	 
	Governing Law:

	 	The State of New York. Each party to
the Bridge Documentation will waive the
right to trial by jury and will consent
to the exclusive jurisdiction of the
state and federal courts located in The
Borough of Manhattan, The City of New
York.

B-I-3

 

EXHIBIT C

SUMMARY OF TERMS AND CONDITIONS

REVOLVING FACILITY

          Capitalized terms not otherwise defined herein have the same meanings as specified therefor in
the Commitment Letter to which this Exhibit C is attached.

	 	 	 

	Borrower:

	 	Arch Coal Inc., a Delaware corporation (the “Borrower”).
	 
	 	 
	Guarantors:

	 	The obligations of the Borrower and its domestic restricted subsidiaries under the Revolving Facility and
under any treasury management, interest protection or other hedging arrangements entered into with a Bank
Lender (or an affiliate thereof) will be guaranteed by each of the existing and future direct and indirect
domestic restricted subsidiaries of the Borrower (the “Guarantors”), other than (a) any bonding subsidiary,
(b) any securitization subsidiary, (c) Arch Western Resources LLC and its subsidiaries, (d) any subsidiary
that is a “controlled foreign corporation” (a “CFC”) under Section 957 of the Internal Revenue Code, (e)
certain other subsidiaries of the Borrower which are also not required to be guarantors of the Borrower’s
outstanding senior notes (as the same may be refinanced, the “Existing Notes”), (f) unrestricted
subsidiaries, (g) immaterial subsidiaries, (h) any subsidiary that is prohibited by applicable law, rule or
regulation or by any contractual obligation from guaranteeing the Facilities or which would require
governmental (including regulatory) consent, approval, license or authorization to provide a Guarantee
unless such consent, approval, license or authorization has been received and (g) certain other exceptions
to be agreed. All guarantees will be guarantees of payment and not of collection.
	 
	 	 
	 

	 	Notwithstanding the foregoing, subsidiaries may be excluded from the guarantee requirements in circumstances
where the Borrower and the Bank Administrative Agent reasonably agree that the cost of providing such a
guarantee is excessive in relation to the value afforded thereby.
	 
	 	 
	Administrative and
Collateral Agent:

	 	PNC Bank, National Association (“PNC Bank”) will act as sole and exclusive administrative and collateral
agent for the Bank Lenders (the “Bank Administrative Agent”).
	 
	 	 
	Co-Lead Arrangers
and Co-Bookrunning
Managers:

	 	PNC Capital Markets LLC (“PNC”) and Morgan Stanley & Co., Inc. (“Morgan Stanley”) will act as co-lead
arrangers and co-bookrunning managers for the Revolving Facility (in such capacity, the “Lead Arrangers”).
	 
	 	 
	Bank Lenders:

	 	PNC and Morgan Stanley Senior Funding, Inc. (“MSSF”) (together, the “Initial Bank Lenders”), and other
banks, financial institutions and 

C-1

 

	 	 	 

	 

	 	institutional lenders selected by PNC in consultation with the Borrower and the
other Lead Arrangers (the “Bank Lenders”).
	 
	 	 
	Senior Credit Facility:

	 	A senior secured revolving credit facility (the
“Revolving Facility”) in an aggregate principal
amount of up to $760 million, available from time
to time after the Closing Date until the fifth
anniversary of the Closing Date, and to include a
sublimit to be determined for the issuance of
standby and commercial letters of credit (each, a
“Letter of Credit”) and a sublimit for swingline
loans (each, a “Swingline Loan”). Letters of
Credit will be initially issued by PNC Bank (in
such capacity, each an “Issuing Bank”), and each
of the Bank Lenders under the Revolving Facility
will purchase an irrevocable and unconditional
participation in each Letter of Credit and each
Swingline Loan. Amounts under the Revolving
Facility, including any amounts necessary to fund
the Acquisition, OID or upfront fees imposed
pursuant to the flex provisions of the Fee Letter,
may be borrowed under the Revolving Facility on
the Closing Date.
	 
	 	 
	Swingline Option:

	 	PNC Bank, in its capacity as the swingline lender,
may make Swingline Loans available on a same day
basis. The Borrower must repay each Swingline
Loan upon demand by the Administrative Agent.
	 
	 	 
	Purpose:

	 	The proceeds of the borrowings under the Revolving
Facility on or after the Tender Offer Funding
Date, together with proceeds from the Notes or the
Bridge Loans, shall be used (i) to finance in part
the Acquisition and the refinancing of the
Existing Credit Facility, and (ii) to pay fees and
expenses incurred in connection with the
Transaction. The proceeds of the Revolving
Facility shall be used to provide ongoing working
capital and for other general corporate purposes
of the Borrower and its subsidiaries.
	 
	 	 
	Interest Rates:

	 	The interest rates per annum applicable to the
Revolving Facility will be, at the option of the
Borrower (i) LIBOR plus the Applicable Margin (as
hereinafter defined) or (ii) the Base Rate plus
the Applicable Margin. The Applicable Margin
means a percentage per annum to be determined in
accordance with the performance pricing grid
referred to below.
	 
	 	 
	 

	 	Each Swingline Loan shall bear interest at the Base Rate plus the
Applicable Margin for Base Rate loans under the Revolving Facility.
	 
	 	 
	 

	 	The Borrower may select interest periods of one, two, three or six
months (and, if agreed to by all relevant Bank Lenders, nine or
twelve months) for LIBOR advances. Interest shall be payable at
the end of the selected interest period, but no less frequently
than quarterly.
	 
	 	 
	 

	 	“LIBOR” and “Base Rate” will have meanings customary and
appropriate for financings of this type.
	 
	 	 
	 

	 	During the continuance of an event of default or a payment default,
interest will accrue (i) on the principal of any loan at a rate of
200 basis

C-2

 

	 	 	 

	 

	 	points in excess of the rate otherwise applicable to such loan and
(ii) on any other outstanding amount at a rate of 200 basis points
in excess of the non-default interest rate then applicable to Base
Rate loans under the Revolving Facility, and will be payable on
demand.
	 
	 	 
	Commitment Fee:

	 	Commencing on the Closing Date, a commitment fee
of 0.50% per annum (and adjusted pursuant to the
table below opposite the Leverage Ratio each
fiscal quarter thereafter) shall be payable on
the actual daily unused portions of the
Revolving Facility, such fee to be payable
quarterly in arrears and on the date of
termination or expiration of the commitments.
Swingline Loans will not be considered
utilization of the Revolving Facility for
purposes of this calculation.
	 
	 	 
	Performance Pricing Grid:

	 	The Commitment Fee and the Applicable Margin for
LIBOR advances under the Revolving Facility
shall be the basis points per annum set forth in
the table below opposite the Leverage Ratio
(total debt/ EBITDA).

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Applicable	 	Applicable
	 	 	 	 	 	 	Margin for	 	Margin for
	Leverage	 	Commitment	 	Base Rate	 	LIBOR Rate
	   Ratio	 	Fee	 	advances	 	advances
	3 4.00 : 1
	 	 	0.50	%	 	 	2.00	%	 	 	3.00	%
	3 3.50 : 1
	 	 	0.50	%	 	 	1.75	%	 	 	2.75	%
	3 3.00 : 1
	 	 	0.50	%	 	 	1.50	%	 	 	2.50	%
	3 2.50 : 1
	 	 	0.50	%	 	 	1.25	%	 	 	2.25	%
	3  2.00 : 1
	 	 	0.375	%	 	 	1.00	%	 	 	2.00	%
	< 2.00 : 1
	 	 	0.375	%	 	 	0.75	%	 	 	1.75	%

	 	 	 

	Calculation of Interest
and Fees:

	 	Other than calculations in respect of interest
at the Base Rate (which shall be made on the
basis of actual number of days elapsed in a
365/366 day year), all calculations of interest
and fees shall be made on the basis of actual
number of days elapsed in a 360-day year.
	 
	 	 
	Cost and Yield Protection:

	 	Customary for transactions and facilities of
this type, including, without limitation, in
respect of breakage or redeployment costs
incurred in connection with prepayments,
changes in capital adequacy and capital
requirements or their interpretation,
illegality, unavailability, reserves without
proration or offset and payments free and clear
of withholding or other taxes.
	 
	 	 
	Letter of Credit Fees:

	 	Letter of Credit fees equal to the Applicable
Margin from time to time on LIBOR advances
under the Revolving Facility on a per annum
basis will be payable quarterly in arrears and
shared proportionately by the Bank Lenders
under the Revolving Facility. In addition, a
fronting fee of 0.125% per annum will be
payable to each Issuing Bank for its own
account, as well as customary issuance and
documentary fees. Both the Letter of Credit
fees and the fronting fees will be calculated
on the amount available to be drawn under each
outstanding Letter of Credit.

C-3

 

	 	 	 

	Maturity:

	 	Five (5) years after the Closing Date.
	 
	 	 
	Increase Option:

	 	After the Closing Date, the Borrower (so long
as no default or event of default has occurred
and is continuing) shall have the option to
increase the Revolving Facility, in an amount
not to exceed $250,000,000 without the consent
of the Lenders. The Borrower may solicit any
Lender and/or any other financial institution
reasonably satisfactory to the Bank
Administrative Agent and the Borrower to
provide such additional or new commitments. No
Lender shall be committed to provide any
incremental commitment until it expressly
agrees to provide such commitment.
	 
	 	 
	Optional Prepayments and
Commitment Reductions:

	 	The Revolving Facility may be prepaid at any
time in whole or in part without premium or
penalty upon written notice, at the option of
the Borrower, except that any prepayment of
LIBOR advances other than at the end of the
applicable interest periods therefor shall be
made with reimbursement for any funding losses
and redeployment costs of the Bank Lenders
resulting therefrom. The unutilized portion of
any commitment under the Revolving Facility may
be reduced permanently or terminated by the
Borrower at any time without penalty.
	 
	 	 
	Security:

	 	The Borrower and each of the Guarantors shall
grant the Bank Administrative Agent (for its
benefit and for the benefit of the Bank
Lenders) valid and perfected first priority
(subject to certain exceptions to be set forth
in the Bank Documentation) liens and security
interests in certain property of the Borrower
and the Guarantors (collectively, the
“Collateral”), including the following types of
property:

	 	(a)	 	all present and future shares
of capital stock of (or other ownership or profit interests
in) each of Borrower’s present and future direct and indirect
subsidiaries (limited, in the case of voting stock of any
entity that is a CFC, to 66% of such voting stock), held by
the Borrower or a Guarantor;
	 
	 	(b)	 	all present and future debt
owed to the Borrower or any Guarantor;
	 
	 	(c)	 	all of the present and future
property and assets, real and personal, of the Borrower and
each Guarantor, including, but not limited to, machinery and
equipment, inventory and other goods, accounts receivable,
owned real estate, leaseholds, fixtures, bank accounts,
general intangibles, financial assets, investment property,
license rights, patents, trademarks, trade names, copyrights,
other intellectual property and other general intangibles,
chattel paper, insurance proceeds, contract rights, hedge
agreements, documents, instruments, indemnification rights,
tax refunds and cash; and

C-4

 

	 	(d)	 	all proceeds and products of
the property and assets described in clauses (a), (b) and (c)
above.

	 	 	 

	 

	 	Notwithstanding anything to the contrary, the Collateral shall
exclude exceptions to be mutually agreed and otherwise
substantially consistent with the Borrower’s Existing Credit
Facility (subject to the Bank Documentation Principles).
	 
	 	 
	 

	 	The obligations of the Borrower and the Guarantors in respect of
the Revolving Facility and the obligations of the Borrower and the
Guarantors in respect of the any interest rate swap or similar
agreements with a Bank Lender or an affiliate of a Bank Lender and
treasury management agreements with a Bank Lender or an affiliate
of a Bank Lender, will all be secured by the Collateral in a manner
consistent with the applicable permitted liens provisions of the
Borrower’s Existing Notes (subject to the Bank Documentation
Principles).
	 
	 	 
	 

	 	All the above-described pledges, security interests and mortgages
shall be created on terms, and pursuant to documentation,
substantially consistent with the documentation relating to the
Existing Credit Facility, subject to the Bank Documentation
Principles.
	 
	Conditions Precedent
to Borrowing on or prior to the
Tender Offer Funding Date:

	 	The availability of the Revolving Facility on or prior the Tender Offer Funding Date
will be subject only to the conditions set forth in Section 1 of the Commitment Letter
and Exhibit D hereto, and the following conditions precedent: (i) delivery of a
written notice of borrowing and (ii) accuracy of the Merger Agreement Representations
and the Specified Representations.
	 
	 	 
	Conditions Precedent to
Funding After Tender Offer
Funding Date:

	 	Conditions precedent loans under the Revolving Facility after the Tender Offer Funding
Date shall be limited to the relevant conditions in Section 4 or 5 of Exhibit D, as
applicable, shall have been satisfied.
	 
	 	 
	Conditions Precedent to Each
Borrowing under the Revolving
Facility after the Merger
Closing Date:

	 	Following the Merger Closing Date, each borrowing or issuance or renewal of a Letter
of Credit under the Revolving Facility (other than the initial extensions of credit on
the Closing Date) will be subject to satisfaction of the following conditions precedent
(except to the extent provided above with respect to the initial extensions of credit
on the Closing Date): (i) all of the representations and warranties in the Bank
Documentation shall be true and correct (in all material respects, unless already
qualified by materiality or material adverse effect) as of the date of such extension
of credit (subject to a materiality qualification); and (ii) no default or event of
default under the Bank Documentation shall

C-5

 

	 	 	 

	 

	 	have occurred and be continuing or would result from such extension of credit.
	 
	 	 
	Representations and
Warranties:

	 	Limited to and substantially consistent with the representations and warranties set
forth in the Borrower’s Existing Credit Facility, subject to the Bank Documentation
Principles.
	 
	 	 
	Covenants:

	 	Limited and substantially consistent with the affirmative and negative covenants set
forth in the Borrower’s Existing Credit Facility, subject to the Bank Documentation
Principles.
	 
	 	 
	Financial Covenants:

	 	Limited to the following:

	 	•	 	Maintenance of a minimum Interest Coverage Ratio
(EBITDA/cash interest expense), with certain
“step-ups” to be agreed;
	 
	 	•	 	Maintenance of a maximum Total Leverage Ratio
(total debt (net of cash and cash
equivalents)/EBITDA), with certain “stepdowns” to be
agreed; and
	 
	 	•	 	Maintenance of a maximum Senior Secured Leverage
Ratio (total senior secured debt (net of cash and cash
equivalents)/EBITDA).

	 	 	 

	 

	 	All of the financial covenants will be calculated on a consolidated
basis and for each consecutive four fiscal quarter period.
Calculations will be made on a pro forma basis for acquisitions and
dispositions outside the ordinary course of business (and
incurrences and repayments of debt in connection therewith)
including the Transaction, as if they had occurred at the beginning
of the applicable period, in accordance with Regulation S-X under
the Securities Act of 1933, as amended and otherwise in a manner
satisfactory to the Lead Arrangers.
	 
	 	 
	Events of Default:

	 	Limited to and substantially consistent with the event
of default set forth in the Borrower’s Existing Credit
Facility, subject to the Bank Documentation Principles.
	 
	 	 
	Assignments and
Participations:

	 	Each Bank Lender will be permitted to make assignments
in minimum amounts to be agreed to other entities
approved by the Bank Administrative Agent and, so long
as no default has occurred, the Borrower, which
approval shall not be unreasonably withheld or delayed;
provided, however, that (i) no approval of the Borrower
shall be required in connection with assignments to
other Bank Lenders or any of their affiliates and (ii)
no approval of the Bank Administrative Agent shall be
required in connection with assignments under the
Revolving Facility to other Bank Lenders under the
Revolving Facility. Each Bank Lender will also have
the right, without consent of the Borrower or the Bank
Administrative Agent, to assign as security all or part
of its rights

C-6

 

	 	 	 

	 

	 	under the Bank Documentation to any Federal Reserve Bank. Bank Lenders will be
permitted to sell participations with voting rights limited to significant
matters such as changes in amount, rate and maturity date.
	 
	 	 
	Waivers and Amendments:

	 	Amendments and waivers of the provisions of the
Bank Documentation will require the approval of
Bank Lenders holding advances and commitments
representing more than 50% of the aggregate
advances and commitments under the Revolving
Facility, except that (a) the consent of all
directly affected Bank Lenders will be required
with respect to, among other things, (i) increases
in commitment amounts, (ii) reductions of
principal, interest, or fees, (iii) extensions of
scheduled maturities or times for payment, (iv)
releases of all or substantially all of the
collateral or value of the guarantees and (v)
changes that impose any restriction on the ability
of any Bank Lender to assign any of its rights or
obligations and (b) tranche voting will be
required for certain Collateral-related matters.
	 
	 	 
	Indemnification:

	 	The Borrower will indemnify and hold harmless the
Administrative Agent, the Lead Arrangers, each
other agent, each Senior Lender and each of their
respective affiliates, successors and assigns and
their respective officers, directors, employees,
agents, advisors and other representatives (each,
an “Indemnified Person”) from and against (and
will reimburse each Indemnified Person as the same
are incurred for) any and all losses, liabilities,
claims, damages or expenses (including, without
limitation, the reasonably fees, disbursements and
other charges of counsel that may be incurred by
or asserted or awarded against any such
Indemnified Person) in each case arising out of or
in connection with or by reason of any
investigation, litigation or proceeding or
preparation of a defense in connection with, the
Transaction, the Revolving Facility or the
Borrower’s use of loan proceeds or the
commitments, except to the extent such claim,
damage, loss, liability or expense is found in a
final, non-appealable judgment by a court of
competent jurisdiction (or by settlement
tantamount to such a judgment) to have resulted
from (i) the gross negligence, bad faith or
willful misconduct of such Indemnified Person,
(ii) a material breach of the obligation of any
Indemnified Person or any of such Indemnified
Person’s affiliates under the Revolving Facility
or (iii) disputes solely between or among
Indemnified Persons (provided, that
notwithstanding this clause (iii) the Bank
Administrative Agent, each Lead Arranger and each
other agent shall be indemnified in their
respective capacities as such in all such
litigations or proceedings). In the case of any
claim, litigation, investigation or proceeding
(any of the foregoing, a “Proceeding”) to which
the indemnity in this paragraph applies, such
indemnity shall be effective whether or not such
Proceeding is brought by the Borrower, its
subsidiaries, its equity holders or creditors or
an Indemnified Person, whether or not an
Indemnified Person is otherwise a party thereto.
It is agreed that no Indemnified Person shall have
any liability (whether direct or indirect, in
contract or tort or otherwise) to you or your
subsidiaries or affiliates or to your equity
holders or

C-7

 

	 	 	 

	 

	 	creditors or any other person arising out of, related to or in connection with
any aspect of the Transaction, except to the extent of direct (as opposed to
special, indirect, consequential or punitive) damages determined in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence, bad faith or willful misconduct of such Indemnified
Party. It is further agreed that the Commitment Parties shall only have
liability to you (as opposed to any other person), and that the Commitment
Parties shall be severally liable solely in respect of their respective
commitments to the Revolving Facility, on a several, and not joint, basis with
any other Lender, and that such liability shall only arise to the extent
damages have been caused by material breach of the Commitment Parties’
respective obligations under the Revolving Facility documentation, as
determined in a final, non-appealable judgment by a court of competent
jurisdiction. The Borrower shall not, without the prior written consent of an
Indemnified Person (which consent shall not be unreasonably withheld), effect
any settlement of any pending or threatened Proceeding against an Indemnified
Person in respect of which indemnity has been sought hereunder by such
Indemnified Person unless (i) such settlement includes an unconditional release
of such Indemnified Person from all liability or claims that are the subject
matter of such Proceeding and (ii) does not include any statement as to any
admission by such Indemnified Person.
	 
	 	 
	Governing Law:

	 	The State of New York, except as to real estate
and certain other collateral documents required
to be governed by local law. Each party to the
Bank Documentation will waive the right to trial
by jury and will consent to the exclusive
jurisdiction of the state and federal courts
located in The Borough of Manhattan, The City of
New York.
	 
	 	 
	Expenses:

	 	The Borrower will pay all costs and expenses
associated with the preparation, due diligence,
administration, syndication and enforcement of
all Bank Documentation, including, without
limitation, the legal fees and expenses of the
Bank Administrative Agent’s counsel, regardless
of whether or not the Revolving Facility is
closed. The Borrower will also pay the expenses
of each Bank Lender in connection with the
enforcement of any of the Bank Documentation
related to the Revolving Facility.
	 
	 	 
	Counsel to the
Bank Administrative Agent
and The Lead Arrangers:

	 	Buchanan Ingersoll & Rooney PC
	 
	 	 
	Miscellaneous:

	 	Each of the parties shall (i) waive its right to
a trial by jury and (ii) submit to New York
jurisdiction.

C-8

 

EXHIBIT D

CONDITIONS PRECEDENT1

$760 MILLION SENIOR SECURED REVOLVING CREDIT FACILITY

$3,800 MILLION SENIOR UNSECURED BRIDGE FACILITY

          Capitalized terms not otherwise defined herein have the same meanings as specified therefor in
the Commitment Letter to which this Exhibit D is attached.

          1. Conditions Applicable to the Facilities. Subject to the Certain Funds Provision,
the initial extension of credit under the Facilities will be subject to satisfaction (or waiver) of
the following conditions precedent:

     (a) Consummation of the Acquisition. The Tender Offer shall be consummated
concurrently with the initial funding of the Bridge Facility in accordance with the Merger
Agreement, without waiver or amendment thereof that is materially adverse to the interests
of the Lenders in their capacities as such unless consented to by the Lead Arrangers, such
consent not to be unreasonably withheld or delayed; it being understood that any decrease in
the purchase price shall be allocated to reduce the Bridge Facility on a dollar for dollar
basis and shall be deemed not to be materially adverse to the interests of the Lenders.

     (b) Financial Statements; Pro Formas. The Lead Arrangers shall have received (i)
audited consolidated balance sheets and related statements of income, changes in equity and
cash flows of each of the Borrower and the Target for the fiscal years ended December 31,
2008, December 31, 2009 and December 31, 2010 and (ii) unaudited consolidated balance sheets
and related statements of income, changes in equity and cash flows of each of the Borrower
and the Target for each subsequent fiscal quarter after December 31, 2010 which has ended at
least 45 days before the Tender Offer Closing Date. The Lead Arrangers shall have received
a pro forma consolidated balance sheet of the Borrower as of the date of the most recent
consolidated balance sheet delivered pursuant to the preceding sentence and a pro forma
statement of operations for the twelve-month period ending on such balance sheet date, for
fiscal 2010 and for any year to date period for which interim financials are provided
pursuant to clause (ii) of this clause (d) in each case adjusted to give effect to the
Transactions, the other transactions related thereto and such other adjustments as are
reflected in the agreed Borrower financial model.

     (c) Patriot Act. The Borrower and each of the Guarantors shall have provided the
documentation and other information to the Administrative Agent that are required by
regulatory authorities under the applicable “know-your-customer” rules and regulations,
including the Patriot Act the extent such information is requested at least 5 business days
prior to the Tender Offer Closing Date.

 

			
	1	 	Please note that the condition
precedents remain subject to our review of the Merger Agreement and may be
revised as necessary.

D-1

 

     (d) Miscellaneous Closing Conditions. Subject to the Certain Funds Provisions, the
Lenders under the Bridge Facility shall have received customary opinions of counsel for the
Borrower and the Guarantors and of local counsel, as the case may be, and such opinions,
corporate resolutions, certificates and closing documentation (including, but not limited
to, a solvency certificate from the Chief Financial Officer of the Borrower in substantially
the form attached hereto as Exhibit E, confirming the solvency of the Borrower and its
subsidiaries on a consolidated basis after giving effect to the Transactions).

     (e) Fees. All accrued fees and expenses required to be paid on the Tender Offer
Closing Date pursuant to the terms of the Fee Letter, to the extent invoiced at least three
business days prior to the Tender Offer Closing Date, (including reasonable legal fees and
expenses) shall have been paid upon the initial borrowing under the Facilities, have been
paid (which amounts may be offset against the proceeds of the Facilities).

     (f) Approvals. There being no court order or similar rule or regulation preventing the
funding of the Bridge Facility.

          2. Additional Condition Applicable to Revolving Facility. Subject to the Certain
Funds Provision, in addition, the initial extension of credit under the Revolving Facility
thereunder will be subject to the satisfaction (or wavier) of the following additional condition
precedent:

     (a) Bridge Facility/Notes. Concurrently with the borrowings under the Bank Facilities,
the Borrower shall have received gross proceeds necessary to effect the Tender Offer on the
Tender Offer Closing Date, the Senior Notes Refinancing and the Convertible Senior Notes
Refinancing on the Tender Offer Closing Date either from borrowings thereunder or the
issuance and sale of the Notes or otherwise.

     (b) Collateral. Subject to the Certain Funds Provisions, the collateral agent shall
have a perfected, first priority security interest in and lien on substantially all assets
as set forth in Exhibit C under the heading “Collateral”, and all necessary filings,
recordations and searches shall have been duly made and paid for. The Bank Administrative
Agent shall have received the results of recent lien searches in each relevant jurisdiction
with respect to the Borrower, the Guarantors, the Target and their subsidiaries, and such
search results shall reveal no liens on any assets of the Borrower, the Guarantors, the
Target and their subsidiaries except for customary permitted liens and liens to be
discharged on or prior to the Closing Date pursuant to documentation reasonably satisfactory
to the Bank Administrative Agent. The Bank Administrative Agent shall have received
endorsements naming the Bank Administrative Agent, on behalf of the Bank Lenders, as an
additional insured or loss payee, as the case may be, under all insurance policies to be
maintained with respect to the properties of the Borrower and its subsidiaries forming part
of the Collateral.

          3. Additional Bridge Facilities Conditions. In addition, the funding under the Bridge
Facility will be subject to the satisfaction (or wavier) of the following additional conditions
precedent:

     (a) Offering Memorandum. The Borrower shall have (i) as soon as practicable, and in no
event later than 15 consecutive business days (provided that such period shall not include
any days during any Blackout Period) prior to the Tender Offer Closing Date, prepared and
delivered to the Lead Arrangers, a customary preliminary prospectuses, offering memoranda or
private placement memoranda (all in a form consistent with previous prospectuses, offering

D-2

 

memoranda or private placement memoranda of the Borrower but in any event including all
financial statements and other information that would be required in a registration
statement on Form S-1 for an offering of debt securities registered under the Securities Act
(including, without limitation, all historical and pro forma financial
information relating to the Borrower and the Target required by Regulation S-X or is
otherwise customary but excluding information required by Regulation S-X Rule 3-10 and
Regulation S-X Rule 3-16) (collectively, the “Offering Document”); provided that this
condition shall be deemed satisfied if such Offering Document excludes sections (cover and
plan of distribution) that would customarily be provided by the Investment Bank but is
otherwise complete and (ii) caused the independent registered public accountants of the
Borrower and the Target to provide drafts of customary “comfort letters” (including
customary “negative assurances”) with respect to the financial information in the Offering
Document that they would each be prepared to render, subject to customary procedures.

          4. Conditions Applicable to the Facilities for Borrowings after Tender Offer Funding Date
and prior to the Merger Closing Date. The commitments of the Lenders to lend pursuant to the
Facilities after the Tender Offer Closing Date and prior to the consummation of the Merger shall be
subject to the satisfaction (or waiver) of the following additional conditions precedent:

     (a) Consummation of the Tender Offer. The Tender Offer shall have been consummated and
the initial extensions of credit pursuant to the Bridge Facility shall have been made in
accordance with the relevant conditions described in preceding Section 1 and the other
applicable conditions contained in the Commitment Letter.

     (b) Merger Agreement. The Merger Agreement described in preceding Section 1(a) shall
remain in full force and effect and there shall have been no modifications, waivers or
amendments thereto or any consents thereunder which would not have been permitted pursuant
to said Section 1(a) through the respective funding.

     (c) Use of Proceeds. The proceeds to be borrowed shall be used solely (x) to make
Top-Off Purchases or (y) to make loans to the Target to enable it to purchase Convertible
Senior Notes as required in accordance with the provisions of clause (vi) of the Acquisition
Summary, in each case after using any cash and cash equivalents.

          5. Conditions Applicable to the Facilities for Borrowings on or after the Merger Closing
Date. The commitments of the Lenders in respect of the Facilities and the obligations to lend
thereunder on or after the date of the Merger Closing Date shall be subject to the satisfaction (or
waiver) the following additional conditions precedent:

     (a) Consummation of the Merger. The Merger shall have been consummated in accordance in
all material respects with the Merger Agreement, which shall be in the form specified in
preceding Section 1(a) and shall not have been modified, waived or amended or any consent
granted thereunder which would not have been permitted under said Section 1(a).

D-3

 

Exhibit E

FORM OF SOLVENCY CERTIFICATE

[_____], 2011

     This Solvency Certificate (this “Certificate”) is delivered pursuant to Section [__] of the
Bank Facility, dated as of [_____], 2011 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the “Bank Facility”), made by and among [_____] (the
“Borrower”), the lending institutions from time to time parties thereto and PNC Bank, National
Association, as the Administrative Agent. Unless otherwise defined herein, capitalized terms used
in this Certificate shall have the meanings set forth in the Bank Facility.

     I, [_____], the Chief Financial Officer of the Borrower, DO HEREBY CERTIFY on behalf of the
Borrower that as of the date hereof, after giving effect to the consummation of the transactions
contemplated by the Bank Facility:

     (xi.) The sum of the liabilities (including without limitation, contingent liabilities) of the
Borrower and the Subsidiaries, on a consolidated basis, does not exceed the present fair saleable
value of the present assets of the Borrower and the Subsidiaries, on a consolidated basis.

     (xii.) The present fair saleable value of the assets of the Borrower and the Subsidiaries, on a
consolidated basis, is not less than the amount that will be required to pay the probable
liabilities (including without limitation, contingent liabilities) of the Borrower and the
Subsidiaries on their debts as they become absolute and matured.

     (xiii.) The capital of the Borrower and the Subsidiaries, on a consolidated basis, is not
unreasonably small in relation to their business as contemplated on the date hereof.

     (xiv.) The Borrower and the Subsidiaries, on a consolidated basis, have not incurred and do not
intend to incur, or believe that they will incur, debts or other liabilities including current
obligations, beyond their ability to pay such debts as they become due (whether at maturity or
otherwise and including pursuant to any refinancing thereof).

     (xv.) The Borrower and the Subsidiaries, on a consolidated basis, are “solvent” within the
meaning given to that term and similar terms under applicable laws relating to fraudulent transfers
and conveyances.

     (xvi.) For purposes of this Certificate, the amount of any contingent liability has been
computed as the amount that, in light of all of the facts and circumstances existing as of the date
hereof, represents the amount that can reasonably be expected to become an actual or matured
liability (irrespective of whether such contingent liabilities meet the criteria for accrual under
Statement of Financial Accounting Standards No. 5).

     (xvii.) In reaching the conclusions set forth in this Certificate, the undersigned has (i)
reviewed the Bank Facility and other documents referred to therein and such other documents deemed
relevant, (ii) reviewed the financial statements (including the pro forma financial statements)
referred to in Section [__]of the Bank Facility (the “Financial Statements”) and (iii) made such
other investigations and inquiries as the undersigned has deemed appropriate, having taken into
account the nature of the particular business anticipated to be conducted by the Borrower and the
Subsidiaries after consummation of the transactions contemplated by the Bank Facility. The
undersigned is familiar with the financial performance

E-1

 

and prospects of the Borrower and its Subsidiaries and hereby confirms that the Financial
Statements were prepared in good faith and fairly present, in all material respects, on a pro forma
basis as of [_____] (after giving effect to the Transactions), the Borrower’s and the Subsidiaries’
consolidated financial condition.

     (xviii.) The financial information and assumptions which underlie and form the basis for the
representations made in this Certificate were fair and reasonable when made and were made in good
faith and continue to be fair and reasonable as of the date hereof.

     (xix.) The undersigned confirms and acknowledges that the Bank Administrative Agent and the
Lenders are relying on the truth and accuracy of this Certificate in connection with the
Commitments under the Bank Facility.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

E-2

 

     IN WITNESS WHEREOF, I have executed this Certificate this as of the date first written above.

	 	 	 	 	 
	 	[ARCH COAL INC.]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

E-3Exhibit 10.1

Exhibit 10.1

FORM

OF

AMENDMENT

TO

SEVERANCE AGREEMENT

This Amendment to Severance Agreement (“Amendment”) dated as of December
 _____, 2010 is made and
entered into by and between DiamondRock Hospitality Company, a Maryland corporation (the
“Company”), and [Name of Executive] (the “Executive”).

WHEREAS, the Company and the Executive are parties to a Severance Agreement dated as of [Date]
(the “Agreement”);

WHEREAS, the parties hereto desire to amend the Agreement in light of additional guidance
issued under Section 409A of the Internal Revenue Code of 1986, as amended;

WHEREAS, the Agreement may be amended or modified only by a written instrument signed by the
Executive and by a duly authorized representative of the Company; and

WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Company and the
Executive agree as follows:

1. The first sentence of the second paragraph of Section 3(a) of the Agreement is hereby
amended and restated in its entirety as follows:

“None of the benefits described in this Section 3 (other than
Accrued Salary) will be payable unless the Executive has signed a
general release which has become irrevocable within 90 days after
the Date of Termination, satisfactory to the REIT in the reasonable
exercise of its discretion, releasing the DiamondRock Group, its
affiliates including the REIT, and their officers, directors and
employees, from any and all claims or potential claims arising from
or related to the Executive’s employment or termination of
employment.”

2. The second sentence of Section 3(a)(ii) is hereby deleted and replaced in its entirety with
the following:

“In such event, the Severance Payments shall be reduced in the
following order: (1) cash payments not subject to Section 409A of
the Code; (2) cash payments subject to Section 409A of the Code; (3)
equity-based payments and acceleration; and (4) non-cash forms of
benefits. To the extent any payment is to be made over
time (e.g., in installments, etc.), then the payments shall be
reduced in reverse chronological order.”

 

 

 

3. The last sentence of Section 3(a)(v) is hereby deleted and replaced in its entirety with
the following:

“The Gross-Up Payment, if any, shall be paid to the relevant tax
authority as withholding taxes on behalf of the Executive at such
time or times as the Excise Tax is due.

4. Each of Sections 3(b)(i), 3(b)(ii), 3(c)(i) and 3(d)(i) is hereby amended by adding the
following immediately prior to the semi-colon at the end thereof:

“to be paid within 90 days after the Date of Termination, provided,
however, that if such 90 day period spans two calendar years, the
amount shall be paid in the second calendar year”

5. Section 8(a) of the Agreement is hereby deleted and replaced in its entirety with the
following:

“Anything in this Agreement to the contrary notwithstanding, if at
the time of the Executive’s separation from service within the
meaning of Section 409A of the Code, the REIT determines that the
Executive is a “specified employee” within the meaning of Section
409A(a)(2)(B)(i) of the Code, then to the extent any payment or
benefit that the Executive becomes entitled to under this Agreement
on account of the Executive’s separation from service would be
considered deferred compensation subject to the 20 percent
additional tax imposed pursuant to Section 409A(a) of the Code as a
result of the application of Section 409A(a)(2)(B)(i) of the Code,
such payment shall not be payable and such benefit shall not be
provided until the date that is the earlier of (A) six months and
one day after the Executive’s separation from service, or (B) the
Executive’s death. The parties intend that this Agreement will be
administered in accordance with Section 409A of the Code. To the
extent that any provision of this Agreement is ambiguous as to its
compliance with Section 409A of the

 

2

 

Code, the provision shall be
read in such a manner so that all payments hereunder comply with
Section 409A of the Code. The parties agree that this Agreement may
be amended, as reasonably requested by either party, and as may be
necessary to fully comply with Section 409A of the Code and all
related rules and regulations in order to preserve the payments and
benefits provided hereunder without additional cost to either party.
To the extent that any payment or benefit described in this
Agreement constitutes “non-qualified deferred compensation” under
Section 409A of the Code, and to the extent that such payment or
benefit is payable upon the
Executive’s termination of employment, then such payments or
benefits shall be payable only upon the Executive’s “separation from
service. The determination of whether and when a separation from
service has occurred shall be made in accordance with the
presumptions set forth in Treasury Regulation Section 1.409A-1(h).
The REIT makes no representation or warranty and shall have no
liability to Executive or any other person if any provisions of this
Agreement are determined to constitute deferred compensation subject
to Section 409A of the Code but do not satisfy an exemption from, or
the conditions of, such Section.”

6. All other provisions of the Agreement shall remain in full force and effect according to
their respective terms, and nothing contained herein shall be deemed a waiver of any right or
abrogation of any obligation otherwise existing under the Agreement except to the extent
specifically provided for herein.

7. This Amendment may be executed in any number of counterparts, each of which when so
executed and delivered shall be taken to be an original; but such counterparts shall together
constitute one and the same document.

 

3

 

IN WITNESS WHEREOF, the Company and the Executive have executed this Amendment to Severance
Agreement as of the day and year first above written.

	 	 	 	 	 
	 

	 	DIAMONDROCK HOSPITALITY COMPANY	 	 
	 

	 	 
 

By:
	 	 
	 

	 	Its:	 	 
	 
	 	 	 	 
	 

	 	EXECUTIVE	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 

 

4

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