EXHIBIT 10.7
FORM OF
ROYALTY PASS-THROUGH AGREEMENT AND GUARANTY
DATED AS OF OCTOBER ___, 2002
AMONG
ARCH COAL, INC.
AND
ARK LAND COMPANY
AND
ACIN LLC
THIS ROYALTY PASS-THROUGH AGREEMENT AND GUARANTY, dated as of October ___,
2002 (this "Agreement"), is entered into by and among Arch Coal, Inc., a
Delaware corporation ("Arch"), Ark Land Company, a Delaware corporation ("Ark"),
and ACIN LLC, a Delaware limited liability company ("ACIN"). Arch, Ark and ACIN
are sometimes referred to together herein as the "Parties" and individually as a
"Party".
RECITALS
WHEREAS, pursuant to two agreements between Black Beauty Land Company,
Inc. ("Black Beauty") and Ark, dated March 4, 1986 which are more specifically
identified on Exhibit A attached hereto (together, the "Mine Agreements"), Ark
assigned to Black Beauty certain leases more specifically identified in said
Mine Agreements; and
WHEREAS, pursuant to the Mine Agreements, Ark retained an overriding
royalty interest on coal mined and sold from the areas more specifically
described in the Mine Agreements (together, the "Mine Areas"); and
WHEREAS, Ark has agreed to pay to ACIN amounts received pursuant to the
overriding royalty interest, if any, paid to Ark under the Mine Agreements; and
WHEREAS, Arch desires to guarantee the payment of such amounts to ACIN on
the terms and subject to the limitations specified herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Each capitalized term used herein shall have the
meanings specified below.
"ACIN" shall have the meaning set forth in the Preamble.
"Agreement" shall have the meaning set forth in the Preamble.
"Arch" shall have the meaning set forth in the Preamble.
"Ark" shall have the meaning set forth in the Preamble.
"Black Beauty" shall have the meaning set forth in the Recitals.
"Business Day" means a day (other than a Saturday or Sunday) on which
banks generally are open in New York City for the conduct of substantially all
of their commercial lending activities.
"Guaranteed Obligations" means the obligation from time to time of Ark to
pay the Royalties pursuant to Section 2.1 of this Agreement.
"Mine Agreements" shall have the meaning set forth in the Recitals.
"Mine Areas" shall have the meaning given such term in the Recitals.
"Party" shall have the meaning set forth in the Preamble.
"Royalties" shall mean all (a) "Advance Royalties" received by Ark
pursuant to Section 8 of each Mine Agreement, and (b) "Overriding Production
Royalties" received by Ark pursuant to Section 9 of each Mine Agreement.
"Termination Date" means the date upon which (a) each Mine Agreement has
been terminated, and (b) all Royalties have been paid by Ark and/or Arch to ACIN
in accordance with the terms of this Agreement.
Section 1.2 Gender, Parts, Articles and Sections. Whenever the context requires,
the gender of all words used in this Agreement shall include masculine, feminine
and neuter, and the number of all words shall include the singular and plural.
All references to Article numbers and Section numbers refer to Articles and
Sections of this Agreement. All defined terms shall be equally applicable to
both the singular and plural forms of the term.
ARTICLE II
PAYMENT OBLIGATION
Section 2.1 Payment. Ark hereby agrees to pay to ACIN any and all Royalties
received by Ark from time to time. Ark hereby agrees to make such payments to
ACIN within fifteen (15) days of Ark's receipt of such Royalties. If Ark fails
to make such payment to ACIN within fifteen (15) days of receipt of the
Royalties, interest shall accrue on the outstanding amount at the lesser of 10%
per annum or the maximum rate permissible by applicable law until the date of
payment, all such interest to be payable on demand.
Whenever any payment to be made hereunder shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day (unless such next succeeding Business Day is after
the Termination Date, in which event the due date shall be the immediately
preceding Business Day).
ARTICLE III
GUARANTY
Section 3.1 Guaranty. Arch hereby (a) absolutely, unconditionally and
irrevocably guarantees to ACIN the full, punctual and prompt payment when due of
the Guaranteed Obligations, and (b) indemnifies and holds harmless ACIN, its
successors and assigns, from, and agrees to pay to ACIN, its successors and
assigns, all reasonable costs and expenses (including reasonable counsel fees
and expenses) incurred by ACIN in enforcing any of its rights under this
Agreement; provided, however, Arch shall not be obligated to make any payment
under this Section 3.1 until five (5) Business Days after Arch has received
written demand therefor from ACIN, which demand shall set forth in reasonable
detail the amount for which demand is being made. The guaranty in this Section
3.1 is a continuing guaranty, and shall apply to all
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Guaranteed Obligations whenever arising and shall remain in full force and
effect, and shall not be terminated until all Guaranteed Obligations and all
costs and expenses have been paid in full.
SECTION 3.2 Obligations Unconditional. Arch guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of this
Agreement, and hereby waives any defenses that Arch or any other person liable
for the Guaranteed Obligations may have or assert, other than the terms of this
Agreement. Arch further waives notices of protest, presentment, demand (other
than the demand for payment described in Section 3.1), nonpayment,
nonperformance, promptness, diligence, default, dishonor and any other notice
with respect to the Guaranteed Obligations and any requirement that ACIN exhaust
any right or take any action against Ark or any other person. The liability of
Arch under this Agreement to the fullest extent permitted by law shall be
absolute and unconditional.
SECTION 3.3 Insolvency of Ark. The obligation of Arch hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Guaranteed Obligations is rescinded or must otherwise
be returned by ACIN for any reason, including, without limitation, the
insolvency, bankruptcy or reorganization of Ark or otherwise, all as though such
payment had not been made, and, in such event, Arch will pay to ACIN an amount
equal to any such payment that has been rescinded or returned. The provisions of
this Section 3.3 shall survive any release or termination of this Agreement.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Termination of the Agreement. Unless otherwise agreed upon by
the parties to this Agreement, this Agreement shall terminate on the Termination
Date and all obligations of Ark and, except as specified in Section 3.3, Arch
hereunder shall immediately cease and Ark and Arch shall have the right to
cancel all Royalty payments with respect to any transactions entered into from
and after such date.
Section 4.2 Notice. Any demand, notice, request, instruction,
correspondence or other document to be given hereunder by Arch to ACIN or by
ACIN to Ark or any other party to this Agreement (herein collectively called
"Notice") shall be in writing and delivered personally or mailed, postage
prepaid, or by telecopier, as follows:
if to Arch:
Arch Coal, Inc.
▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇.▇.
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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if to Ark:
Ark Land Company
▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇.▇.
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
if to ACIN LLC:
ACIN LLC
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇.▇.
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
All such Notices shall be effective, if mailed, two Business Days after
deposit in the mails; if sent by overnight courier, one Business Day after
delivery to the courier company; and if sent by telecopier, when received by the
receiving telecopier equipment, respectively; provided, however, that telecopied
Notices received by any party after its normal business hours (or on a day other
than a Business Day) shall be effective on the next Business Day.
Section 4.3 Amendment or Waiver. No amendment, waiver, supplement or other
modification of any provision of this Agreement shall be effective unless the
same shall be in writing and signed by all parties to this Agreement and then
such amendment, waiver, supplement or other modification shall be effective only
in the specific instance and for the specific purpose for which given.
Section 4.4 Successors and Assigns. This Agreement shall be binding upon
Ark and Arch and their successors and assigns and shall inure to the benefit of
and be enforceable by ACIN and its successors and assigns; provided that Ark and
Arch may not assign or transfer any of their rights or obligations under this
Agreement without the prior written consent of ACIN and its successors and
assigns.
Section 4.5 Severability. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
then the validity, legality and enforceability of the remaining provisions or
obligations, or such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
Section 4.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF MISSOURI.
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Section 4.7 Captions. The captions in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
Section 4.8 Further Assurances. On or after the execution of this
Agreement, each Party, at the request of another Party, will execute and deliver
to the requesting Party all such further agreements, contracts, instruments and
other documents as the requesting Party may reasonably request in order to
perform, accomplish, perfect or record, if reasonably necessary, the
transactions contemplated by this Agreement and to otherwise carry out the
intention of this Agreement.
Section 4.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
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WHEREOF, Arch, Ark and ACIN have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written.
ARCH COAL, INC.
By:
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Name:
------------------------------
Title:
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ARK LAND COMPANY
By:
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Name:
------------------------------
Title:
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ACIN LLC
By: NRP (Operating) LLC, ACIN LLC's sole
member
By:
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Name:
------------------------------
Title:
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EXHIBIT A
1. Mine Area Two Agreement dated March 4, 1986 between Black Beauty Land
Company, Inc. and Ark Land Company, unrecorded (I-120-2).
2. Mine Area Three Agreement dated March 4, 1986 between Black Beauty Land
Company, Inc. and Ark Land Company, unrecorded (I-120-3).