ALLIANCE RESOURCE OPERATING PARTNERS, L.P.

Exhibit 10.2

 

EXECUTION COPY

 

 

 

ALLIANCE RESOURCE OPERATING PARTNERS, L.P.

 

 

 

 

 

 

FIRST AMENDMENT
Dated as of January 27, 2017

 

 

 

to

 

 

 

NOTE PURCHASE AGREEMENT
Dated as of June 26, 2008

 

 

 

 

 

 

Re:
$145,000,000 6.72% Senior Notes, Series B, due June 26, 2018

 

 

 

 

 

 

FIRST AMENDMENT

 

THIS FIRST AMENDMENT dated as of January 27, 2017 (this “First Amendment”) amends the Note Purchase Agreement dated as of June 26, 2008 (the “Note Purchase Agreement”) among ALLIANCE RESOURCE OPERATING PARTNERS, L.P., a Delaware limited partnership (the “Company”), each of the Subsidiary Guarantors (as defined in the Note Purchase Agreement) listed on the signature pages hereto, and each of the institutional investors listed on the signature pages hereto (collectively, the “Noteholders”):

 

RECITALS:

 

A.     The Company and each of the Purchasers (as defined in the Note Purchase Agreement) heretofore entered into the Note Purchase Agreement, pursuant to which the Company issued $350,000,000 aggregate principal amount of its Senior Notes consisting of (a) $205,000,000 aggregate principal amount of its 6.28% Senior Notes, Series A, due June 26, 2015 (the “Series A Notes”), and (b) $145,000,000 aggregate principal amount of its 6.72% Senior Notes, Series B, due June 26, 2018 (the “Series B Notes” and, together with the Series A Notes, are collectively referred to herein as the “Notes”).  The Company repaid the Series A Notes on June 26, 2015.  The Noteholders are the holders of 100% of the outstanding principal amount of the Series B Notes.

 

B.     Capitalized terms used herein shall have the respective meanings ascribed thereto in the Note Purchase Agreement, as amended hereby, unless herein defined or the context shall otherwise require.

 

C.     Each of the Subsidiary Guarantors will enter into the Subsidiary Guaranty Agreement concurrently herewith pursuant to which it will guarantee the obligations of the Company under the Note Purchase Agreement and the Notes.

 

D.     The Company has agreed to certain modifications to the terms and provisions of the Note Purchase Agreement as set forth herein, including the granting of collateral by the Company and certain of its Subsidiaries to a collateral agent for the equal and ratable benefit of the Noteholders and the lenders under the Bank Facility.

 

E.     The Noteholders have agreed to amend the Note Purchase Agreement in the respects, but only in the respects, hereinafter set forth.

 

F.     All requirements of law have been fully complied with and all other acts and things necessary to make this First Amendment a valid, legal and binding instrument according to its terms for the purposes herein expressed have been done or performed.

 

NOW, THEREFORE, upon the full and complete satisfaction of the conditions precedent to the effectiveness of this First Amendment set forth in Section 3.1 hereof (the “Effective Date”), and in consideration of good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Company and the Noteholders do hereby agree as follows:

 

SECTION 1.     AMENDMENTS TO THE NOTE PURCHASE AGREEMENT.  The body of the Note Purchase Agreement is amended as set forth in the attached Exhibit A, it being understood and agreed that (a) each Schedule and Exhibit to the Note Purchase Agreement included in such Exhibit A shall be deemed to, as applicable, (i) replace the corresponding Schedule or Exhibit delivered as of the Original Closing Date or (ii) be added to the Note Purchase Agreement, and (b) Exhibit 2.2(b) to the Note Purchase Agreement shall be deleted in its entirety.

 

SECTION 2.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

2.1.     To induce the Noteholders to execute and deliver this First Amendment (which representations shall survive the execution and delivery of this First Amendment), the Company represents and warrants to the Noteholders that:

 

(a)     this First Amendment, the Intercreditor Agreement and each of the Collateral Documents has been duly authorized by all necessary corporate or other action on the part of the Company and/or the Subsidiary Guarantors party thereto and, in the case of each Collateral Document delivered on or prior to the date hereof, has been duly executed and delivered by the Company and/or the Subsidiary Guarantors party thereto, and each of this First Amendment, the Note Purchase Agreement (as amended hereby) and each Collateral Document constitutes (or, in the case of a Collateral Document delivered after the date hereof, will, when executed and delivered, constitute) the legal, valid and binding obligation, contract and agreement of the Company and/or the Subsidiary Guarantors party thereto enforceable against such Person(s) in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally;

 

(b)     the execution and delivery of this First Amendment, the Intercreditor Agreement and each of the Collateral Documents by the Company and/or the Subsidiary Guarantors party thereto and the performance hereof and thereof, and of the Note Purchase Agreement, as amended hereby, by the Company and/or the Subsidiary Guarantors party thereto will not (1) violate (i) any provision of law, statute, rule or regulation or any such Person’s articles or certificate of incorporation or bylaws or other charter documents, (ii) any order of any court or any rule, regulation or order of any other agency or government binding upon any such Person, or (iii) any provision of any indenture, agreement or other instrument to which any such Person is a party or by which its properties or assets are or may be bound, or (2) result in a breach or constitute (alone or with due notice or lapse of time or both) a default under any indenture, agreement or other instrument referred to in clause (1)(iii) of this Section 2.1(b);

 

(c)     no consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution and delivery of this First Amendment, the Intercreditor Agreement or any

Collateral Document by the Company and/or any Subsidiary Guarantor party thereto or the performance hereof or thereof or of the Note Purchase Agreement, as amended hereby, by the Company or any Subsidiary Guarantor party thereto;

 

(d)     all the representations and warranties contained in Section 5 of the Note Purchase Agreement, as amended hereby, are true and correct in all material respects with the same force and effect as if made by the Company on and as of the Effective Date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they were true and correct in all material respects as of such earlier date);

 

(e)     after giving effect to this First Amendment and the Bank Facility, no Default or Event of Default exists; and no Default or Event of Default under the Bank Facility exists or would result from the effectiveness of this First Amendment;

 

(f)     the Persons appearing as Subsidiary Guarantors on the signature pages to this First Amendment constitute all Persons who are required to be Subsidiary Guarantors pursuant to the terms of the Note Purchase Agreement as amended hereby; and

 

(g)     neither the Company nor any Subsidiary has paid or agreed to pay, and neither the Company nor any Subsidiary will pay or agree to pay, any fees or other consideration to any Person in connection with the closing of the Bank Facility, other than (i) commitment fees and similar fees given in consideration of a new extension of credit under the Bank Facility, (ii) structuring, arrangement or similar fees solely for the account of the administrative agent and other lead arrangers and syndication agents or an affiliate thereof under the Bank Facility and (iii) out-of-pocket fees and expenses of legal counsel to the lenders under the Bank Facility and out-of-pocket fees and expenses of legal counsel to the Company and the Subsidiary Guarantors.

 

SECTION 3.     CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT.

 

3.1.     This First Amendment shall not become effective until, and shall become effective when, each and every one of the following conditions shall have been satisfied to the satisfaction of the Noteholders (which satisfaction shall be evidenced by the release from escrow of the signature page of the Noteholders to this First Amendment by ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, special counsel to the Noteholders):

 

(a)     counterparts of this First Amendment, duly executed by the Company, the Subsidiary Guarantors and the Noteholders, shall have been delivered to the Noteholders (or their special counsel);

 

(b)     counterparts of the Intercreditor Agreement, duly executed by each of the parties thereto, shall have been delivered to the Noteholders (or their special counsel);

 

(c)     counterparts of the Subsidiary Guaranty Agreement, duly executed by each of the Subsidiary Guarantors, shall have been delivered to the Noteholders (or their special counsel);

 

(d)     counterparts of each of the Collateral Documents required to be delivered on or prior to the date hereof by the Note Purchase Agreement, as amended hereby, as are necessary to grant in favor of the Collateral Agent Liens in and to the Collateral as contemplated by this First Amendment and the Bank Facility, duly executed by the Company and/or the Subsidiary Guarantors party thereto and the Collateral Agent, shall have been delivered to the Noteholders (or their special counsel), together with:

 

(i)     certificates and instruments, if any, representing the securities Collateral referred to therein accompanied by undated stock powers or instruments of transfer executed in blank;

 

(ii)     UCC financing statements in form appropriate for filing under the UCC of all jurisdictions that the Noteholders may deem necessary or desirable in order to perfect the Liens created under the Security Agreement, covering the Collateral described in the Security Agreement (except to the extent such Collateral is fixtures or “as extracted” collateral);

 

(iii)     certified copies of UCC, United States Patent and Trademark Office and United States Copyright Office, tax and judgment lien searches, or equivalent reports or searches, each of a recent date listing all effective financing statements, lien notices or comparable documents (together with copies of such financing statements and documents) that name the Company or any Subsidiary Guarantor as debtor and that are filed in those state and county jurisdictions in which the Company or such Subsidiary Guarantor is organized or maintains its principal place of business and such other searches that are required by the Perfection Certificate or that the Noteholders deem necessary or appropriate, none of which encumber the Collateral covered or intended to be covered by the Collateral Documents (other than Permitted Liens);

 

(iv)     a Perfection Certificate, duly executed by the Company and each Subsidiary Guarantor; and

 

(v)     evidence that all other actions, recordings and filings that the Noteholders may deem necessary or desirable in order to perfect the Liens created under the Collateral Documents (except with respect to fixture filings related to the Mortgaged Properties and “as-extracted” collateral filings) have been taken;

 

(e)     the Company shall have delivered to each Noteholder (or special counsel to the Noteholders) certified copies of the Bank Facility and, to the extent requested by

the Noteholders, the other Related Documents, all of which shall be in form and substance reasonably satisfactory to the Noteholders;

 

(f)     the Noteholders (or their special counsel) shall have received (1) copies of the articles or certificate of incorporation or organization of the Company and each Subsidiary Guarantor, together with all amendments, certified by the appropriate governmental officer in its jurisdiction of incorporation or organization, (2) a certificate of good standing for the Company and each Subsidiary Guarantor and (if applicable) each general partner or managing member thereof, dated as of a recent date and certified by the Secretary of State or other appropriate governmental officer in its jurisdiction of incorporation or organization, (3) a certificate of the Secretary of State or other appropriate governmental officer of each jurisdiction in which the Company or any Subsidiary Guarantor or (if applicable) any general partner or managing member thereof is required to be qualified to do business, dated as of a recent date and stating that such Person is duly qualified and in good standing as a foreign corporation, limited partnership or limited liability company, as applicable, in such State and has filed all annual reports required to be filed to the date of such certificate, (4) copies, certified by the Secretary or Assistant Secretary of the Company and each Subsidiary Guarantor, of its bylaws, operating agreement or other internal governance documents, together with all amendments thereto, and (5) copies, certified by the Secretary or Assistant Secretary of the Company and each Subsidiary Guarantor, of the resolutions or actions of its Board of Directors or other governing body authorizing the execution of this First Amendment, the Intercreditor Agreement and the Collateral Documents to which such Person is a party;

 

(g)     the Noteholders (or their special counsel) shall have received an incumbency certificate, executed by a Secretary or Assistant Secretary of the Company and each Subsidiary Guarantor, which shall identify by name and title and bear the signatures of the authorized officers of such Person authorized to sign this First Amendment, the Intercreditor Agreement and each Collateral Document to which it is a party;

 

(h)     (1) the representations and warranties of the Company set forth in Section 2 hereof are true and correct on and with respect to the date hereof and (2) before giving effect to the transactions contemplated by this First Amendment and the other Related Documents, no event shall have occurred since December 31, 2015 that could reasonably be expected to have a Material Adverse Effect, and each Noteholder shall have received an Officer’s Certificate certifying as to the matters in the foregoing clauses (1) and (2);

 

(i)     the Noteholders shall have received a certificate attesting to the Solvency of the Company and each Subsidiary Guarantor, in each case individually and together with its Subsidiaries, before and after giving effect to the transactions contemplated by this First Amendment and the other Related Documents, from the chief financial officer (or person performing similar functions) of the Company;

 

(j)     the Noteholders shall have received a five year Business Plan in form and scope satisfactory to the Noteholders;

 

(k)     the Noteholders shall have received a favorable opinion of (1) ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Mains PLLC, special counsel for the Company and the Subsidiary Guarantors, in substantially the form of such opinion pre-approved by counsel to the Noteholders prior to the Effective Date, and (2) ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ PLLC, New York counsel for the Company and the Subsidiary Guarantors, in substantially the form of such opinion pre-approved by counsel to the Noteholders prior to the Effective Date;

 

(l)     the Noteholders shall have received such other documents and certificates as the Noteholder or their special counsel may reasonably request relating to any legal matters relating to the Company or any of its Subsidiaries, this First Amendment, the Intercreditor Agreement or the Collateral Documents, all in form and substance satisfactory to the Noteholders and their counsel; and

 

(m)     the Company shall have paid the fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, special counsel to the Noteholders, in connection with the negotiation, preparation, execution and delivery of this First Amendment and the Intercreditor Agreement and the transactions contemplated hereby and thereby.

 

SECTION 4.     MISCELLANEOUS.

 

4.1.     This First Amendment shall be construed in connection with and as part of the Note Purchase Agreement, and except as amended or otherwise affected hereby, all terms, conditions and covenants contained in the Note Purchase Agreement and the Notes are hereby ratified and shall be and remain in full force and effect.

 

4.2.     Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this First Amendment may refer to the Note Purchase Agreement without making specific reference to this First Amendment but nevertheless all such references shall include this First Amendment unless the context otherwise requires.

 

4.3.     None of the terms or conditions of this First Amendment may be changed, modified, waived or canceled orally or otherwise, except in writing and in accordance with Section 17.1 of the Note Purchase Agreement, as amended hereby.

 

4.4.     The descriptive headings of the various Sections or parts of this First Amendment are for convenience only and shall not affect the meaning or construction of any of the provisions hereof.

 

4.5.     This First Amendment shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, excluding

choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

 

4.6.     The execution and delivery hereof by the parties hereto shall constitute a contract between the parties hereto for the uses and purposes hereinabove set forth, and this First Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement.

 

[Remainder of page intentionally left blank.]

 

 

 

 

 

 

 

 

Accepted and Agreed to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

COMPOSITE COPY TO REFLECT MODIFICATIONS PURSUANT TO THE FIRST AMENDMENT DATED AS OF JANUARY 27, 2017

 

 

 

ALLIANCE RESOURCE OPERATING PARTNERS, L.P.

 

 

 

$205,000,000 6.28% Senior Notes, Series A, due June 26, 2015

$145,000,000 6.72% Senior Notes, Series B, due June 26, 2018

 

 

NOTE PURCHASE AGREEMENT

 

 

Dated as of June 26, 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALLIANCE RESOURCE OPERATING PARTNERS, L.P.

▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇

 

$205,000,000 6.28% Senior Notes, Series A, due June 26, 2015

$145,000,000 6.72% Senior Notes, Series B, due June 26, 2018

 

Dated as of June 26, 2008

 

TO EACH OF THE PURCHASERS LISTED IN

SCHEDULE A HERETO:

 

Ladies and Gentlemen:

 

ALLIANCE RESOURCE OPERATING PARTNERS, L.P., a Delaware limited partnership (the “Company”), agrees with each of the purchasers whose names appear at the end hereof (each, a “Purchaser” and, collectively, the “Purchasers”) as follows:

 

SECTION 1.     AUTHORIZATION OF NOTES.

 

The Company will authorize the issue and sale of (a) $205,000,000 aggregate principal amount of its 6.28% Senior Notes, Series A, due June 26, 2015 (the “Series A Notes”) and (b) $145,000,000 aggregate principal amount of its 6.72% Senior Notes, Series B, due June 26, 2018 (the “Series B Notes”; the Series A Notes and the Series B Notes being hereinafter collectively referred to as the “Notes”, such term to include any such notes issued in substitution therefor pursuant to Section 13).  The Notes shall be substantially in the form set out in Exhibit 1 or Exhibit 2, as the case may be.  Certain capitalized and other terms used in this Agreement are defined in Schedule B; and references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

 

SECTION 2.     SALE AND PURCHASE OF NOTES.

 

Section 2.1.     Purchase and Sale of Notes.  Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser and each Purchaser will purchase from the Company, at the Closing provided for in Section 3, Notes in the principal amount and of the same series specified opposite such Purchaser’s name in Schedule A at the purchase price of 100% of the principal amount thereof.  The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.

 

Section 2.2.     Subsidiary Guaranty Agreement.  (a)The payment by the Company of all amounts due with respect to the Notes will be absolutely and unconditionally guaranteed by the Subsidiaries listed on Schedule 2.2(a) (collectively, the “Original Subsidiary Guarantors” and together with any additional Subsidiary who delivers a guaranty pursuant to Section 10.18, the

“Subsidiary Guarantors”) pursuant to the amended and restated guaranty agreement substantially in the form of Exhibit 2.2(a) attached hereto and made a part hereof (as the same may be amended, modified, restated, extended or renewed, the “Subsidiary Guaranty Agreement”).

 

(b)     The enforcement of the rights and benefits in respect of the Subsidiary Guaranty Agreement and the Collateral Documents and the allocation of proceeds thereof shall be subject to the Intercreditor Agreement.

 

(c)     The holders of the Notes acknowledge and agree that such holders will discharge and release any Subsidiary Guarantor from the Subsidiary Guaranty Agreement to which it is a party pursuant to the written request of the Company, provided that (i) either (1) such Subsidiary Guarantor has been released and discharged as an obligor and guarantor under and in respect of all Debt of the Company due and owing pursuant to the Bank Facility and all other Qualified Debt Agreements or (2) such Subsidiary Guarantor is sold, disposed of or otherwise transferred within the limitations of Section 10.5, the Bank Facility and all other Qualified Debt Agreements, and the Company so certifies to the holders of the Notes in a certificate which accompanies such request for release and discharge, (ii) any such release and discharge shall be expressly conditioned upon receipt by the holders of the Notes of a written agreement executed by the Company pursuant to which the Company shall agree that if, for any reason whatsoever, the Subsidiary Guarantor to be released thereafter becomes an obligor or guarantor under and in respect of any Debt of the Company, then the Company shall cause such Subsidiary Guarantor to contemporaneously provide written notice thereof to the holders of the Notes accompanied by an executed Subsidiary Guaranty Agreement of such Subsidiary Guarantor, and (iii) at the time of such release and discharge, the Company shall deliver a certificate of a Responsible Officer to the holders of the Notes to the effect that no Default or Event of Default exists immediately prior to such release and discharge or would exist immediately after giving effect thereto.

 

(d)     The Company agrees that it will not, nor will it permit any Subsidiary or Affiliate to, directly or indirectly, pay or cause to be paid any consideration or remuneration, whether by way of supplemental or additional interest, fee or otherwise, to any creditor of the Company or of any Subsidiary Guarantor as consideration for or as an inducement to the entering into by any such creditor of any release or discharge of any Subsidiary Guarantor with respect to any liability of such Subsidiary Guarantor as an obligor or guarantor under or in respect of Debt of the Company, unless such consideration or remuneration is concurrently paid, on the same terms, ratably to the Noteholders of all of the Notes then outstanding.

 

SECTION 3.     CLOSING.

 

The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the offices of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. Chicago time, at a closing (the “Closing”) on June 26, 2008 or on such other Business Day thereafter on or prior to June 26, 2008 as may be agreed upon by the Company and the Purchasers.  At the Closing, the Company will deliver to each Purchaser the Notes of the series to be purchased by such Purchaser in the form of a single Note of each series of the Notes so to be purchased or such greater number of Notes in denominations of at least $200,000 as such Purchaser may request, dated the date of the Closing and registered in such Purchaser’s name (or in the name of its nominee), against delivery by such Purchaser to the Company or its order of

immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to the bank and the account number thereof specified in the Funding Instruction Letter delivered pursuant to Section 4.12.  If at the Closing the Company shall fail to tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.

 

SECTION 4.     CONDITIONS TO CLOSING.

 

Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at the Closing, of the following conditions:

 

Section 4.1.     Representations and Warranties.  (a)The representations and warranties of the Company in this Agreement shall be correct (or, if not qualified by a standard of materiality, correct in all material respects) when made and at the time of the Closing (except to the extent the same relate to an earlier date, in which case they shall have been correct (or, if not qualified by a standard of materiality, correct in all material respects) as of such earlier date).

 

(b)     The representations and warranties of each Subsidiary Guarantor in the Subsidiary Guaranty Agreement shall be correct when made and at the time of the Closing (except to the extent the same relate to an earlier date, in which case they shall have been correct (or, if not qualified by a standard of materiality, correct in all material respects) as of such earlier date).

 

Section 4.2.     Performance; No Default.  (a)The Company shall have performed and complied in all material respects with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing, and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.14), no Default or Event of Default shall have occurred and be continuing.  Neither the Company nor any Subsidiary shall have entered into any transaction since the date of the Memorandum that would have been prohibited by Section 10 had such Section applied since such date.

 

(b)     Each Subsidiary Guarantor shall have performed and complied in all material respects with all agreements and conditions contained in the Subsidiary Guaranty Agreement required to be performed and complied with by it prior to or at the Closing, and after giving effect to the issue and sale of Notes (and the application of the proceeds thereof as contemplated by Section 5.14), no Default or Event of Default shall have occurred and be continuing.

 

Section 4.3.     COMPLIANCE CERTIFICATES.

 

(a)     Officer’s Certificate. The Company shall have delivered to such Purchaser an Officer’s Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1(a),  4.2(a) and 4.9 have been fulfilled.

 

(b)     Subsidiary Guarantor Officer’s Certificate.  Each Subsidiary Guarantor shall have delivered to such Purchaser a certificate of an authorized officer (or, in the case of Alliance Coal, LLC, a certificate of an officer of its managing member), dated the date of the Closing, certifying that the conditions set forth in Sections 4.1(b),  4.2(b) and 4.9 have been fulfilled.

 

(c)     Secretary’s Certificate.  The Company shall have delivered to such Purchaser a certificate of the Secretary or Assistant Secretary of its managing general partner, dated the date of Closing, certifying as to the resolutions attached thereto and other legal proceedings relating to the authorization, execution and delivery by the Company of the Notes and this Agreement.

 

(d)     Subsidiary Guarantor Secretary’s Certificate.  Each Subsidiary Guarantor shall have delivered to such Purchaser a certificate of its Secretary or Assistant Secretary (or, in the case of Alliance Coal, LLC, a certificate of the Secretary or Assistant Secretary of its managing member), dated the date of Closing, certifying as to the resolutions attached thereto and other legal proceedings relating to the authorization, execution and delivery by such Subsidiary Guarantor of the Subsidiary Guaranty Agreement.

 

Section 4.4.     Opinions of Counsel.  Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing, (a) from ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel for the Company and the Original Subsidiary Guarantors, substantially in the form set forth in Exhibit 4.4(a) (and the Company hereby instructs its counsel to deliver such opinion to the Purchasers), (b) from R. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq., counsel for the Company and the Original Subsidiary Guarantors, substantially in the form set forth in Exhibit 4.4(b) (and the Company hereby instructs such counsel to deliver such opinion to such Purchasers) and (c) from ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLP, the Purchasers’ special counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.4(c) and covering such other matters incident to such transactions as such Purchaser may reasonably request.

 

Section 4.5.     Subsidiary Guaranty Agreement.  Such Purchaser shall have received a counterpart original of the Subsidiary Guaranty Agreement, duly executed and delivered by each Original Subsidiary Guarantor, and said Subsidiary Guaranty Agreement shall be in full force and effect.

 

Section 4.6.     Intercreditor Agreement.  Such Purchaser shall have received a counterpart original of the Intercreditor Agreement, duly executed and delivered by each Purchaser, each Original Subsidiary Guarantor, the Company and JPMorgan Chase Bank, N.A. as Paying Agent under the Bank Facility, and said Intercreditor Agreement shall be in full force and effect.

 

Section 4.7.     Purchase Permitted by Applicable Law, Etc.  On the date of the Closing such Purchaser’s purchase of Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any tax, penalty

 

or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof.  If requested by such Purchaser, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.

 

Section 4.8.     Sale of Other Notes.  Contemporaneously with the Closing, the Company shall sell to each other Purchaser, and each other Purchaser shall purchase, the Notes to be purchased by it at the Closing as specified in Schedule A.

 

Section 4.9.     Payment of Special Counsel Fees.  Without limiting the provisions of Section 15.1, the Company shall have paid on or before the Closing the fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Closing.

 

Section 4.10.     Private Placement Number.  A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for each series of the Notes.

 

Section 4.11.     Changes in Legal Structure.  Neither the Company nor any of the Original Subsidiary Guarantors shall have changed its respective jurisdiction of incorporation or organization, as applicable, or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.5 other than any merger, consolidation or succession to liabilities of any Person in connection with an Asset Acquisition that is permitted under the terms hereof.

 

Section 4.12.     Funding Instructions.  At least three Business Days prior to the date of the Closing, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Company (the “Funding Instruction Letter”) confirming the information specified in Section 3 including (a) the name and address of the transferee bank, (b) such transferee bank’s ABA number and (c) the account name and number into which the purchase price for the Notes is to be deposited.

 

Section 4.13.     Proceedings and Documents.  All legal and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.

 

SECTION 5.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to each Purchaser that:

 

Section 5.1.     Organization; Power and Authority.  The Company is a limited partnership duly formed and validly existing under the laws of the State of Delaware, and is duly

 

licensed or qualified as a foreign limited partnership in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  The Company has the legal power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to perform the provisions hereof and thereof.  The name of each Person holding an Equity Interest in the Company (including a description of the nature of such interest) is set forth on Schedule 5.1.

 

Section 5.2.     Authorization, Etc.  (a)This Agreement and the Notes have been duly authorized by all necessary legal action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

(b)     Authorization by Original Subsidiary Guarantors.  The Subsidiary Guaranty Agreement has been duly authorized by all necessary action on behalf of the applicable Original Subsidiary Guarantor, and the Subsidiary Guaranty Agreement constitutes a legal valid and binding obligation of the applicable Original Subsidiary Guarantor enforceable against such Original Subsidiary Guarantor in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

Section 5.3.     Disclosure.  The Company, through its agents, Citigroup Global Capital Markets and ▇▇ ▇▇▇▇▇▇ Securities Inc., delivered to each Purchaser a copy of a Private Placement Memorandum, dated May 2008 (the “Memorandum”), relating to the transactions contemplated hereby.  As of the date of the Closing, the Memorandum fairly describes, in all material respects, the general nature of the business and principal properties of the Company and its Subsidiaries.  Except as disclosed in Schedule 5.3, as of the date of the Closing, this Agreement, the Memorandum and the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company in connection with the transactions contemplated hereby and identified in Schedule 5.3, together with the MLP’s (i) annual report on Form 10-K for the period ended December 31, 2007, (ii) quarterly report on Form 10-Q for the quarterly period ended March 31, 2008 and (iii) all current reports filed on Form 8-K since December 31, 2007, whether or not incorporated by reference, in whole or in part, in the Memorandum, and the financial statements listed in Schedule 5.5 (this Agreement, the Memorandum and such documents, certificates or other writings and such financial statements delivered (or, in the case of the periodic or current reports filed on Forms 10-K, 10-Q or 8-K, made available on the SEC’s website) to each Purchaser prior to June 6, 2008 being referred to, collectively, as the “Disclosure Documents”), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made.  As of the date of the Closing, except as disclosed in the Disclosure Documents, since December 31, 2007, there has been no change in

 

the financial condition, operations, business, properties or prospects of the Company or any of its Subsidiaries except changes that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect.  As of the date of the Closing, there is no fact known to the Company that could reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents.  As of the date of the Closing, after giving effect to the execution and delivery of the Notes, this Agreement and the Subsidiary Guaranty Agreement and the consummation of the transactions contemplated herein and therein, the Company and the Original Subsidiary Guarantors will be Solvent.

 

Section 5.4.     Organization and Ownership of Shares of Subsidiaries; Affiliates.  (a)Schedule 5.4 contains (except as noted therein) complete and correct lists (i) of the Company’s Subsidiaries, showing, as to each Subsidiary, whether such Subsidiary is an Original Subsidiary Guarantor, the correct name thereof, the jurisdiction of its organization or formation, and the percentage of shares, interests or units of each class of its Capital Stock outstanding and owned by the Company and each other Subsidiary and (ii) of the Company’s Affiliates, other than Subsidiaries.

 

(b)     All of the outstanding shares, interests or units of Capital Stock of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have been validly issued, are fully paid (to the extent required under the Partnership Agreement or by the Subsidiary’s operating agreement, in the case of a partnership, or a limited liability company) and nonassessable (except as such non-assessability may be affected by the Delaware Revised Uniform Limited Partnership Act in the case of the Company or by Section 18-607 of the Delaware Limited Liability Company Act or Section 275.230 of the Kentucky Limited Liability Company Act, as applicable, in the case of a limited liability company) and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.4).

 

(c)     Each Subsidiary identified in Schedule 5.4 is a limited liability company, corporation or other legal entity duly organized or formed and, validly existing under the laws of its jurisdiction of organization or formation, and is duly qualified in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Each such Subsidiary has the legal power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact.

 

(d)     No Subsidiary is a party to, or otherwise subject to, any legal, regulatory, contractual or other restriction (other than this Agreement, the Bank Facility and the agreements listed on Schedule 5.4 and customary limitations imposed by applicable law or similar statutes) restricting the ability of such Subsidiary to make any distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of Capital Stock of such Subsidiary.

 

Section 5.5.     Financial Statements; Material Liabilities.  As of the date of the Closing, the Company has delivered to each Purchaser copies of the consolidated financial statements of the Company and its Subsidiaries listed on Schedule 5.5.  As of the date of the First

 

Amendment, the Company has delivered to each Purchaser copies of the consolidated financial statements of the Company and its Subsidiaries listed on Schedule 5.5A.  All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates specified in such financial statements and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments).  The Company and its Subsidiaries do not have any Material liabilities that are not disclosed on such financial statements or otherwise disclosed in the Disclosure Documents.

 

Section 5.6.     Compliance with Laws, Other Instruments, Etc.  Neither the execution, delivery and performance by the Company of this Agreement and the Notes nor the execution, delivery and performance of the Subsidiary Guaranty Agreement by the Original Subsidiary Guarantors will (a) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, articles of formation, partnership agreement, operating agreement, corporate charter or by-laws, or any other agreement or instrument to which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or affected, (b) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (c) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary except in the cases of clauses (a), (b) and (c) such contraventions, breaches, defaults, conflicts and violations which could not reasonably be expected to have a Material Adverse Effect.

 

Section 5.7.     Governmental Authorizations, Etc.  No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the (a) execution, delivery or performance by the Company of this Agreement or the Notes or (b) the execution, delivery and performance of the Subsidiary Guaranty Agreement by the Original Subsidiary Guarantors.

 

Section 5.8.     Litigation; Observance of Agreements, Statutes and Orders.  (a)Except as disclosed in Schedule 5.8, there are no actions, suits, investigations or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(b)     Neither the Company nor any Subsidiary is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including without limitation Environmental Laws, the USA Patriot Act or any of the other laws and regulations that are referred to in Section 5.16) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

Section 5.9.     Taxes.  The Company and its Subsidiaries have filed all income tax returns and all other material tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (a) the amount of which is not individually or in the aggregate Material or (b) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or such Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP.  The Company knows of no basis for any other tax or assessment that could reasonably be expected to have a Material Adverse Effect.  The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of federal, state or other taxes for all fiscal periods are adequate.

 

Section 5.10.     Title to Property; Leases.  The Company and its Subsidiaries have good and sufficient title to their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet of the MLP for the year ended December 31, 2007 and referred to in Section 5.5 or purported to have been acquired by the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement.  All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.  All properties of the Company and its Subsidiaries (whether owned with a freehold or leasehold interest) that are used in the conduct of their respective businesses and that are individually or in the aggregate, Material, are in a sufficient state of repair and condition to enable such businesses, taken as a whole, to be carried on effectively.

 

Section 5.11.     Licenses, Permits, Etc.  (a)The Company and its Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others other than such conflicts that could not reasonably be expected to have a Material Adverse Effect.

 

(b)     To the best knowledge of the Company, no product of the Company or any of its Subsidiaries infringes in any Material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service ▇▇▇▇, trademark, trade name or other right owned by any other Person.

 

(c)     To the best knowledge of the Company, there is no Material violation by any Person of any right of the Company or any of its Subsidiaries with respect to any patent, copyright, proprietary software, service ▇▇▇▇, trademark, trade name or other right owned or used by the Company or any of its Subsidiaries.

 

Section 5.12.     Compliance with ERISA.  (a)The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the

 

Code relating to employee benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that could reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to section 401(a)(29) or 412 of the Code, other than such liabilities or Liens as would not be individually or in the aggregate Material.

 

(b)     The present value of the aggregate benefit liabilities under each of the Plans that is subject to Title IV of ERISA (other than Multiemployer Plans), determined as of the end of such Plan’s most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities by more than $10,000,000 in the aggregate for all Plans.  The term “benefit liabilities” has the meaning specified in section 4001 of ERISA and the terms “current value” and “present value” have the meaning specified in section 3 of ERISA.

 

(c)     The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.

 

(d)     The expected post retirement benefit obligation (determined as of the last day of the Company’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by Section 49808 of the Code) of the Company and its Subsidiaries is not Material.

 

(e)     The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that constitutes a non-exempt prohibited transaction within the meaning of Section 406(a) of ERISA, or in connection with which a tax could reasonably be expected to be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code.  The representation by the Company in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Notes to be purchased by such Purchaser.

 

Section 5.13.     Private Offering by the Company.  Neither the Company nor anyone authorized to act on its behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Purchasers and not more than 65 other Institutional Investors, each of which has been offered the Notes at a private sale for investment.  Neither the Company nor anyone authorized to act on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act or to the registration requirements of any securities or blue sky laws of any applicable jurisdiction.  For purposes of this Section 5.13 and Section 6.1 only, each reference to the Notes shall be deemed to include a reference to the Subsidiary Guaranty Agreement.

 

Section 5.14.     Use of Proceeds; Margin Regulations.  The Company will apply the proceeds of the sale of the Notes as set forth in Section 1 of the Memorandum under the heading “The Offering and Use of Proceeds”.  No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).  Margin stock does not constitute more than 5% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 5% of the value of such assets.  As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.

 

Section 5.15.     Existing Debt; Future Liens.  (a)Schedule 5.15 sets forth a complete and correct list of all outstanding Debt of the Company and its Subsidiaries as of the date of the Closing (including a description of the obligors and obligees, principal amount outstanding and collateral therefor, if any, and Guaranty thereof, if any), and Schedule 5.15A sets forth a complete and correct list of all outstanding Debt of the Company and its Subsidiaries as of the date of the First Amendment (including a description of the obligors and obligees, principal amount outstanding and collateral therefor, if any, and Guaranty thereof, if any).  Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect in the payment of any principal or interest on any Debt of the Company or such Subsidiary, and no event or condition exists with respect to any Debt of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

 

(b)     Neither the Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 10.2.

 

(c)     Neither the Company nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Debt of the Company or such Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter or other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Debt of the Company or any Subsidiary, except as specifically indicated in Schedule 5.15 or Schedule 5.15A.

 

Section 5.16.     Foreign Assets Control Regulations, Etc.  (a) Neither the Company nor any Controlled Entity (i) is a Blocked Person, (ii) has been notified that its name appears or may in the future appear on a State Sanctions List or (iii) is a target of sanctions that have been imposed by the United Nations or the European Union.

 

(b)     Neither the Company nor any Controlled Entity (i) has violated, been found in violation of, or been charged or convicted under, any applicable U.S. Economic Sanctions Laws, Anti-Money Laundering Laws or Anti-Corruption Laws or (ii) to the Company’s knowledge, is

 

under investigation by any Governmental Authority for possible violation of any U.S. Economic Sanctions Laws, Anti-Money Laundering Laws or Anti-Corruption Laws.

 

(c)     No part of the proceeds from the sale of the Notes hereunder:

 

(i)     constitutes or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used by the Company or any Controlled Entity, directly or indirectly, (A) in connection with any investment in, or any transactions or dealings with, any Blocked Person, (B) for any purpose that would cause any Purchaser to be in violation of any U.S. Economic Sanctions Laws or (C) otherwise in violation of any U.S. Economic Sanctions Laws;

 

(ii)     will be used, directly or indirectly, in violation of, or cause any Purchaser to be in violation of, any applicable Anti-Money Laundering Laws; or

 

(iii)     will be used, directly or indirectly, for the purpose of making any improper payments, including bribes, to any Governmental Official or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage, in each case which would be in violation of, or cause any Purchaser to be in violation of, any applicable Anti-Corruption Laws.

 

(d)     The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable U.S. Economic Sanctions Laws, Anti-Money Laundering Laws and Anti-Corruption Laws.

 

Section 5.17.     Status under Certain Statutes.  Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.

 

Section 5.18.     Notes Rank Pari Passu.  The obligations of the Company under this Agreement and the Notes, and each Original Subsidiary Guarantor’s obligations under the Subsidiary Guaranty Agreement will, upon the issuance of the Notes and the execution and delivery of the Subsidiary Guaranty Agreement, respectively, rank at least pari passu in right of payment with all obligations under the Bank Facility and each other Qualified Debt Agreement.

 

Section 5.19.     Environmental Matters.  (a)Neither the Company nor any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Company or any of its Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect.

 

(b)     Neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or

 

formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect.

 

(c)     Neither the Company nor any of its Subsidiaries has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them or has disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that could reasonably be expected to result in a Material Adverse Effect.

 

(d)     All buildings on all real properties now owned, leased or operated by the Company or any of its Subsidiaries are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect.

 

Section 5.20.     Reserves Relating to Mining Business.  To the best knowledge of the Company, the Company and its Subsidiaries maintain adequate reserves for future costs associated with any lung disease claim alleging pneumoconiosis or silicosis or arising out of exposure or alleged exposure to coal dust or the coal mining environment, and such reserves are not less than those required by GAAP.

 

Section 5.21.     ERISA.  Set forth on Schedule 5.21 is a complete and accurate list as of the date of the First Amendment of all Plans and Multiemployer Plans.

 

Section 5.22.     Liens.  There are no Liens of any nature whatsoever on any assets of the Company or any Subsidiary Guarantor other than:  (a) Liens granted pursuant to the Collateral Documents, (b) other Liens in existence on the date of the First Amendment as reflected on Schedule 10.2, (c) Permitted Liens and (d) such other Liens as permitted by the Collateral Documents.

 

Section 5.23.     Investments.  Set forth on Schedule 5.23 is a complete and accurate list of all Investments consisting of Debt or equity securities held by the Company or any of its Subsidiaries on the date of the First Amendment, showing as of such date the amount, obligor or issuer and maturity, if any, thereof.

 

Section 5.24.     Collateral Matters.  The provisions of the Collateral Documents create legal and valid Liens on all the Collateral in favor of the Collateral Agent, for the benefit of the Secured Parties, and, upon the filing of appropriate UCC financing statements and, with respect to any intellectual property, filings in the United States Patent and Trademark Office and the United States Copyright Office, or taking such other action as may be required for perfection under applicable law, such Liens will constitute, to the extent required by the Collateral Documents, perfected and continuing Liens on the Collateral, securing the obligations of the Company and the Subsidiary Guarantors under this Agreement, the Notes and the other Note Documents and the other Secured Obligations, enforceable against the Company and each Subsidiary Guarantor party thereto, and having priority over all other Liens on the Collateral except (a) to the extent any such Liens would have priority over the Liens in favor of the Collateral Agent pursuant to any applicable law, (b) in the case of Liens perfected only by possession (including possession of any certificate of title) to the extent the Collateral Agent has not obtained or does not maintain possession of such Collateral, (c) to the extent that perfection

 

of such security interests and Liens are not required by the Note Documents, (d) Liens that are Permitted Liens under paragraphs (a), (b), (c) and (e) of the definition of Permitted Liens, (e) Permitted Encumbrances and (f) Liens in Collateral consisting of real property or fixtures or Liens in As-Extracted Collateral (as defined in the Security Agreement), each of which will not be perfected until the execution, acknowledgment and proper recordation of Mortgages and the filing of UCC fixture filings and/or “as extracted” financing statements, as applicable, in accordance with the requirements set forth in Section 9.10 or 9.11(d).

 

Section 5.25.     Mining Facilities.  Each of the Company and each Subsidiary Guarantor has an undivided fee simple title to the real property interest (including interests in surface and/or coal mining rights) or a leasehold interest in an undivided interest in the real property interest (including interests in surface and/or coal mining rights) together with no less than those real properties, easements, licenses, privileges, rights and appurtenances as are necessary to mine, remove, process and transport coal in the manner operated at such time (subject only to Permitted Encumbrances and such other Liens as permitted by the Collateral Documents) to all active Mining Facilities covered by outstanding permits, approvals, consents, franchises, licenses or similar authorizations issued by a Governmental Authority to the Company or such Subsidiary Guarantor to the extent necessary to conduct its business as currently conducted and to utilize such properties for their intended purpose. Schedule 5.25 accurately describes in all material respects all Mining Facilities owned, leased or operated by the Company and its Subsidiaries as of the date of the First Amendment, including the location of such Mining Facilities and indicates which Mining Facilities are active or inactive.  Neither the Company nor any of its Subsidiaries own, as of the date of the First Amendment, support operations that are material to the operation of the active Mining Facilities that are not listed on the portion of Schedule 5.26 labeled “Other” (the properties labeled “Other” on such Schedule 5.26, collectively, the “Other Facilities”).

 

Section 5.26.     Mortgaged Properties.

 

(a)     Schedule 5.26 sets forth a complete and accurate list as of the date of the First Amendment of the locations of the Mortgaged Property held by the Company or any of its Subsidiaries and all leases, including Mining Leases, of the Mortgaged Property to which Company or any of its Subsidiaries are a party (except for those leases for which Company or any of its Subsidiaries are the lessors), and in the case of any surface leases or subleases for the active Mining Facilities or the Other Facilities on which facilities are located, whether such lease, sublease or other instrument requires the consent of the landlord or counterparty thereunder or other parties thereto in order to grant the Liens on the Collateral to the Collateral Agent for the benefit of the Secured Parties and the other secured parties, if any, under the Security Agreement.

 

(b)     The Mortgages to be executed and delivered pursuant to Sections 9.10 and 9.11 will, when executed, acknowledged, delivered, filed and recorded in the proper real estate filing office or recording offices, be, effective to create in favor of the Collateral Agent (for the benefit of the Secured Parties) a legal, valid and enforceable first priority Lien on all of the right, title and interest of the Company or the applicable Subsidiary Guarantor in and to the Mortgaged Property (as such term is defined in the applicable Mortgage) thereunder, and when such Mortgages are filed or recorded in the proper real estate filing or recording offices, and all

 

relevant mortgage taxes and recording charges are duly paid, the Collateral Agent (for the benefit of the Secured Parties) shall have a perfected first priority Lien on, and security interest in, all right, title, and interest of the Company or the applicable Subsidiary Guarantor in such Mortgaged Property prior and superior in right to the Lien of any other person, except for Permitted Liens and Permitted Encumbrances.

 

SECTION 6.     REPRESENTATIONS OF THE PURCHASERS.

 

Section 6.1.     Purchase for Investment.  Each Purchaser severally represents that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof; provided that the disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control.  Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to register the Notes.

 

Section 6.2.     Source of Funds.  Each Purchaser, and each Person who receives a Note in an exchange therefor or transfer thereof pursuant to Section 13.2, severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by such Purchaser or transferee, as applicable, to pay the purchase price of the Notes to be purchased by such Purchaser or transferee, as applicable, hereunder:

 

(a)     the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed ten percent (10%) of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

 

(b)     the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

 

(c)     the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1, or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as have been disclosed by such Purchaser to the

 

Company in writing at least five (5) Business Days prior to the date this representation is made pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

 

(d)     the Source constitutes assets of an “investment fund” (within the meaning of Part V of the QPAM Exemption) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(l) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed (i) 20% of the total client assets managed by such QPAM, or (ii) 10% of the assets of the investment fund, the conditions of Parts 1(c), (d), (f) and (g) of the QPAM Exemption are satisfied, and as of the last day of its most recent calendar quarter, the QPAM does not own a 10% or more interest in the Company and no Person controlling or controlled by the QPAM (applying the definition of “control” in Section V(e) of the QPAM Exemption) owns a 20% or more interest in the Company (or less than 20% but greater than 10%, if such person exercises control over the management or policies of the Company by reason of its ownership interest) and (i) the identity of such QPAM and (ii) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing at least five (5) Business Days prior to the date this representation is made pursuant to this clause (d); or

 

(e)     the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM Exemption), the conditions of Parts I(a), (c), (d), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a Person controlling or controlled by the INHAM (applying the definition of “control” in Section IV(d) of the INHAM Exemption) owns a 5% or more interest in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing at least five (5) Business Days prior to the date this representation is made pursuant to this clause (e); or

 

(f)     the Source is a governmental plan which is not subject to any law which is similar to section 406 of ERIS A or section 4975 of the Code; or

 

(g)     the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing at least five (5) Business Days prior to the date this representation is made pursuant to this clause (g); or

 

(h)     the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA and which is not subject to any law which is similar to sections 406 of ERISA or 4975 of the Code.

 

As used in this Section 6.2, the terms “employee benefit plan”, “governmental plan”, “party in interest” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA.

 

In the event a Purchaser or transferee shall disclose a plan pursuant to clause (c), (d), (e) or (g) of this Section 6.2 and the Company is either a “party in interest” or “disqualified person” with respect to such plan, the Company shall promptly deliver a certificate to such Purchaser or transferee to such effect.  In the event the Company is either a “party in interest” or “disqualified person” with respect to such plan, such Purchaser or transferee, as applicable, shall use a different Source to pay the purchase price of the Notes, and which source shall be able to make the representation set forth in this Section 6.2.

 

SECTION 7.     INFORMATION AS TO THE COMPANY.

 

Section 7.1.     Financial and Business information.  The Company shall deliver to each holder of Notes that is an Institutional Investor:

 

(a)     Quarterly Statements — as soon as available, but in any event within 60 days after the end of each quarterly fiscal period in each Fiscal Year of the Company (other than the last quarterly fiscal period of each such Fiscal Year), duplicate copies of:

 

(i)     an unaudited consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and

 

(ii)     an unaudited consolidated statement of income, changes in partners’ equity and cash flows of the Company and its Subsidiaries for such quarter and (in the case of the second and third quarters) for the portion of the Fiscal Year ending with such quarter,

 

setting forth in each case in comparative form the figures for the corresponding periods in the previous Fiscal Year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from normal, recurring year-end adjustments; provided that delivery within the time period specified above of copies of the MLP’s SEC Form 10-Q prepared in compliance with the requirements therefor and filed with the SEC shall, so long as the only material operating entity and other assets held by the MLP are, and the only material liabilities of the MLP are liabilities of, the Company (including, for this purpose, the Company’s Subsidiaries) be deemed to satisfy the requirements of this Section 7.1(a);  provided,  further, that the Company shall be deemed to have made such delivery of such SEC Form 10-Q if it shall have timely made such SEC Form 10-Q available on “▇▇▇▇▇” and on its home page on the worldwide web (at the date of this Agreement located at:  http//▇▇▇.▇▇▇▇.▇▇▇ or after the date of this Agreement at such other web page specified in a notice to the Purchasers) and shall have given each Purchaser prior notice of such availability on ▇▇▇▇▇ and on its home page in connection with each delivery (such availability and notice thereof being referred to as “Electronic Delivery”);

 

(b)     Annual Statements − as soon as available, but in any event within 120 days after the end of each Fiscal Year of the Company, duplicate copies of,

 

(i)     a consolidated balance sheet of the Company and its Subsidiaries, as at the end of such year, and

 

(ii)     consolidated statements of income, changes in partners’ equity and cash flows of the Company and its Subsidiaries, for such year,

 

setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by a report and opinion thereon of independent public accountants of recognized national standing, which opinion shall be without a “going concern” or similar qualification or exception and without any qualification or exception as to the scope of the audit on which such opinion is based and shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with the standards of the Public Company Accounting Oversight Board (United States), and that such audit provides a reasonable basis for such opinion in the circumstances; provided that the delivery within the time period specified above of the MLP’s SEC Form 10-K for such Fiscal Year (together with the Company’s annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the SEC shall, so long as the only material operating entity and other assets held by the MLP are, and the only material liabilities of the MLP are liabilities of, the Company (including, for this purpose, the Company’s Subsidiaries), be deemed to satisfy the requirements of this Section 7.1(b); and provided,  further, that the Company shall be deemed to have made such delivery of such SEC Form 10-K if it shall have timely made Electronic Delivery thereof;

 

(c)     SEC and Other Reports − promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by the MLP, the Company or any Subsidiary to its principal lending banks as a whole (excluding information sent to such banks in the ordinary course of administration of a bank facility, such as information relating to pricing and borrowing availability or to its public securities holders generally) and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto filed by the MLP, the Company or any Subsidiary with the SEC and of all press releases and other statements made available generally by the MLP, the Company or any Subsidiary to the public concerning developments that are Material; provided that the Company shall be deemed to have made delivery of such reports, statements and releases if it shall have timely made Electronic Delivery thereof;

 

(d)     Notice of Default or Event of Default − promptly, and in any event within five Business Days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action

with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to in Section 11(f), a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto;

 

(e)     Annual Business Plan − as soon as available, and in any event within120 days after the end of each Fiscal Year, a Business Plan;

 

(f)     Available Cash Report —within 60 days (or in the case of the fourth fiscal quarter, 120 days) following the end of each fiscal quarter of the Company, a report of Available Cash, cash reserves (including, in the case of any such cash distribution the cash reserve withheld from distribution that is necessary for the proper conduct of business (including reserves for future capital expenditures) as set forth in the most recent Business Plan delivered to the holders of the Notes pursuant to clause (e) above and other related items of the Company and its Subsidiaries in form and substance satisfactory to the Required Holders;

 

(g)     ERISA Matters − promptly, and in any event within five Business Days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto:

 

(i)     with respect to any Plan that is subject to Title IV of ERISA, any reportable event, as defined in Section 4043(c) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or

 

(ii)     the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under Section 4042 of ERIS A for the termination of, or the appointment of a trustee to administer, any Plan that is subject to Title IV of ERISA, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or

 

(iii)     any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect;

 

(h)     Notices from Governmental Authority − promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect;

 

(i)     Resignation or Replacement of Auditors − within 10 days following the date on which the auditors of the Company or the MLP resign or the Company or the MLP elects to change auditors, as the case may be, notification thereof, together with such further information as the Required Holders may request;

 

(j)     Environmental Reports; Insurance Summary — concurrently with the delivery thereof to the administrative agent or any lender under the Bank Facility, a copy of (i) each environmental assessment report with respect to any property of the Company or any Subsidiary and (ii) each report summarizing the insurance coverage then in effect for the Company and its Subsidiaries;

 

(k)     Coal and Mining Agreements − promptly after the occurrence thereof, notice of any material change to any material coal sales agreement or material contract, contract mining agreement or coal purchase agreements to which the Company or any of its Subsidiaries is a party;

 

(l)     Rating Agency Reports − promptly upon receipt thereof, copies of any statement or report furnished by any rating agency to the Company or any of its Subsidiaries in connection with the Notes.

 

(m)     Collateral Information − concurrently with the delivery of financial statements pursuant to Section 7.1(b), commencing with the financial statements for the Fiscal Year ending December 31, 2017, a Perfection Certificate Supplement and a certificate of a Responsible Officer certifying that all UCC financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction necessary to protect and perfect the security interests and Liens under the Collateral Documents for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period);

 

(n)     Change of Name, Identity or Structure — promptly, and in any event no less than 30 days (or such lesser notice period agreed to by the Required Holders, it being understood and agreed that any lesser notice period agreed to in writing by the administrative agent under the Bank Facility shall be deemed to apply to this clause (n); provided that any such notice required under this clause (n) shall be delivered concurrently with any similar notice under the Bank Facility) prior to any change (i) in the legal name of the Company or any Subsidiary Guarantor, (ii) in the location of the chief executive office of the Company or any Subsidiary Guarantor, (iii) in the identity or organizational structure of the Company or any Subsidiary Guarantor, (iv) in the Federal Taxpayer Identification Number or organizational identification number, if any, of the Company or any Subsidiary Guarantor, or (v) in the jurisdiction of organization of the Company or any Subsidiary Guarantor (in each case, including by merging with or into any other entity, reorganizing, dissolving, liquidating, reorganizing or organizing in any other jurisdiction), written notice (in the form of a certificate signed by a Responsible Officer) reflecting its intention to do so, clearly describing such change and providing

such other information in connection therewith as the Collateral Agent or the Required Holders may request, together with evidence reasonably satisfactory to the Collateral Agent that the Company or such Subsidiary Guarantor shall have taken all action reasonably satisfactory to the Collateral Agent to maintain the perfection and priority of the security interest of the Collateral Agent for the benefit of the Secured Parties in the Collateral, if applicable (and the Company and each Subsidiary Guarantor shall promptly provide the holders of the Notes with certified Constitutive Documents reflecting any of the changes described above); and

 

(o)     Requested Information − with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the MLP, the Company or any of its Subsidiaries (including, but without limitation, actual copies of the MLP’s SEC Form 10-Q and SEC Form 10-K) or relating to the ability of the Company to perform its obligations hereunder, under the Notes or under any other Note Document or the ability of any Subsidiary Guarantor to perform its obligations under the Subsidiary Guaranty Agreement or any other Note Document, as from time to time may be reasonably requested by any such holder of Notes.

 

Section 7.2.     Officer’s Certificate.  Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a Senior Financial Officer setting forth (which, in the case of Electronic Delivery of such financial statements, shall be by separate concurrent delivery of such certificate to each holder of Notes):

 

(a)     Covenant Compliance − the information (including detailed calculations where applicable) required in order to establish whether the Company was in compliance with the covenants set forth in Section 10.1, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence and specifying those adjustments in any items abstracted by such financial statements necessary to reflect the adjustments of GAAP provided for in this Agreement); and

 

(b)     Event of Default − a statement that such Senior Financial Officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.

 

In the event that the Company or any Subsidiary has made an election to measure any financial liability using fair value (which election is being disregarded for purposes of

 

determining compliance with this Agreement pursuant to Section 22.3) as to the period covered by any such financial statement, such Senior Financial Officer’s certificate as to such period shall include a reconciliation from GAAP with respect to such election.

 

Section 7.3.     Visitation.  The Company shall permit the representatives of each holder of Notes that is an Institutional Investor:

 

(a)     No Default − if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company’s officers, and (with the consent of the Company, which consent will not be unreasonably withheld) and with an opportunity for one or more Responsible Officers to be present, it being understood that the failure of such Responsible Officers to be present shall not preclude the representatives of such holder from proceeding with such meeting) its independent public accountants, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times and as often as may be reasonably requested in writing; and

 

(b)     Default − if a Default or Event of Default then exists, at the expense of the Company, to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries) so long as one or more Responsible Officers has an opportunity to be present, it being understood that the failure of such Responsible Officers to be present shall not preclude the representatives of such holder from proceeding with such meeting), all at such times and as often as may be requested.

 

SECTION 8.     PREPAYMENT OF THE NOTES.

 

Section 8.1.     Maturity.  As provided therein, the entire unpaid principal balance of the Notes shall be due and payable on the stated maturity date thereof.

 

Section 8.2.     Optional Prepayments with Make-Whole Amount.  The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes, in an amount not less than 10% of the aggregate principal amount of the Notes then outstanding (but if in the case of a partial prepayment, then against each series of Notes in proportion to the aggregate principal amount outstanding of all series of Notes), at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of such prepayment, and the Make-Whole Amount determined for the prepayment date with respect to such principal amount.  The Company will give each holder of Notes written notice of each optional prepayment under this Section 8.2 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment.  Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of each series of the Notes to be prepaid on such

 

date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.5), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation.  At least two Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.

 

Section 8.3.     [Reserved].

 

Section 8.4.     Change in Control.

 

(a)     Notice of Change in Control. The Company will, within five Business Days after any Responsible Officer has knowledge of the occurrence of any Change in Control, give written notice of such Change in Control to each holder of Notes. If a Change in Control has occurred, such notice shall contain and constitute an offer to prepay Notes as described in subparagraph (b) of this Section 8.4 and shall be accompanied by the certificate described in subparagraph (c) of this Section 8.4.

 

(b)     Offer to Prepay Notes. The offer to prepay Notes contemplated by subparagraph (a) of this Section 8.4 shall be an offer to prepay, in accordance with and subject to this Section 8.4, all, but not less than all, the Notes held by each holder (in this case only, “holder” in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the “Proposed Prepayment Date”). Such date shall be not less than 30 days and not more than 120 days after the date of such offer (if the Proposed Prepayment Date shall not be specified in such offer, the Proposed Prepayment Date shall be the first Business Day after the 45th day after the date of such offer).

 

(c)     Acceptance/Rejection. A holder of Notes may accept the offer to prepay made pursuant to this Section 8.4 by causing a notice of such acceptance to be delivered to the Company not later than 15 days after receipt by such holder of the most recent offer of prepayment. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 8.4 shall be deemed to constitute rejection of such offer by such holder.

 

(d)     Prepayment. Prepayment of the Notes to be prepaid pursuant to this Section 8.4 shall be at 100% of the principal amount of such Notes, together with interest on such Notes accrued to the date of prepayment, but without Make-Whole Amount or other premium. The prepayment shall be made on the Proposed Prepayment Date.

 

(e)     Officer’s Certificate. Each offer to prepay the Notes pursuant to this Section 8.4 shall be accompanied by a certificate, executed by a Senior Financial Officer and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this Section 8.4; (iii) the principal amount of each Note offered to be prepaid; (iv) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date; (v) that the conditions of this Section 8.4 have been fulfilled; and (vi) in reasonable detail, the nature and date of the Change in Control.

 

(f)     Certain Definitions.

 

“Change in Control” means the occurrence of any of the following:  (a) the managing general partner of the Company shall at any time for any reason cease to be either the sole or managing general partner of the MLP or (b) the AHGP Management Investors (as defined below) shall at any time for any reason cease to (i) possess the right, directly or indirectly, to elect or appoint a majority of the board of directors of the managing general partner of the Company or (ii) control, directly or indirectly, the managing general partner of the Company.  Notwithstanding the foregoing, any transaction or series of transactions that result in (I) Alliance Holdings GP, L.P. merging with and into the MLP, with the MLP as the surviving entity, (II) Alliance Holdings GP, L.P. becoming a direct or indirect Wholly Owned Subsidiary of the MLP, (III) the MLP merging with or into Alliance Holdings GP, L.P. or a Subsidiary thereof, with Alliance Holdings GP, L.P. or such Subsidiary as the surviving entity or (IV) any exchange of incentive distribution rights in the MLP and/or exchange of general partner interests in the MLP or the Company for common units of the MLP (any such transaction described in clause (I) - (IV) above, a “Simplification Transaction”), shall not constitute a Change in Control hereunder regardless of whether or not, after giving effect to such Simplification Transaction, any of the events described in the first sentence of this definition of Change in Control shall have occurred.

 

“AHGP Management Investors” means any of (A) C-Holdings, LLC, (B) the management, officers and/or directors of Alliance GP, LLC and/or the Company and/or the sole or managing general partner of the Company who are also unitholders (or partners or shareholders) of Alliance Holdings GP, L.P. or the MLP (all such persons of management, officers and directors, collectively, the “Management Persons”), (C) any corporation, limited liability company, partnership, trust or other legal entity owned, directly or indirectly, by such Management Person or by such Management Person and his or her spouse or direct lineal descendent or, in the case of a trust, as to which such Management Person is (either individually or together with such Management Person’s spouse) a trustee and/or (D) any Person that is a party to that certain Transfer Restrictions Agreement (so long as such Transfer Restrictions Agreement remains in effect).

 

“Transfer Restrictions Agreement” means that certain Transfer Restrictions Agreement, dated as of June 13, 2006, by and among Alliance Holdings GP, L.P., Alliance GP, LLC, C-Holdings, LLC, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III, Alliance Resource Holdings II, Inc., Alliance Resource Holdings, Inc., Alliance Resource GP, LLC and each other party named therein as a party thereto, as the same may be amended, modified or supplemented.

 

(g)     Calculations. All calculations contemplated in this Section 8.4 involving the Capital Stock of any Person shall be made with the assumption that all convertible Securities of such Person then outstanding and all convertible Securities issuable upon the exercise of any warrants, options and other rights outstanding at such time were converted at such time and that all options, warrants and similar rights to acquire shares of Capital Stock of such Person were exercised at such time.

 

Section 8.5.     Allocation of Partial Prepayments.  In the case of each partial prepayment of the Notes pursuant to Section 8.2, the principal amount of the Notes to be prepaid shall be (a) allocated among each series of Notes in proportion to the aggregate unpaid principal amount outstanding of all such series of Notes and (b) with respect to the Notes of each Series, allocated pro rata among all of the holders of such series of Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.  All partial prepayments made pursuant to Section 8.4 shall be applied only to the Notes of the holders who have elected to participate in such prepayment.

 

Section 8.6.     Maturity; Surrender, Etc.  In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment (which shall be a Business Day), together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any.  From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue.  Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

 

Section 8.7.     Purchase of Notes.  The Company will not and will not permit any Subsidiary or Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any series of the outstanding Notes or any part or portion of any series except upon the payment or prepayment of each series of the Notes in accordance with the terms of this Agreement and the Notes.  The Company will promptly cancel all Notes acquired by it, any Subsidiary or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.

 

Section 8.8.     Make-Whole Amount.  The term “Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal; provided that the Make-Whole Amount may in no event be less than zero.  For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

 

“Called Principal” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

 

“Discounted Value” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.

 

“Reinvestment Yield” means, with respect to the Called Principal of any Note, .50% (50 basis points) over the yield to maturity implied by (i) the “ask-yield(s)”

reported as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on the run U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date.  In the case of each determination under clause (i) or clause (ii), as the case may be, of the preceding paragraph, such implied yield will be determined, if necessary, by (a) converting U.S. Treasury ▇▇▇▇ quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the applicable U.S. Treasury security with the maturity closest to and greater than such Remaining Average Life and (2) the applicable U.S. Treasury security with the maturity closest to and less than such Remaining Average Life.  The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.

 

“Remaining Average Life” means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (a) such Called Principal into (b) the sum of the products obtained by multiplying (i) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (ii) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

 

“Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date; provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or 12.1.

 

“Settlement Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

 

SECTION 9.     AFFIRMATIVE COVENANTS.

 

The Company covenants that so long as any of the Notes are outstanding:

 

Section 9.1.     Compliance with Law.  The Company will, and will cause each of its Subsidiaries to, comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, ERISA, Environmental Laws, the USA Patriot Act and the other laws and regulations that are referred to in Section 5.16, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 9.2.     Insurance.  The Company will, and will cause each of its Subsidiaries to, (a) maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated or consistent with the existing practices of the Company and its Subsidiaries as of the date of the First Amendment and disclosed in the MLP’s Form 10-K for the Fiscal Year ended December 31, 2015, and (b) if at any time any Mortgaged Property is a Flood Hazard Property, keep and maintain, at all times flood insurance on terms and in an amount sufficient to comply with the rules and regulations promulgated under the National Flood Insurance Act of 1968 and Flood Disaster Protection Act of 1973, each as amended from time to time, provided that in the case of a Mortgaged Property listed on Schedule 5.26 that is a Flood Hazard Property or any real property that is acquired after the date of the First Amendment that is a Flood Hazard Property, any evidence of the flood insurance required to be maintained under this Section 9.2(b) shall be delivered to the holders of the Notes prior to the effective date of the Mortgage in respect of such Flood Hazard Property and such evidence of flood insurance shall be subject to the reasonable approval of the Collateral Agent.  The foregoing requirement for flood insurance shall not apply to Flood Hazard Properties that are otherwise excluded under the definition of Excluded Assets.

 

Section 9.3.     Maintenance of Properties.  The Company will, and will cause each of its Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times; provided that this Section 9.3 shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 9.4.     Payment of Taxes.  The Company will, and will cause each of its Subsidiaries to, file all income tax returns and all other material tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns (and all other taxes, assessments, governmental charges, or levies in the form of a tax) imposed on them or any of their properties, assets, income or franchises, to the extent the same have become due and payable and before they have become delinquent and all claims for which sums

 

have become due and payable that have or might become a Lien on properties or assets of the Company or any Subsidiary; provided that neither the Company nor any Subsidiary need pay any such tax, assessment, charge, levy or claim if (a) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (b) the nonpayment of all such taxes, assessments, charges, levies and claims in the aggregate could not reasonably be expected to have a Material Adverse Effect.

 

Section 9.5.     Legal Existence, Etc.  Subject to and except as permitted by Section 10.6, the Company will at all times preserve and keep in full force and effect its legal existence as a limited partnership.  Subject to and except as permitted by Sections 10.5 and 10.6, the Company will at all times preserve and keep in full force and effect the legal existence of each of its Subsidiaries (unless merged into the Company or a Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such legal existence, right or franchise could not, individually or in the aggregate, have a Material Adverse Effect.

 

Section 9.6.     Ranking; Covenant to Secure Notes Equally.  The Company will ensure that, at all times, all liabilities of the Company under the Notes will rank in right of payment either pari passu or senior to all obligations under the Bank Facility and each other Qualified Debt Agreement.

 

Section 9.7.     Performance of Related Documents.  Subject to Sections 9.5,  10.5 and 10.6, the Company will perform and observe, and cause each of its Subsidiaries to perform and observe, all of the terms and provisions of each Related Document to be performed or observed by it, maintain each such Related Document in full force and effect, enforce such Related Document in accordance with its terms, take all such action to such end as may be from time to time requested by the Required Holders and make to each other party to each such Related Document such demands and requests for information and reports or for action as the Company or any of its Subsidiaries is entitled to make under such Related Document, except, in any case, where the failure to do so, either individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect.

 

Section 9.8.     Maintenance of Controlled Reserve Base.  The Company will maintain a controlled reserve base of sufficient mineable tonnage of coal such that the ratio of aggregate controlled mineable tons of coal over current annual production levels of tons of coal per year is greater than 125% of the remaining duration of the Notes.  For purposes of this Section 9.8, a “controlled reserve base” of coal denotes the aggregate of coal reserves which may be economically and legally mined by the Company or a Subsidiary at the time of the reserve determination.  In making any determination of reserves for the purpose of this Section 9.8, the Company may include properties (“Option Properties”) which may be acquired by the Company or a Subsidiary under a valid and enforceable option or purchase contract which is subject to no conditions other than the payment of the purchase price provided for under such option or contract (the “Contract Price”); provided that to the extent and for so long as the Company shall elect to include Option Properties in any such determination, (a) the amount equal to the Contract Price could then be incurred as Debt without causing a Default or Event of Default to exist (the

 

“Notional Debt”) and (b) assuming for all purposes of Section 10.1 that an amount equal to all such Notional Debt was considered to be outstanding.

 

Section 9.9.     Books and Records.  The Company will, and will cause each of its Subsidiaries to, maintain proper books of record and account, in which full and correct entries in all material respects shall be made of all financial transactions and the assets and business of the Company and each Subsidiary, in conformity with GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over the Company, or such Subsidiary, as the case may be. The Company and its Subsidiaries have devised a system of internal accounting controls sufficient to provide reasonable assurances that their respective books, records, and accounts accurately reflect all transactions and dispositions of assets and the Company will, and will cause each of its Subsidiaries to, continue to maintain such system.

 

Section 9.10.     Security.

 

(a)     The Company will:

 

(i)     within 45 days after any Subsidiary is required to deliver a Subsidiary Guaranty Supplement to the Subsidiary Guaranty Agreement pursuant to Section 10.18, furnish to the holders of the Notes a description of such Subsidiary’s real and personal properties (whether tangible, intangible, or mixed property, but excluding Excluded Assets), in detail satisfactory to the Required Holders;

 

(ii)     within 45 days after any acquisition of Material Acquired Real Properties (or, if earlier, the date of delivery of the following pursuant to the Bank Facility), furnish to the holders of the Notes a description of any Material Acquired Real Properties of such Subsidiary, in detail reasonably satisfactory to the Collateral Agent;

 

(iii)     within 45 days after any Subsidiary is required to deliver a Subsidiary Guaranty Supplement to the Subsidiary Guaranty Agreement pursuant to Section 10.18, take, and cause such Subsidiary to take, whatever action (including, without limitation, execution and delivery of Collateral Documents), in all such cases, as specified by the Collateral Agent or the Required Holders and in form and substance reasonably satisfactory to the Collateral Agent (including delivery to the Collateral Agent of all certificates, if any, representing the Capital Stock in and of such Subsidiary and all documents required to be delivered pursuant to Section 3 of the First Amendment or Section 9.11(d)(vii)), in all such cases to the same extent that such documents and instruments would have been required to have been delivered by Persons that were Subsidiary Guarantors on the date of the First Amendment, securing payment of all obligations of such Subsidiary Guarantor under the Note Documents;

 

(iv)     with respect to any Material Acquired Real Properties, within 60 days after the acquisition thereof (or, if earlier, the date on which any of the following actions is taken pursuant to the Bank Facility), cause such Subsidiary and each direct and indirect parent of such Subsidiary to take, whatever action (including, without limitation, the recording of mortgages, deeds of trust, assignments, the filing of UCC financing statements, the giving of notices and the endorsement of notices on title documents) as

 

may be necessary or advisable in the reasonable opinion of the Collateral Agent to vest in the Collateral Agent (or in any representative of the Collateral Agent designated by it in accordance with the Intercreditor Agreement) valid and subsisting first priority, perfected Liens on the Material Acquired Real Properties, in favor of the Collateral Agent for the benefit of the Secured Parties to secure the obligations of the Company and the Subsidiary Guarantors under the Notes and the other Note Documents and the other Secured Obligations in accordance with the terms and conditions of the Collateral Documents, subject in any case to Permitted Liens, Permitted Encumbrances and terms of leases and conveyance instruments, including without limitation delivery of each item set forth in Section 9.11(d) with respect to the property to be mortgaged;

 

(v)     by March 15 of each year, commencing with March 15, 2018, with respect to any real property that is associated with an active Mining Facility described on Schedule 5.25 and was acquired during the prior calendar year and was not a Material Acquired Real Property (an “Additional Real Property”), cause such Subsidiary and each direct and indirect parent of such Subsidiary to take, whatever action (including, without limitation, the recording of mortgages, deeds of trust, assignments, the filing of UCC financing statements, the giving of notices and the endorsement of notices on title documents) as may be necessary or advisable in the reasonable opinion of the Collateral Agent to vest in the Collateral Agent (or in any representative of the Collateral Agent designated by it in accordance with the Intercreditor Agreement) valid and subsisting first priority, perfected Liens on such Additional Real Property, in favor of the Collateral Agent for the benefit of the Secured Parties to secure the obligations of the Company and the Subsidiary Guarantors under the Notes and the other Note Documents and the other Secured Obligations in accordance with the terms and conditions of the Collateral Documents, subject in any case to Permitted Liens, Permitted Encumbrances and terms of leases and conveyance instruments, including without limitation delivery of each item set forth in Section 9.11(d) with respect to the property to be mortgaged;

 

(vi)     with respect to any Material Acquired Real Properties, and as a condition precedent to delivery of any Mortgage, comply with the flood hazard determination requirements set forth in Section 9.11(d)(vii), and if any Material Acquired Real Properties that constitute real property or leasehold interest in real property is a Flood Hazard Property, within 60 days after the acquisition thereof (or, if earlier, the date of compliance pursuant to the Bank Facility), comply with the flood insurance requirements set forth in Section 9.2(b) and Section 9.11(d)(vii);

 

(vii)     with respect to any Additional Real Properties, comply with the requirements set forth in Section 9.11(d)(vii), and if any Additional Real Property that constitutes real property or leasehold interest in real property is a Flood Hazard Property, by March 15 of the year following acquisition, commencing March 15, 2018, comply with the flood insurance requirements set forth in Section 9.2(b) and Section 9.11(d)(vii);

 

(viii)     contemporaneously with the delivery of such Collateral Documents required to be delivered to the holders of the Notes or the Collateral Agent, upon the request of the Required Holders in their reasonable discretion, deliver to the holders of

 

the Notes a signed copy of an opinion of counsel for the Company and the Subsidiary Guarantors reasonably acceptable to the Required Holders, as to the validity and enforceability of the agreements entered into pursuant to this Section 9.10(a) and as to such other related matters as the Required Holders may reasonably request;

 

(ix)     within 45 days after acquisition of any Material Acquired Real Properties (or, if earlier, the date of delivery of the following pursuant to the Bank Facility), provide or cause the applicable Subsidiary Guarantor to provide, to the Collateral Agent and the holders of the Notes a legal description of all such Material Acquired Real Properties, as applicable, from which any As-Extracted Collateral (as defined in the Security Agreement) will be severed or to which As-Extracted Collateral (as defined in the Security Agreement) otherwise relates, together with the name of the record owner of such Material Acquired Real Properties, as applicable, the county in which such Material Acquired Real Properties is located and such other information as may be necessary or desirable to file real property related financing statements or mortgages under Section 9-502(b) or 9-502(c) of the UCC or any similar legal requirements;

 

(x)     by February 15 of each year, commencing with February 15, 2018,  provide, or cause the applicable Subsidiary Guarantor to provide, to the Collateral Agent and the holders of the Notes a legal description of all such Additional Real Properties acquired during the prior year, as applicable, from which any As-Extracted Collateral (as defined in the Security Agreement) will be severed or to which As-Extracted Collateral (as defined in the Security Agreement) otherwise relates, together with the name of the record owner of such Additional Real Properties, as applicable, the county in which such Additional Real Properties is located and such other information as may be necessary or desirable to file real property related financing statements or mortgages under Section 9-502(b) or 9-502(c) of the UCC or any similar legal requirements;

 

(xi)     at any time and from time to time, promptly execute and deliver any and all further instruments and documents and take all such other action as the Required Holders may reasonably deem necessary or desirable in perfecting and preserving the first priority Liens, subject to Permitted Liens and Permitted Encumbrances, of such mortgages, pledges, assignments, security agreement supplements, intellectual property security agreement supplements and security agreements as required under the terms of the Note Documents; and

 

(xii)     promptly upon request by the Required Holders, (1) correct, and cause each of its Subsidiaries promptly to correct, any material defect or error (as to which both the Company and the Required Holders agree in good faith constitutes a defect or error) that may be discovered in any Note Document or in the execution, acknowledgment, filing or recordation thereof, and (2) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Required Holders may reasonably require from time to time in order to (A) carry out more effectively the purposes of the Note Documents, (B) to the fullest extent permitted by applicable law, subject the Company’s and/or a Subsidiary Guarantor’s or any of its Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral

 

Documents, (C) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (D) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Note Document or under any other instrument executed in connection with any Note Document to which the Company or any of its Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do so.

 

(b)     The time periods set forth in Section 9.10(a) may be extended upon the request of the Company, if (i) the Company and the Subsidiary Guarantors are diligently pursuing same, in the sole discretion of the Required Holders and (ii) the administrative agent under the Bank Facility has agreed to such extension.  Notwithstanding the foregoing, if the administrative agent under the Bank Facility has agreed in writing to an extension of the time period for any requirement under the Bank Facility that is similar to a requirement in Section 9.10(a), then such extension shall, upon notice to the holders of the Notes, automatically apply to such requirement in Section 9.10(a), without the approval or consent of the Required Holders; provided that such extension shall in no event exceed 60 days after the original period of time specified in Section 9.10(a) for such requirement and provided,  further, that such extension shall be deemed to end on the date of compliance with the corresponding requirement under the Bank Facility.  Any documentation delivered pursuant to Section 9.10(a) shall constitute a Note Document hereunder and any such document creating or purporting to create a Lien in favor of the Collateral Agent for the benefit of the Secured Parties shall constitute a Collateral Document hereunder.

 

(c)     This Section 9.10 shall not apply to Excluded Assets.

 

Section 9.11.     Post First Amendment Covenants.  As promptly as practicable, and in any event within the time periods after the date of the First Amendment (or such later date as the Required Holders may agree to in their sole discretion or as otherwise provided below), the Company and each Subsidiary Guarantor, as applicable, will take the following actions and execute and deliver the following documents to the Collateral Agent and each holder of a Note: (a)     no later than 30 days after the date of the First Amendment, certificates of insurance, and related policy endorsements, each in form reasonably satisfactory to the Collateral Agent, naming the Collateral Agent on behalf of the Secured Parties, as an additional insured and/or loss payee, as the case may be, under all insurance policies (including flood insurance policies) maintained with respect to the assets and properties of the Company and the Subsidiary Guarantors that constitute Collateral;

 

(b)     no later than 90 days after the date of the First Amendment, Deposit Account Control Agreements and the Securities Account Control Agreement, in each case to the extent defined pursuant to the Security Agreement and duly executed by the appropriate parties;

 

(c)     no later than 90 days after the date of the First Amendment, to the extent obtainable after using commercially reasonable efforts, landlord waivers and collateral access agreements, in each case, to the extent required under the Security Agreement and duly executed by the appropriate parties.  Notwithstanding anything to the contrary in this Agreement, if the Company shall fail to obtain the landlord waivers and collateral access agreements within the

 

specified time period, after using commercially reasonable efforts to do so, the Company shall have no further obligation to execute and deliver to the Collateral Agent the same and the covenant set forth in this  Section 9.11(c) with respect to such landlord waivers and collateral access agreements shall be deemed to be satisfied by the Company.  The Company shall promptly, upon request by the Required Holders, provide the holders of the Notes with a report in reasonable detail summarizing the commercially reasonable efforts undertaken to obtain the landlord waivers and collateral access agreements referenced in this Section 9.11(c);

 

(d)     no later than 90 days after the date of the First Amendment, deeds of trust, trust deeds, deeds to secure debt, mortgages, leasehold mortgages and leasehold deeds of trust, in form and substance reasonably acceptable to the Collateral Agent and covering the properties listed on Schedule 5.26 (together with each other mortgage delivered pursuant to Section 9.10, in each case as amended, the “Mortgages”), duly executed by the Company and/or the applicable Subsidiary Guarantor, together with:

 

(i)     evidence that counterparts of the Mortgages have been duly executed, acknowledged and delivered and are in form suitable for filing or recording in all filing or recording offices that the Collateral Agent may deem necessary or desirable in order to create a valid first and subsisting Lien, subject to Permitted Liens and Permitted Encumbrances, on the property described therein in favor of the Collateral Agent for the benefit of the Secured Parties and that all filing, documentary, stamp, intangible and recording taxes and other fees in connection therewith have been paid;

 

(ii)     with respect to the properties listed on Schedule 9.11(d)(ii), fully paid American Land Title Association Loan Policies of Title Insurance, in standard form, or such other form reasonably acceptable to the Collateral Agent (the “Mortgage Policies”) covering the Company’s and/or the applicable Subsidiary Guarantor’s title and interest in the surface rights on which active facilities are located with endorsements and in amounts acceptable to the Collateral Agent, issued, coinsured and reinsured by title insurers acceptable to the Collateral Agent, insuring the Mortgages to be valid first and subsisting Liens on the property described therein, free and clear of all defects (including, but not limited to, mechanics’ and materialmen’s Liens) and encumbrances, excepting only Permitted Encumbrances and Permitted Liens, and providing for such other affirmative insurance and such coinsurance and direct access reinsurance as the Collateral Agent may deem necessary or desirable;

 

(iii)     with respect to the properties listed on Schedule 9.11(d)(ii), (1) American Land Title Association/American Congress on Surveying and Mapping form surveys, of the immediate surface area surrounding the opening of each active Mine and active Mining Facilities, which surface area is approved by the Collateral Agent, showing all plants, significant buildings and other major improvements, any major off-site improvements, encroachments, if any, and (2) “boundary” surveys, which may be produced by orthophotography, photogrammetric mapping, laser scanning or other similar mechanism, of the remainder of the surface Mortgaged Property in the vicinity of above-ground improvements at each Mine, and in the case of the foregoing clauses (1) and (2), for which all necessary fees (where applicable) have been paid, and dated no more than 60 days before the effective date of such Mortgage, certified to the Collateral

 

Agent and the issuer of the Mortgage Policies in a manner satisfactory to the Collateral Agent by a land surveyor duly registered and licensed in the States in which the property described in such surveys is located and acceptable to the Collateral Agent, and in any case sufficient for the issuer of the Mortgage Policies to remove the standard survey exception from such Mortgage Policies;

 

(iv)     a certificate executed by a Responsible Officer of the Company summarizing, in reasonable detail, the current and historical practices of the Company and its Subsidiaries with respect to obtaining title opinion letters for its mining tracts, along with an exhibit containing representative title opinion letters previously obtained by the Company or its Subsidiaries with respect to mining tracts within their active Mining Facilities (such summary, together with such exhibit, the “Title Practices Certificate”), which Title Practices Certificate shall be in form and substance reasonably acceptable to the Collateral Agent;

 

(v)     to the extent obtainable after using commercially reasonable efforts, estoppel and consent agreements executed by each of the lessors of the leased real properties listed on Schedule 9.11(d)(v), along with (1) a memorandum of lease in recordable form with respect to such leasehold interest, executed and acknowledged by the owner of the affected real property, as lessor, or (2) evidence that the applicable lease with respect to such leasehold interest or a memorandum thereof has been recorded in all places necessary or desirable, in the reasonable judgment of the Collateral Agent, to give constructive notice to third-party purchasers of such leasehold interest, or (3) if such leasehold interest was acquired or subleased from the holder of a recorded leasehold interest, the applicable assignment or sublease document, executed and acknowledged by such holder, in each case in form sufficient to give such constructive notice upon recordation and otherwise in form satisfactory to the Collateral Agent. Notwithstanding anything to the contrary in this Agreement, if the Company shall fail to obtain the estoppel and consent agreement or accompanying documents with respect to any such real property lease within the specified time period, after using commercially reasonable efforts to do so, the Company shall have no further obligation to execute and deliver to the Collateral Agent and each holder of a Note the same and the covenant set forth in this Section 9.11(d)(v) with respect to such estoppel and consent agreement and accompanying documents shall be deemed to be satisfied by the Company.  The Company shall promptly, upon request, provide the holders of the Notes with a report in reasonable detail summarizing the commercially reasonable efforts undertaken to obtain the estoppel and consent agreements referenced in this Section 9.11(d)(v);

 

(vi)     evidence of the insurance required by the terms of the Mortgages;

 

(vii)     a “Life-of-Loan” Federal Emergency Management Agency Standard Flood Hazard Determination with respect to each surface parcel of Mortgaged Property covered by such Mortgage, and, in the event any portion of a Mortgaged Property includes a structure with at least two walls and a roof or a building in the course of construction (each, a “Building”) and, as shown in the related flood hazard determination, such Building is located in a special flood hazard area (a “Flood Hazard Property”), then (1) a notice about special flood hazard area status and flood disaster assistance duly

 

executed by the Company, and (2) evidence of flood insurance on such terms and in such amounts as required by the Flood Disaster Protection Act (as amended) reasonably satisfactory to the Collateral Agent, or a certificate from the Company that such Mortgaged Property does not include a Building or Buildings, which certificate shall be in a form reasonably satisfactory to the Collateral Agent; the Company shall provide not less than 45 days’ prior written notice to the holders of the Notes and the Collateral Agent of any proposed execution and delivery of a Mortgage;

 

(viii)     UCC financing statements, including without limitation, UCC fixture filings and As-Extracted Collateral (as defined in the Security Agreement) filings on the Mortgaged Properties in form appropriate for filing under the UCC of all jurisdictions that the Collateral Agent may deem necessary or desirable in order to perfect the Liens created under the Mortgages;

 

(ix)     favorable opinions of local counsel for the Company and the Subsidiary Guarantors, (1) in states in which the Mortgaged Properties are located, with respect to the enforceability and perfection of all Mortgages covering the Mortgaged Properties and any related fixture and filings covering As-Extracted Collateral (as defined in the Security Agreement), in form and substance reasonably satisfactory to the Required Holders, and (2) in states in which the Company and/or the applicable Subsidiary Guarantor that is party to the Mortgages is organized or formed, that the relevant mortgagor is validly existing and in good standing, corporate power, due authorization, execution and delivery, no conflicts and no consents of the Company or such Subsidiary Guarantor in the granting of the Mortgages, in form and substance reasonably satisfactory to the Required Holders, and such other opinions of counsel as the Required Holders shall reasonably request in form reasonably acceptable to the Required Holders relating to the delivery of such Mortgage;

 

(x)     evidence that all other action that the Collateral Agent may deem necessary or desirable in order to create valid first and subsisting Liens, excluding Permitted Liens and Permitted Encumbrances, on the property described in the Mortgages has been taken that the Collateral Agent may reasonably deem necessary or desirable in order to perfect and protect the Liens created thereby; and

 

(xi)     to the extent obtainable after using commercially reasonable efforts, such other consents, agreements and confirmations of lessors and third parties as the Collateral Agent may deem necessary or desirable and evidence that all other actions that the Collateral Agent may deem necessary or desirable in order to create valid first and subsisting Liens on the Mortgaged Property has been taken. Notwithstanding anything to the contrary in this Agreement, if the Company shall fail to obtain such other consents, agreements and confirmations of lessors and third parties within the specified time period, after using commercially reasonable efforts to do so, the Company shall have no further obligation to execute and deliver to the Collateral Agent the same and the covenant set forth in this Section 9.11(d)(xi) with respect to such other consents, agreements and confirmations of lessors and third parties shall be deemed to be satisfied by the Company.  The Company shall promptly, upon request, provide the holders of the Notes with a report in reasonable detail summarizing the commercially reasonable efforts

 

undertaken to obtain such other consents, agreements and confirmations of lessors and third parties referenced in this Section 9.11(d)(xi); and

 

(e)     no later than 30 days after the date of the First Amendment, deliver to the Collateral Agent the stock certificate(s) of Matrix Design Africa (Pty) Ltd. held by Matrix Design International, LLC representing 65% of the Capital Stock of Matrix Design Africa (Pty) Ltd., accompanied by an undated stock power or instrument of transfer executed in blank.

 

The time periods set forth in this Section 9.11 may be extended by the Required Holders upon the request of the Company, if (i) the Company and the Subsidiary Guarantors are diligently pursuing same, in the sole discretion of the Required Holders and (ii) the administrative agent under the Bank Facility has agreed to such extension.  Notwithstanding the foregoing, if the administrative agent under the Bank Facility has agreed in writing to an extension of the time period for any requirement under the Bank Facility that is similar to a requirement in Section 9.11, then such extension shall, upon notice to the holders of the Notes, automatically apply to such requirement in Section 9.11, without the approval or consent of the Required Holders; provided that such extension shall in no event exceed 60 days after the original period of time specified in Section 9.11 for such requirement and provided,  further, that such extension shall be deemed to end on the date of compliance with the corresponding requirement under the Bank Facility.

 

The requirements of this Section 9.11 shall not apply to any Excluded Assets.

 

Section 9.12.     Compliance with Terms of Leases.  The Company will make all payments and otherwise perform all obligations in respect of all leases of real property, including the Mining Leases, in each case, to which the Company or any of its Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or canceled, notify the holders of the Notes of any default by any party with respect to such leases and cooperate with the holders of the Notes in all respects to cure any such default, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect.

 

Section 9.13.     Most Favored Lender.

 

(a)     If, on any date, the Bank Facility contains one or more Additional Covenants or Additional Defaults (including, for the avoidance of doubt, as a result any amendment to the Bank Facility, whether or not in effect on the date of the First Amendment, causing it to contain one or more Additional Covenants or Additional Defaults), then, concurrently therewith, (i) the Company will notify the holders of the Notes thereof, and (ii) whether or not the Company provides such notice, the terms of this Agreement shall, without any further action on the part of the Company or any holder of the Notes, be deemed to be amended automatically to include each Additional Covenant and each Additional Default in this Agreement.  The Company further covenants to promptly execute and deliver at its expense (including, without limitation, the fees and expenses of counsel for the holders of the Notes) an amendment to this Agreement in form and substance satisfactory to the Required Holders evidencing the amendment of this Agreement

 

to include such Additional Covenants and Additional Defaults in this Agreement, provided that the execution and delivery of such amendment shall not be a precondition to the effectiveness of such amendment as provided for in this clause (a), but shall merely be for the convenience of the parties hereto.

 

(b)     If after the time this Agreement is amended pursuant to clause (a) of this Section 9.13 to include in this Agreement any Additional Covenant or Additional Default (an “Incorporated Provision”) contained in the Bank Facility, such Incorporated Provision ceases to be in effect under or is deleted from the Bank Facility or is amended or modified for the purposes of the Bank Facility so as to become less restrictive with respect to the Company and its Subsidiaries, then, upon the request of the Company, the holders of the Notes will amend this Agreement to delete or similarly amend or modify, as the case may be, such Incorporated Covenant as in effect in this Agreement, provided that (i) no Default or Event of Default shall be in existence immediately before or after such deletion, amendment or modification (including under such Incorporated Provision otherwise to be deleted, amended or modified), and (ii) if any fees or other remuneration were paid to any lender under the Bank Facility with respect to causing such Incorporated Provision to cease to be in effect or be deleted or to be so amended or modified, then the Company shall have paid to the holders of the Notes the same fees or other remuneration on a pro rata basis in proportion to the relative outstanding principal amounts of the Notes and the principal amount of the Debt outstanding under the Bank Facility.  Notwithstanding the foregoing, no amendment to this Agreement pursuant to this clause (b) as the result of any Incorporated Provision ceasing to be in effect or being deleted, amended or otherwise modified shall cause any covenant or Event of Default in this Agreement to be less restrictive as to the Company or its Subsidiaries than such covenant or Event of Default as contained in this Agreement as in effect on the date of the First Amendment, and as amended other than as the result of the application of clause (a) of this Section 9.13 originally caused by such Incorporated Provision in the Bank Facility.

 

SECTION 10.     NEGATIVE COVENANTS.

 

The Company covenants that so long as any of the Notes are outstanding:

 

Section 10.1.     Financial Covenants.  The Company will:

 

(a)     Consolidated Debt to Consolidated Cash Flow Ratio.  Maintain at all times a Consolidated Debt to Consolidated Cash Flow Ratio of not more than 2.25 to 1.0.

 

(b)     Interest Coverage Ratio.  Maintain at all times an Interest Coverage Ratio of not less than 3.0 to 1.0.

 

Section 10.2.     Liens.  The Company will not create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on or with respect to any of its properties of any character (including, without limitation, accounts) whether now owned or hereafter acquired, or sign or file or suffer to exist, or permit any of its Subsidiaries to sign or file or suffer to exist, under the UCC of any jurisdiction, a financing statement that names the Company or any of its Subsidiaries as debtor, or sign or suffer to exist, or permit any of its Subsidiaries to sign or suffer to exist, any security agreement authorizing any

 

secured party thereunder to file such financing statement, or assign, or permit any of its Subsidiaries to assign, any accounts or other right to receive income, except:

 

(a)     Permitted Liens;

 

(b)     other Liens incurred in the ordinary course of business securing obligations (other than obligations under the Bank Facility or any other Qualified Debt Agreement) in an aggregate amount not to exceed $25,000,000;

 

(c)     Liens existing on the date of the First Amendment and described on Schedule 10.2;

 

(d)     non-recourse Liens upon or in real property or equipment acquired or held by the Company or any of its Subsidiaries in the ordinary course of business to secure the purchase price of such property or equipment or to secure non-recourse, tax-exempt Debt incurred solely for the purpose of financing the acquisition, construction or improvement of any such property or equipment to be subject to such Liens, or Liens existing on any such property or equipment at the time of acquisition (other than any such Liens created in contemplation of such acquisition that do not secure the purchase price), or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount; provided,  however, that no such Lien shall extend to or cover any property other than the property or equipment being acquired, constructed or improved, and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to the Lien being extended, renewed or replaced;

 

(e)     Liens arising in connection with Capital Leases permitted under Section 10.3(c)(vii);  provided that no such Lien shall extend to or cover any assets other than the assets subject to such Capital Leases;

 

(f)     the replacement, extension or renewal of any Lien permitted by clauses (c) through (e) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby;

 

(g)     Liens on personal property leased under leases (including synthetic leases) entered into by the Company which are accounted for as operating leases in accordance with GAAP to the extent not prohibited under Section 10.9;

 

(h)     easements, exceptions or reservations in any property of the Company or any Subsidiary granted or reserved for the purpose of pipelines, roads, the removal of oil, gas, coal or other minerals, and other like purposes, or for the joint or common use of real property, facilities and equipment, which are incidental to, and do not materially interfere with, the ordinary conduct of the business of the Company or any of its Subsidiaries;

 

(i)     Liens on documents of title and the property covered thereby securing obligations in respect of letters of credit to the extent not prohibited under Section 10.3;

 

(j)     Liens on property or assets of the Company or any of its Subsidiaries securing Debt owing to the Company or to a Wholly Owned Subsidiary in an aggregate principal amount

 

not to exceed $10,000,000; provided that no promissory note evidencing such intercompany Debt shall be pledged to any Person, other than the Collateral Agent for the benefit of the Secured Parties, as security for any Debt or any other obligation of the Company or such Subsidiary;

 

(k)     Liens arising under letter of credit cash deposit account arrangements, it being understood that any such cash deposit account is used to support then outstanding letters of credit and is not required to be funded or otherwise utilized to support the renewal of existing letters of credit or the issuance of new letters of credit;

 

(l)     assignments of the right to receive income or Liens that arise in connection with receivables securitization programs described, and in an aggregate principal amount not to exceed the amount specified therefor, in Section 10.3(c)(viii) at any time outstanding;

 

(m)     Liens created pursuant to the Collateral Documents to secure the obligations under this Agreement, the Notes and the other Note Documents;

 

(n)     Liens on the Collateral securing obligations arising under or in connection with the Bank Facility, so long as such Liens are subject to the terms of the Intercreditor Agreement;

 

(o)     protective UCC filings with respect to personal property leased by, or consigned to, the Company or any Subsidiary Guarantor; and

 

(p)     normal and customary rights of setoff upon deposits of cash in favor of banks and other depository institutions in the ordinary course of business and not securing or otherwise relating to Debt for borrowed money.

 

Section 10.3.     Debt.  The Company will not create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Debt, except:

 

(a)     in the case of the Company:

 

(i)     Debt owed to a Wholly Owned Subsidiary of the Company; provided that (A) any such Debt owed by the Company to any Wholly Owned Subsidiary of the Company that is not a Subsidiary Guarantor shall be expressly subordinated in right of payment to the obligations of the Company under the Note Documents and (B) if any such Debt is owed to a Subsidiary Guarantor, such Debt shall be evidenced by, and subject to the provisions of, an intercompany note that shall be pledged to the Collateral Agent in accordance with the terms of the Security Agreement;

 

(ii)     other unsecured Debt incurred in the ordinary course of business aggregating not more than $50,000,000 at any time outstanding other than Guaranties or other contingent obligations of the Company with respect to any Debt or other obligation of any Subsidiary; provided that (1) the Company shall be in pro forma compliance with the covenants contained in Section 10.1, calculated based on the financial statements most recently delivered to the holders of the Notes pursuant to Section 7.1(a) or (b) and as though such Debt had been incurred at the beginning of the four-quarter period covered thereby, as evidenced by a certificate of the chief financial officer (or person

 

performing similar functions) of the Company delivered to the holders of the Notes demonstrating such compliance and (2) such unsecured Debt ranks junior to the Notes;

 

(iii)     other unsecured Debt incurred in the ordinary course of business (including, for the avoidance of doubt, any long-term Debt incurred in connection with a note offering) other than Guaranties or other contingent obligations of the Company with respect to any Debt or other obligation of any Subsidiary; provided that (1) the Company shall be in pro forma compliance with the covenants contained in Section 10.1, calculated based on the financial statements most recently delivered to the holders of the Notes pursuant to Section 7.1(a) or (b) and as though such Debt had been incurred at the beginning of the four-quarter period covered thereby, as evidenced by a certificate of the chief financial officer (or person performing similar functions) of the Company delivered to the holders of the Notes demonstrating such compliance, (2) such unsecured Debt matures, and does not begin to amortize until, more than six months after the maturity date of the Series B Notes and (3) the covenants and other material terms of such unsecured Debt are no more restrictive than those set forth in this Agreement and the other Note Documents; and

 

(iv)     Debt under the Bank Facility in an aggregate outstanding principal amount not to exceed $750,000,000 at any time;

 

(b)     in the case of any Subsidiary of the Company: (i) Debt owed to the Company or to a Wholly Owned Subsidiary of the Company; provided that (A) any such Debt owed by a Subsidiary Guarantor to a Wholly Owned Subsidiary that is not a Subsidiary Guarantor shall be expressly subordinated in right of payment to the obligations of such Subsidiary Guarantor under the Note Documents and (B) except in the case of Debt arising pursuant to a transaction permitted by clause (c)(viii) below, any such Debt owed to the Company or to a Subsidiary Guarantor shall be evidenced by, and subject to the provisions of, an intercompany note that shall be pledged to the Collateral Agent in accordance with the terms of the Security Agreement, and (ii) Debt in the form of a Guaranty of Debt otherwise permitted under this Section 10.3; and

 

(c)     in the case of the Company and its Subsidiaries:

 

(i)     Debt under this Agreement, the Notes and the other Note Documents;

 

(ii)     the Surviving Debt set forth on Schedule 10.3(c) hereto (other than Debt under the Bank Facility);

 

(iii)     non-recourse Debt of the Company and its Subsidiaries incurred solely to finance capital expenditures for the development of Greenfield Projects;

 

(iv)     non-recourse Debt secured by Liens permitted by Section 10.2(d);

 

(v)     Debt in respect of (1) Swaps incurred in the ordinary course of business and consistent with prudent business practice with the aggregate value thereof not to exceed $10,000,000 at any time outstanding and (2) interest rate Swaps incurred in the ordinary course of business and consistent with prudent business practice of up to $250,000,000 in the aggregate of notional indebtedness at any time outstanding;

 

(vi)     any Debt extending the maturity of, or refunding or refinancing, in whole or in part, any Surviving Debt or other Debt permitted under this Section 10.3 (other than Debt under the Bank Facility); provided that the principal amount of such Debt shall not be increased above the principal amount thereof outstanding immediately prior to such extension, refunding or refinancing, and the direct and contingent obligors therefor shall not be changed, as a result of or in connection with such extension, refunding or refinancing; provided,  further, that the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such extending, refunding or refinancing Debt, and of any agreement entered into and of any instrument issued in connection therewith, are consistent with prudent business practice and incurred in the ordinary course of business;

 

(vii)     Capital Lease Obligations aggregating not more than $100,000,000 and other unsecured Debt incurred in the ordinary course of business; provided, in each case, that the Company shall be in pro forma compliance with the covenants contained in Section 10.1, calculated based on the financial statements most recently delivered to the holders of the Notes pursuant to Section 7.1(a) or (b) and as though such Capital Lease Obligations or Debt had been incurred at the beginning of the four-quarter period covered thereby, as evidenced by a certificate of the chief financial officer (or person performing similar functions) of the Company delivered to the holders of the Notes demonstrating such compliance, and

 

(viii)     Debt of the Company and its Subsidiaries, if any, arising in connection with receivables securitization programs on terms and conditions customary for transactions of that type in an aggregate principal amount not to exceed $100,000,000 at any time outstanding.

 

Section 10.4.     Change in Nature of Business.  The Company will not engage, or permit any of its Subsidiaries to engage, in any business or business activity that would impair the Company’s status as a partnership for federal income tax purposes.

 

Section 10.5.     Sales, Etc. of Assets.  The Company will not sell, lease, transfer or otherwise dispose of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose of, any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets other than Inventory to be sold in the ordinary course of its business, except:

 

(a)     sales of Inventory in the ordinary course of its business;

 

(b)     sales of assets that are obsolete or no longer used or useful for fair value in an aggregate amount not to exceed $10,000,000 per annum;

 

(c)     sale-leasebacks of used equipment in an aggregate amount not to exceed $100,000,000 over the term of the Series B Notes;

 

(d)     sales of assets (i) by the Company to a Wholly Owned Subsidiary that is a Subsidiary Guarantor, (ii) by a Subsidiary to the Company or to another Subsidiary that is a Subsidiary Guarantor with respect to which the Company shall have at least the same degree of ownership and control as it had with respect to the Subsidiary responsible for the asset sale,

 

transfer or disposition or (iii) by a Subsidiary that is not a Subsidiary Guarantor to any other Subsidiary that is not a Subsidiary Guarantor;

 

(e)     in a transaction permitted by Section 10.6;

 

(f)     sales of other assets (including the Capital Stock of any Subsidiary of the Company) with a fair value in an amount not to exceed $50,000,000 individually or $125,000,000 in the aggregate over the term of the Series B Notes; provided,  however, that (i) the purchase price paid to the Company or such Subsidiary for such asset shall be no less than the fair market value of such asset at the time of such sale and such sale shall be in the best interest of the Company or such Subsidiary, as determined in good faith by the board of directors (or other person performing such functions) of the Company or such Subsidiary, as the case may be, and (ii) immediately after giving effect to such sales of assets, no Default or Event of Default shall exist; and

 

(g)     sales of receivables in connection with a receivables financing permitted by Section 10.3(c)(viii) along with such other assets or rights (including payment intangibles) related thereto as shall be customary for the purposes of consummating such permitted receivables financing.

 

Section 10.6.     Mergers, Etc.  The Company will not merge into or consolidate with any Person or permit any Person to merge into it or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person, or permit any of its Subsidiaries to do so, except that:

 

(a)     any Subsidiary of the Company may merge into or consolidate with any other Wholly Owned Subsidiary of the Company or may convey, transfer or lease any or all of its assets to a Wholly Owned Subsidiary of the Company; provided that, in the case of any such merger or consolidation, the Person formed by such merger or consolidation shall be a Wholly Owned Subsidiary of the Company; provided,  further, that, in the case of any such merger or consolidation to which a Subsidiary Guarantor is a party, the Person formed by such merger or consolidation shall be a Subsidiary Guarantor, and such newly-created or acquired Subsidiary shall comply with the applicable requirements of Sections 9.10 and 10.18;  provided,  further, that, for the avoidance of doubt, nothing contained in this Section 10.6 shall prohibit any Subsidiary from selling, transferring or otherwise conveying receivables (and related assets, as contemplated by Section 10.5(g)) to any Receivables Financing Subsidiary entity created (directly or indirectly) by the Company for purposes of entering into or consummating any receivables financing transaction permitted by Section 10.3(c)(viii);

 

(b)     any of the Company’s Subsidiaries may consolidate with or merge into the Company; provided that the Company is the surviving entity; and

 

(c)     any of the Subsidiaries of the Company may (i) merge into or consolidate with, any other Person, or (ii) convey, transfer or lease substantially all of its assets in compliance with Section 10.5 (other than Section 10.5(e)) in a single transaction or series of related transactions to any other Person or (iii) permit any other Person to merge into or consolidate with it; provided, in each case with respect to any merger or consolidation or conveyance, transfer or

 

lease of substantially all of its assets, (1) the Person formed by such consolidation or into which the Subsidiary shall be merged or assets shall be conveyed, transferred or leased shall, at the effective time of such merger or consolidation or transfer or lease be Solvent, shall have assumed all obligations of such Subsidiary under the Subsidiary Guaranty Agreement in a writing satisfactory in form and substance to the Required Holders and such newly-created or acquired Subsidiary shall comply with the applicable requirements of Sections 9.10 and 10.18 and (2) the Company shall have caused to be delivered to the holders of the Notes an opinion of independent counsel satisfactory to the Required Holders to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with the terms thereof; provided,  further, that the provisions of the first proviso to this clause (c) shall not apply to (x) the sale, transfer or other conveyance of any assets of the Company (including the Capital Stock of any Subsidiary of the Company), howsoever effected (including by way of merger or consolidation, sale of assets, lease, or otherwise) in a transaction permitted by Section 10.5(f), (y) any transaction involving the acquisition of a Person by a Subsidiary of the Company by merger or consolidation where the surviving entity shall be a Subsidiary of the Company unless, immediately after giving effect to such merger or consolidation, the surviving entity constitutes a Subsidiary that is not a Foreign Subsidiary and is newly formed or newly acquired, directly or indirectly, by the Company having total assets, as reflected on its balance sheet as of any date of determination, equal to or in excess of five percent (5%) of the total consolidated assets of the Company and its Subsidiaries as reflected on the Company’s consolidated balance sheet as of such date of determination, in each case as determined in accordance with GAAP, and (z) any sale, transfer or other conveyance of any assets to any Receivables Financing Subsidiary; provided that, with respect to this subclause (z), the sale, transfer or conveyance of such assets is permitted by the provisions of this Agreement;

 

provided,  however, that in each case of clauses (a), (b) and (c) above, immediately after giving effect thereto, (A) no event shall occur and be continuing that constitutes a Default or an Event of Default and (B) the Company shall be in pro forma compliance with the covenants contained in Section 10.1, as evidenced by a certificate of the chief financial officer (or persons performing similar functions) of the Company delivered to the holders of the Notes demonstrating such compliance.

 

Section 10.7.     Investments in Other Persons.  The Company will not make or hold, or permit any of its Subsidiaries to make or hold, any Investment in any Person, except:

 

(a)     Investments consisting of property to be used in the ordinary course of business and consistent with past practice;

 

(b)     Investments in accounts receivable arising from the sales of goods and services in the ordinary course of business;

 

(c)     equity Investments (i) by the Company and its Subsidiaries in Wholly Owned Subsidiaries that are not Subsidiary Guarantors in an aggregate amount not to exceed $50,000,000 at any time outstanding and (ii) by the Company and its Subsidiaries in Wholly Owned Subsidiaries that are Subsidiary Guarantors;

 

(d)     Investments by the Company and its Subsidiaries in Cash Equivalents;