1
EXHIBIT 10.2
Draft dated August , 1999
---
================================================================================
ALLIANCE RESOURCE GP, LLC
---------------------------
NOTE PURCHASE AGREEMENT
---------------------------
DATED AS OF AUGUST 1, 1999
Re: $180,000,000 8.31% Senior Notes due August 1, 2014
================================================================================
2
TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. AUTHORIZATION OF NOTES; GUARANTEE............................1
Section 1.1 Authorization of Notes.......................................1
Section 1.2 Guarantee of Notes...........................................1
SECTION 2. SALE AND PURCHASE OF NOTES...................................1
SECTION 3. CLOSING......................................................2
SECTION 4. CONDITIONS TO CLOSING........................................2
Section 4.1 Representations and Warranties...............................2
Section 4.2 Performance; No Default......................................2
Section 4.3 Compliance Certificates......................................3
Section 4.4 Opinion of Counsel...........................................3
Section 4.5 Original Subsidiary Guarantee Agreements.....................3
Section 4.6 Intercreditor Agreement......................................4
Section 4.7 Purchase Permitted by Applicable Law, Etc....................4
Section 4.8 Related Transactions. The Company shall.....................4
Section 4.9 Payment of Special Counsel Fees..............................5
Section 4.10 Private Placement Number.....................................5
Section 4.11 Changes in Structure.........................................5
Section 4.12 Rating.......................................................5
Section 4.13 Year 2000 Questionnaire......................................5
Section 4.14 Proceedings and Documents....................................5
SECTION 5. REPRESENTATIONS AND WARRANTIES OF
THE COMPANY..................................................5
Section 5.1 Formation; Power and Authority; Ownership....................5
Section 5.2 Authorization, Etc...........................................6
Section 5.3 Disclosure...................................................6
Section 5.4 Formation and Ownership of Subsidiaries; Affiliates..........7
Section 5.5 Financial Statements.........................................7
Section 5.6 Compliance with Laws, Other Instruments, Etc.................8
Section 5.7 Governmental Authorizations, Etc.............................8
Section 5.8 Litigation; Observance of Agreements, Statutes and Orders....8
Section 5.9 Taxes........................................................9
Section 5.10 Title to Property; Leases....................................9
Section 5.11 Licenses, Permits, Etc.......................................9
Section 5.12 Compliance with ERISA.......................................10
Section 5.13 Private Offering by the Company.............................11
3
Section 5.14 Use of Proceeds; Margin Regulations.........................11
Section 5.15 Existing Debt; Future Liens.................................11
Section 5.16 Foreign Assets Control Regulations, Etc.....................12
Section 5.17 Status under Certain Statutes...............................12
Section 5.18 Environmental Matters.......................................12
Section 5.19 Pari Passu Ranking..........................................12
Section 5.20 Solvency....................................................12
Section 5.21 Year 2000...................................................13
SECTION 6. REPRESENTATIONS OF THE PURCHASER............................13
Section 6.1 Purchase for Investment.....................................13
Section 6.2 Source of Funds.............................................13
SECTION 7. INFORMATION AS TO COMPANY; STATUS OF
SUBSIDIARIES................................................15
Section 7.1 Financial and Business Information..........................15
Section 7.2 Officer's Certificate.......................................18
Section 7.3 Inspection..................................................19
Section 7.4 Change in Status of Subsidiaries............................19
SECTION 8. PREPAYMENT OF THE NOTES.....................................20
Section 8.1 Required Prepayments........................................20
Section 8.2 Optional Prepayments with Make-Whole Amount.................20
Section 8.3 Prepayment Out of Proceeds of Transfer......................20
Section 8.4 Allocation of Partial Prepayments...........................21
Section 8.5 Maturity; Surrender, Etc....................................21
Section 8.6 Purchase of Notes...........................................21
Section 8.7 Make-Whole Amount...........................................21
SECTION 9. AFFIRMATIVE COVENANTS.......................................23
Section 9.1 Compliance with Law.........................................23
Section 9.2 Insurance...................................................23
Section 9.3 Maintenance of Properties...................................23
Section 9.4 Payment of Taxes............................................24
Section 9.5 Existence, Etc..............................................24
Section 9.6 Ranking; Covenant to Secure Notes Equally...................24
SECTION 10. NEGATIVE COVENANTS..........................................25
Section 10.1 Incurrence of Debt, Transfer of Qualifying Securities.......25
Section 10.2 Priority Debt...............................................26
Section 10.3 Liens.......................................................27
Section 10.4 Restricted Payments.........................................28
Section 10.5 Restrictions on Dividends of Subsidiaries, Etc..............29
4
Section 10.6 Mergers and Consolidations..................................29
Section 10.7 Transfer of Assets..........................................30
Section 10.8 Mining Restrictions.........................................32
Section 10.9 Restricted Investments......................................32
Section 10.10 Additional Subsidiary Guarantee Agreements..................32
Section 10.11 Nature of Business..........................................33
Section 10.12 Transactions with Affiliates................................33
SECTION 11. EVENTS OF DEFAULT...........................................33
SECTION 12. REMEDIES ON DEFAULT, ETC....................................36
Section 12.1 Acceleration................................................36
Section 12.2 Other Remedies..............................................37
Section 12.3 Rescission..................................................37
Section 12.4 No Waivers or Election of Remedies, Expenses, Etc...........37
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES...............37
Section 13.1 Registration of Notes.......................................37
Section 13.2 Transfer and Exchange of Notes..............................38
Section 13.3 Replacement of Notes........................................38
Section 13.4 Name of Company.............................................38
SECTION 14. PAYMENTS ON NOTES...........................................39
Section 14.1 Place of Payment............................................39
Section 14.2 Home Office Payment.........................................39
SECTION 15. EXPENSES, ETC...............................................39
Section 15.1 Transaction Expenses........................................39
Section 15.2 Survival....................................................40
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT............................................40
SECTION 17. AMENDMENT AND WAIVER........................................40
Section 17.1 Requirements................................................40
Section 17.2 Solicitation of Holders of Notes............................41
Section 17.3 Binding Effect, Etc.........................................41
Section 17.4 Notes Held by Company, Etc..................................41
SECTION 18. NOTICES.....................................................42
SECTION 19. REPRODUCTION OF DOCUMENTS...................................42
5
SECTION 20. CONFIDENTIAL INFORMATION....................................43
SECTION 21. SUBSTITUTION OF PURCHASER...................................44
SECTION 22. MISCELLANEOUS...............................................44
Section 22.1 Successors and Assigns......................................44
Section 22.2 Payments Due on Non-Business Days...........................44
Section 22.3 Severability................................................44
Section 22.4 Construction................................................45
Section 22.5 Counterparts................................................45
Section 22.6 Governing Law...............................................45
Section 22.7 Recourse Only to the Company and the Subsidiary Guarantors;
Non-Recourse to the General Partner and Associated Persons..45
Schedule A -- Information Relating To Purchasers
Schedule B -- Defined Terms
Schedule 4.7(d) -- Assumption Conditions
Schedule 5.1 -- Ownership of Company
Schedule 5.3 -- Disclosure Materials
Schedule 5.4 -- Subsidiaries of the Company and Ownership of Subsidiary Equity
Interest
Schedule 5.5 -- Financial Statements
Schedule 5.8 -- Certain Litigation
Schedule 5.11 -- Licenses, Permits, etc.
Schedule 5.14 -- Use of Proceeds
Schedule 5.15 -- Existing Indebtedness and Liens
Exhibit 1 -- Form of Note
Exhibit 4.4(a) -- Form of Opinion of Special Counsel for the Company
Exhibit 4.4(b) -- Form of Opinion of Special Counsel for the Original Subsidiary
Guarantors
Exhibit 4.4(c) -- Form of Opinion of Special Counsel for the Purchasers
Exhibit 4.5 -- Form of Subsidiary Guarantee Agreement
Exhibit 4.6 -- Form of Intercreditor Agreement
6
ALLIANCE RESOURCE GP, LLC
$180,000,000 8.31% Senior Notes due August 1, 2014
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
ALLIANCE RESOURCE GP, LLC, a Delaware limited liability company,
agrees with each of the Purchasers listed in the attached Schedule A as follows:
SECTION 1. AUTHORIZATION OF NOTES; GUARANTEE.
Section 1.1 Authorization of Notes. The Company (as defined in
Schedule B) will authorize the issue and sale of $180,000,000 aggregate
principal amount of its 8.31% Senior Notes due August 1, 2014 (the "Notes", such
term to include any such notes delivered in substitution or exchange therefor,
or in subsequent substitutions or exchanges, pursuant to Section 13 of this
Agreement). The Notes shall be substantially in the form set out in Exhibit 1,
with such changes therefrom, if any, as prescribed in Section 13.4 or as may be
approved by each Purchaser and the Company. Certain capitalized terms used in
this Agreement are defined in Schedule B; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement.
Section 1.2 Guarantee of Notes. The obligations of the Company under
and pursuant to this Agreement and the Notes are to be fully and unconditionally
guaranteed by each of the Subsidiary Guarantors pursuant to a Subsidiary
Guarantee Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to each purchaser listed in Schedule A (individually, a
"Purchaser" and collectively, the "Purchasers") and each Purchaser will purchase
from the Company, at the Closing provided for in Section 3, Notes in the
respective aggregate principal amount specified opposite such Purchaser's name
in Schedule A at the purchase price of 100% of the principal amount thereof. The
obligations of each Purchaser hereunder are several and not joint obligations
and each Purchaser shall have no obligation and no liability to any Person for
the performance or nonperformance by any other Purchaser hereunder.
1
7
Alliance Resource GP, LLC Note Purchase Agreement
SECTION 3. CLOSING
The sale and purchase of the Notes to be purchased by each Purchaser
shall occur at the offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000 (or at such other location in New York City acceptable to the
Purchasers and the Company) at 10:00 A.M. New York City time, at a closing (the
"Closing") on August -, 1999. At the Closing the Company will deliver to each
Purchaser the Notes to be purchased by such Purchaser in the form of a single
Note (or such greater number of Notes, in denominations of at least $1,000,000,
as such Purchaser may request and as shall be reflected in Schedule A) dated the
date of the Closing and registered in such Purchaser's name (or in the name of
such Purchaser's nominee, as so reflected), against delivery by such Purchaser
to the Company 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 account number _______________ at [INSERT name and address of
bank, ABA number for wire transfers and any other relevant wire transfer
information]. 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 any Purchaser's
satisfaction, such Purchaser shall, at such Purchaser's 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.
The obligation of each Purchaser 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. The representations and
warranties of the Company in Section 5 of this Agreement, and the
representations and warranties of the Original Subsidiary Guarantors in the
Original Subsidiary Guarantee Agreements, 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 in all Material respects as of such
earlier date).
Section 4.2 Performance; No Default. The Company and the Original
Subsidiary Guarantors shall have performed and complied with all agreements and
conditions contained in this Agreement and in the Original Subsidiary Guarantee
Agreements required to be performed or complied with by them 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 Schedule 5.14), no
Default or Event of Default shall have occurred and be continuing. Except for
the Restructuring Transactions, neither the Company nor any Restricted
Subsidiary shall have entered into any transaction since the date of the
Memorandum that would have been prohibited by Section 10.1, 10.3, 10.6, 10.7 or
10.10 hereof had such Section applied since such date.
2
8
Alliance Resource GP, LLC Note Purchase Agreement
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, 4.2, 4.11 and 4.12 have been
fulfilled.
(b) Secretarial Certificate. The Company shall have delivered to such
Purchaser a certificate by Alliance Coal Corporation, owner of the sole member
interest in the Company, certifying on behalf of the Company or the Original
Subsidiary Guarantors, as the case may be, as to the resolutions attached
thereto and other proceedings relating to the authorization, execution and
delivery of the Notes, this Agreement and the Original Subsidiary Guarantee
Agreements.
(c) ERISA Certificate. If such Purchaser shall have made any of the
written disclosures referred to in Section 6.2(b), (c) or (e), such Purchaser
shall have received the certificate from the Company described in the last
paragraph of Section 6.2 and such certificate shall state that (i) the Company
is neither a "party in interest" nor a "disqualified person" (as defined in
Section 4975(e)(2) of the Code), with respect to any plan identified pursuant to
Section 6.2(b) or (e) or (ii) with respect to any plan, identified pursuant to
Section 6.2(c), neither the Company nor any "affiliate" (as defined in Section
V(c) of the QPAM Exemption) has, at such time or during the immediately
preceding one year, exercised the authority to appoint or terminate the QPAM as
manager of the assets of any plan identified in writing pursuant to Section
6.2(c) or to negotiate the terms of said XXXX's management agreement on behalf
of any such identified plans.
Section 4.4 Opinion of Counsel. Such Purchaser shall have received
opinions in form and substance satisfactory to such Purchaser, dated the date of
the Closing (a) from Xxxxxxx & Xxxxx L.L.P., special counsel for the Company,
and from _______________, [General Counsel] for Alliance Coal Corporation, taken
together covering the matters set forth in Exhibit 4.4(a) and covering such
other matters incident to the transactions contemplated hereby as such Purchaser
or such Purchaser's special counsel may reasonably request (and the Company
hereby instructs its counsel to deliver such opinion to such Purchaser), (b)
from Xxxxxxx & Xxxxx L.L.P., special counsel for the Original Subsidiary
Guarantors, covering the matters set forth in Exhibit 4.4(b) and covering such
other matters incident to the issuance of the Original Subsidiary Guarantee
Agreements as such Purchaser or such Purchaser's special counsel may reasonably
request (and the Company hereby instructs such counsel to deliver such opinion
to such Purchaser) and (c) from Xxxxxxx Xxxx & Xxxxxxxxx, 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 Original Subsidiary Guarantee Agreements. Such Purchaser
shall have received a counterpart original of a Subsidiary Guarantee Agreement,
duly executed and delivered by each Original Subsidiary Guarantor, in the form
of Exhibit 4.5 (collectively, the "Original
3
9
Alliance Resource GP, LLC Note Purchase Agreement
Subsidiary Guarantee Agreements") and said Original Subsidiary Guarantee
Agreements 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 Purchasers, each Original Subsidiary Guarantor, the
Company and [Banks under Bank Facility] in the form of Exhibit 4.6 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 each purchase of Notes shall (a) be permitted by the laws and
regulations of each jurisdiction to which each 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 any
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 any 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 as specified in clause (a) of the preceding sentence.
Section 4.8 Related Transactions. The Company shall
(a) together with the Transferee Company, have completed each of the
transactions described in the Contribution Agreement (the "Contribution
Transactions") and no provision of the Contribution Agreement relating to the
consummation of the Contribution Transactions shall have been waived, modified
or supplemented without such Purchaser's consent;
(b) have executed and delivered the Bank Facility in the form of
Agreement previously furnished to such Purchaser providing for borrowings of not
less than [$ ] and the same shall be in full force and effect and no default
shall exist thereunder;
(c) have consummated the sale of the entire principal amount of the
Notes scheduled to be sold on the date of Closing pursuant to this Agreement;
(d) together with the Transferee Company, have fulfilled each of the
conditions described in Schedule 4.7(d) (the "Assumption Conditions"); and
(e) have made arrangements satisfactory to such Purchaser and its
special counsel for the satisfaction and discharge of the Liens listed on
Schedule 5.15 that are indicated on such Schedule as being released at the time
of Closing.
4
10
Alliance Resource GP, LLC Note Purchase Agreement
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(c) 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 the Notes.
Section 4.11 Changes in Structure. Except for the Restructuring
Transactions, neither the Company nor either Original Subsidiary Guarantor shall
have changed its jurisdiction of formation, been a party to any merger or
consolidation or, except as contemplated by the Assumption Agreement, succeeded
to all or any substantial part of the liabilities of any other entity, at any
time since the date of the Memorandum.
Section 4.12 Rating. Prior to the date of Closing, the Notes shall
have received a rating of BBB- or better from either Fitch Investors Service,
Inc. or Duff & Xxxxxx Credit Rating Co. and such rating shall remain in effect
at the time of Closing.
Section 4.13 Year 2000 Questionnaire. Such purchaser shall have
received a duly completed response to the Year 2000 Due Diligence Questionnaire
supplied by the Securities Valuation Office of the National Association of
insurance Commissioners.
Section 4.14 Proceedings and Documents. All 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 such Purchaser's special counsel, and such Purchaser and such
Purchaser's special counsel shall have received all such counterpart originals
or certified or other copies of such documents as such Purchaser or such
Purchaser's 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 Formation; Power and Authority; Ownership. The Company is
a limited liability company duly formed and validly existing under the laws of
the State of Delaware, and is duly licensed or qualified as a foreign limited
liability company 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 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
5
11
Alliance Resource GP, LLC Note Purchase Agreement
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) Authorization by the Company. This Agreement and the Notes have
been duly authorized by all necessary action on behalf 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 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 considered in a proceeding
in equity or at law).
(b) Authorization by Original Subsidiary Guarantors. Each Original
Subsidiary Guarantee Agreement has been duly authorized by all necessary action
on behalf of the applicable Original Subsidiary Guarantor, and each Original
Subsidiary Guarantee 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 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 considered in a
proceeding in equity or at law).
Section 5.3 Disclosure. The Company, through its agents, Xxxxxxx Xxxxx
Xxxxxx Inc. and Xxxxxx Brothers Inc., has delivered to each Purchaser a copy of
a Private Placement Memorandum, dated June 16, 1999 (collectively, including its
appendices and the Registration Statement, the "Memorandum"), relating to the
transactions contemplated hereby. The Memorandum describes, in all material
respects, the general nature of the business and principal properties of the
Company and its Restricted Subsidiaries. Except as disclosed in Schedule 5.3,
this Agreement, the Memorandum (other than the Pro Forma Financial Statements,
which are the subject of the representation in Section 5.5(b)) and the
documents, certificates or other writings delivered to each Purchaser by or on
behalf of the Company in connection with the transactions contemplated hereby
and the financial statements listed in Schedule 5.5, 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. Except as disclosed in the Memorandum
or as expressly described in Schedule 4.7(d), Schedule 5.3, or in one of the
documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since the date of the Memorandum,
there has been no change in the financial condition, operations, business,
properties or prospects of the Company or any of its Restricted Subsidiaries as
contemplated in the Pro Forma Financial Statements except changes that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. 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 Memorandum or in the other documents, certificates and
other
6
12
Alliance Resource GP, LLC Note Purchase Agreement
writings delivered to each Purchaser by or on behalf of the Company specifically
for use in connection with the transactions contemplated hereby.
Section 5.4 Formation and Ownership 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, its status
(whether a Restricted or Unrestricted Subsidiary), whether such Subsidiary is an
Original Subsidiary Guarantor, the correct name thereof, the jurisdiction of its
organization or formation, and the percentage of each class of its Capital Stock
outstanding owned by the Company and each other Subsidiary, and (ii) of the
Company's Affiliates, other than Subsidiaries.
(b) All of the outstanding shares 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 and nonassessable 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 Restricted Subsidiary identified in Schedule 5.4 is a limited
liability company or limited partnership duly formed and validly existing under
the laws of its jurisdiction of formation, and is duly qualified as a foreign
limited liability company or 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. Each such
Restricted Subsidiary has the 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 Restricted Subsidiary is a party to, or otherwise subject to,
any legal restriction or any agreement (other than this Agreement, the
agreements listed on Schedule 5.4 and customary limitations imposed by
partnership or limited liability company law statutes) restricting the ability
of such Restricted Subsidiary to make any distributions of profits to the Note
Purchase Agreement Company or any of its Restricted Subsidiaries that owns
outstanding shares of Capital Stock or of such Restricted Subsidiary.
Section 5.5 Financial Statements. (a) The Company has delivered to
each Purchaser copies of the consolidated financial statements of the Company
and its Subsidiaries, and their predecessor entities, listed on Schedule 5.5.
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 entities being reported upon as of the respective dates
specified in such Schedule 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).
7
13
Alliance Resource GP, LLC Note Purchase Agreement
(b) The Pro Forma Financial Statements, consisting of the unaudited
pro forma financial statements of the MLP as of and for the three months ended
March 31, 1999 and for the year ended December 31, 1998 set forth in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the published rules
and regulations thereunder and the assumptions on which the pro forma
adjustments reflected in such Pro Forma Financial Statements are based provide a
reasonable basis for presenting the significant effects of the transactions
contemplated by such Pro Forma Financial Statements and such pro forma
adjustments give appropriate effect to such assumptions and are property applied
in such Pro Forma Financial Statements.
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 Original Subsidiary
Guarantee Agreements 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 Restricted
Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, articles of formation, partnership agreement, corporate
charter, by-laws, operating agreement or any other agreement or instrument to
which the Company or any Restricted Subsidiary is bound or by which the Company
or any Restricted 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 Restricted
Subsidiary or (c) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Restricted 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 (a) the execution, delivery or
performance by the Company of this Agreement or the Notes (except as required by
law in connection with the offer, issue, sale and delivery by the MLP of its
limited partnership units ("MLP Unit Consents") all of which have been obtained
or completed except for such MLP Unit Consents the failure to obtain of which
could not reasonably be expected to have a Material Adverse Effect), or (b) the
execution, delivery or performance of the Original Subsidiary Guarantee
Agreements 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 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.
8
14
Alliance Resource GP, LLC Note Purchase Agreement
(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) 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 predecessor entities of the Company and its
Subsidiaries have filed all 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 any 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 Restricted 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 Restricted
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 balance sheet contained in the Pro Forma Financial Statements
or purported to have been acquired by the Company or any Restricted Subsidiary
after the date of said Pro Forma Financial Statements (except as sold or
otherwise disposed of in the ordinary course of business), in each case free and
clear of Liens that individually or in the aggregate would have a Material
Adverse Effect. 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 Restricted 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 Restricted Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights, 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, or
the failure of ownership of which would not reasonably be expected to have a
Material Adverse Effect.
9
15
Alliance Resource GP, LLC Note Purchase Agreement
(b) To the best knowledge of the Company, no product or practice of
the Company or any of its Restricted Subsidiaries infringes in any Material
respect any license, permit, franchise, authorization, patent, copyright,
service mark, 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 Restricted
Subsidiaries with respect to any patent, copyright, service mark, trademark,
trade name or other right owned or used by the Company or any of its Restricted
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 (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
meanings 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 4980B of
the Code) of the Company and its Restricted 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 is subject to
the prohibitions of Section 406 of
10
16
Alliance Resource GP, LLC Note Purchase Agreement
ERISA or in connection with which a tax could 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 each Purchaser's representation in Section 6.2 as to the sources of
the funds to be 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
Xxxxxxx Xxxxx Xxxxxx Inc. or Xxxxxx Brothers Inc., the sole Persons acting on
its behalf in the offering of the Notes, 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 other institutional investors, each of
which has been offered a portion of 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. For purposes
of this Section 5.13 only, each reference to the Notes shall be deemed to
include a reference to the Original Subsidiary Guarantee Agreements.
Section 5.14 Use of Proceeds; Margin Regulations. The Company will
apply the proceeds of the sale of the Notes as set forth in Schedule 5.14. 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 25% of the value of the consolidated assets of the Company
and its Restricted Subsidiaries and the Company does not have any present
intention that margin stock will constitute more than 25% 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
Restricted Subsidiaries as of the date of Closing. Neither the Company nor any
Restricted 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 Restricted Subsidiary and no event or condition exists with respect to
any Debt of the Company or any Restricted 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 Restricted 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 10.3.
11
17
Alliance Resource GP, LLC Note Purchase Agreement
Section 5.16 Foreign Assets Control Regulations, Etc. Neither the sale
of the Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto.
Section 5.17 Status under Certain Statutes. Neither the Company nor
any Restricted Subsidiary is an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended, or is
subject to regulation under the Public Utility Holding Company Act of 1935, as
amended, or the Federal Power Act, as amended.
Section 5.18 Environmental Matters. 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.
(a) Neither the Company nor any Restricted 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.
(b) Neither the Company nor any of its Restricted 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.
(c) All buildings on all real properties now owned, leased or operated
by the Company or any of its Restricted 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 5.19 Pari Passu Ranking. The Company's obligations under the
Notes, and this Agreement, and each Original Subsidiary Guarantor's obligations
under its Subsidiary Guarantee Agreement, will, upon (a) issuance of the Notes
and the execution and delivery of such Subsidiary Guarantee Agreements,
respectively, and (b) the effectiveness of the Assumption Agreement, rank at
least pari passu, without preference or priority, with all of the outstanding
unsecured and unsubordinated Debt of the Company or of such Original Subsidiary
Guarantor, as the case may be.
Section 5.20 Solvency. The Company is not, and upon giving effect to
the issuance of the Notes, will not be, and the Original Subsidiary Guarantors
are not, and upon giving effect to the
12
18
Alliance Resource GP, LLC Note Purchase Agreement
issuance of their respective Subsidiary Guarantee Agreements (including without
limitation the subrogation and contribution provisions thereof), will not be,
"insolvent" as said term is defined in the United States Bankruptcy Code 11,
U.S.C. ss. 101 (32) (A) or (B) (as applicable) and its obligations are not, and
will not be, in default as to "principal or interest", as said terms are used in
Section 1405(c) of the New York State Insurance Law.
Section 5.21 Year 2000. The Company has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations that could be adversely affected by the risk that computer
applications used by the Company or any of its Subsidiaries may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999 (the "Year 2000 Problem"), (ii)
distributed a questionnaire to each of its suppliers, vendors and customers
requesting such party's plans and timetable for addressing the Year 2000
Problem, (iii) developed a plan and timetable for addressing the Year 2000
Problem on a timely basis and no later than November 31, 1999 will have
completed such plan, and (iv) to date, implemented that plan in accordance with
such timetable. Based on the foregoing, the Company believes that all computer
applications that are material to its or any of its Subsidiaries' business and
operations are reasonably expected on a timely basis to be able to perform
properly date-sensitive functions for all dates before and after January 1, 2000
("Year 2000 Compliant"), except to the extent that a failure to do so could not
reasonably be expected to have a Material Adverse Effect.
SECTION 6. REPRESENTATIONS OF THE PURCHASER.
Section 6.1 Purchase for Investment. Each Purchaser represents that it
is purchasing the Notes for its own account or for one or more separate accounts
maintained by it or for the account of one or more pension or trust funds with
respect to which it has the requisite investment discretion and not with a view
to the distribution thereof, provided that the disposition of such Purchaser's
or such pension or trust funds' property shall at all times be within such
Purchaser's or such pension or trust funds' 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 so register the Notes or to qualify an indenture in
respect thereof under the Trust Indenture Act of 1939.
Section 6.2 Source of Funds. Each Purchaser 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 it to pay the purchase price of the Notes to
be purchased by it hereunder:
(a) the Source is an "insurance company general account" within
the meaning of Department of Labor Prohibited Transaction Exemption
("PTE") 95-60 (issued July 12, 1995) and there is no employee benefit
plan, treating as a single plan, all plans maintained by the same
employer or employee organization, with respect to which the amount of
the general account reserves and liabilities for all contracts held by
or on behalf of such plan,
13
19
Alliance Resource GP, LLC Note Purchase Agreement
exceeds ten percent (10%) of the total reserves and liabilities of
such general account (exclusive of separate account liabilities) plus
surplus, as set forth in the NAIC Annual Statement for such Purchaser
most recently filed with such Purchaser's state of domicile; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of the PTE
91-38 (issued July 12, 1991) and, except as such Purchaser has
disclosed to the Company in writing pursuant to this paragraph (b), 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
(c) 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)(I) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of
the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM (applying the definition of
"control" in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in the Company 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 pursuant
to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) 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 pursuant to this paragraph (e);
(f) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA; or
(g) the Source is an insurance company separate account
maintained solely in connection with the fixed contractual obligations
of the insurance company under which the amounts payable, or credited,
to any employee benefit plan (or its related trust) and 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.
14
20
Alliance Resource GP, LLC Note Purchase Agreement
If any Purchaser or any subsequent transferee of the Notes shall furnish to the
Company any written disclosure pursuant to paragraph (b), (c) or (e) above, the
Company shall deliver on the date of Closing or on the date of transfer, as
applicable, a certificate, which shall state whether (i) it is a party in
interest or a "disqualified person" (as defined in Section 4975(e)(2) of the
Code), with respect to any plan identified pursuant to paragraphs (b) or (e)
above, or (ii) with respect to any plan, identified pursuant to paragraph (c)
above, whether it or any "affiliate" (as defined in Section V(c) of the QPAM
Exemption) has at such time, and during the immediately preceding one year,
exercised the authority to appoint or terminate said QPAM as manager of any plan
identified in writing pursuant to paragraph (c) above or to negotiate the terms
of said XXXX's management agreement on behalf of any such identified plan. 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.
SECTION 7. INFORMATION AS TO COMPANY; STATUS OF SUBSIDIARIES.
Section 7.1 Financial and Business Information. The Company shall
deliver to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements - 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
Restricted Subsidiaries as at the end of such quarter, and
(ii) unaudited consolidated statements of income, changes in
partners' equity and cash flows of the Company and its Restricted
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 (commencing with the fiscal quarter ending December 31, 2000) 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 entities 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 Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the Securities and
Exchange Commission 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);
15
21
Alliance Resource GP, LLC Note Purchase Agreement
(b) Annual Statements - 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 Restricted
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 Restricted Subsidiaries,
for such year,
setting forth (commencing with the fiscal year ending December 31, 2001) 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) a report thereon of independent certified public accountants
of recognized national standing, which report shall state that such
financial statements present fairly, in all material respects, the
financial position of the entities 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 generally accepted auditing standards, and that such audit
provides a reasonable basis for such report in the circumstances, and
(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making their
audit, they have become aware of any financial condition or event that
then constitutes a Default or an Event of Default, and, if they are
aware that any such condition or event then exists, specifying the
nature and period of the existence thereof (it being understood that
such accountants shall not be liable, directly or indirectly, for any
failure to obtain knowledge of any Default or Event of Default unless
such accountants should have obtained knowledge thereof in making an
audit in accordance with generally accepted auditing standards or did
not make such an audit),
provided that the delivery within the time period specified above of the MLP's
Annual Report on Form 10-K for such fiscal year (together with the Company's
annual report to shareholders, if any, prepared pursuant to Rule l4a-3 under the
Exchange Act) prepared in accordance with the requirements therefor and filed
with the Securities and Exchange Commission, together with the accountant's
certificate described in clause (B) above, 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);
(c) SEC and Other Reports - promptly upon their becoming available,
one copy of 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
16
22
Alliance Resource GP, LLC Note Purchase Agreement
or any Restricted Subsidiary with the Securities and Exchange Commission and of
all press releases and other statements made available generally by the MLP,
Company or any Restricted Subsidiary to unitholders of the MLP concerning
developments that are Material;
(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) Actions, Proceedings - promptly after a Responsible Officer of the
Company becoming aware of the commencement thereof, notice of any action or
proceeding relating to the Company or any Restricted Subsidiary in any court or
before any Governmental Authority or arbitration board or tribunal as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect.
(f) 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 XXXXX Xxxxxxxxx proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined in
section 4043(b) 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 ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, 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;
17
23
Alliance Resource GP, LLC Note Purchase Agreement
(g) 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;
(h) Rule 144A - promptly upon the request of any holder of Notes, such
financial and other information as such holder may reasonably determine to be
necessary in order to permit compliance with the information requirements of
Rule 144A under the Securities Act in connection with the resale of Notes,
except at such times as the Company is subject to the reporting requirements of
section 13 or 15(d) of the Exchange Act;
(i) Year 2000 Compliance - promptly after the Company's discovery or
determination thereof, notice (in reasonable detail) that any computer
application that is material to its or to any of its Subsidiaries' business and
operations will not be Year 2000 Compliant (as defined in Section 5.21), except
to the extent that such failure could not reasonably be expected to have a
Material Adverse Effect; and
(j) Requested Information - with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries
relating to the ability of the Company to perform its obligations hereunder and
under the Notes, or the ability of any Subsidiary Guarantor to perform its
obligations under the Subsidiary Guarantee Agreement, 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)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance - any information (including detailed
calculations where applicable) required to establish whether the Company was in
compliance with the requirements of Section 10.1 through Section 10.9 hereof,
inclusive, 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 from such financial statements necessary to
reflect the adjustments to GAAP provided for in this Agreement); and
(b) Event of Default - a statement that such 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
Restricted 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
18
24
Alliance Resource GP, LLC Note Purchase Agreement
such review has not 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 Restricted
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action, if any, shall have been taken or is
proposed to be taken with respect thereto.
Section 7.3 Inspection. 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 Restricted 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 Restricted
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 Restricted 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 Restricted 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 7.4 Change in Status of Subsidiaries. (a) So long as no
Default or Event of Default shall have occurred and be continuing, the Company
may at any time and from time to time, upon not less than 30 days' prior written
notice given to each holder of a Note, designate a previously Restricted
Subsidiary as an Unrestricted Subsidiary or a previously Unrestricted Subsidiary
(including a new Subsidiary designated on the date of its formation or
acquisition) which satisfies the requirements of clauses (i), (ii) and (iii) of
the definition of "Restricted Subsidiary" as a Restricted Subsidiary, provided
that immediately after such designation and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing, and the
Company would be permitted, pursuant to the provisions of Section 10.1(a) to
incur at least $1 of additional
19
25
Alliance Resource GP, LLC Note Purchase Agreement
Debt owing to a Person other than a Restricted Subsidiary, and provided further
that after such designation the status of such Subsidiary had not been changed
more than twice.
(b) Any notice of designation pursuant to this Section 7.4 shall be
accompanied by a certificate signed by a Responsible Officer of the Company
stating that the provisions of this Section 7.4 have been complied with in
connection with such designation and setting forth the name of each other
Subsidiary (if any) which has or will become a Restricted Subsidiary or an
Unrestricted Subsidiary, as the case may be, as a result of such designation.
SECTION 8. PREPAYMENT OF THE NOTES.
Section 8.1 Required Prepayments. On August 1, 2005 and on each
August 1 thereafter to and including August 1, 2013, the Company will prepay
$18,000,000 principal amount (or such lesser principal amount as shall then be
outstanding) of the Notes at par and without payment of the Make-Whole Amount or
any premium, provided that upon any partial prepayment of the Notes pursuant to
Section 8.2 or Section 8.3 the principal amount of each required prepayment of
the Notes becoming due under this Section 8.1 on and after the date of such
prepayment or purchase shall be reduced in the same proportion as the aggregate
unpaid principal amount of the Notes is reduced as a result of such prepayment
or purchase.
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, at 100% of the principal amount so
prepaid, together with interest accrued thereon to the date of such prepayment,
plus any applicable 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, the aggregate principal amount of the
Notes to be prepaid on such date, the principal amount of each Note held by such
holder to be prepaid, 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.
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 Prepayment Out of Proceeds of Transfer. In the event that
the Company shall elect to apply all or any portion of the proceeds of any
Transfer of assets to the repayment or prepayment of unsubordinated Debt of the
Company or a Restricted Subsidiary as contemplated in Section 10.7(B)(ii), the
Company will give written notice ("Company Notice") of such election to all
holders of the Notes. The Company Notice shall (i) describe the facts and
circumstances of such sales, leases or other dispositions in reasonable detail,
(ii) set forth the aggregate principal amount
20
26
Alliance Resource GP, LLC Note Purchase Agreement
of such proceeds (the "Designated Proceeds") which it intends to apply to the
prepayment or repayment of unsubordinated Debt (iii) contain an offer by the
Company to prepay on a stated date (the "Prepayment Date"), which shall be a
Business Day not more than 60 days and not less than 30 days after such Company
Notice, an amount equal to (x) the principal amount of the Notes held by each
holder which bears the same relationship to the aggregate amount of such
Designated Proceeds as the aggregate principal amount of all Notes held by such
holder bears to the aggregate principal amount of all then outstanding Debt
(including the Notes) with respect to which a portion of such Designated
Proceeds is to be applied, plus (y) interest on the principal amount of Notes to
be prepaid to the Prepayment Date, but without any Make-Whole Amount (showing in
such offer the amount of interest which would be paid on such Prepayment Date),
and (iv) request each holder to notify the Company in writing by a stated date,
which date shall be not less than 15 days after such holder's receipt of the
Company Notice, of its acceptance or rejection of such prepayment offer. If a
holder does not notify the Company as provided in subclause (iv) above, then
such holder shall be deemed to have rejected such offer.
Section 8.4 Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes pursuant to Section 8.1 or Section 8.2, the
principal amount of the Notes to be prepaid shall be allocated among all of the
Notes at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment. Partial prepayments of the Notes pursuant to Section 8.3 shall be
allocated as therein provided.
Section 8.5 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 in full shall mature and become due and payable on the date fixed for
such prepayment, 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 canceled and shall not
be reissued, and no Note shall be issued in lieu of any prepaid principal amount
of any Note.
Section 8.6 Purchase of Notes. The Company will not and will not
permit any Subsidiary or Affiliate controlled by the Company or any Subsidiary
to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement. The Company will promptly cancel
all Notes acquired by it, any Subsidiary or any Affiliate controlled by the
Company or any Subsidiary and no Notes may be delivered in substitution or
exchange for any such Notes.
Section 8.7 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
21
27
Alliance Resource GP, LLC Note Purchase Agreement
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 generally 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, 0.50% over the yield to maturity implied by (i) the
yields 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 678" on the Telerate (or
such other display as may replace Page 678 on the Telerate) for
actively traded 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, 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 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied
yield will be determined, if necessary, by (a) converting U.S.
Treasury bill quotations to bond-equivalent yields in accordance with
accepted financial practice and (b) interpolating linearly between (1)
the actively traded U.S. Treasury security with the maturity closest
to and greater than the Remaining Average Life and (2) the actively
traded U.S. Treasury security with the maturity closest to and less
than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Note Purchase Agreement Called
Principal into (h) the sum of the products obtained by multiplying (a)
the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) 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.
22
28
Alliance Resource GP, LLC Note Purchase Agreement
"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,
Environmental Laws, 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
Restricted Subsidiaries to, maintain, with financially sound and reputable
insurers, insurance with respect to their respective Material properties and
businesses against such casualties and contingencies, of such types, on such
terms and in such amounts (including deductibles, co-insurance and
selfinsurance, if adequate reserves are maintained with respect thereto) as is
customary (with respect to such types, terms, amounts and reserves) in the case
of entities of established reputations engaged in the same or a similar business
and similarly situated and consistent with the existing practices of the Company
and its Restricted Subsidiaries as of the date hereof.
Section 9.3 Maintenance of Properties. The Company will, and will
cause each of its Restricted 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 shall not prevent the Company or any Restricted Subsidiary from
discontinuing the
23
29
Alliance Resource GP, LLC Note Purchase Agreement
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 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
imposed on them or any of their properties, assets, income or franchises, to the
extent such taxes and assessments 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 or assessment or claims if (i) 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 (ii) the nonpayment of all such taxes and
assessments in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
Section 9.5 Existence, Etc. The Company will at all times preserve and
keep in full force and effect its existence as a limited liability company or
limited partnership, as the case may be. Subject to and except as permitted by
Sections 10.6 and 10.7, the Company will at all times preserve and keep in full
force and effect the corporate, limited liability company or partnership
existence, as the case may be, of each of its Restricted Subsidiaries and all
rights and franchises of the Company and its Restricted Subsidiaries unless, in
the good faith judgment of the Company, the termination of or failure to
preserve and keep in fun force and effect such 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 other Debt of
the Company except for Debt which is preferred as a result of being secured as
permitted by Section 10.3 (but then only to the extent of such security). The
Company will, if it or any Restricted Subsidiary shall create or assume any Lien
upon any of its property or assets, whether now owned or hereafter acquired,
other than Liens permitted by the provisions of Section 10.3 (unless prior,
written consent to the creation or assumption thereof shall have been obtained
pursuant to Section 17), make or cause to be made effective provision whereby
the Notes will be secured by such Lien equally and ratably with any and all
other Debt thereby secured so long as any such other Debt shall be so secured.
24
30
Alliance Resource GP, LLC Note Purchase Agreement
SECTION 10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
Section 10.1 Incurrence of Debt, Transfer of Qualifying Securities.
The Company will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, create, incur, assume, guarantee, or otherwise become directly or
indirectly liable with respect to, any Debt (other than Debt owing to the
Company, a Subsidiary Guarantor or a Wholly-Owned Restricted Subsidiary) other
than:
(a) Debt of the Company or any Restricted Subsidiary if, on the date
the Company or such Restricted Subsidiary becomes liable with respect to any
such Debt, and immediately after giving effect thereto and the concurrent
retirement of any other Debt (the "Determination Date"):
(i) no Default or Event of Default exists; and
(ii) any such Debt of a Restricted Subsidiary is permitted
pursuant to Section 10.2; and
(iii) if the Determination Date is prior to December 31, 1999, the
aggregate outstanding principal amount of Debt of the Company and its
Restricted Subsidiaries does not exceed $230,000,000; and
(iv) (A) if the Determination Date is on or after December 31,
1999 and prior to September 30, 2000, the ratio of Consolidated Cash
Flow for the period of such number of consecutive complete fiscal
quarters of the Company as shall have elapsed following Closing and
ending on, or most recently ended prior to, the Determination Date to
Consolidated Interest Expense for such period is not less than 2.25 to
1, or
(B) if the Determination Date is on or after September 30,
2000, the ratio of Consolidated Cash Flow for the period of four
consecutive fiscal quarters of the Company ending on, or most
recently ended prior to, the Determination Date to Consolidated
Interest Expense for such period is not less than 2.25 to 1; and
(v) (A) if the Determination Date is on or after December 31, 1999
and prior to September 30, 2000, the ratio of Consolidated Net Debt on
the Determination Date to Consolidated Cash Flow for the period of
such number of consecutive complete fiscal quarters of the Company as
shall have elapsed following Closing and ending on, or most recently
ended prior to, the Determination Date is not greater than 4 to 1, or
(B) if the Determination Date is on or after September 30,
2000, the ratio of Consolidated Net Debt on the Determination Date
to Consolidated Cash Flow for
25
31
Alliance Resource GP, LLC Note Purchase Agreement
the period of four consecutive fiscal quarters of the Company
ending on, or most recently ended prior to, the Determination
Date is not greater than 4 to 1;
provided, however, that in making the calculations required by the foregoing
Sections 10.1(a)(iv)(A) and 10.1(a)(v)(A) with respect to any period ending
prior to September 30, 2000 and thus containing fewer than four consecutive
complete fiscal quarters, the applicable amounts of Consolidated Cash Flow and
Consolidated Interest Expense shall be determined by calculating the respective
amounts thereof for such period and multiplying the result so obtained by a
fraction whose numerator is 4 and whose denominator is the number of consecutive
complete fiscal quarters in such period); provided, further, that
notwithstanding the foregoing provisions of this Section 10.1, if any
Determination Date shall fall on or after the last day of any fiscal quarter of
the Company but prior to the earlier of the date on which financial statements
for the period in question are delivered or are required to be delivered as
specified in Section 7.1, then, (x) if the last day of such fiscal quarter is
December 31, 1999, Section 10.1(a)(iii) (and not Section 10.1(a)(iv) or (v))
shall apply, and (y) if the last day of such fiscal quarter is any subsequent
date, Sections 10.1(a)(iv) and (v) shall apply and computations shall be made
using financial information from the Company's fiscal quarter that ended on the
last day of the Company's then second most recently ended fiscal quarter; and
(b) Debt of the Company or any Restricted Subsidiary, in addition to
the Debt permitted pursuant to the provisions of clause (a) of this Section
10.1, (I) owing to the Company, or (II) subordinated to the Notes in a manner
satisfactory to the Required Holders and owing to a Subsidiary Guarantor or a
Wholly-Owned Restricted Subsidiary.
For the purposes of this Section 10.1,
(i) any Person becoming a Restricted Subsidiary after the date
hereof shall be deemed, at the time it becomes a Restricted
Subsidiary, to have incurred all of its then outstanding Debt, and any
Person Refinancing any Debt shall be deemed to have incurred such Debt
at the time of such Refinancing; and
(ii) any Transfer of any Qualifying Securities (other than the
Transfer thereof to the pledgee in satisfaction of the Debt secured
thereby) shall be deemed to constitute the incurrence of a principal
amount of Debt of the Company equal to the aggregate principal amount
of the Qualifying Securities so Transferred and the Company will not
permit such Transfer unless the Company would, on the date of such
Transfer, be permitted under the provisions of Section 10.1(a) to
incur at least $1 of additional Debt owing to a Person other than a
Restricted Subsidiary.
Section 10.2 Priority Debt. The Company will not at any time permit
the sum of (x) the aggregate unpaid principal amount of all Consolidated
Adjusted Restricted Subsidiary Debt, plus (y) the aggregate unpaid principal
amount of all Debt of the Company secured by Liens pursuant to
26
32
Alliance Resource GP, LLC Note Purchase Agreement
the provisions of Section 10.4(k) to exceed 15% of Consolidated Total Assets
determined as of the end of the then most recently completed fiscal quarter of
the Company.
Section 10.3 Liens. The Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly create, incur, assume or
permit to exist (upon the happening of a contingency or otherwise) any Lien on
or with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of the
Company or any such Restricted Subsidiary, whether now owned or held or
hereafter acquired, or any income or profits therefrom, or assign or otherwise
convey any right to receive income or profits, except:
(a) Liens for property taxes, assessments or other governmental
charges which are not yet due and payable and delinquent or the validity of
which is being contested in good faith in compliance with Section 9.4;
(b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other similar Liens, in each case, incurred in the
ordinary course of business for sums not yet due and payable or the amount,
applicability or validity thereof is being contested by the Company or such
Restricted Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Restricted Subsidiary has established adequate
reserves therefor in accordance with GAAP on the books of the Company or such
Restricted Subsidiary;
(c) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business (i) in connection with workers'
compensation, unemployment insurance and other types of social security or
retirement benefits, or (ii) to secure (or to obtain letters of credit that
secure) the performance of tenders, statutory obligations, surety bonds, appeal
bonds, bids, leases (other than Capital Leases), performance bonds, purchase,
construction or sales contracts and other similar obligations, in each case not
incurred or made in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of property;
(d) any attachment or judgment Lien for the payment of money in an
aggregate amount not to exceed $10,000,000, provided that the execution or other
enforcement of such Liens is effectively stayed and the claims secured thereby
are contested by the Company or such Restricted Subsidiary on a timely basis in
good faith and in appropriate proceedings, and the Company or a Restricted
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Restricted Subsidiary;
(e) leases or subleases granted to others, zoning restrictions,
easements, licenses, reservations, provisions, covenants, conditions, waivers,
restrictions on the use of property or irregularities of title (and with respect
to leasehold interests, mortgages, obligations, liens and other encumbrances
incurred, created, assumed or permitted to exist and arising by, through or
under a landlord or owner of the leased property, with or without consent of the
lessee), and not interfering
27
33
Alliance Resource GP, LLC Note Purchase Agreement
with, the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries, provided that such Liens do not, in the aggregate,
materially detract from the value of such property or impair the use of such
property;
(f) Liens on property or assets of the Company or any of its
Restricted Subsidiaries securing Debt owing to the Company or to a Wholly-Owned
Restricted Subsidiary or a Subsidiary Guarantor;
(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;
(h) at any time before December 31, 2000, Liens on Qualifying
Securities securing that portion of Debt incurred to purchase or carry the
Qualifying Securities;
(i) easements, exceptions or reservations in any property of the
Company or any Restricted 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 Restricted
Subsidiaries;
(j) Liens on documents of title and the property covered thereby
securing obligations in respect of letters of credit that are commercial letters
of credit (i.e., obtained for the purpose of paying all or a portion of the
purchase price of such property);
(k) other Liens securing Debt not otherwise permitted by paragraphs
(a) through (j), provided that on the date any such Lien is created, incurred or
assumed and immediately after giving effect to the incurrence of any related
Debt and the concurrent retirement of any other Debt, the Company is in
compliance with the provisions of Section 10.2; and
(l) Liens reflected in Schedule 5.15 securing Debt of the Company and
its Restricted Subsidiaries on the date of Closing, but only until the time of
Closing in the case of Liens reflected in Part A of such Schedule.
For the purposes of this Section 10.3, any Person becoming a Restricted
Subsidiary after the date of this Agreement shall be deemed to have incurred all
of its then outstanding Liens at the time it becomes a Restricted Subsidiary.
Section 10.4 Restricted Payments.
(a) Limitation. The Company will not, and will not permit any of its
Restricted Subsidiaries to, at any time, declare or make, or incur any liability
to declare or make, any Restricted
28
34
Alliance Resource GP, LLC Note Purchase Agreement
Payment; provided that, from and after the fulfillment of all of the Assumption
Conditions, the Company may make one Restricted Payment in each fiscal quarter
of the Company if:
(i) the amount of such Restricted Payment would not exceed the
Available Cash for the immediately preceding fiscal quarter of the
Company;
(ii) before and after giving effect to such Restricted Payment,
the ratio of Consolidated Net Debt on the date of declaration thereof
to Consolidated Cash Flow for the period of the lesser of (A) four
consecutive complete fiscal quarters of the Company most recently
ended or (B) such number of consecutive complete fiscal quarters of
the Company as shall have elapsed following Closing and ending on, or
most recently ended prior to, such declaration is not greater than
4.25 to 1; provided, however, that in making the calculations required
by the foregoing provisions of this Section 10.4(a)(ii) with respect
to any period ending prior to September 30, 2000 and thus containing
fewer than four consecutive complete fiscal quarters, the applicable
amounts of Consolidated Cash Flow and Consolidated Interest Expense
shall be determined by calculating the respective amounts thereof for
such period and multiplying the result so obtained by a fraction whose
numerator is 4 and whose denominator is the number of consecutive
complete fiscal quarters in such period; and
(iii) no Default or Event of Default would exist before or after
such Restricted Payment.
(b) Time of Payment. Each Restricted Payment shall be made within 60
days of declaration thereof, and, notwithstanding any other provision of this
Section 10.4 if the payment would have been permitted as of the date of such
declaration, such payment shall be permitted if made during such 60-day period.
Section 10.5 Restrictions on Dividends of Subsidiaries, Etc. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
enter into any agreement which would restrict any Restricted Subsidiary's
ability or right to pay dividends to, or make advances to or Investments in, the
Company or, if such Restricted Subsidiary is not directly owned by the Company,
the "parent" Subsidiary of such Restricted Subsidiary.
Section 10.6 Mergers and Consolidations. The Company will not, and
will not permit any Restricted Subsidiary to, consolidate with or be a party to
a merger with any other Person or convey, transfer or lease substantially all of
its assets in a single transaction or series of transactions to any Person;
provided, however, that the Company or any Restricted Subsidiary may consolidate
or merge with, or convey, transfer or lease substantially all of its assets to,
any other Person so long as (i) the surviving entity (if not the Company or such
Restricted Subsidiary) or the transferee or lessee is a solvent partnership,
limited liability company or corporation organized and existing under the laws
of the United States of America or any State thereof, (ii) (a) in the case of
the Company, if the
29
35
Alliance Resource GP, LLC Note Purchase Agreement
Company is not the surviving entity, or it shall convey, transfer or lease its
assets to another Person, the surviving entity, transferee or lessee expressly
assumes in writing the Company's obligations under the Notes and this Agreement,
and (b) in the case of a Restricted Subsidiary, if such Restricted Subsidiary is
not the surviving entity, or it shall convey, transfer or lease its assets to
another Person, the surviving entity, transferee or lessee shall be, or upon
consummation of such transaction, become, a Restricted Subsidiary with respect
to which the Company shall have at least the same degree of ownership and
control as it had with respect to such disappearing Restricted Subsidiary and,
in the case of a Restricted Subsidiary which is a Subsidiary Guarantor, such
surviving entity, transferee or lessee shall expressly assume, in writing, the
obligations of such disappearing Subsidiary Guarantor in respect of its
Subsidiary Guarantee Agreement, and (c) in the case of either clause (a) or (b)
above, the Company shall have caused to be delivered to each holder of Notes an
opinion of independent counsel satisfactory to such holders to the effect that
all agreements or instruments effecting such assumptions are enforceable in
accordance with their terms and comply with the terms thereof, (iii) at the time
of such consolidation, merger, conveyance, transfer or lease and after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing, and (iv) the Company or the surviving entity or transferee of a
transaction involving the Company would be permitted by the provisions of
Section 10.1 (a) to incur at least $1 of additional Debt owing to a Person other
than a Restricted Subsidiary. Upon consummation of any such conveyance or
transfer (other than by way of lease) of substantially all of the assets of the
Company or any successor Person, the transferor shall be released from its
obligations hereunder and under the Notes, but no such lease shall have the
effect of releasing the Company or any other Person that shall have become such
in the manner prescribed in this Section 10.6 from its liability hereunder or
under the Notes.
Section 10.7 Transfer of Assets. The Company will not, and will not
permit any Restricted Subsidiary to, Transfer assets (except assets Transferred
for Fair Market Value in the ordinary course of business); provided that the
foregoing restrictions do not apply to:
(1) the Transfer of assets (x) by the Company to a Wholly-Owned
Restricted Subsidiary, or (y) by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary with respect to which the
Company shall have at least the same degree of ownership and control
as it had with respect to the transferring Restricted Subsidiary, or
(z) constituting Capital Stock of an Unrestricted Subsidiary; or
(2) the Transfer of assets for cash or other property to a Person
or Persons if all of the following conditions are met:
(i) such assets (valued at net book value at the time of such
Transfer) do not, together with all other assets of the Company and
its Restricted Subsidiaries previously Transferred (valued at net book
value at the time of their Transfer) (other than in the ordinary
course of business) within 365 days immediately preceding the date of
such Transfer, exceed
30
36
Alliance Resource GP, LLC Note Purchase Agreement
10% of Consolidated Total Assets (determined as of the last day of the
fiscal year of the Company ending on, or most recently ended prior to,
such Transfer);
(ii) in the opinion of the board of directors of the Company, such
Transfer is for Fair Market Value and is in the best interests of the
Company; and
(iii) immediately after giving effect to such Transfer, and the
application of the proceeds thereof, no Default or Event of Default
would exist.
Computations under this Section 10.7 shall include all issues or sales
of any Capital Stock of any class (including as Capital Stock for the purposes
of this Section 10.7, any warrants, rights or options to purchase or otherwise
acquire shares or similar equity interests or other Securities exchangeable for
or convertible into shares or similar equity interests) of any Restricted
Subsidiary to any Person other than the Company or a Wholly-Owned Restricted
Subsidiary, except Capital Stock issued or sold for the purpose of qualifying
directors, or except Capital Stock issued or sold in satisfaction of the validly
pre-existing preemptive rights of minority shareholders or interest holders in
connection with the simultaneous issuance of shares to the Company and/or
Restricted Subsidiaries whereby the Company and/or such Restricted Subsidiaries
maintain their same proportionate interest in such Restricted Subsidiary.
Computations under this Section 10.7 shall not include any Transfer of
assets for Fair Market Value, to the extent that all or any portion of an amount
equal to such Fair Market Value is applied, within 365 days after the date of
such transaction, to:
(A) the purchase, acquisition or construction of similar assets
which are to be used in the business of the Company and its Restricted
Subsidiaries and are not subject to Liens not permitted pursuant to
Section 10.3; or
(B) the repayment or prepayment of Qualified Debt; provided that
the Company has, on or prior to the application of any such proceeds
to the repayment or prepayment of any other Qualified Debt, offered to
repay or prepay the Notes, pro rata with all other Qualified Debt then
being repaid or prepaid (with any such repayment or prepayment of the
Notes to be made in accordance with the terms of Section 8.3).
For purposes of this Section 10.7 the term "Qualified Debt" shall mean
unsubordinated Debt of the Company or a Restricted Subsidiary other than
(i) unsubordinated Debt owing to the Company or to any Affiliate
or Restricted Subsidiary; and
31
37
Alliance Resource GP, LLC Note Purchase Agreement
(ii) unsubordinated Debt in respect of any revolving credit or
similar credit facility providing the Company or any Restricted
Subsidiary with the right to obtain loans or other extensions of
credit from time to time, except to the extent that in connection with
payment of such unsubordinated Debt the availability of credit under
such credit facility is permanently reduced by an amount not less than
the amount of the proceeds applied to the payment of such
unsubordinated Debt.
Section 10.8 Mining Restrictions. 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 is greater than 125% of the remaining term of the Notes. For
purposes of this Section 10.7, a "controlled reserve base" of coal denotes the
aggregate of coal reserves which may be economically and legally mined by the
Company or a Restricted Subsidiary at the time of the reserve determination. In
making any determination of reserves for the purposes of this Section 10.8 the
Company may include properties ("Option Properties") which may be acquired by
the Company or a Restricted 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 "Contact
Price"), provided that to the extent and for as long as the Company shall elect
to include Option Properties in any such determination (x) an amount equal to
the Contact Price could then be incurred as Debt under the provisions of Section
10.1(a) ("Notional Debt") and (y) for all purposes of Sections 10.1(a) and
10.4(a)(ii) an amount equal to all such Notional Debt shall be considered to be
outstanding.
Section 10.9 Restricted Investments. The Company will not, and will
not permit any Restricted Subsidiary to, make any Investments other than
Permitted Investments.
In valuing any Investments for the purpose of applying the limitations
set forth in this Section 10.9 such Investments shall be taken at the original
cost thereof, without allowance for any subsequent write-offs or appreciation or
depreciation thereof, but less any amount repaid or recovered on account of
capital or principal.
For purposes of this Section 10.9, at any time when a Person becomes a
Restricted Subsidiary, all Investments of such Person at such time shall be
deemed to have been made by such Person, as a Restricted Subsidiary, at such
time.
Section 10.10 Additional Subsidiary Guarantee Agreements. The Company
will not permit any Restricted Subsidiary which is not at the time a Subsidiary
Guarantor to become obligated, subsequent to the date of Closing with respect to
any Guarantee of Debt of the Company (including Debt under the Bank Facility),
or a Restricted Subsidiary ("Other Subsidiary Guarantees") unless, concurrently
with, or prior to, becoming liable with respect to such Guarantee, such
Restricted Subsidiary shall have executed and delivered, to each holder of then
outstanding Notes, a Subsidiary Guarantee Agreement and provided to each of such
holders a legal opinion with respect thereto substantially in the form of the
opinion contemplated in Exhibit 4.4(b) with respect to such
32
38
Alliance Resource GP, LLC Note Purchase Agreement
Restricted Subsidiary and the Subsidiary Guarantee Agreement delivered thereby.
All Other Subsidiary Guarantees will be in form and substance substantially
identical to the Subsidiary Guarantee Agreement (with only such changes as are
necessary to properly reflect the parties and Debt involved) and the
beneficiaries of such Other Subsidiary Guarantees shall have become parties to
the Intercreditor Agreement in the manner provided for therein.
Section 10.11 Nature of Business. Neither the Company nor any
Restricted Subsidiary will engage in any business if, as a result, the general
nature of the business in which the Company and its Restricted Subsidiaries,
taken as a whole, would then be engaged would be substantially changed from the
general nature of the business in which the Company and its Restricted
Subsidiaries, taken as a whole, are engaged on the date of Closing, as described
in the Memorandum.
Section 10.12 Transactions with Affiliates. Except as set forth in the
Prospectus contained in the Registration Statement under the headings "Certain
Relationships and Related Transactions" and "Conflicts of Interest and Fiduciary
Responsibilities", the Company will not and will not permit any Restricted
Subsidiary to enter into, directly or indirectly, any transaction or group of
related transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate, except in the ordinary course and pursuant to the reasonable
requirements of the Company's or such Restricted Subsidiary's business and upon
fair and reasonable terms no less favorable (taken as a whole, as determined in
good faith by the Board of Directors of the General Partner) to the Company or
such Restricted Subsidiary than would be obtainable in a comparable arm's-length
transaction with a Person not an Affiliate.
SECTION 11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of, or compliance with,
any term contained in Section 7.1(d) or Section 10; or
(d) the Company defaults in the performance of, or compliance with,
any term contained herein (other than those referred to in paragraphs (a), (b)
and (c) of this Section 11) or in the Assumption Agreement and such default is
not remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company receiving
33
39
Alliance Resource GP, LLC Note Purchase Agreement
written notice of such default from any holder of a Note (any such written
notice to be identified as a "notice of default" and to refer specifically to
this paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on behalf of
the Company or the Transferee Company or any Original Subsidiary Guarantor or by
any officer of the General Partner, the Company, the Transferee Company or any
Original Subsidiary Guarantor in this Agreement, the Assumption Agreement, an
Original Subsidiary Guarantee Agreement or in any writing furnished in
connection with the transactions contemplated hereby (including, without
limitation, the assumption of all obligations of the Company under this
Agreement and the Notes by the Transferee Company), taken as a whole, proves to
have been false or incorrect in any material respect on the date as of which
made (except to the extent that any such representation or warranty relates to
any earlier date, in which case it shall have been false or incorrect in any
material respect as of such earlier date); or
(f) (i) the Company or any Restricted Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any principal of or
premium or makewhole amount or interest on any Debt that is outstanding in an
aggregate principal amount of at least $10,000,000 beyond any period of grace
provided with respect thereto, or (ii) the Company or any Restricted Subsidiary
is in default in the performance of or compliance with any term of any evidence
of any Debt of the Company or a Restricted Subsidiary in an aggregate
outstanding principal amount of at least $10,000,000 or of any mortgage,
indenture or other agreement relating thereto or any other condition exists, and
as a consequence of such default or condition such Debt has become, or has been
declared (or one more Persons are entitled to declare such Debt to be), due and
payable before its stated maturity or before its regularly scheduled dates of
payment, or (iii) as a consequence of the occurrence or continuation of any
event or condition (other than the passage of time or the right of the holder of
such Debt to convert such Debt into equity interests), (x) the Company or any
Restricted Subsidiary has become obligated to purchase or repay Debt before its
regular maturity or before its regularly scheduled dates of payment in an
aggregate outstanding principal amount of at least $10,000,000, or (y) one or
more Persons have the right to require the Company or any Restricted Subsidiary
so to purchase or repay such Debt; or
(g) the Company or the General Partner unless timely replaced by a new
General Partner to the extent permitted by the Company's Partnership Agreement
or any Restricted Subsidiary (i) is generally not paying, or admits in writing
its inability to pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an assignment
for the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes action for the
purpose of any of the foregoing; or
34
40
Alliance Resource GP, LLC Note Purchase Agreement
(h) a court or governmental authority of competent jurisdiction enters
an order appointing, without consent by the Company or the General Partner or
any Restricted Subsidiary, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Company or the
General Partner or any Restricted Subsidiary, or any such petition shall be
filed against the Company or the General Partner or any Restricted Subsidiary
and such petition shall not be dismissed or appointment discharged within 60
days unless, in the case of the General Partner, timely replaced by a new
General Partner to the extent permitted by the Company's Partnership Agreement;
or
(i) a final judgment or judgments for the payment of money aggregating
in excess of $10,000,000 are rendered against one or more of the Company and its
Restricted Subsidiaries and which judgments are not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal, or are not discharged
within 60 days after the expiration of such stay; or
(j) any Subsidiary Guarantee Agreement shall cease to be in full force
and effect in any material respect or shall be declared by a court or
Governmental Authority to be void, voidable or unenforceable against the
applicable Subsidiary Guarantor, or the Company, any Subsidiary or the MLP (or
any Person on behalf of any thereof) asserts any of the foregoing in writing or
before any court or Governmental Authority; or
(k) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or granted
under Section 412 of the Code, (ii) a notice of intent to terminate any Plan
shall have been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under Section 4042 of ERISA to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit liabilities"
(within the meaning of Section 4001(a)(18) of ERISA) under all Plans, determined
in accordance with Title IV of ERISA, shall exceed $10,000,000, (iv) the Company
or any ERISA Affiliate shall have incurred or is reasonably expected to incur
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, (v) the Company or
any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company
or any Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase the
liability of the Company or any Restricted Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either individually
or together with any other such event or events, could reasonably be expected to
have a Material Adverse Effect. As used in this Section 11(k) the terms
"employee benefit plan" and "employee welfare benefit plan" shall have the
respective meanings assigned to such terms in Section 3 of ERISA; or
35
41
Alliance Resource GP, LLC Note Purchase Agreement
(l) if the Company's Partnership Agreement shall be amended,
supplemented or restated in any manner that is reasonably likely to result in a
Material Adverse Effect or which is otherwise materially adverse to the
interests of the holders of the Notes; or
(m) if the MLP Agreement shall be amended, supplemented or restated in
any manner that is reasonably likely to result in a Material Adverse Effect or
which is otherwise materially adverse to the interests of the holders of the
Notes; or
(n) if the MLP or any entity controlled by the MLP shall purchase or
otherwise acquire, directly or indirectly, any of the outstanding Notes except,
in the case of the Company, upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement.
SECTION 12. REMEDIES ON DEFAULT, ETC.
Section 12.1 Acceleration. (a) If an Event of Default with respect to
the Company or the General Partner described in paragraph (g) or (h) of Section
11 (other than an Event of Default described in clause (i) of paragraph (g) or
described in clause (vi) of paragraph (g) by virtue of the fact that such clause
encompasses clause (i) of paragraph (g)) has occurred, all the Notes then
outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 50% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.
Upon any Note's becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Note will forthwith mature and the
entire unpaid principal amount of such Note, plus (i) all accrued and unpaid
interest thereon and (ii) the Make-Whole Amount determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
36
42
Alliance Resource GP, LLC Note Purchase Agreement
Section 12.2 Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12. 1, the holder
of any Note at the time outstanding may proceed to protect and enforce the
rights of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
Section 12.3 Rescission. At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of Section 12.1, the
holders of a majority in principal amount of the Notes then outstanding, by
written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
Section 12.4 No Waivers or Election of Remedies, Expenses, Etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
Section 13.1 Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
37
43
Alliance Resource GP, LLC Note Purchase Agreement
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
Section 13.2 Transfer and Exchange of Notes. Upon surrender of any
Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of such Note or its attorney duly authorized
in writing and accompanied by the address for notices of each transferee of such
Note or part thereof), the Company shall execute and deliver, at the Company's
expense (except as provided below), one or more new Notes (as requested by the
holder thereof) in exchange therefor, in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of Notes being surrendered as set forth in Exhibit 1. Each such new
Note shall be dated and bear interest from the date to which interest shall have
been paid on the surrendered Note or dated the date of the surrendered Note if
no interest shall have been paid thereon. The Company may require payment of a
sum sufficient to cover any stamp tax or governmental charge imposed in respect
of any such transfer of Notes. Notes shall not be transferred in denominations
of less than $1,000,000, provided that if necessary to enable the registration
of transfer by a holder of its entire holding of Notes, one Note may be in a
denomination of less than $1,000,000. Any transferee, by its acceptance of a
Note registered in its name (or the name of its nominee), shall be deemed to
have made the representation set forth in Section 6.2.
Section 13.3 Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another holder of a Note with a minimum net worth
of at least $200,000,000, such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
Section 13.4 Name of Company. Notes delivered pursuant to this Section
13 subsequent to the effectiveness of the Assumption Agreement shall be executed
by, and be issued in the name
38
44
Alliance Resource GP, LLC Note Purchase Agreement
of, Alliance Resource Operating Partners, L.P., or its successor as obligor
under this Agreement and the Notes.
SECTION 14. PAYMENTS ON NOTES.
Section 14.1 Place of Payment. Subject to Section 14.2, payments of
principal, Make Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in New York City, New York at the principal office of
The Chase Manhattan Bank in such jurisdiction. The Company may at any time, by
notice to each holder of a Note, change the place of payment of the Notes so
long as such place of payment shall be either the principal office of the
Company in New York State or the principal office of a bank or trust company in
New York State.
Section 14.2 Home Office Payment. So long as any Purchaser or such
Purchaser's nominee shall be the holder of any Note, and notwithstanding
anything contained in Section 14.1 or in such Note to the contrary, the Company
will pay all sums becoming due on such Note for principal, Make-Whole Amount, if
any, and interest by the method and at the address specified for such purpose
for such Purchaser on Schedule A, or by such other method or at such other
address as such Purchaser shall have from time to time specified to the Company
in writing for such purpose, without the presentation or surrender of such Note
or the making of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, such Purchaser shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by any Purchaser or such Purchaser's nominee such Purchaser
will, at its election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes pursuant to Section
13.2. The Company will afford the benefits of this Section 14.2 to any
Institutional Investor that is the direct or indirect transferee of any Note
purchased by any Purchaser under this Agreement and that has made the same
agreement relating to such Note as such Purchaser has made in this Section 14.2.
SECTION 15. EXPENSES, ETC.
Section 15.1 Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including attorneys' fees of a special counsel and, if reasonably required,
local or other counsel) incurred by each Purchaser or holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or the Notes (whether or not
such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by
39
45
Alliance Resource GP, LLC Note Purchase Agreement
reason of being a holder of any Note, and (b) the costs and expenses, including
financial advisors' fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any work-out
or restructuring of the transactions contemplated hereby and by the Notes. The
Company shall not, in connection with any of the matters described in this
Section 15.1, be liable for the costs and expenses of more than one separate
legal firm, and separate local counsel as reasonably required, unless a holder
of a Note reasonably determines that its interests as such a holder differ from
the interests of other holders of Notes so as to require separate legal advice.
The Company will pay, and will save each Purchaser and each other holder of a
Note harmless from, all claims in respect of any fees, costs or expenses if any,
of brokers and finders (other than those retained by such Purchaser or holder).
Section 15.2 Survival. The obligations of the Company under this
Section 15 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by any Purchaser of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of such
Purchaser or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement. Subject to the preceding sentence, this Agreement
and the Notes embody the entire agreement and understanding between each
Purchaser and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.
SECTION 17. AMENDMENT AND WAIVER.
Section 17.1 Requirements. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any
defined term (as it is used therein), will be effective as to any Purchaser
unless consented to by such Purchaser in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or change the rate or change the time of
payment or method of computation of interest or of the Make-Whole Amount on, the
Notes, (ii) change the percentage of the principal
40
46
Alliance Resource GP, LLC Note Purchase Agreement
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8.11(a), 11(b), 12, 17 or
20.
Section 17.2 Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes of any waiver or amendment of any of the terms and provisions hereof or of
the Notes unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such waiver or amendment.
Section 17.3 Binding Effect, Etc. Any amendment or waiver consented to
as provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term "this Agreement" and references thereto shall
mean this Agreement as it may from time to time be amended or supplemented.
Section 17.4 Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates or Restricted
Subsidiaries shall be deemed not to be outstanding.
41
47
Alliance Resource GP, LLC Note Purchase Agreement
SECTION 18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to a Purchaser or such Purchaser's nominee, to such
Purchaser or such Purchaser's nominee at the address specified for
such communications for such Purchaser signature on Schedule A, or at
such other address as such Purchaser or such Purchaser's nominee shall
have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at
ALLIANCE RESOURCE GP, LLC
Attention:
, or at such other address as the Company shall have specified to the
holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
SECTION 19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by each Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to each Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such Purchaser
may destroy any original document so reproduced. The Company agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit the
42
48
Alliance Resource GP, LLC Note Purchase Agreement
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
SECTION 20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
information delivered to any Purchaser by or on behalf of the Company, any
Subsidiary, the MLP, the General Partner, the Special General Partner or
Alliance Coal Corporation in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified in writing when
received by such Purchaser as being confidential information of the Company,
such Subsidiary or such Affiliate, provided that such term does not include
information that (a) was publicly known or otherwise known to such Purchaser
prior to the time of such disclosure, (b) subsequently becomes publicly known
through no act or omission by such Purchaser or any Person acting on such
Purchaser's behalf, (c) otherwise becomes known to such Purchaser other than
through disclosure by the Company or any Subsidiary or (d) constitutes financial
statements delivered to such Purchaser under Section 7.1 that are otherwise
publicly available. Each Purchaser will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by such Purchaser
in good faith to protect confidential information of third parties delivered to
such Purchaser, provided that such Purchaser may deliver or disclose
Confidential Information to (i) such Purchaser's directors, trustees, officers,
employees, agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by such
Purchaser's Notes), (ii) such Purchaser's financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20, (iii)
any other holder of any Note, (iv) any Institutional Investor to which such
Purchaser sells or offers to sell such Note or any part thereof or any
participation therein (if such Person has agreed with the Company in writing
prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 20 by delivery of a letter substantially in the form
of Schedule 20 hereto), (v) any Person from which such Purchaser offers to
purchase any security of the Company (if such Person has agreed with the Company
in writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 20 by delivery of a letter substantially in the
form of Schedule 20 hereto), (vi) any federal or state regulatory authority
having jurisdiction over such Purchaser, (vii) the National Association of
Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about such
Purchaser's investment portfolio, or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Purchaser, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which such Purchaser is a party or (z) if an Event of Default has
occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under such
Purchaser's Notes and this Agreement. Each holder of a Note, by its acceptance
of a Note, will
43
49
Alliance Resource GP, LLC Note Purchase Agreement
be deemed to have agreed to be bound as a "Purchaser" by and to be entitled as
such to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.
SECTION 21. SUBSTITUTION OF PURCHASER.
Each Purchaser shall have the right to substitute any one of such
Purchaser's Affiliates as the purchaser of the Notes that such Purchaser has
agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both such Purchaser and such Purchaser's Affiliate, shall
contain such Affiliate's agreement to be bound by this Agreement and shall
contain a confirmation by such Affiliate of the accuracy with respect to it of
the representations set forth in Section 6. Upon receipt of such notice,
wherever the word "Purchaser" is used in this Agreement (other than in this
Section 21), such word shall be deemed to refer to such Affiliate in lieu of
such Purchaser. In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to such Purchaser
all of the Notes then held by such Affiliate, upon receipt by the Company of
notice of such transfer, wherever the word "Purchaser" is used in this Agreement
(other than in this Section 21), such word shall no longer be deemed to refer to
such Affiliate, but shall refer to such Purchaser, and such Purchaser shall have
all the rights of an original holder of the Notes under this Agreement.
SECTION 22. MISCELLANEOUS.
Section 22.1 Successors and Assigns. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.
Section 22.2 Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of, or Make-Whole Amount or interest on, any Note that is due on a date other
than a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.
Section 22.3 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
44
50
Alliance Resource GP, LLC Note Purchase Agreement
Section 22.4 Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
Section 22.5 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
Section 22.6 Governing Law. THIS AGREEMENT 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.
Section 22.7 Recourse Only to the Company and the Subsidiary
Guarantors; Non-Recourse to the General Partner and Associated Persons. Upon the
Assumption Agreement becoming effective as provided in Section 6 thereof, each
Purchaser agrees on behalf of itself and its successors, assigns and legal
representatives, and each subsequent holder of any Note, by acceptance thereof
shall be deemed so to have agreed, that neither the General Partner nor any
Person (other than the Transferee Company or a Subsidiary Guarantor or the
Special General Partner) which is a partner, shareholder, member, owner,
officer, director, supervisor, trustee or other principal (collectively,
"Associated Persons") of the Transferee Company or of the General Partner or of
a Subsidiary Guarantor, or any of their respective successors or assigns (as
such), shall have any personal liability for the payment or performance of any
of the Company's obligations hereunder or under any of the Notes and no monetary
or other judgment shall be sought or enforced against the General Partner or any
of such Associated Persons or any of their respective successors or assigns (as
such). Notwithstanding the foregoing, no Purchaser shall be deemed barred by
this Section 22.7 from asserting any claim against any Person based upon an
allegation of fraud or misrepresentation.
* * * * *
45
51
Alliance Resource GP, LLC Note Purchase Agreement
The execution hereof by the Purchasers shall constitute a contract
among the Company and the Purchasers for the uses and purposes hereinabove set
forth.
Very truly yours,
ALLIANCE RESOURCE GP, LLC
By: Alliance Coal Corporation, its sole
member
By
------------------------------------
Its
-----------------------------------
52
Alliance Resource GP, LLC Note Purchase Agreement
Accepted as of August 1, 1999:
[VARIATION]
By
------------------------------------
Name:
Title:
53
PRINCIPAL AMOUNT
OF NOTES TO BE
PURCHASED
NAME OF PURCHASER
SCHEDULE A
(TO NOTE PURCHASE AGREEMENT)
A-1
54
DEFINED TERMS
GENERAL PROVISIONS
Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the express
requirements of this Agreement. All express or implied references herein to "the
Company and the Restricted Subsidiaries" for the purposes of computing the
consolidated financial position, results of operations, or other balance sheet
or financial statement item (including, without limitation, Available Cash,
Consolidated Cash Flow, Consolidated Income Tax Expense, Consolidated Interest
Expense, Consolidated Net Income, Consolidated Non-Cash Charges and Consolidated
Total Assets) shall be deemed to include only the Company and the Restricted
Subsidiaries as separate legal entities (and for the purpose of such
computations all such Restricted Subsidiaries shall be treated as being
Wholly-Owned subsidiaries) and, unless otherwise expressly provided herein,
shall not include the financial position, results of operations, or other such
items, of any other Person (including, without limitation, an Unrestricted
Subsidiary), whether or not, in any particular instance, such accounting
treatment would be in accordance with GAAP.
DEFINITIONS
As used herein (including the Schedules hereto), the following terms
have the respective meanings set forth below or set forth in the Section hereof
following such term:
"Affiliate" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, (b) any Person beneficially owning or holding, directly or
indirectly, 10% or more of the Capital Stock of such first Person or any
subsidiary of such first Person or any corporation of which such first Person
and the subsidiaries of such first Person beneficially own or hold, in the
aggregate, directly or indirectly, 10% or more of the Capital Stock, and (c) any
officer or director of such first Person. As used in this definition, "Control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company; provided, however, the Company shall not be an
Affiliate of any Restricted Subsidiary and no Restricted Subsidiary shall be an
Affiliate of the Company or any other Restricted Subsidiary.
SCHEDULE B
(TO NOTE PURCHASE AGREEMENT)
B-1
55
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged with or into the Company or
any Restricted Subsidiary, (b) the acquisition by the Company or any Restricted
Subsidiary of the assets of any Person (other than a Restricted Subsidiary)
which constitute all or substantially all of the assets of such Person or (c)
the acquisition by the Company or any Restricted Subsidiary of any division or
line of business of any Person (other than a Restricted Subsidiary).
"Assumption Agreement" is defined in Schedule 4.7(d).
"Assumption Conditions" is defined in Section 4.7(d).
"Available Cash" means, with respect to any fiscal quarter ending
prior to the Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the
Partnership Group on hand at the end of such fiscal quarter, and (ii)
all additional cash and cash equivalents of the Partnership Group on
hand on the date of determination of Available Cash with respect to
such fiscal quarter resulting from Working Capital Borrowings made
subsequent to the end of such fiscal quarter, less
(b) the amount of any cash reserves that is necessary or
appropriate in the reasonable discretion of the General Partner to (i)
provide for the proper conduct of the business of the Partnership
Group (including reserves for future capital expenditures and for
anticipated future credit needs of the Partnership Group) subsequent
to such fiscal quarter, (ii) comply with applicable law or any loan
agreement, security agreement, mortgage, debt installment or other
agreement or obligation to which any Group Member is a party or by
which it is bound or its assets are subject or (iii) provide funds for
distributions under Section 6.4 or 6.5 of the MLP Agreement in respect
of any one or more of the next four fiscal quarters; provided,
however, that the General Partner may not establish cash reserves
pursuant to (iii) above if the effect of such reserves would be that
the MLP is unable to distribute the Minimum Quarterly Distribution on
all Common Units, plus any Cumulative Common Unit Arrearage on all
Common Units, with respect to such fiscal quarter, and provided
further that disbursements made by a Group Member or cash reserves
established, increased or reduced after the end of such fiscal quarter
but on or before the date of determination of Available Cash with
respect to such fiscal quarter shall be deemed to have been made,
established, increased or reduced, for purposes of determining
Available Cash, within such fiscal quarter if the General Partner so
determines.
Notwithstanding the foregoing, "Available Cash" with respect to the
fiscal quarter in which the Liquidation Date occurs and any subsequent Quarter
shall equal zero.
B-2
56
For purposes of the definition of "Available Cash", the following
terms shall have the following meanings:
"Common Unit" has the meaning assigned to such term in the MLP
Agreement.
"Cumulative Common Unit Arrearage" has the meaning assigned to
such term in the MLP Agreement.
"Group Member" means a member of the Partnership Group.
"Liquidation Date" means (a) in the case of an event giving rise
to the dissolution of the Transferee Company of the type described in
clauses (a) and (b) of the first sentence of Section 12.2 of the
Partnership Agreement, the date on which the applicable time period
during which the partners of the Transferee Company have the right to
elect to reconstitute the Transferee Company and continue its business
has expired without such an election being made, and (b) in the case
of any other event giving rise to the dissolution of the Transferee
Company, the date on which such event occurs.
"Minimum Quarterly Distribution" has the meaning assigned to such
term in the MLP Agreement.
"MLP Agreement" means the Amended and Restated Agreement of
Limited Partnership of the MLP, as it may be amended, supplemented or
restated from time to time without causing an Event of Default under
Section 11(l).
"Partnership Agreement" means the Agreement of Limited
Partnership of the Transferee Company, as it may be amended,
supplemented or restated from time to time without causing an Event of
Default under Section 11(m).
"Partnership Group" means the Transferee Company and all
Subsidiaries, treated as a single consolidated entity.
"Working Capital Borrowings" means borrowings under the Bank
Facility giving rise to Debt incurred for working capital purposes and
for the purpose of making distributions to the MLP.
"Bank Facility" means the Debt facility made available to the company
for (i) the purchase of Qualifying Securities and/or (ii) for the provision of
working capital, and/or (iii) the provision of additional funds for general
partnership purposes, all pursuant to the [Credit Agreement] dated __________,
1999 between Alliance Resource GP, LLC and the banks named therein, as from time
to time amended, supplemented or refinanced and any other credit agreements from
time to time entered into by the Company for the purchase of Qualifying
Securities and/or the provision of working capital and/or the provision of
additional funds for general partnership purposes.
B-3
57
"Business Day" means (a) for the purposes of Section 8.7 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provisions of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in Tulsa, Oklahoma or New York City are required
or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.
"Capital Stock" shall mean, with respect to any Person, any and all
shares, units representing interests, participations, rights in or other
equivalents (however designated) of such Person's capital stock, including, (x)
with respect to partnerships, partnership interests (whether general or limited)
and any other interest or participation that confers upon a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
such partnership, (y) with respect to limited liability companies, member
interests, and (z) with respect to any Person, any rights (other than debt
securities convertible into capital stock), warrants or options exchangeable for
or convertible into such capital stock.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.
"Company" means Alliance Resource GP, LLC, a Delaware limited
liability company, subject however to the provisions of Section 1(b) of the
Assumption Agreement from and after the time at which the same becomes effective
in accordance with Section 6 thereof and the provisions of Section 10.6.
"Company Notice" is defined in Section 8.3.
"Confidential Information" is defined in Section 20.
"Consolidated Adjusted Restricted Subsidiary Debt" means all Debt of
Restricted Subsidiaries other than
(i) Debt owing to the Company or to a Restricted Subsidiary with
respect to which the Company shall have at least the same degree of
ownership and control as it does with respect to the indebted
Restricted Subsidiary; and
B-4
58
(ii) Debt consisting of Guaranties by Subsidiary Guarantors of
Debt of the Company or of other Restricted Subsidiaries which are
executed and remain outstanding in conformity with the provisions of
Section 10.10.
"Consolidated Cash Flow" means, as of any date of determination for
any applicable period, the excess, if any, of (a) the sum of, without
duplication, the amounts for such period, taken as a single accounting period,
of (i) Consolidated Net Income for such period, plus (ii) to the extent deducted
in the determination of Consolidated Net Income for such period, without
duplication, (A) Consolidated Non-Cash Charges, (B) Consolidated Interest
Expense and (C) Consolidated Income Tax Expense, over (b) any non-cash items
increasing Consolidated Net Income for such period to the extent that such items
constitute reversals of Consolidated Non-Cash Charges for a previous period and
which were included in the computation of Consolidated Cash Flow for such
previous period pursuant to the provisions of the preceding clause (a), provided
that in calculating Consolidated Cash Flow for any such period, (1) full effect
shall be given to the proviso to the definition of "Consolidated Interest
Expense" set forth below and (2) Consolidated Cash Flow shall be calculated
after giving effect on a pro forma basis for such period, in all respects in
accordance with GAAP, to any Transfer or Asset Acquisitions (including, without
limitation any Asset Acquisition by the Company or any Restricted Subsidiary
giving rise to the need to determine Consolidated Cash Flow as a result of the
Company or one of its Restricted Subsidiaries (including any Person that becomes
a Restricted Subsidiary as result of any such Asset Acquisition) incurring,
assuming or otherwise becoming liable for any Debt) occurring during the period
commencing on the first day of such period to and including the date of the
transaction, as if such Transfer or Asset Acquisition occurred on the first day
of such period.
"Consolidated Income Tax Expense" means, with respect to any period,
all provisions for Federal, state, local and foreign income taxes of the Company
and its Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Expense" means, as of the date of any
determination for any applicable period, the sum (without duplication) of the
following (in each case, eliminating all offsetting debits and credits between
the Company and its Restricted Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial statements
of the Company and its Restricted Subsidiaries in accordance with GAAP): (a) all
interest in respect of Debt of the Company and its Restricted Subsidiaries
whether earned or accrued (including non-cash interest payments and imputed
interest on Capital Lease Obligations) deducted in determining Consolidated Net
Income for such period, and (b) all debt discount (but not expense) amortized or
required to be amortized in the determination of Consolidated Net Income for
such period, less (c) all interest earned or accrued with respect to Qualifying
Securities during such period; provided that for purposes of making any
computation pursuant to Section 10.1(a)(iii), (iv) or (v) or Section 10.4(ii)
(including any calculation of Consolidated Cash Flow relating thereto),
Consolidated Interest Expense (A) shall be determined on a pro forma basis
giving effect to the incurrence of all Debt (and the application of proceeds
thereof) which either (x) is the subject of such computation, or (y) was issued
after the end of such period and prior to such date of computation, as if all of
such Debt had
B-5
59
been incurred (and the proceeds thereof applied) on the first day of such
period, and (B) shall not be reduced by the amount of any interest earned or
accrued with respect to transferred Qualifying Securities during such period for
the purposes of any computation then being made under clause (ii) of the last
sentence of Section 10.1. In computing Consolidated Interest Expense for any
period prior to the end of the first four fiscal quarters ending after the date
of Closing, Consolidated Interest Expense of the Company and the Restricted
Subsidiaries shall be determined with respect to the principal amount of Debt
actually outstanding from time to time but on the basis of interest accruing at
a rate equal to the weighted average interest rate payable on the date of
determination with respect to Debt outstanding under the Notes and the Bank
Facility, rather than the rates of interest actually applicable to the Debt
refinanced thereby.
"Consolidated Net Debt" means, as of any date of determination, the
aggregate outstanding principal amount of all Debt of the Company and its
Restricted Subsidiaries outstanding on such date, after eliminating all
offsetting debits and credits between the Company and its Restricted
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Company and its
Restricted Subsidiaries in accordance with GAAP; less the principal amount of
all Qualifying Securities held by the Company and its Restricted Subsidiaries.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Company and its Restricted Subsidiaries for such period
(taken as a cumulative whole), as determined in accordance with GAAP, provided
that there shall be excluded:
(a) the income (or loss) of any Person accrued prior to the date
it becomes a Subsidiary or is merged into or consolidated with the
Company or a Subsidiary, and the income (or loss) of any Person,
substantially all of the assets of which have been acquired in any
manner, realized by such other Person prior to the date of
acquisition,
(b) the income (or loss) of any Person (other than a Restricted
Subsidiary) in which the Company or any Restricted Subsidiary has an
ownership interest, except to the extent that any such income has been
actually received by the Company or such Restricted Subsidiary in the
form of cash dividends or similar cash distributions,
(c) the undistributed earnings of any Restricted Subsidiary to
the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary is not at the time
permitted by the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary,
(d) any aggregate net gain or loss during such period arising
from the sale, conversion, exchange or other disposition of capital
assets (such term to include, without limitation, (i) all non-current
assets, and, without duplication, (ii) the following, whether or
B-6
60
not current: all fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed assets,
and all Securities), and
(e) any net income or gain or loss during such period from (i) any
change in accounting principles in accordance with GAAP, (ii) any
prior period adjustments resulting from any change in accounting
principles in accordance with GAAP, or (iii) any extraordinary or
unusual items.
"Consolidated Non-Cash Charges" means, with respect to the Company and
its Restricted Subsidiaries for any period, the aggregate depreciation,
depletion and amortization (other than amortization of debt discount and
expense), the non-cash portion of advance royalties and any non-cash employee
compensation expenses for such period, in each case, reducing Consolidated Net
Income of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Assets" means, at any time, the total assets and
properties of the Company and its Restricted Subsidiaries which would be shown
as assets on a consolidated balance sheet of the Company and its Restricted
Subsidiaries as of such time prepared in accordance with GAAP.
"Contribution Agreement" means the Contribution Agreement dated as of
August 1, 1999 between the Company and the Transferee Company.
"Contribution Transactions" means the transactions referred to in the
initial recital of the Assumption Agreement and more fully described in and
occurring pursuant to the Contribution Agreement.
"Debt" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including, without limitation, all
liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property);
(c) its Capital Lease Obligations;
(d) all liabilities secured by any Lien with respect to any
property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks or other financial institutions (whether
B-7
61
or not representing obligations for borrowed money), other than any
thereof incurred in the ordinary course of business of such Person and
which are issued (i) to support such Person's obligations in respect
of workmen's compensation or unemployment insurance laws, the payment
of retirement benefits or performance guarantees relating to coal
deliveries or insurance deductibles and aggregating no more than
$10,000,000 at any time outstanding for all of the foregoing or (ii)
in respect of current trade payables of such Person.
(f) Swaps of such Person, to the extent required to be reflected
on a balance sheet of such Person prepared as of any date of
determination in accordance with GAAP;
(g) Preferred Stock of Restricted Subsidiaries owned by Persons
other than the Company, a Subsidiary Guarantor or a Wholly-Owned
Restricted Subsidiary); and
(h) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (g) hereof.
Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (h) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" means with respect to any Note that rate of interest
that is the greater of (i) 2% per annum above the rate of interest stated in
clause (a) of the first paragraph of such Note or (ii) the rate of interest
publicly announced by Citibank, N.A. as its "base" or "prime" rate.
"Designated Proceeds" is defined in Section 8.3.
"Distribution" means, in respect of any corporation, association or
other business entity:
(a) dividends or other distributions or payments on Capital Stock
of such corporation, association or other business entity (except
distributions in such stock or other equity interest); and
(b) the redemption, retirement, purchase or acquisition of such
stock or other equity interests or of warrants, rights or other
options to purchase such stock or other equity interests (except when
solely in exchange for such stock or other equity interests) unless
made, contemporaneously, from the net proceeds of a sale of such stock
or other equity interests.
"Environmental Laws" means any and all applicable Federal, state,
local, and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions,
B-8
62
grants, franchises, licenses, agreements or governmental restrictions relating
to pollution and the protection of the environment or the release of any
materials into the environment, including but not limited to those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under Section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"General Partner" means, from and after the fulfillment of the
Assumption Conditions, Alliance Resource Management GP, LLC, a Delaware limited
liability company, and its successors and permitted assigns as the managing
general partner of the Transferee Company.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any other jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Company or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" and, with correlative meaning, "Guaranteed" means, with
respect to any Person, any obligation (except the endorsement in the ordinary
course of business of negotiable instruments for deposit or collection) of such
Person guaranteeing or in effect guaranteeing any Debt
B-9
63
of any other Person in any manner, whether directly or indirectly, including
(without limitation) obligations incurred through an agreement, contingent or
otherwise, by such Person:
(a) to purchase such Debt or any property constituting security
therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such Debt, or (ii) to maintain any working capital or other balance
sheet condition or any income statement condition of any other Person
or otherwise to advance or make available funds for the purchase or
payment of such Debt;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Debt of the
ability of any other Person to make payment of the Debt; or
(d) otherwise to assure the owner of such Debt against loss in
respect thereof
In any computation of the Debt of the obligor under any Guaranty, the Debt that
is the subject of such Guaranty shall be assumed to be a direct obligation of
such obligor. The amount of any Guaranty shall be equal to the outstanding
amount of the Debt guaranteed, or such lessor amount to which the maximum
exposure of such Person shall have been specifically limited.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"Holder" or "holder" means, with respect to any Note, the Person in
whose name such Note is registered in the register maintained by the Company
pursuant to Section 13. 1.
"Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Intercreditor Agreement" means an agreement substantially in the form
of the Intercreditor Agreement attached hereto as Exhibit 4.6, as the same may
be amended and be from time to time in effect.
"Investment" means any investment, made in cash or by delivery of
property, by the Company or any of its Restricted Subsidiaries (i) in any
Person, whether by acquisition of stock, debt
B-10
64
or other obligations or Security, or by loan, guaranty of any debt, advance,
capital contribution or otherwise, or (ii) in any property.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest, production payment or other encumbrance, or any
interest or title of any vendor, lessor, lender or other secured party to or of
such Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust agreements
and all similar arrangements); provided, however, "Lien" shall not include any
negative pledge.
"MLP" means Alliance Resource Partners, L.P., a Delaware limited
partnership.
"Make- Whole Amount" is defined in Section 8.6.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties or prospects of the Company and
its Restricted Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Restricted Subsidiaries taken as a whole, (b) the ability of the
Company to perform its payment obligations, its obligations under Sections 9 or
10 or any other material obligations under this Agreement and the Notes, (c) the
ability of a Subsidiary Guarantor to perform its payment obligations, its
obligations under [Sections __ or__ ]of its Subsidiary Guarantee Agreement or
other material obligations under its Subsidiary Guarantee Agreement, or (d) the
validity or enforceability of this Agreement, the Notes or a Subsidiary
Guarantee Agreement.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of Alliance Coal Corporation whose
responsibilities extend to the subject matter of such certificate.
"Original Subsidiary Guarantee Agreement" is defined in Section 4.5.
"Original Subsidiary Guarantor" means a Restricted Subsidiary which is
identified as an Original Subsidiary Guarantor in Schedule 5.4.
B-11
65
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permitted Investments" means, at any time, all of the following:
(a) Investments in property to be used in the ordinary course of
business of the Company and its Restricted Subsidiaries;
(b) Investments in current assets arising from the sales of goods
and services in the ordinary course of business of the Company and its
Restricted Subsidiaries;
(c) Investments in one or more Restricted Subsidiaries or any
Person that concurrently with such Investment becomes a Restricted
Subsidiary;
(d) Investments in United States Governmental Securities maturing
within one year (or, in the case of Qualifying Securities, two years)
from the date of acquisition;
(e) Investments in certificates of deposit, banker's acceptances
or other bank instruments maturing within one year (or, in the case of
Qualifying Securities, two years) from the date of acquisition
thereof, issued by Acceptable Banks;
(f) Investments in Repurchase Agreements;
(g) Investments in obligations of any state of the United States
of America, or any municipality of any such state, in each case rated
"AA" or better by S&P, "Aa2" or better by Moody's or an equivalent
rating by any other credit rating agency of recognized national
standing, provided that such obligations mature within one year from
the date of acquisition thereof;
(h) Investments in commercial paper maturing in 270 days or less
from the date of issuance which, at the time of acquisition by the
Company or any Restricted Subsidiary, is rated Al or better by S&P or
P1 or better by Moody's or an equivalent rating by any other credit
rating agency of recognized national standing; and
(i) Other Investments, provided that the aggregate of all such
other Investments would not exceed 10% of Consolidated Total Assets.
As used in this definition of "Permitted Investments":
"Acceptable Bank" means (i) any bank or trust company (a) which
is organized under the laws of the United States of America or any
State thereof, (b) which has capital, surplus and undivided profits
aggregating at least $500,000,000, and (iii) whose long-term unsecured
debt obligations (or the long-term unsecured debt obligations of the
holding company
B-12
66
owning all of the capital stock of such bank or trust company) shall
have been given a rating of "AA-"or better by S&P, "Aa3" or better by
Xxxxx'x or an equivalent rating by any other credit rating agency of
recognized national standing or (2) the commercial paper or other
short-term unsecured debt obligations of which (or the short-term
unsecured debt obligations of the holding company owning all of the
capital stock of such bank or trust company) shall have been given a
rating of "Al" or better by S&P or "Prime 1" or better by Moody's or
an equivalent rating by any other credit rating agency of recognized
national standing or (ii) any bank party to the Bank Facility..
"Acceptable Broker-Dealer" means any Person other than a natural
person (i) which is registered as a broker or dealer pursuant to the
Exchange Act and (ii) whose long-term unsecured debt obligations shall
have been given a rating of "AA-" or better by S&P, "Aa3" or better by
Moody's or an equivalent rating by any other credit rating agency of
recognized national standing.
"Xxxxx'x" means Xxxxx'x Investors Service, Inc.
"Repurchase Agreement" means any written agreement.
(a) that provides for (i) the transfer of one or more United
States Governmental Securities in an aggregate principal amount at
least equal to the amount of the Transfer Price (defined below) to the
Company or any of its Restricted Subsidiaries from an Acceptable Bank
or an Acceptable Broker-Dealer against a transfer of funds (the
"Transfer Price") by the Company or such Restricted Subsidiary to such
Acceptable Bank or Acceptable Broker-Dealer, and (ii) a simultaneous
agreement by the Company or such Restricted Subsidiary, in connection
with such transfer of funds, to transfer to such Acceptable Bank or
Acceptable Broker-Dealer the same or substantially similar United
States Governmental Securities for a price not less than the Transfer
Price plus a reasonable return thereon at a date certain not later
than 365 days after such transfer of funds,
(b) in respect of which the Company or such Restricted Subsidiary
shall have the right, whether by contract or pursuant to applicable
law, to liquidate such agreement upon the occurrence of any default
thereunder, and
(c) in connection with the Company or such Restricted Subsidiary,
or an agent thereof, shall have taken all action required by
applicable law or regulations to perfect a Lien in such United States
Governmental Securities.
"S&P" means Standard & Poor's Ratings Group, a division of
XxXxxx-Xxxx, Inc.
"United States Governmental Security" means any direct obligation
of, or obligation guaranteed by, the United States of America, or any
agency controlled or supervised by or acting as an instrumentality of
the United States of America pursuant to authority granted
B-13
67
by the Congress of the United States of America, so long as such
obligation or guarantee shall have the benefit of the full faith and
credit of the United States of America which shall have been pledged
pursuant to authority granted by the Congress of the United States of
America.
"Person" means an individual, partnership, joint venture, corporation,
limited liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"Prepayment Date" is defined in Section 8.3.
"Preferred Stock" of any Person means any class of Capital Stock of
such Person that is preferred over any other class of Capital Stock of such
Person as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such Person.
"Pro Forma Financial Statements" means the financial statements of the
Company and its Restricted Subsidiaries contained in the Registration Statement
and giving effect, on a pro forma basis, to the completion of the Restructuring
Transactions, all as more specifically described in Section 5.5(b).
"property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, xxxxxx
or inchoate.
"Purchaser" and "Purchasers" are defined in Section 2.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Qualified Debt" is defined in Section 10.7.
"Qualifying Securities" means Investments of the Company or any
Restricted Subsidiary of the type described in clauses (d) through (h) of the
definition of the term "Permitted Investments" but only to the extent that (x)
such Investments have been purchased with the proceeds of Debt (not exceeding
$50,000,000 in aggregate principal amount at any time outstanding) and have been
pledged to secure the payment thereof and (y) the acquisition of such
Investments and the incurrence of such Debt shall be effected only in connection
with maintenance or expansion capital expenditures to be made by the Company and
its Restricted Subsidiaries; provided, that, solely for
B-14
68
purposes of this definition, Investments described in clauses (d) and (e) of the
definition of the term "Permitted Investments" may have a maturity of up to two
years from their date of acquisition by the Company or a Restricted Subsidiary.
"Registration Statement" shall mean the Registration Statement on Form
S-1 of Alliance Resource Partners L.P. (Registration No. 33-78845) filed with
the Securities and Exchange Commission on May 20, 1999, as amended by Amendment
No. 1, filed with the Securities and Exchange Commission on June 30, 1999,
Amendment No. 2, filed with the Securities and Exchange Commission on
__________, 1999, and Amendment No. 3, filed with the Securities and Exchange
Commission on __________, 1999 in the form when declared effective by the
Commission and as amended on or prior to the date of this Agreement.
"Required Holders" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the General Partner with responsibility for the administration of the
relevant portion of this Agreement or a Subsidiary Guarantee Agreement, as
applicable.
"Restricted Payment" means any Distribution in respect of the Company
or a Restricted Subsidiary (other than, in the case of a Restricted Subsidiary,
a Distribution made to the Company or another Restricted Subsidiary or a
Distribution constituting or resulting in a Permitted Investment), including,
without limitation, any Distribution resulting in the acquisition by the Company
of securities that would constitute treasury stock. For purposes of this
Agreement, the amount of any Restricted Payment made in property shall be the
greater of (x) the Fair Market Value of such property (as determined in good
faith by the board of directors (or equivalent governing body) of the Person
making such Restricted Payment) and (y) the net book value thereof on the books
of such Person, in each case determined as of the date on which such Restricted
Payment is made.
"Restricted Subsidiary" means any Subsidiary (i) of which more than
50% (by number of votes) of each class of (x) Voting Stock, and (y) all other
securities convertible into, exchangeable for or representing the right to
purchase, Voting Stock is beneficially owned, directly or indirectly, by the
Company, (ii) which is organized under the laws of the United States or any
State thereof, (iii) which maintains substantially all of its assets and
conducts substantially all of its business within the United States, and (iv)
which is properly designated as such by the Company in the most recent notice
(or, prior to any such notice, on Schedule 5.4, including MAPCO Coal LLC and MC
Mining LLC with respect to such Subsidiary given by the Company pursuant to and
in accordance with the provisions of Section 7.4.
"Restructuring Transactions" shall mean the Contribution Transactions
and the transactions described in clauses 1, 2, 4, 5 and 6 of Schedule 4.7(d).
B-15
69
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Security" has the meaning set forth in section 2(a)(1) of the
Securities Act.
"Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or controller of the General Partner.
"Special General Partner" means Alliance Resource GP, LLC, a Delaware
limited liability company, and its successors and permitted assigns as a special
general partner of the Transferee Company.
"Subsidiary" shall mean, with respect to any Person, any corporation,
limited liability company, partnership, joint venture, association, trust or
other entity of which (or in which) more than 50% of (a) the issued and
outstanding Capital Stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether at the time
Capital Stock of any other class or classes of such corporation shall or might
have voting power upon the occurrence of any contingency), (b) the interests in
the capital or profits of such partnership, limited liability company, joint
venture or association with ordinary voting power to elect a majority of the
board of directors (or Persons performing similar functions) of such
partnership, limited liability company, joint venture or association, or (c) the
beneficial interests in such trust or other entity with ordinary voting power to
elect a majority of the board of trustees (or Persons performing similar
functions) of such trust or other entity, is at the time directly or indirectly
owned or controlled by such Person, by such Person and one or more of its
Subsidiaries, or by one or more of such Person's other Subsidiaries.
"Subsidiary Guarantee Agreement" means an agreement substantially in
the form of the Subsidiary Guarantee Agreement attached hereto as Exhibit 4.5,
as the same may be amended and be from time to time in effect.
"Subsidiary Guarantor" means an Original Subsidiary Guarantor or
another Restricted Subsidiary which, subsequent to the date of Closing, executes
and delivers a Subsidiary Guarantee Agreement pursuant to the provisions of
Section 10.10, in each case so long as the Subsidiary Guarantee Agreement of
such Person and the Intercreditor Agreement, as it relates to such Subsidiary,
remains in full force and effect.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous
B-16
70
payment of amounts by and to such Person, then in each such case, the amount of
such obligation shall be the net amount so determined.
"Transfer" means, with respect to any Person, any transaction in which
such Person sells, conveys, abandons, transfers, leases (as lessor), or
otherwise disposes of any of its assets; provided, however, that "Transfer"
shall not include (i) the granting of any Liens permitted to be granted pursuant
to this Agreement, (ii) any transfer of assets permitted pursuant to Section
10.6 or (iii) the making of any Restricted Payment permitted pursuant to Section
10.4.
"Transferee Company" means Alliance Resource Operating Partners, L.P.,
a Delaware limited partnership.
"Unrestricted Subsidiary" means a Subsidiary which is not a Restricted
Subsidiary.
"Voting Stock" means, (i) Securities of any class of classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the directors (or Persons performing similar functions) or
(ii) in the case of a partnership, limited liability company or joint venture,
interests in the profits or capital thereof entitling the holders of such
interests to approve major business actions.
"Wholly-Owned Restricted Subsidiary" means, at any time, any
Restricted Subsidiary at least ninety-eight percent (98%) of all of the equity
interests (except directors' qualifying shares) and voting interests of which
are owned by any one or more of the Company and the Company's other Wholly-Owned
Restricted Subsidiaries at such time.
B-17
71
ASSUMPTION CONDITIONS
1. The Company shall have transferred to the Transferee Company a 99.999%
interest in each of (x) MAPCO Coal LLC, a Delaware limited liability company,
and (y) MC Mining LLC, a Delaware limited liability company.
2. The Transferee Company shall have authorized, executed and delivered an
agreement substantially in the form of the Assumption Agreement attached to this
Schedule as Annex I (the "Assumption Agreement").
3. The General Partner of the Transferee Company shall have delivered to
each Purchaser a certificate certifying as to the resolutions attached thereto
and other proceedings relating to the authorization, execution and delivery of
the Assumption Agreement on behalf of the Transferee Company by Alliance Coal
Corporation, owner of the sole member interest in the Company, which is the
owner of the sole general partner interest in the Transferee Company.
4. All obligations of the Company under the Bank Facility shall have been
assumed by the Transferee Company; all rights of the Company under said Bank
Facility shall have accrued to the Transferee Company; and such Bank Facility
shall be in full force and effect.
5. The MLP shall have issued and sold limited partnership units to the
public for an aggregate net sale price of at least [$182,300,0001.
6. The MLP shall have contributed [$__________] net cash proceeds from the
sale of its limited partnership units to the Transferee Company in exchange for
a limited partnership interest in the Transferee Company.
7. Each Purchaser shall have received an opinion from Xxxxxxx & Xxxxx
L.L.P., special counsel for the Transferee Company, in form and substance
satisfactory to such Purchaser, dated the date of Closing, covering the matters
set forth in Annex II to this Schedule and covering such other matters incident
to the Transferee Company's assumption of the obligations of the Company under
the Note Purchase Agreement and the Notes and the other transactions
contemplated herein as such Purchaser or such Purchaser's counsel may reasonably
request.
SCHEDULE 4.7(d)
(TO NOTE PURCHASE AGREEMENT)
BB-1
72
FORM OF ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated as of August 1, 1999 made by ALLIANCE
RESOURCE OPERATING PARTNERS, L.P., a Delaware limited partnership (the
"Transferee Company'), in favor of the persons or entities listed on Schedule A
attached hereto (the "Noteholders"), each of which is a party to that certain
Note Purchase Agreement dated as of August 1, 1999 (the "Note Purchase
Agreement") of Alliance Resource GP, LLC, a Delaware limited liability company
that is the special general partner of the Transferee Company (the "Company").
Capitalized terms used herein without definition shall have the meanings
assigned to such terms in the Note Purchase Agreement.
WITNESSETH:
WHEREAS, pursuant to the Contribution Agreement dated as of August 1,
1999, between the Company and the Transferee Company, the Company has conveyed a
99.999% interest in (i) MAPCO Coal LLC, a Delaware limited liability company,
and (ii) MC Mining LLC, a Delaware limited liability company, to the Transferee
Company in exchange for a .001% general partner interest and a limited partner
interest in the Transferee Company and the assumption by the Transferee Company
all of the rights, duties, liabilities and obligations of the Company,
including, without limitation, all of the rights, duties, liabilities and
obligations of the Company under the Note Purchase Agreement and the Notes (the
"Transaction"); and
WHEREAS, the Transferee Company, as the transferee of such assets of
the Company pursuant to the Transaction, shall receive direct and indirect
benefits by reason of the investments made by the Noteholders under the Note
Purchase Agreement (which benefits are hereby acknowledged); and
WHEREAS, the Note Purchase Agreement requires, as a condition
precedent to the issuance and sale of the Notes, that the Transferee Company
execute and deliver this Agreement;
Now THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Transferee Company hereby agrees as follows:
1. Assumption. (a) The Transferee Company, as the transferee of
the above described assets of the Company pursuant to the Transaction,
hereby unconditionally and expressly assumes, confirms and agrees to
perform and observe each and every one of the covenants, rights,
promises, agreements, terms, conditions, obligations, duties and
liabilities of the Company under the Note Purchase Agreement and the
Notes and under any documents, instruments or agreements executed and
delivered or furnished by the Company in connection therewith.
ANNEX I
(TO SCHEDULE 4.7(d) TO NOTE PURCHASE AGREEMENT)
-1-
73
(b) From and after the effectiveness of this Agreement (as
provided in Section 6 hereof), unless the context clearly otherwise
requires, all references to "the Company" in the Note Purchase
Agreement or any Note or any other document, instrument or agreement
(other than this Agreement) executed and delivered or furnished, or to
be executed and delivered or furnished, in connection therewith shall
be deemed to be references to the Transferee Company, except that
references to the Company as at any time prior to the consummation of
the initial issuance, sale and delivery of the Notes under the Note
Purchase Agreement and satisfaction of all conditions precedent
thereto shall continue as references to the Company.
2. Representations and Warranties. The Transferee Company hereby
accepts and assumes all obligations and liabilities of the Company related to
each representation or warranty made by the Company in the Note Purchase
Agreement or any other document, instrument or agreement executed and delivered
or furnished in connection therewith. In addition, the Transferee Company
further represents, warrants and affirms for the benefit of the Noteholders
that, after giving effect to the Assumption Conditions:
(a) Organization; Power and Authority; Ownership. The Transferee
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 or in good
standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Transferee Company has
the 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 to perform the provisions hereof.
(b) Authorization, Etc. This Agreement has been duly authorized by
all necessary action on the part of the Board of Directors of Alliance
Coal Corporation, a Delaware corporation, which is the sole general
partner of the Transferee Company, and this Agreement constitutes, and
upon execution and delivery thereof each Note will constitute, a
legal, valid and binding obligation of the Transferee Company
enforceable against the Transferee 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).
(c) Compliance with Laws, Other Instruments, Etc. The execution,
delivery and performance by the Transferee Company of this Agreement
will not (i) 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 Transferee Company or any Restricted Subsidiary under,
any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, articles of formation, partnership agreement,
operating agreement or other agreement or instrument to
-2-
74
which the Transferee Company or any Restricted Subsidiary is bound or
by which the Transferee Company or any Restricted Subsidiary or any of
their respective properties may be bound or affected, (ii) result in a
breach of any of the terms, conditions or provisions of any Material
order, judgment, decree, or ruling of any court, arbitrator or
Governmental Authority applicable to the Transferee Company or any
Restricted Subsidiary or (iii) violate any provision of any statute or
other rule or regulation of any Governmental Authority applicable to
the Transferee Company or any Restricted Subsidiary.
(d) Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution,
delivery or performance by the Transferee Company of this Agreement.
(e) Pari Passu Ranking. The Transferee Company's obligations
under the Notes, and the Note Purchase Agreement will rank at least
pari passu, without preference or priority with all of the outstanding
unsecured and unsubordinated Debt of the Transferee Company.
(f) Default. No Default or Event of Default has occurred and is
continuing under the Note Purchase Agreement.
3. Further Assurances. At any time and from time to time, upon any
Noteholder's request and at the sole expense of the Transferee Company, the
Transferee Company will promptly execute and deliver any and all further
instruments and documents and will take such further action as such Noteholder
may reasonably deem necessary to effect the purposes of this Agreement.
4. Amendment, Etc. No amendment or waiver of any provision of this
Agreement shall be effective, unless the same be in writing and executed in
accordance with the provisions of the Note Purchase Agreement.
5. Notices Under Section 18(iii) of Note Purchase Agreement. From and
after the effectiveness of this Agreement (as provided in Section 6 hereof), all
notices and communications to the Company under the Note Purchase Agreement
shall be sent to:
Alliance Resource Operating Partners, L.P.
------------------------------------------
------------------------------------------
Attention:
--------------------------------
6. Binding Effect; Assignment; Effectiveness. This Agreement shall be
binding upon the Transferee Company, and shall inure to the benefit of the
Noteholders and their respective successors and assigns. This Agreement shall
take effect as of a moment in time one nanosecond following the initial
issuance, sale and delivery of the Notes by the Company pursuant to the Note
Purchase Agreement.
-3-
75
7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered by its duly authorized officer on the date first
above written.
ALLIANCE RESOURCE OPERATING PARTNERS, L.P.
By: Alliance Resource Management GP, LLC,
its Managing General Partner
By: Alliance Coal Corporation, its sole
member
By:
---------------------------------------
Name:
Title:
Agreed and consented to as of
the date first above written
ALLIANCE RESOURCE GP, LLC
By: Alliance Coal Corporation, its sole member
By:
---------------------------------------
Name:
Title:
-4-
76
FORM OF OPINION OF SPECIAL COUNSEL
FOR THE TRANSFEREE COMPANY
[A draft will be provided by Xxxxxxx & Xxxxx X.X.X.]
XXXXX XX
(TO SCHEDULE 4.7(d) TO NOTE PURCHASE AGREEMENT)
77
OWNERSHIP OF COMPANY
[To be provided by Company]
SCHEDULE 5.1
(TO NOTE PURCHASE AGREEMENT)
78
DISCLOSURE MATERIALS
[To be provided by Company]
SCHEDULE 5.3
(TO NOTE PURCHASE AGREEMENT)
79
SUBSIDIARIES OF COMPANY AND OWNERSHIP
OF SUBSIDIARIES CAPITAL STOCK
[To be provided by Company]
SCHEDULE 5.4
(TO NOTE PURCHASE AGREEMENT)
80
FINANCIAL STATEMENTS
[To be provided by Company]
SCHEDULE 5.5
(TO NOTE PURCHASE AGREEMENT)
81
CERTAIN LITIGATION
[To be provided by Company]
SCHEDULE 5.8
(TO NOTE PURCHASE AGREEMENT)
82
LICENSES, PERMITS, ETC.
[To be provided by Company]
SCHEDULE 5.11
(TO NOTE PURCHASE AGREEMENT)
83
USE OF PROCEEDS
[The proceeds from the issuance and sale of the Notes will be used to
repay certain of the Company's existing Debt and for general corporate
purposes.]
SCHEDULE 5.14
(TO NOTE PURCHASE AGREEMENT)
84
EXISTING DEBT AND LIENS
[To be provided by Company]
SCHEDULE 5.15
(TO NOTE PURCHASE AGREEMENT)
85
[FORM OF NOTE]
ALLIANCE RESOURCE GP, LLC
8.31% SENIOR NOTE, DUE AUGUST 1, 2014
No. [R- ] [Date]
--
$[ ] PPN
---------- ---------
FOR VALUE RECEIVED, the undersigned, ALLIANCE RESOURCE GP, LLC (herein
called the "Company"), a limited liability company organized and existing under
the laws of the State of [Delaware], hereby promises to pay to [____________] or
registered assigns, the principal sum of [__________] DOLLARS on August 1, 2014
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance thereof at the rate of 8.31% per annum. from the date
hereof, payable semiannually, on the first day of February and August in each
year, commencing with the February or August next succeeding the date hereof,
until the principal hereof shall have become due and payable, and (b) to the
extent permitted by law, on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum. from time to time
equal to the greater of (i) 10.31% or (i) the rate of interest publicly
announced by The Chase Manhattan Bank from time to time as its "base" or "prime"
rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of The Chase Manhattan Bank in New York City or
at such other place as provided in the Note Purchase Agreement referred to
below.
This Note is one of the 8.31% Senior Notes (herein called the
"Notes"), issued pursuant to the Note Purchase Agreement, dated as of August 1,
1999 (as from time to time amended, the "Note Purchase Agreement"), between the
Company and the Purchasers named therein and is entitled to the benefits
thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreement and (ii) to have made the applicable representation set
forth in Section 6.2 of the Note Purchase Agreement, and (iii) to have made the
agreement contained in Section 22.7 of the Note Purchase Agreement. The Notes
are entitled to the benefits of a Subsidiary Guarantee Agreement and an
Intercreditor Agreement (each as defined in the Note Purchase Agreement).
EXHIBIT 1
(TO NOTE PURCHASE AGREEMENT)
1-1
86
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such xxxxxx's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreement. This Note is also
subject to prepayment, in whole or from time to time in part, at the times and
on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
This Note shall be construed and enforced in accordance with, and the
rights of the issuer and holder hereof shall be governed by, the law of the
State of New York.
ALLIANCE RESOURCE GP, LLC
By: Alliance Coal Corporation, its sole member
-------------------------------------------
By:
-------------------------------------------
Its
-------------------------------------------
1-2
87
FORM OF OPINION OF SPECIAL COUNSEL FOR THE COMPANY
The closing opinion of Xxxxxxx & Xxxxx L.L.P., special counsel for the
Company, which is called for by Section 4.4(a) of the Note Purchase Agreement
shall be dated the date of the Closing and addressed to the Purchasers, shall be
satisfactory in scope and form to the Purchasers and shall be to the effect
that:
[To come]
EXHIBIT 4.4(a)
(TO NOTE PURCHASE AGREEMENT)
88
FORM OF OPINION OF SPECIAL COUNSEL
FOR THE ORIGINAL SUBSIDIARY GUARANTORS
The closing opinion of Xxxxxxx & Xxxxx L.L.P., special counsel for the
Original Subsidiary Guarantors, which is called for by Section 4.4(b) of the
Note Purchase Agreement, shall be dated the date of the Closing and addressed to
the Purchasers, shall be satisfactory in scope and form to the Purchasers and
shall be to the effect that:
[To come]
EXHIBIT 4.4(b)
(TO NOTE PURCHASE AGREEMENT)
89
FORM OF OPINION OF SPECIAL COUNSEL
FOR THE PURCHASERS
The closing opinion of Xxxxxxx Xxxx & Xxxxxxxxx, special counsel for
the Purchasers, called for by Section 4.4(b) of the Note Purchase Agreement,
shall be dated the date of the Closing and addressed to the Purchasers, shall be
satisfactory in form and substance to the Purchasers and shall be to the effect
that:
1. The Company is a limited liability company, validly existing and in
good standing under the laws of the State of Delaware and has the power and the
authority to execute and deliver the Note Purchase Agreement and to issue the
Notes.
2. The Note Purchase Agreement has been duly authorized by all
necessary action on behalf of the Company, has been duly executed and delivered
on behalf of the Company and constitutes the legal, valid and binding contract
of the Company enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors' rights
generally, and general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in equity or at
law).
3. The Notes have been duly authorized by all necessary action on
behalf of the Company, and the Notes being delivered on the date hereof have
been duly executed and delivered on behalf of the Company and constitute the
legal, valid and binding obligations of the Company enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreement do not, under existing
law, require the registration of the Notes under the Securities Act of 1933, as
amended, or the qualification of an indenture under the Trust Indenture Act of
1939, as amended.
The opinion of Xxxxxxx Xxxx & Xxxxxxxxx shall also state that the
opinions of Xxxxxxx & Xxxxx L.L.P., special counsel for the Company and the
Original Subsidiary Guarantors are satisfactory in scope and form to Xxxxxxx
Xxxx & Xxxxxxxxx and that, in their opinion, the Purchasers are justified in
relying thereon.
In rendering the opinion set forth in paragraph 1 above, Xxxxxxx Xxxx
& Xxxxxxxxx may rely, as to matters referred to in paragraph 1, solely upon an
examination of the Articles of Formation certified by, the Secretary of State of
the State of Delaware, and the operating agreement of the
EXHIBIT 4.4(c)
(TO NOTE PURCHASE AGREEMENT)
90
Company. The opinion of Xxxxxxx Xxxx & Xxxxxxxxx shall be limited to the laws of
the State of New York, the Delaware limited liability company law and the
Federal laws of the United States.
With respect to matters of fact upon which such opinion is based,
Xxxxxxx Xxxx & Xxxxxxxxx may rely on appropriate certificates of public
officials, appropriate certificates delivered on behalf of the Company,
representations made on behalf of the Company and representations of the
Purchasers delivered in connection with the issuance and sale of the Notes.
91
FORM OF SUBSIDIARY GUARANTEE AGREEMENT
[To be based on Subsidiary Guarantee Agreement used by Banks with
respect to the Bank Facility]
EXHIBIT 4.5
(TO NOTE PURCHASE AGREEMENT)
