EXHIBIT 1.1
EXECUTION COPY
ARCH WESTERN FINANCE, LLC
$250,000,000
6 3/4% Senior Notes Due 2013
Purchase Agreement
New York, New York
October 19, 2004
Citigroup Global Markets Inc.
X.X. Xxxxxx Securities Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
As Representatives of the Initial Purchasers
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Arch Western Finance, LLC, a limited liability company
organized under the laws of Delaware (the "Issuer"), proposes to issue and sell
to the several parties named in Schedule I hereto (the "Initial Purchasers"),
for whom you (the "Representatives") are acting as representatives, $250,000,000
principal amount of its 6 3/4% Senior Notes Due 2013 (the "Notes"). The Notes
will be fully and unconditionally guaranteed as to the payment of principal,
premium, if any, and interest (the "Guarantees" and together with the Notes,
hereinafter referred to as the "Securities") by Arch Western Resources, LLC, a
limited liability company organized under the laws of Delaware ("Arch Western"),
and each of Arch Western's wholly owned subsidiaries listed in Schedule II
hereto (each a "Subsidiary Guarantor" and collectively the "Subsidiary
Guarantors" and together with Arch Western, hereinafter referred to as the
"Guarantors"). The Securities are to be issued under an indenture, dated as of
June 25, 2003, as supplemented (the "Indenture") among the Issuer, the
Guarantors and the Bank of New York, as trustee (the "Trustee"). The Securities
have the benefit of a registration rights agreement (the "Registration Rights
Agreement"), to be dated the Closing Date (as defined below), among the Issuer,
Arch Coal, Inc., a corporation organized under the laws of Delaware (the
"Company"), the Guarantors and the Initial Purchasers, pursuant to which each of
the Issuer and the Guarantors, jointly and severally, has agreed to register the
Securities under the Act subject to the terms and conditions therein specified.
Pursuant to a pledge agreement (the "Pledge Agreement"), dated as of June 25,
2003, between Arch Western and the Trustee, the obligations of each of the
Issuer and the Guarantors shall be secured by demand promissory notes (the
"Company Notes"), issued by the Company to Arch Western and pledged by Arch
Western to the Trustee as security for the payment of the Notes. The use of the
neuter in this Agreement shall include the feminine and masculine wherever
appropriate. Certain terms used herein are defined in Section 17 hereof.
The sale of the Securities to the Initial Purchasers will be
made without registration of the Securities under the Act in reliance upon
exemptions from the registration requirements of the Act.
In connection with the sale of the Securities, the Company and
Arch Western have prepared a preliminary offering memorandum, dated October 18,
2004 (as amended or supplemented at the Execution Time, including any and all
exhibits thereto and any information incorporated by reference therein, the
"Preliminary Memorandum"), and a final offering memorandum, dated October 19,
2004 (as amended or supplemented at the Execution Time, including any and all
exhibits thereto and any information incorporated by reference therein, the
"Final Memorandum"). Each of the Preliminary Memorandum and the Final Memorandum
sets forth certain information concerning the Issuer, the Company, the
Guarantors and the Securities. Each of the Issuer, the Company and the
Guarantors hereby confirms that it has authorized the use of the Preliminary
Memorandum and the Final Memorandum, and any amendment or supplement thereto, in
connection with the offer and sale of the Securities by the Initial Purchasers.
Unless stated to the contrary, any reference herein to the terms "amend",
"amendment" or "supplement" with respect to the Final Memorandum shall be deemed
to refer to and include any information filed under the Exchange Act subsequent
to the Execution Time which is incorporated by reference therein.
1. Representations and Warranties. Each of the Issuer, the
Company and the Guarantors, jointly and severally, represents and warrants, as
of the Execution Time and as of the Closing Date, to each Initial Purchaser as
set forth below in this Section 1.
(a) The Preliminary Memorandum, at the date thereof, did not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. At the date of the Final Memorandum,
on the Closing Date and on any settlement date, the Final Memorandum did not and
will not (and any amendment or supplement thereto, at the date thereof, at the
Closing Date and on any settlement date, will not), contain any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Issuer, the Company and the
Guarantors make no representation or warranty as to the information contained in
or omitted from the Preliminary Memorandum or the Final Memorandum, or any
amendment or supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Issuer, Company or any Guarantor by or
on behalf of the Initial Purchasers through the Representatives specifically for
inclusion therein.
(b) The documents incorporated or deemed to be incorporated by
reference in the Final Memorandum, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects with the
requirements of the Exchange Act and, when read together with the other
information in the Final Memorandum, at the date of the Final Memorandum, at the
Closing Date and on any settlement date, did not, do not and will not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
2
(c) Neither the Issuer, nor the Company, nor any Guarantor,
nor any of its or their Affiliates, nor any person acting on its or their behalf
has, directly or indirectly, made offers or sales of any security, or solicited
offers to buy any security, under circumstances that would require the
registration of the Securities under the Act.
(d) Neither the Issuer, nor the Company, nor any Guarantor,
nor any of its or their Affiliates, nor any person acting on its or their behalf
has engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with any offer or sale of the
Securities in the United States.
(e) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Act.
(f) Neither the Issuer, nor the Company, nor any Guarantor,
nor any of its or their Affiliates, nor any person acting on its or their behalf
has engaged in any directed selling efforts with respect to the Securities, and
each of them has complied with the offering restrictions requirement of
Regulation S. Terms used in this paragraph have the meanings given to them by
Regulation S.
(g) The Issuer, the Company and the Guarantors have been
advised by the NASD's PORTAL Market that the Securities have been designated
PORTAL eligible securities in accordance with the rules and regulations of the
NASD.
(h) Neither the Issuer, nor the Company nor any Guarantor has
paid or agreed to pay to any person any compensation for soliciting another to
purchase any securities of the Issuer, the Company or any Guarantor (except as
contemplated by this Agreement).
(i) Neither the Issuer, nor the Company nor any Guarantor has
taken, directly or indirectly, any action designed to cause or which has
constituted or which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in the stabilization or manipulation of the price of
any security of the Issuer or any Guarantor to facilitate the sale or resale of
the Securities.
(j) Neither the Issuer nor any Guarantor is, and upon the
issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Final Memorandum will be, an
"investment company" or an entity "controlled" by an "investment company", as
such terms are defined in the Investment Company Act.
(k) The information provided by the Issuer, the Company and
the Guarantors pursuant to Section 5(h) hereof will not, at the date thereof,
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(l) All information related to the coal reserves of (i) the
Company and its subsidiaries, and (ii) Arch Western and its subsidiaries,
(including, without limitation, each of the Company's and Arch Western's
respective (x) estimated assigned and unassigned recoverable coal reserves and
(y) proven, probable and total recoverable coal reserves, in the aggregate and
by region and mining complex location) included in the Final Memorandum as of
the date of the Final Memorandum and at the Closing Time (the "Coal Reserve
Information"),
3
(A) was and is accurate in all material respects, (B) would, if the offer and
sale of the Securities were registered under the Act, comply in all material
respects with the requirements of the Act, and complied and will comply in all
material respects with the requirements of the Exchange Act, as applicable, and
(C) when read together with the other information in the Final Memorandum, did
not and will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading. The Coal Reserve Information has been
calculated in accordance with standard mining engineering procedures used in the
coal industry and applicable government reporting requirements and applicable
law. All assumptions used in the calculation of the Coal Reserve Information
were and are reasonable.
(m) Since the date as of which information is given in the
Final Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, properties, business or prospects of (i) the Company and its
subsidiaries, taken as a whole, or (ii) Arch Western and its subsidiaries, taken
as a whole, whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), (B) there have been no transactions entered into by
the Company and its subsidiaries or Arch Western and its subsidiaries, other
than those arising in the ordinary course of business, which are material with
respect to the Company and its subsidiaries, taken as a whole, or Arch Western
and its subsidiaries, taken as a whole, and (C) except for (i) regular quarterly
dividends on the Company's common stock, in amounts per share that are
consistent with past practice, (ii) the Preferred Return paid by Arch Western
and (iii) preferred dividends paid with respect to the Company's 5% Perpetual
Cumulative Convertible Preferred STOCK, in accordance with the terms thereof,
there has been no dividend or distribution of any kind declared, paid or made by
the Company or Arch Western on any class of their respective capital stock.
(n) The Issuer has been duly organized and is validly existing
as a limited liability company in good standing under the laws of the State of
Delaware and has power and authority to own, lease and operate its properties
and to conduct its business as described in the Final Memorandum and to enter
into and perform its obligations under, or as contemplated under, this
Agreement. The Issuer is duly qualified to transact business and is in good
standing in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good standing would
not result in a Material Adverse Effect. All of the issued and outstanding
capital stock of the Issuer has been duly authorized and is validly issued,
fully paid and non-assessable and is owned by Arch Western, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. None of the outstanding shares of capital stock of
the Issuer was issued in violation of preemptive or other similar rights of any
securityholder of the Issuer.
(o) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware and has power and authority to own, lease and operate its properties
and to conduct its business as described in the Final Memorandum and to enter
into and perform its obligations under, or as contemplated under, this
Agreement. The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not result in a Material Adverse
4
Effect. All of the issued and outstanding capital stock of the Company has been
duly authorized and validly issued by the Company, fully paid and
non-assessable, and was not issued in violation of preemptive or other similar
rights of any securityholder of the Company.
(p) Arch Western has been duly organized and is validly
existing as a limited liability company in good standing under the laws of the
State of Delaware and has the power and authority to own, lease and operate its
properties and to conduct its business as described in the Final Memorandum and
to enter into and perform its obligations under, or as contemplated under, this
Agreement. Arch Western is duly qualified to transact business and is in good
standing in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good standing would
not result in a Material Adverse Effect. All of the issued and outstanding
capital stock of Arch Western has been duly authorized and validly issued, fully
paid and non-assessable and, except as otherwise stated in the Final Memorandum,
is owned by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity. None of
the outstanding shares of capital stock of Arch Western was issued in violation
of preemptive or other similar rights of any securityholder of Arch Western.
(q) Each Subsidiary of the Company that is not a Guarantor has
been duly organized and is validly existing as a corporation, limited liability
company or partnership, as applicable, in good standing under the laws of the
jurisdiction of its formation, has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the Final
Memorandum and is duly qualified to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure to so qualify or be in good standing would not result in a Material
Adverse Effect. Except as otherwise stated in the Final Memorandum, all of the
issued and outstanding capital stock of each Subsidiary of the Company that is
not a Guarantor has been duly authorized and validly issued, fully paid and
non-assessable and is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity. None of the outstanding shares of capital stock of any
Subsidiary of the Company that is not a Guarantor was issued in violation of
preemptive or other similar rights of any securityholder of such Subsidiary of
the Company.
(r) Each Subsidiary Guarantor and Canyon Fuel Company, LLC
("Canyon Fuel") has been duly organized and is validly existing as a limited
liability company in good standing under the laws of Delaware, has power and
authority to own, lease and operate its properties and to conduct its business
as described in the Final Memorandum and is duly qualified to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or be in good
standing would not result in a Material Adverse Effect. Except as otherwise
stated in the Final Memorandum, all of the issued and outstanding capital stock
of each Subsidiary Guarantor and Canyon Fuel has been duly authorized and
validly issued, fully paid and non-assessable and is owned by Arch Western,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity. None of the outstanding
shares of capital stock of any Subsidiary
5
Guarantor or Canyon Fuel was issued in violation of preemptive or other similar
rights of any securityholder of such Subsidiary Guarantor or Canyon Fuel.
(s) The authorized, issued and outstanding capital stock of
the Company and Arch Western is as set forth in the column entitled "Actual"
under the caption "Capitalization" (except for subsequent issuances, if any,
pursuant to reservations, agreements or employee benefit plans referred to or
incorporated by reference in the Final Memorandum or pursuant to the exercise of
convertible securities or options referred to or included in the Final
Memorandum).
(t) The statements in the Final Memorandum under the headings
"Governing Documents and Certain Other Agreements", "Certain Relationships and
Related Party Transactions", "Description of the Notes", "Exchange Offer;
Registration Rights", "Important Federal Income Tax Considerations" and "ERISA
Considerations", fairly summarize the matters therein described.
(u) This Agreement has been duly authorized, executed and
delivered by each of the Issuer, the Company and the Guarantors.
(v) The Indenture has been duly authorized, executed and
delivered by each of the Issuer and the Guarantors and constitutes a valid and
binding obligation of the Issuer and the Guarantors, enforceable against each of
them in accordance with its terms (subject, as to the enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect and to general
principles of equity).
(w) The Notes have been duly authorized, and, when executed
and authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchasers as provided in the Final
Memorandum, will have been duly executed and delivered by the Issuer and will
constitute a valid and binding obligation of the Issuer, enforceable against the
Issuer in accordance with its terms, and will be entitled to the benefits of the
Indenture (subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of equity).
(x) The Company Notes have been duly authorized, executed and
delivered by the Company and constitute the legal, valid and binding obligations
of the Company (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity).
(y) Each Guarantee has been duly authorized, and when executed
and delivered in accordance with the provisions of the Indenture, will have been
duly executed and delivered by each of Arch Western and the Subsidiary
Guarantors and will constitute a valid and binding obligation of Arch Western
and each Subsidiary Guarantor, enforceable against each of them in accordance
with its terms, and will be entitled to the benefits of the Indenture (subject,
as to the enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights generally from
time to time in effect and to general principles of equity).
6
(z) The Registration Rights Agreement has been duly authorized
and, when executed and delivered by each of the Issuer, the Company and the
Guarantors, will constitute a valid and binding obligation of the Issuer, the
Company and each Guarantor, enforceable against each of them in accordance with
its terms (subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of equity and
except as rights to indemnification or contribution thereunder may be limited by
federal or state securities laws or the public policy underlying such laws).
(aa) The Pledge Agreement has been duly authorized, executed
and delivered by Arch Western and constitutes a valid and binding obligation of
Arch Western, enforceable against Arch Western in accordance with its terms
(subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of equity) and
at the time of the sale of the Securities, the Pledge Agreement will have
created a valid, continuing and perfected first priority security interest in
favor of the Trustee in the Company Notes, pledged thereunder as security for
the payment of the Notes.
(bb) Neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to which
any of the assets, properties or operations of the Company or any of its
subsidiaries is subject (collectively, "Agreements and Instruments"), except for
such defaults that would not result in a Material Adverse Effect. The execution,
delivery and performance of this Agreement, the Indenture, the Registration
Rights Agreement, the Pledge Agreement and any other agreement or instrument
entered into or issued or to be entered into or issued by each of the Issuer,
the Company and the Guarantors in connection with the transactions contemplated
hereby or thereby or in the Final Memorandum and the consummation of the
transactions contemplated herein and in the Final Memorandum (including the
issuance and sale of the Securities and the use of the proceeds from the sale of
the Securities as described under the caption "Use of Proceeds" in the Final
Memorandum) and compliance by each of the Issuer, the Company and the Guarantors
with its obligations hereunder and thereunder have been duly authorized by all
necessary corporate or other action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below) under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any assets, properties or operations of the Company or any of its subsidiaries
pursuant to, any Agreements and Instruments (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any of its subsidiaries
or any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its subsidiaries or any
of their assets, properties or operations.
(cc) No labor dispute with the employees of the Company or any
of its subsidiaries exists or, to the knowledge of the Company, is imminent, and
the Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or any
7
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.
(dd) There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of each of the Issuer,
the Company and the Guarantors, threatened, against or affecting the Company or
any of its subsidiaries which would be required to be disclosed in a
Registration Statement if the offer and sale of the Securities were to be
registered under the Act (other than as stated in the Final Memorandum), or
which might reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect the
assets, properties or operations thereof or the consummation of the transactions
contemplated under the Final Memorandum, this Agreement, the Indenture, the
Registration Rights Agreement, the Pledge Agreement or the performance by each
of the Issuer, the Company and the Guarantors of its obligations hereunder and
thereunder. The aggregate of all pending legal or governmental proceedings to
which the Company or any of its subsidiaries is a party or of which any of their
respective assets, properties or operations is subject which are not described
in the Final Memorandum, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(ee) There are no contracts or documents required to be
described in the documents incorporated by reference in the Final Memorandum or
to be filed as exhibits thereto, which have not been so described and filed as
required.
(ff) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, is necessary or required
for the due authorization, execution and delivery by each of the Issuer, the
Company and the Guarantors of this Agreement in connection with the issuance of
the Securities or for the performance by each of the Issuer, the Company and the
Guarantors of the transactions contemplated under the Final Memorandum, this
Agreement, the Indenture, the Registration Rights Agreement or the Pledge
Agreement, except such as have been already made, obtained or rendered, and such
as will be obtained under the Act and the Trust Indenture Act and such as may be
required under blue sky laws of any jurisdiction in connection with the purchase
and sale by the Initial Purchasers in the manner contemplated herein and in the
Final Memorandum and the Registration Rights Agreement, as applicable, as of the
Closing Date.
(gg) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in a Material Adverse Effect.
8
(hh) The Company and its subsidiaries possess such permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them. The Company and its subsidiaries are in compliance with the
terms and conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, result in a Material Adverse
Effect. All of the Governmental Licenses are valid and in full force and effect,
except where the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not result in a
Material Adverse Effect. Neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(ii) The Company and its subsidiaries have good and marketable
title to all real property owned by the Company and its subsidiaries and good
title to all other properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind, except (i) as otherwise stated in the Final Memorandum
or (ii) those which do not, singly or in the aggregate, materially affect the
value of such property and do not interfere with the use made and proposed to be
made of such property by the Company or any of its subsidiaries. All of the
leases and subleases material to the business of (1) the Company and its
subsidiaries, taken as a whole, and (2) Arch Western and its subsidiaries, taken
as a whole, and under which the Company or any of its subsidiaries holds
properties described in the Final Memorandum, are in full force and effect, and
neither the Company nor any of its subsidiaries has received any notice of any
material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any of its subsidiaries under any of the leases or
subleases mentioned above, or affecting or questioning the rights of the Company
or such subsidiary of the continued possession of the leased or subleased
premises under any such lease or sublease.
(jj) Except as otherwise stated in the Final Memorandum and
except as would not, singly or in the aggregate, result in a Material Adverse
Effect, (i) neither the Company nor any of its subsidiaries is in violation of
any federal, state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof including any judicial or administrative order, consent,
decree or judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (ii) neither the Company nor any of its subsidiaries
fails to possess any permit, authorization or approval required under any
applicable Environmental Laws or to be in compliance with their requirements,
(iii) there are no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries and (iv) there are no events or
circumstances that might reasonably be expected to form the basis of an order
for clean-up or remediation, or an action, suit or proceeding by any private
party or governmental body or
9
agency, against or affecting the Company or any of its subsidiaries relating to
Hazardous Materials or any Environmental Laws.
(kk) The consolidated historical financial statements and
schedules of (i) the Company and its consolidated subsidiaries, (ii) Arch
Western and its consolidated subsidiaries, (iii) Canyon Fuel and (iv) Vulcan
Coal Holdings, L.L.C. ("Vulcan") and its consolidated subsidiaries included in
the Final Memorandum present fairly in all material respects the financial
condition, results of operations and cash flows of the Company, Arch Western,
Canyon Fuel and Vulcan respectively, as of the dates and for the periods
indicated, comply as to form with the applicable accounting requirements of the
Act and have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as otherwise noted therein); the selected financial data set forth under the
captions "Arch Western Selected Consolidated Financial and Operating Data" and
"Arch Coal Selected Consolidated Financial and Operating Data" in the Final
Memorandum fairly present, on the basis stated in the Final Memorandum, the
information included therein; the pro forma financial statements included in the
Final Memorandum include assumptions that provide a reasonable basis for
presenting the significant effects directly attributable to the transactions and
events described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma adjustments reflect the proper
application of those adjustments to the historical financial statement amounts
in the pro forma financial statements included in the Final Memorandum; the pro
forma financial statements included in the Final Memorandum comply as to form in
all material respects with the applicable accounting requirements of Regulation
S-X under the Act; and the pro forma adjustments have been properly applied to
the historical amounts in the compilation of those statements.
(ll) (i) Ernst & Young LLP, who have certified certain audited
financial statements of (1) the Company and its consolidated subsidiaries, (2)
Arch Western and its consolidated subsidiaries and (3) Canyon Fuel and delivered
their reports with respect to the audited consolidated financial statements and
schedules of the Company, Arch Western and Canyon Fuel, respectively, included
in the Final Memorandum, are independent public accountants with respect to the
Company, Arch Western, and Canyon Fuel within the meaning of the Act and (ii)
PricewaterhouseCoopers LLP, who have certified certain audited financial
statements of Vulcan and its consolidated subsidiaries and delivered their
report with respect to the audited consolidated financial statements and
schedules of Vulcan included in the Final Memorandum, are independent public
accountants with respect to Vulcan under Rule 101 of AICPA's Code of
Professional Conduct.
(mm) There are no stamp or other issuance or transfer taxes or
duties or other similar fees or charges under federal law or the laws of any
state, or any political subdivision thereof, required to be paid in connection
with the execution and delivery of this Agreement or the issuance or sale by the
Issuer and the Guarantors of the Securities.
(nn) Each of the Company and its subsidiaries has filed all
foreign, federal, state and local tax returns that are required to be filed or
has requested extensions thereof except in any case in which the failure so to
file would not have a Material Adverse Effect and except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment or supplement
thereto) and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except
10
for any such assessment, fine or penalty that is currently being contested in
good faith or as would not have a Material Adverse Effect and except as set
forth in or contemplated in the Final Memorandum (exclusive of any amendment or
supplement thereto).
(oo) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; all policies of insurance and fidelity or surety bonds insuring the
Company, or any of its subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect; the Company and
its subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the Company or
any of its subsidiaries under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of
rights clause; neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect, except as set
forth in or contemplated in the Final Memorandum (exclusive of any amendment or
supplement thereto).
(pp) No subsidiary of the Company and no subsidiary of Arch
Western is currently prohibited, directly or indirectly, from paying any
dividends to the Company or Arch Western, as the case may be, from making any
other distribution on such subsidiary's capital stock, from repaying to the
Company or Arch Western, as the case may be, any loans or advances to such
subsidiary from the Company or Arch Western, as the case may be, or from
transferring any of such subsidiary's property or assets to the Company or Arch
Western, as the case may be, or any other subsidiary of the Company or Arch
Western, as the case may be, except as described in or contemplated by the Final
Memorandum (exclusive of any amendment or supplement thereto).
(qq) The Company, Arch Western, and each of their respective
subsidiaries, maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(rr) Each of the Company and its subsidiaries has fulfilled
its obligations, if any, under the minimum funding standards of Section 302 of
the United States Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the regulations and published interpretations thereunder with
respect to each "plan" (as defined in Section 3(3) of ERISA and such regulations
and published interpretations) in which employees of the Company and its
subsidiaries are eligible to participate and each such plan is in compliance in
all material respects with the presently applicable provisions of ERISA and such
regulations and published interpretations; the Company and its subsidiaries have
not incurred any unpaid liability to the
11
Pension Benefit Guaranty Corporation (other than for the payment of premiums in
the ordinary course) or to any such plan under Title IV of ERISA.
Any certificate signed by any officer of the Issuer or any
Guarantor and delivered to the Representatives or counsel for the Initial
Purchasers in connection with the offering of the Securities shall be deemed a
representation and warranty by the Issuer or such Guarantor, as to matters
covered thereby, to each Initial Purchaser.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the Issuer
agrees to sell to each Initial Purchaser, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Issuer, at a purchase price of
102.916875% of the principal amount thereof, plus accrued interest from July 1,
2004 to the Closing Date, the principal amount of Securities set forth opposite
such Initial Purchaser's name in Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the
Securities shall be made at 10:00 A.M., New York City time, on October 22, 2004,
or at such time on such later date (not later than October 29, 2004) as the
Representatives shall designate, which date and time may be postponed by
agreement between the Representatives and the Company or as provided in Section
9 hereof (such date and time of delivery and payment for the Securities being
herein called the "Closing Date"). Delivery of the Securities shall be made to
the Representatives for the respective accounts of the several Initial
Purchasers against payment by the several Initial Purchasers through the
Representatives of the purchase price thereof to or upon the order of Arch
Western by wire transfer payable in same-day funds to the account specified by
Arch Western. Delivery of the Securities shall be made through the facilities of
The Depository Trust Company unless the Representatives shall otherwise
instruct.
4. Offering by Initial Purchasers. Each Initial Purchaser,
severally and not jointly, represents and warrants to and agrees with each of
the Issuer and the Guarantors that:
(a) It has not offered or sold, and will not offer or sell,
any Securities except (i) to those it reasonably believes to be qualified
institutional buyers (as defined in Rule 144A under the Act) and that, in
connection with each such sale, it has taken or will take reasonable steps to
ensure that the purchaser of such Securities is aware that such sale is being
made in reliance on Rule 144A or (ii) in accordance with the restrictions set
forth in Exhibit A hereto.
(b) Neither it nor any person acting on its behalf has made or
will make offers or sales of the Securities in the United States by means of any
form of general solicitation or general advertising (within the meaning of
Regulation D) in the United States.
5. Agreements. Each of the Issuer, the Company and the
Guarantors, jointly and severally, agrees with each Initial Purchaser that:
(a) The Issuer, the Company and the Guarantors will furnish to
each Initial Purchaser and to counsel for the Initial Purchasers, without
charge, during the period referred to in paragraph (c) below, as many copies of
the Final Memorandum and any amendments and supplements thereto as they may
reasonably request.
12
(b) The Issuer, the Company and the Guarantors will not amend
or supplement the Final Memorandum without the prior written consent of the
Representatives.
(c) If at any time prior to the completion of the sale of the
Securities by the Initial Purchasers (as determined by the Representatives), any
event occurs as a result of which the Final Memorandum, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it should
be necessary to amend or supplement the Final Memorandum to comply with
applicable law, the Company promptly (i) will notify the Representatives of any
such event; (ii) subject to the requirements of paragraph (b) of this Section 5,
will prepare an amendment or supplement that will correct such statement or
omission or effect such compliance; and (iii) will supply any supplemented or
amended Final Memorandum to the several Initial Purchasers and counsel for the
Initial Purchaser without charge in such quantities as they may reasonably
request.
(d) The Issuer, the Company and the Guarantors will arrange,
if necessary, for the qualification of the Securities for sale by the Initial
Purchasers under the laws of such jurisdictions as the Initial Purchasers may
designate and will maintain such qualifications in effect so long as required
for the sale of the Securities; provided that in no event shall the Issuer, the
Company and the Guarantors be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Securities, in any jurisdiction where it is not now so
subject. The Company will promptly advise the Representatives of the receipt by
the Issuer, the Company or any Guarantor of any notification with respect to the
suspension of the qualification of the Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose.
(e) The Issuer, the Company and the Guarantors will not, and
will not permit any of their respective Affiliates to, resell any Securities
that have been acquired by any of them.
(f) Neither the Issuer, nor the Company, nor any Guarantor,
nor any of their respective Affiliates, nor any person acting on their behalf
will, directly or indirectly, make offers or sales of any security, or solicit
offers to buy any security, under circumstances that would require the
registration of the Securities under the Act.
(g) Neither the Issuer, nor the Company, nor any Guarantor,
nor any of their respective Affiliates, nor any person acting on its or their
behalf will engage in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with any offer or sale of the
Securities in the United States.
(h) So long as any of the Securities are "restricted
securities" within the meaning of Rule 144(a)(3) under the Act, each of the
Company and Arch Western will, unless it becomes subject to and complies with
Section 13 or 15(d) of the Exchange Act, provide to each holder of such
restricted securities and to each prospective purchaser (as designated by such
holder) of such restricted securities, upon the request of such holder or
prospective purchaser, any information required to be provided by Rule
144A(d)(4) under the Act. This covenant is intended to be for the benefit of the
holders, and the prospective purchasers designated by such holders, from time to
time of such restricted securities.
13
(i) Neither the Issuer, nor the Company, nor any Guarantor,
nor any of their respective Affiliates, nor any person acting on their behalf
will engage in any directed selling efforts with respect to the Securities, and
each of them will comply with the offering restrictions requirement of
Regulation S. Terms used in this paragraph have the meanings given to them by
Regulation S.
(j) Each of the Issuer and the Guarantors will cooperate with
the Representatives and use its best efforts to permit the Securities to be
eligible for clearance and settlement through The Depository Trust Company.
(k) The Company and Arch Western will not for a period of 60
days following the Execution Time, without the prior written consent of
Citigroup Global Markets Inc., offer, sell, or otherwise dispose of (or enter
into any transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company or Arch Western
or any Affiliate of the Company or Arch Western; or any person in privity with
the Company or Arch Western or any Affiliate of the Company or Arch Western),
directly or indirectly, or announce the offering of, any debt securities issued
or guaranteed by the Company or Arch Western or its subsidiaries (other than the
Securities).
(l) Each of the Issuer, the Company and the Guarantors will
not take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities.
(m) Each of the Issuer, the Company and the Guarantors,
jointly and severally, agrees to pay the costs and expenses relating to the
following matters: (i) the preparation of the Indenture and the Registration
Rights Agreement, the issuance of the Securities and the fees of the Trustee;
(ii) the preparation, printing or reproduction of the Preliminary Memorandum and
Final Memorandum and each amendment or supplement to either of them; (iii) the
printing (or reproduction) and delivery (including postage, air freight charges
and charges for counting and packaging) of such copies of the Preliminary
Memorandum and Final Memorandum, and all amendments or supplements to either of
them, as may, in each case, be reasonably requested for use in connection with
the offering and sale of the Securities; (iv) the preparation, printing,
authentication, issuance and delivery of certificates for the Securities,
including any stamp or transfer taxes in connection with the original issuance
and sale of the Securities; (v) the printing (or reproduction) and delivery of
this Agreement, any blue sky memorandum and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of the
Securities; (vi) any registration or qualification of the Securities for offer
and sale under the securities or blue sky laws of the several states (including
filing fees and the reasonable fees and expenses of counsel for the Initial
Purchasers relating to such registration and qualification and preparation of a
blue sky memorandum); (vii) admitting the Securities for trading in the PORTAL
Market; (viii) the transportation and other expenses incurred by or on behalf of
the Company's and Arch Western's representatives in connection with
presentations to prospective purchasers of the Securities; (ix) the fees and
expenses of the Issuer's, Company's and Guarantors' accountants and the fees and
expenses of counsel (including local and special counsel) for the Issuer, the
Company and the Guarantors and (x) all other costs and expenses incident to the
performance by the Issuer and the Guarantors of their obligations hereunder.
14
6. Conditions to the Obligations of the Initial Purchasers.
The obligations of the Initial Purchasers to purchase the Securities shall be
subject to the accuracy of the representations and warranties on the part of the
Issuer, the Company and the Guarantors contained herein at the Execution Time,
the Closing Date and any settlement date pursuant to Section 3 hereof, to the
accuracy of the statements of the Issuer, the Company and the Guarantors made in
any certificates pursuant to the provisions hereof, to the performance by the
Issuer, the Company and the Guarantors of their obligations hereunder and to the
following additional conditions:
(a) The Company shall have requested and caused Xxxxxx X.
Xxxxx, Vice President - Law and General Counsel of the Company, to furnish to
the Representatives his opinion dated the Closing Date and addressed to the
Representatives, to the effect that: (i) the Company is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify or be in good standing would not result in a Material
Adverse Effect;
(ii) the shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued by the Company and
are fully paid and non-assessable, and none of such shares of capital
stock was issued in violation of preemptive or other similar rights of
any securityholder of the Company.
(iii) each of Arch Western, the Subsidiary Guarantors and the
Subsidiaries of the Company (other than Arch Western) has been duly
incorporated or organized, as applicable, and is validly existing as a
corporation or limited liability company, as applicable, in good
standing under the laws of the jurisdiction in which it was organized,
with full corporate or other power and authority to own, lease and
operate its properties and to conduct its business as described in the
Final Memorandum and is duly qualified to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify or be
in good standing would not result in a Material Adverse Effect. Except
as otherwise described in the Final Memorandum, all of the issued and
outstanding capital stock or membership interests of each of Arch
Western and the Subsidiary Guarantors, the Subsidiaries of the Company
(other than Arch Western) has been duly authorized and is validly
issued, fully paid and non-assessable and, to the best of his knowledge
and other than as set forth in the Offering Memorandum, is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity. None of the outstanding shares of capital stock or membership
interests, as applicable, of each of Arch Western, the Subsidiary
Guarantors and the Subsidiaries of the Company (other than Arch
Western) was issued in violation of preemptive or other similar rights
of any securityholder of such Subsidiary.
(iv) the authorized, issued and outstanding shares of capital
stock and members' equity, as applicable, of the Company and Arch
Western, respectively, is as set forth in the column entitled "Actual"
under the caption "Capitalization" in the Final
15
Memorandum (except, with respect to the Company, for subsequent
issuances thereof, if any, pursuant to reservations, agreements or
employee benefit plans referred to in the Final Memorandum or pursuant
to the exercise of convertible securities or options referred to in the
Final Memorandum).
(v) neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws, and no default by the Company or
any of its subsidiaries exists in the due performance or observance of
any material obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the Final
Memorandum or filed or incorporated by reference as an exhibit to the
Company's annual report on Form 10-K for the year ended December 31,
2003 as filed with the Commission on March 8, 2004. Except as set forth
in the Final Memorandum, to the best of his knowledge, there are no
options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock or ownership
interests in the Company or any of its subsidiaries.
(vi) the execution, delivery and performance of this
Agreement, the Indenture, the Registration Rights Agreement, the Pledge
Agreement and any other agreement or instrument entered into or issued
or to be entered into or issued by the Issuer, the Company or any
Guarantor in connection with the transactions contemplated in this
Agreement, the Indenture, the Registration Rights Agreement, the Pledge
Agreement, the Notes, the Guarantees and the Final Memorandum and the
consummation of the transactions contemplated hereunder and thereunder
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described under the caption
"Use of Proceeds") and compliance by each of the Issuer, the Company
and the Guarantors with its obligations hereunder and thereunder does
not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event under or result in the creation or
imposition of any lien, charge or encumbrance upon any assets,
properties or operations of the Company or any of its subsidiaries
pursuant to any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it
or any of them may be bound, or to which any of the assets, properties
or operations of the Company or any of its subsidiaries is subject
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will
such action result in any violation of the provisions of the charter or
by-laws of the Company or any of its subsidiaries, or any applicable
law, statute, rule, regulation, judgment, order, writ or decree, known
to me, of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties, assets or
operations.
(vii) to the best of his knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation to
which the Company or any of its subsidiaries is a party or to which the
assets, properties or operations of the Company or any of its
subsidiaries is subject, before or by any court or governmental agency
or body, domestic or foreign, which might reasonably be expected to
result in a Material Adverse Effect or which might reasonably be
expected to materially and adversely affect the assets,
16
properties or operations thereof or the consummation of the
transactions contemplated under this Agreement, the Indenture, the
Registration Rights Agreement, the Pledge Agreement, the Notes, the
Guarantees and the Final Memorandum or the performance by the Company
of its obligations thereunder.
(viii) The information in the Annual Report on Form 10-K of
the Company for the year ended December 31, 2003 under "Legal
Proceedings" and incorporated by reference in the Final Memorandum, to
the extent that it constitutes a summary of legal matters, legal
proceedings, or legal conclusions, is correct in all material respects.
(ix) All descriptions in the Final Memorandum of contracts and
other documents to which the Company or its subsidiaries are a party
are accurate in all material respects.
Xxxxxx X. Xxxxx shall also state that nothing has come to his
attention that causes him to believe that the Final Memorandum, (except for
financial statements and schedules and other financial data included or
incorporated by reference therein or omitted therefrom, as to which he need make
no statement), at the Execution Time and on the Closing Date, included or
includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(b) The Company shall have requested and caused Xxxxxxxxxxx &
Xxxxxxxx, LLP, counsel for the Company, to furnish to the Representatives its
opinion, dated the Closing Date and addressed to the Representatives, to the
effect that:
(i) the Company, Arch Western, the Issuer and each Subsidiary
Guarantor has been duly incorporated or organized, as applicable, and
is validly existing as a corporation or limited liability company, as
applicable, in good standing under the laws of the State of Delaware,
with full corporate or limited liability company power and authority to
own or lease, as the case may be, and to operate its properties and
conduct its business as described in the Final Memorandum, to the
extent so described therein.
(ii) the Purchase Agreement has been duly authorized, executed
and delivered by the Issuer, the Company, Arch Western and each
Subsidiary Guarantor.
(iii) the Indenture has been duly authorized, executed and
delivered by each of the Issuer, Arch Western and the Subsidiary
Guarantors, and, assuming due authorization, execution and delivery
thereof by the Trustee, constitutes a valid and binding obligation of
the Issuer, Arch Western and each Subsidiary Guarantor, enforceable
against the Issuer, Arch Western and each Subsidiary Guarantor in
accordance with its terms (subject to the effect of bankruptcy,
insolvency, fraudulent transfer, reorganization, receivership,
moratorium and other laws affecting the rights and remedies of
creditors or secured parties generally, and to the exercise of judicial
discretion in accordance with general principles of equity (whether
applied by a court of law or equity)).
(iv) the Notes have been duly authorized, executed and
delivered and, when authenticated in accordance with the provisions of
the Indenture and delivered to and
17
paid for by the Initial Purchasers under this Agreement, will
constitute a valid and binding obligation of the Issuer, entitled to
the benefits set forth in the Indenture (subject to the effect of
bankruptcy, insolvency, fraudulent transfer, reorganization,
receivership, moratorium and other laws affecting the rights and
remedies of creditors or secured parties generally, and to the exercise
of judicial discretion in accordance with general principles of equity
(whether applied by a court of law or equity)).
(v) each Guarantee has been duly authorized, executed and
delivered and constitutes a valid and binding obligation of Arch
Western or the Subsidiary Guarantor party thereto, as applicable
(subject to the effect of bankruptcy, insolvency, fraudulent transfer,
reorganization, receivership, moratorium and other laws affecting the
rights and remedies of creditors or secured parties generally, and to
the exercise of judicial discretion in accordance with general
principles of equity (whether applied by a court of law or equity)).
(vi) the Registration Rights Agreement has been duly
authorized, executed and delivered and constitutes a valid and binding
obligation of the Issuer, Arch Coal, Arch Western and each Subsidiary
Guarantor (subject to the effect of bankruptcy, insolvency, fraudulent
transfer, reorganization, receivership, moratorium and other laws
affecting the rights and remedies of creditors or secured parties
generally, and to the exercise of judicial discretion in accordance
with general principles of equity (whether applied by a court of law or
equity) and except as rights to indemnification or contribution
thereunder may be limited by federal or state securities laws or the
public policy underlying such laws).
(vii) the Pledge Agreement has been duly authorized, executed
and delivered by Arch Western and, assuming due authorization,
execution and delivery thereof by the Trustee, constitutes a valid and
binding obligation of Arch Western (subject to the effect of
bankruptcy, insolvency, fraudulent transfer, reorganization,
receivership, moratorium and other laws affecting the rights and
remedies of creditors or secured parties generally, and to the exercise
of judicial discretion in accordance with general principles of equity
(whether applied by a court of law or equity)).
(viii) the Company Notes have been duly authorized, executed
and delivered by the Company and constitute a valid and binding
obligation of the Company (subject to the effect of bankruptcy,
insolvency, fraudulent transfer, reorganization, receivership,
moratorium and other laws affecting the rights and remedies of
creditors or secured parties generally, and to the exercise of judicial
discretion in accordance with general principles of equity (whether
applied by a court of law or equity)
(ix) the security interest in the Company Notes granted to the
Trustee pursuant to the Pledge Agreement, for the benefit the Holders,
as defined in the Indenture, was perfected upon the Trustee taking
possession of the Company Notes in New York. Assuming that the Trustee
has taken and is retaining possession of the Company Notes and the
Trustee has taken the Company Notes in good faith without notice
(actual or constructive) of any adverse claim within the meaning of the
UCC, there has been created under the Pledge Agreement, and there has
been granted to the Trustee for the benefit of
18
the Holders, a valid and perfected first priority security interest in
the Company Notes to the extent a security interest may be obtained by
possession under the UCC.
(x) the statements set forth under the headings "Description
of the Notes" and "Exchange Offer; Registration Rights" in the Final
Memorandum, insofar as such statements purport to summarize certain
provisions of the Notes, the Indenture and the Registration Rights
Agreement, provide a fair summary of such provisions.
(xi) the statements in the Final Memorandum under the headings
"Governing Documents and Certain Other Agreements", "Important Federal
Income Tax Considerations" and "ERISA Considerations" fairly summarize
the matters therein described.
(xii) the execution and delivery by the Issuer, Arch Coal,
Arch Western and each Subsidiary Guarantor of the Transaction Documents
to which it is a party, and the performance by the Issuer, Arch Coal,
Arch Western and each Subsidiary Guarantor of its respective
obligations under the Transaction Documents to which it is a party, do
not violate Arch Coal's Amended and Restated Certificate of
Incorporation and Bylaws or the respective Certificates of Formation
and Limited Liability Company Agreements of the Issuer, Arch Western or
any Subsidiary Guarantor.
(xiii) the Issuer, Arch Coal, Arch Western and each Subsidiary
Guarantor each (a) have the corporate or limited liability company
power and authority to execute, deliver and perform its respective
obligations under the Transaction Documents to which it is a party, (b)
has taken all corporate or other action necessary to authorize the
execution and delivery of and performance of its obligations under the
Transaction Documents to which it is a party and (c) has duly executed
each Transaction Document to which it is a party.
(xiv) the execution and delivery by the Issuer, Arch Coal,
Arch Western and each Subsidiary Guarantor of the Transaction Documents
to which it is a party, and the performance by the Issuer, Arch Coal,
Arch Western and each Subsidiary Guarantor of its obligations under the
Transaction Documents to which it is a party, do not (a) breach or
constitute a default or an event which, with the giving of notice or
the passage of time or both, would constitute a default of the Issuer,
Arch Coal, Arch Western or any Subsidiary Guarantor under the express
terms of any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument to
which the Issuer, Arch Coal, Arch Western or any Subsidiary Guarantor
is a party or by which any of them may be bound, or to which any of the
assets, properties or operations of any of them is subject, that has
been listed as an exhibit to the most recent Annual Report on Form 10-K
of the Company or subsequent filings of the Company with the Commission
under Section 13 of the Exchange Act (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that will not
have a Material Adverse Effect) nor will such action result in any
violation of the provisions of the Amended and Restated Certificate of
Incorporation and Bylaws of Arch Coal or the respective Certificates of
Formation and Limited Liability Company Agreements of the Issuer, Arch
Western or any Subsidiary Guarantors or (assuming compliance with the
securities or blue sky laws of the various states, and provided that we
express no opinion with respect to the
19
provisions of Section 8 of the Purchase Agreement) any applicable law,
statue, rule, regulation, judgment, order, writ or decree, known to
such counsel, of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over Arch Coal, the Issuer,
Arch Western and the Subsidiary Guarantors or any of their assets.
(xv) the execution and delivery by the Issuer, Arch Coal, Arch
Western and each Subsidiary Guarantor of the Transaction Documents to
which it is a party, and the performance by the Issuer, Arch Coal, Arch
Western and each Subsidiary Guarantor of its respective obligations
under the Transaction Documents to which it is a party, do not require
the Issuer, Arch Coal, Arch Western or any Subsidiary Guarantor to
obtain any consent, approval, authorization, filing with or order of
any court or governmental agency or body in connection with the
transactions contemplated by the Transaction Documents, except such as
will be obtained under the Act, the Trust Indenture Act, and as may be
required under the blue sky or securities laws of any jurisdiction in
connection with the purchase and sale of the Notes by the Initial
Purchasers in the manner contemplated in the Purchase Agreement, the
Final Memorandum and the Registration Rights Agreement and such other
approvals and filings as have been previously obtained or made and in
full force and effect.
(xvi) the documents of the Company incorporated by reference
in the Final Memorandum, as described in the Final Memorandum under the
heading "Where You Can Find More Information" (other than the financial
statements and supporting schedules and other financial and statistical
data included therein or omitted therefrom, as to which we express no
opinion), when they were filed with the Commission, complied as to form
in all material respects with the requirements of the Exchange Act.
(xvii) neither the Issuer nor any Subsidiary Guarantor is, and
upon the issuance and sale of the Securities as contemplated by the
Transaction Documents and the application of the net proceeds therefrom
as described in the Final Memorandum will be, an "investment company"
or an entity "controlled" "by an investment company", as such terms are
defined in the Investment Company Act.
(xviii) assuming the accuracy of the representations and
warranties and compliance with the agreements contained herein, no
registration of the Securities under the Act, and no qualification of
an indenture under the Trust Indenture Act, are required for the offer
and sale by the Initial Purchasers of the Securities in the manner
contemplated by the Purchase Agreement.
Such counsel shall also state that while it is not opining as
to factual matters and is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the information
included in the Final Memorandum and assumes the correctness and completeness of
the information included in the Final Memorandum and has made no independent
investigation or verification of such information, except as set forth in
paragraphs (x) and (xi) above, that on the basis of its review of the Final
Memorandum and its participation in its preparation, nothing has come to its
attention that causes it to believe that the Final Memorandum (except for
financial statements and supporting schedules and other financial and reserve
data included therein or omitted therefrom, as to which it need not make any
statement) at the Execution Time and the Closing Time included an untrue
statement of a material fact or
20
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
State of Delaware, the State of New York or the Federal laws of the United
States, to the extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be reliable and
who are satisfactory to counsel for the Initial Purchasers; and (B) as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials. References to the Final Memorandum
in Section 6(a) and Section (b) include any amendment or supplement thereto at
the Closing Date.
(c) The Representatives shall have received from Shearman &
Sterling LLP, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Indenture, the Registration Rights
Agreement, the Final Memorandum (as amended or supplemented at the Closing Date)
and other related matters as the Representatives may reasonably require, and the
Company shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chief Executive Officer and the Chief
Financial Officer of the Company, dated the Closing Date, to the effect that the
signers of such certificate have carefully examined the Final Memorandum, any
amendment or supplement to the Final Memorandum and this Agreement and that:
(i) the representations and warranties of each of the Issuer
and the Guarantors in this Agreement are true and correct in all
material respects on and as of the Closing Date with the same effect as
if made on the Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed
or satisfied hereunder at or prior to the Closing Date; and
(ii) since the date of the most recent financial statements
included in the Final Memorandum (exclusive of any amendment or
supplement thereto), there has been no material adverse change in the
condition (financial or otherwise), prospects, earnings, business or
properties of (A) the Company and its subsidiaries, taken as a whole,
or (B) Arch Western and its subsidiaries, taken as a whole, whether or
not arising from transactions in the ordinary course of business,
except as set forth in or contemplated by the Final Memorandum
(exclusive of any amendment or supplement thereto).
(e) At the Execution Time and at the Closing Date, the Company
shall have requested and caused Ernst & Young LLP to furnish to the
Representatives letters, dated respectively as of the Execution Time and as of
the Closing Date, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act, that they have performed a review of the unaudited interim
consolidated financial information of the Company and Arch Western,
respectively, for the six-month period ended June 30, 2004 and as at June 30,
2004, and stating in effect that:
21
(i) in their opinion the (A) audited financial statements and
pro forma financial statements of the Company and (B) audited financial
statements of Arch Western, included in the Final Memorandum and
reported on by them, comply in form in all material respects with the
applicable accounting requirements of the Exchange Act;
(ii) on the basis of a reading of the latest unaudited
consolidated financial statements made available by the Company and
Arch Western; their limited review in accordance with the standards
established under Statement on Auditing Standards No. 100, of the
unaudited interim financial information for the six-month period ended
June 30, 2004 and as at June 30, 2004; carrying out certain specified
procedures (but not an examination in accordance with generally
accepted auditing standards) which would not necessarily reveal matters
of significance with respect to the comments set forth in such letter;
a reading of the minutes of the meetings of the stockholders, directors
and members, as applicable, and of the Audit Committee, Finance
Committee, Personnel and Compensation Committee and Directors Committee
of the Company and its subsidiaries; and inquiries of certain officials
of the Company and Arch Western who have responsibility for financial
and accounting matters of the Company and its subsidiaries and Arch
Western and its subsidiaries, as to transactions and events subsequent
to December 31, 2003, nothing came to their attention which caused them
to believe that:
(1) any unaudited financial statements included in
the Final Memorandum do not comply in form in all material
respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect
to financial statements included or incorporated in quarterly
reports on Form 10-Q under the Exchange Act; and said
unaudited financial statements are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included in the Final Memorandum; or
(2) with respect to the period subsequent to June 30,
2004, there were any changes, at a specified date not more
than five days prior to the date of the letter, (i) in the
long-term debt of the Company and its subsidiaries or capital
stock of the Company or decreases in the stockholders' equity
of the Company or net current assets of the Company as
compared with the amounts shown on the June 30, 2004
consolidated balance sheet included in the Final Memorandum,
or for the period from July 1, 2004 to such specified date
there were any decreases, as compared with the corresponding
period in the preceding year in income from operations or in
total or per share amounts of net income of the Company and
its subsidiaries; or (ii) in the long-term debt of Arch
Western and its subsidiaries or membership interests of Arch
Western or net current assets of Arch Western as compared with
amounts shown on the June 30, 2004 consolidated balance sheet
included in the Final Memorandum, or for the period from July
1, 2004 to such specified date there were any decreases, as
compared with the corresponding period in the proceeding year,
in income from operations or in net income of Arch Western and
its subsidiaries except in all instances for changes or
decreases set forth in the Final Memorandum; or
22
(3) the information included under the headings "Arch
Western Selected Consolidated Financial and Operating Data"
and "Arch Coal Selected Consolidated Financial and Operating
Data" is not in conformity with the disclosure requirements of
Regulation S-K;
(4) on the basis of a reading of the unaudited pro
forma financial statements included in the Final Memorandum
(the "pro forma financial statements"); carrying out certain
specified procedures; inquiries of certain officials of the
Company who have responsibility for financial and accounting
matters; and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in the pro forma financial statements, nothing came to
their attention which caused them to believe that the pro
forma financial statements do not comply as to form in all
material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of such statements; or
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Final Memorandum in the Final Memorandum, agrees with the
accounting records of the Company and its subsidiaries, excluding any
questions of legal interpretation.
References to the Final Memorandum in this Section 6(e)
include any amendment or supplement thereto at the date of the
applicable letter.
(f) At the Execution Time and at the Closing Date, the Company
shall have requested and caused Ernst & Young LLP to furnish to the
Representatives letters, dated respectively as of the Execution Time and as of
the Closing Date, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act, that they have performed a review of the unaudited interim
consolidated financial information of Canyon Fuel for the six-month period ended
June 30, 2004 and as at June 30, 2004, and stating in effect that:
(i) in their opinion the audited financial statements of
Canyon Fuel included in the Final Memorandum and reported on by them
comply in form in all material respects with the applicable accounting
requirements of the Exchange Act;
(ii) on the basis of a reading of the latest unaudited
consolidated financial statements made available by Canyon Fuel their
limited review in accordance with the standards established under
Statement on Auditing Standards No. 100, of the unaudited interim
financial information for the six-month period ended June 30, 2004 and
as at June 30, 2004; carrying out certain specified procedures (but not
an examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of significance
with respect to the comments set forth in such letter; a reading of the
minutes of the meetings of the directors; and inquiries of certain
officials of Canyon Fuel who have responsibility for financial and
accounting matters of Canyon Fuel and its
23
subsidiaries, as to transactions and events subsequent to December 31,
2003, nothing came to their attention which caused them to believe
that:
(1) any unaudited financial statements included in
the Final Memorandum do not comply in form in all material
respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect
to financial statements included or incorporated in quarterly
reports on Form 10-Q under the Exchange Act; and said
unaudited financial statements are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included in the Final Memorandum; or
(2) with respect to the period subsequent to June 30,
2004, there were any changes, at a specified date not more
than five days prior to the date of the letter, in the
long-term debt of Canyon Fuel or decreases in the members'
equity of the Canyon Fuel or net current assets of the Canyon
Fuel as compared with the amounts shown on the June 30, 2004
consolidated balance sheet included in the Final Memorandum,
or for the period from July 1, 2004 to such specified date
there were any decreases, as compared with the corresponding
period in the preceding year in net revenue, income before
extraordinary items or in net income of Canyon Fuel and its
subsidiaries; or
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Canyon Fuel and its subsidiaries) set
forth in the Final Memorandum in the Final Memorandum, agrees with the
accounting records of the Canyon Fuel and its subsidiaries, excluding
any questions of legal interpretation.
References to the Final Memorandum in this Section 6(f) include any
amendment or supplement thereto at the date of the applicable letter.
(g) At the Execution Time and at the Closing Date, the Company
shall have requested and caused PricewaterhouseCoopers LLP to furnish to the
Representatives letters, dated respectively as of the Execution Time and as of
the Closing Date, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act, that they have performed a review of the unaudited interim
consolidated financial information of Vulcan for the six-month period ended June
30, 2004 and as at June 30, 2004, and stating in effect that:
(i) in their opinion the audited financial statements of
Vulcan included in the Final Memorandum and reported on by them comply
in form in all material respects with the applicable accounting
requirements of the Exchange Act;
(ii) on the basis of a reading of the latest unaudited
consolidated financial statements made available by Vulcan; their
limited review in accordance with the standards established under
Statement on Auditing Standards No. 100, of the unaudited interim
financial information for the six-month period ended June 30, 2004 and
as at June 30, 2004; carrying out certain specified procedures (but not
an examination in accordance
24
with generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter; a reading of the minutes of the meetings of the
stockholders and directors; and inquiries of certain officials of
Vulcan who have responsibility for financial and accounting matters of
Vulcan and its subsidiaries, as to transactions and events subsequent
to June 30, 2004, nothing came to their attention which caused them to
believe that:
(1) any unaudited financial statements included in
the Final Memorandum do not comply in form in all material
respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect
to financial statements included or incorporated in quarterly
reports on Form 10-Q under the Exchange Act; and said
unaudited financial statements are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included in the Final Memorandum; or
(2) with respect to the period subsequent to June 30,
2004, there were any changes, at a specified date not more
than five days prior to the date of the letter, in the
long-term debt of Vulcan and its subsidiaries or capital stock
of Vulcan or decreases in the stockholders' equity of the
Vulcan or net current assets of the Vulcan as compared with
the amounts shown on the June 30, 2004 consolidated balance
sheet included in the Final Memorandum, or for the period from
July 1, 2004 to such specified date there were any decreases,
as compared with the corresponding period in the preceding
year in income from operations or in total or per share
amounts of net income of Vulcan and its subsidiaries; or
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Vulcan and its subsidiaries) set
forth in the Final Memorandum in the Final Memorandum, agrees with the
accounting records of the Vulcan and its subsidiaries, excluding any
questions of legal interpretation.
References to the Final Memorandum in this Section 6(g) include any
amendment or supplement thereto at the date of the applicable letter.
(h) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Final Memorandum (exclusive of any
amendment or supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraphs (e), (f)
and (g) of this Section 6; or (ii) any change, or any development involving a
prospective change, in or affecting the condition (financial or otherwise),
prospects, earnings, business or properties of (i) the Company and its
subsidiaries, taken as a whole, or (ii) Arch Western and its subsidiaries, taken
as a whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final Memorandum
(exclusive of any amendment or supplement thereto) the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the sole judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering, sale or delivery of the Securities as
contemplated by the Final Memorandum (exclusive of any amendment or supplement
thereto).
25
(i) The Securities shall have been designated as
PORTAL-eligible securities in accordance with the rules and regulations of the
NASD, and the Securities shall be eligible for clearance and settlement through
The Depository Trust Company.
(j) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of the Company's debt securities or Arch
Western's debt securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act) or any
notice given of any intended or potential decrease in any such rating or of a
possible change in any such rating that does not indicate the direction of the
possible change.
(k) Prior to the Closing Date, the Issuer, the Company and the
Guarantors shall have furnished to the Representatives such further consents,
waivers, information, certificates and documents as the Representatives may
reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Initial Purchasers, this Agreement and all obligations of the Initial Purchasers
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 will
be delivered at the office of counsel for the Initial Purchasers, at Shearman &
Sterling LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, on the
Closing Date.
7. Reimbursement of Expenses. If the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the Initial Purchasers set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Issuer, the Company or any
Guarantor to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Initial Purchasers, each of the
Issuer, the Company and the Guarantors, jointly and severally, agrees that it
will reimburse the Initial Purchasers severally through Citigroup Global Markets
Inc. on demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) Each of the Issuer,
the Company and the Guarantors, jointly and severally, agrees to indemnify and
hold harmless each Initial Purchaser, the affiliates, directors, officers,
employees and agents of each Initial Purchaser and each person who controls any
Initial Purchaser within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Memorandum, the Final
Memorandum (or in any supplement or amendment thereto) or any information
provided by the Issuer or any Guarantor to any holder or prospective purchaser
of
26
Securities pursuant to Section 5(h), or in any amendment thereof or received by
it supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that neither the Issuer,
nor the Company nor any Guarantor will be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made in the Preliminary Memorandum or the Final Memorandum, or in any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information furnished to the Issuer, the Company or any Guarantor by or
on behalf of any Initial Purchasers through the Representatives specifically for
inclusion therein. This indemnity agreement will be in addition to any liability
which the Issuer, the Company or any Guarantor may otherwise have.
(b) Each Initial Purchaser severally and not jointly agrees to
indemnify and hold harmless the Issuer, the Company and the Guarantors, each of
their respective directors, each of their respective officers, and each person
who controls the Issuer, the Company or any Guarantor within the meaning of
either the Act or the Exchange Act, to the same extent as the foregoing
indemnity from each of the Issuer, the Company and the Guarantors to each
Initial Purchaser, but only with reference to written information relating to
such Initial Purchaser furnished to the Issuer, the Company or any Guarantor by
or on behalf of such Initial Purchaser through the Representatives specifically
for inclusion in the Preliminary Memorandum or the Final Memorandum (or in any
amendment or supplement thereto). This indemnity agreement will be in addition
to any liability which any Initial Purchaser may otherwise have. Each of the
Issuer, the Company and the Guarantors acknowledges that the statements set
forth in the paragraph related to stabilization, syndicate covering transactions
and penalty bids on page 141 of the Preliminary Memorandum and the Final
Memorandum, constitute the only information furnished in writing by or on behalf
of the Initial Purchasers for inclusion in the Preliminary Memorandum or the
Final Memorandum (or in any amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses;
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees,
27
costs and expenses of such separate counsel if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest; (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party; (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action; or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding and does not involve any statement as to or any admission of
fault, culpability or failure to act by or on behalf of any indemnified party.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Issuer, the Company, the Guarantors and
the Initial Purchasers agree to contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) (collectively "Losses") to
which the Issuer, the Company, the Guarantors and one or more of the Initial
Purchasers may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Issuer, the Company and the Guarantors, taken
as a whole, on the one hand and by the Initial Purchasers on the other from the
offering of the Securities; provided, however, that in no case shall any Initial
Purchaser (except as may be provided in any agreement among the Initial
Purchasers relating to the offering of the Securities) be responsible for any
amount in excess of the purchase discount or commission applicable to the
Securities purchased by such Initial Purchaser hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the Issuer, the Company, the Guarantors and the Initial Purchasers shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Issuer, the Company and the
Guarantor, taken as a whole, on the one hand and of the Initial Purchasers on
the other in connection with the statements or omissions which resulted in such
Losses, as well as any other relevant equitable considerations. Benefits
received by each of the Issuer, the Company and the Guarantors shall be deemed
to be equal to the total net proceeds from the offering (before deducting
expenses) received by the Issuer, the Company and the Guarantors, taken as a
whole, and benefits received by the Initial Purchasers shall be deemed to be
equal to the total purchase discounts and commissions. Relative fault shall be
determined by reference to, among other things, whether any untrue or any
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information provided by the Issuer, the
Company and the Guarantors, taken as a whole, on the one hand or the Initial
Purchasers on the other, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The Issuer, the Company, the Guarantors and the Initial
Purchasers agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation
28
which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Initial Purchaser within the meaning of either the Act or the
Exchange Act and each affiliate, director, officer, employee and agent of an
Initial Purchaser shall have the same rights to contribution as such Initial
Purchaser, and each person who controls the Issuer, the Company or any Guarantor
within the meaning of either the Act or the Exchange Act and each respective
officer and director of each of the Issuer, the Company and the Guarantors shall
have the same rights to contribution as each of the Issuer, the Company and the
Guarantors, subject in each case to the applicable terms and conditions of this
paragraph (d). The Initial Purchasers' obligations in this Section 8 to
contribute are several in proportion to their respective underwriting
obligations and not joint.
9. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Securities agreed to be
purchased by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Initial Purchasers) the Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase; provided,
however, that in the event that the aggregate principal amount of Securities
which the defaulting Initial Purchaser or Initial Purchasers agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of Securities set
forth in Schedule I hereto, the remaining Initial Purchasers shall have the
right to purchase all, but shall not be under any obligation to purchase any, of
the Securities, and if such nondefaulting Initial Purchasers do not purchase all
the Securities, this Agreement will terminate without liability to any
nondefaulting Initial Purchaser, the Issuer, the Company or any Guarantor. In
the event of a default by any Initial Purchaser as set forth in this Section 9,
the Closing Date shall be postponed for such period, not exceeding five Business
Days, as the Representatives shall determine in order that the required changes
in the Final Memorandum or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any defaulting
Initial Purchaser of its liability, if any, to the Issuer, the Company, any
Guarantor or any nondefaulting Initial Purchaser for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if at any
time prior to such time (i) trading in the Company's securities shall have been
suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum prices shall have been established on such Exchange; (ii) a
banking moratorium shall have been declared either by Federal or New York State
authorities; or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impracticable or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Final Memorandum (exclusive of any amendment or supplement
thereto).
29
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
each of the Issuer, the Company, the Guarantors or their respective officers and
of the Initial Purchasers set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of the Initial Purchasers or the Issuer, the Company, any Guarantor or
any of the officers, directors or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to the Citigroup Global Markets Inc., General
Counsel (fax no.: (000) 000-0000) and confirmed to the General Counsel Citigroup
Global Markets Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: General Counsel; or, if sent to the Issuer, the Company or any
Guarantor, will be mailed, delivered or telefaxed and confirmed to it at Arch
Coal Inc., CityPlace Xxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000, Attention:
General Counsel (fax no.: (000) 000-0000).
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and, except as expressly set forth in Section 5(h) hereof, no other person will
have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
15. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Affiliate" shall have the meaning specified in Rule 501(b) of
Regulation D.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in The City of New York.
"Commission" shall mean the Securities and Exchange
Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
30
"Execution Time" shall mean, the date and time that this
Agreement is executed and delivered by the parties hereto.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended, and the rules and regulations of the Commission promulgated
thereunder.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Preferred Return" shall have the meaning ascribed to it in
the Limited Liability Company Agreement of Arch Western Resources, LLC, dated as
of June 1, 1998, between Delta Housing Corporation and Arch Western Acquisition
Corporation.
"Regulation D" shall mean Regulation D under the Act.
"Regulation S" shall mean Regulation S under the Act.
"Repayment Event" shall mean any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Company
or any of its subsidiaries.
"Subsidiary" shall mean a "significant subsidiary" as such
term is defined in Rule 1-02 of Regulation S-X promulgated under the Act (each,
a "Subsidiary" and, collectively, the "Subsidiaries")
"subsidiary" of a specified person shall mean an affiliate
controlled by such person directly, or indirectly through one or more
intermediaries.
"Transaction Documents" shall mean, collectively, this
Agreement, the Indenture, the Registration Rights Agreement, the Pledge
Agreement and the Company Notes.
"Trust Indenture Act" shall mean the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Commission promulgated
thereunder.
31
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this Agreement and your acceptance shall represent a binding agreement
among the Issuer, the Company, the Guarantors and the several Initial
Purchasers.
Very truly yours,
ARCH WESTERN FINANCE, LLC ARCH COAL, INC.
By: /s/ XXXXX X. XXXXXXXX By: /s/ XXXXX X. XXXXXXXX
----------------------------------- ----------------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxxxx
Title: Vice President and Treasurer Title: Treasurer
ARCH WESTERN RESOURCES, LLC THUNDER BASIN COAL COMPANY, L.L.C.
By: /s/ XXXXX X. XXXXXXXX By: /s/ XXXXX X. XXXXXXXX
----------------------------------- -----------------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxxxx
Title: Vice President and Treasurer Title: Vice President and Treasurer
MOUNTAIN COAL COMPANY, L.L.C. ARCH OF WYOMING, LLC
By: /s/ XXXXX X. XXXXXXXX By: /s/ XXXXX X. XXXXXXXX
----------------------------------- -----------------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxxxx
Title: Vice President and Treasurer Title: Vice President and Treasurer
TRITON COAL COMPANY, LLC ARCH WESTERN BITUMINOUS GROUP, LLC
By: /s/ XXXXX X. XXXXXXXX By: /s/ XXXXX X. XXXXXXXX
----------------------------------- -----------------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxxxx
Title: Vice President and Treasurer Title: Vice President and Treasurer
32
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
CITIGROUP GLOBAL MARKETS INC.
X.X. XXXXXX SECURITIES INC.
XXXXXX XXXXXXX & CO. INCORPORATED
By: Citigroup Global Markets Inc.
By: /s/ XXXXXXX XXXXXXXX
----------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Director
For themselves and the other several
Initial Purchasers named in
Schedule I to the foregoing Agreement.
33
SCHEDULE I
Principal Amount of
Securities
Initial Purchasers to Be Purchased
------------------ ------------------
Citigroup Global Markets Inc. ......................................... $ 70,000,000
X.X. Xxxxxx Securities Inc. ........................................... 70,000,000
Xxxxxx Xxxxxxx & Co. Incorporated ..................................... 35,000,000
PNC Capital Markets, Inc. ............................................. 20,000,000
Wachovia Capital Markets, LLC ......................................... 17,500,000
BNP Paribas Securities Corp. .......................................... 7,500,000
BNY Capital Markets, Inc. ............................................. 7,500,000
Calyon Securities (USA) Inc. .......................................... 7,500,000
NatCity Investments, Inc. ............................................. 7,500,000
Xxxxx Xxxxxxx & Co. ................................................... 7,500,000
------------
Total......................................................... $250,000,000
============
SCHEDULE II
Subsidiary Guarantors Jurisdiction of Organization
--------------------- ----------------------------
Arch of Wyoming, LLC Delaware
Mountain Coal Company, L.L.C. Delaware
Thunder Basin Coal Company, L.L.C. Delaware
Triton Coal Company, LLC Delaware
Arch Western Bituminous Group, LLC Delaware
EXHIBIT A
Selling Restrictions for Offers and
Sales outside the United States
(1)(a) The Securities have not been and will not be registered
under the Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with Regulation
S under the Act or pursuant to an exemption from the registration requirements
of the Act. Each Initial Purchaser represents and agrees that, except as
otherwise permitted by Section 4(a) of the Agreement to which this is an
exhibit, it has offered and sold the Securities, and will offer and sell the
Securities, (i) as part of their distribution at any time; and (ii) otherwise
until 40 days after the later of the commencement of the offering and the
Closing Date, only in accordance with Rule 903 of Regulation S under the Act.
Accordingly, each Initial Purchaser represents and agrees that neither it, nor
any of its Affiliates nor any person acting on its or their behalf has engaged
or will engage in any directed selling efforts with respect to the Securities,
and that it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Initial Purchaser agrees that, at
or prior to the confirmation of sale of Securities (other than a sale of
Securities pursuant to Section 4(a) of the Agreement to which this is an
exhibit), it shall have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Securities from it
during the distribution compliance period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Act") and may not be offered or
sold within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the
offering and [specify closing date of the offering], except in either
case in accordance with Regulation S or Rule 144A under the Act. Terms
used above have the meanings given to them by Regulation S."
(b) Each Initial Purchaser also represents and agrees that it
has not entered and will not enter into any contractual arrangement with any
distributor with respect to the distribution of the Securities, except with its
Affiliates or with the prior written consent of the Company.
(c) Terms used in this section have the meanings given to them
by Regulation S.
(2) Each Initial Purchaser represents and agrees that (i) it
has not offered or sold and, prior to the date six months after the date of
issuance of the Securities, will not offer or sell any Securities to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or as
agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995;
(ii) it has complied and will comply with all applicable provisions of the
Financial Services and Markets Act 2000 ("FMSA") with respect to anything done
by it in relation to the Securities in, from or otherwise involving the United
A-1
Kingdom; and (iii) it has only communicated and will only communicate or cause
to be communicated any invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the FMSA) received by it in connection with
the issue or sale of any Securities in which Section 21(1) of the FMSA does not
apply to the Issuer or the Guarantors.
A-2
