THIS PLEDGE AGREEMENT (NOTEHOLDERS), dated as of June 26, 2008 (this “Agreement”), is made and entered into by and among,
Exhibit 10.4
[Execution Form]
THIS PLEDGE AGREEMENT (NOTEHOLDERS), dated as of June 26, 2008 (this “Agreement”), is made and
entered into by and among,
(i) XXXXXXXXXXXX COAL COMPANY, a Delaware corporation (“Parent”),
(ii) XXXXXXXXXXXX MINING LLC, a Delaware limited liability company (the “Company”),
(iii) each other Person who shall from time to time become a party hereto as a pledgor
hereunder (each, an “Additional Pledgor”; all such Additional Pledgors, together with Parent
and the Company, being hereinafter sometimes referred to, collectively, as the “Pledgors”
and, each individually, as a “Pledgor”) by execution of a Joinder Agreement pursuant hereto,
and
(iv) U.S. BANK NATIONAL ASSOCIATION, a national banking association, in its capacity as
Collateral Agent under the Collateral Agency Agreement referred to below (together with its
successors from time acting as such Collateral Agent thereunder, the “Secured Party”) on
behalf and for the benefit and security of the Noteholders referred to below.
RECITALS:
A. The Company and the Guarantors identified therein have entered into a Note Purchase
Agreement, dated as of June 26, 2008 (as the same may be amended, supplemented, extended, renewed
or replaced and in effect from time to time, the “Note Agreement”), with the institutional
investors identified in Schedule 1 thereto (collectively, the “Purchasers”, and, each individually,
a “Purchaser”), providing, among other things, for (1) the issue and sale by the Company and,
subject to the terms and conditions set forth therein, the purchase by the Purchasers severally, of
the Company’s 8.02% Senior Guaranteed Secured Notes due 2018 in an original aggregate principal
amount of $125,000,000 (the “Notes”, such term to include any such notes issued pursuant to Section
13 of the Note Agreement in substitution for any previously issued Notes), and (2) the joint and
several guaranty of the Secured Obligations by the Guarantors.
B. The Company, each of the Guarantors, Texas Xxxxxxxxxxxx Coal Co., a Montana corporation
(“TWCC”), the Secured Party, the Securities Intermediary, and the Purchasers have entered into the
Collateral Agency Agreement, dated as of June 26, 2008 (as the same may be amended, supplemented,
extended, renewed or replaced and in effect from time to time, the “Collateral Agency Agreement”),
in order, among other things, to set forth certain rights, powers and remedies of the Collateral
Agent, for the equal and ratable benefit and security of the Noteholders, with respect to the
Collateral (including the Pledged Collateral referred to below) securing the Secured Obligations.
C. It is a condition to the obligations of the respective Purchasers to purchase Notes
pursuant to the Note Agreement that Parent and the Company enter into this Agreement with the
Secured Party and that, pursuant hereto, all of the issued and outstanding Equity Interests of each
corporation, limited liability company, partnership or other entity (each a “Pledged Company” and
collectively the “Pledged Companies”) that is either identified on Schedule 1 hereto or
owned by an Additional Pledgor, or acquired subsequent to the date hereof by any Pledgor
(other than Parent), be pledged to the Secured Party in accordance herewith.
D. On the date hereof the outstanding Equity Interests in each of the Pledged Companies
identified on Schedule 1 hereto are owned by Parent or the Company, as indicated on such Schedule
1.
E. Each Pledgor acknowledges that it will materially benefit from the issue and sale of the
Notes and the maintenance of the Notes outstanding in accordance with the terms of the Note
Agreement, and that, in order to induce the Purchasers to purchase the Notes pursuant to the Note
Agreement, and to assure compliance by the Obligors with the terms thereof, it is desirous of
entering into this Agreement and providing collateral security for the Secured Obligations in
accordance with the further provisions hereof.
NOW, THEREFORE, in consideration of the foregoing premises, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
1. Defined Terms.
(a) Capitalized terms used herein, unless otherwise defined in Section 1(b) or elsewhere in
this Agreement, shall have the respective meanings assigned to them in the Note Agreement; provided
that, where applicable and except as otherwise expressly provided herein, terms used herein
(whether or not capitalized) which are defined in the Uniform Commercial Code as enacted in the
State of New York (as amended from time to time, the “Code”), shall have the respective meanings
assigned to such terms therein.
(b) As used in this Agreement, the following terms shall have the respective meanings
indicated (terms defined in the singular to have a correlative meaning when used in the plural and
vice-versa):
“Acknowledgment” is defined in Section 4.
“Acquisition Event” is defined in Section 12.
“Additional Pledgor” is defined in the introductory paragraph.
“Agreement” is defined in the introductory paragraph.
“Code” is defined in Section 1(a).
“Collateral Agency Agreement” is defined in Recital paragraph B.
“Company” is defined in the introductory paragraph.
“Equity Interests” shall mean, with respect to any Person, all of the shares of capital stock
of (or other ownership or profit interests in) such Person, all of the warrants, options or other
rights for the purchase or acquisition from such Person of shares of capital stock of (or
2
other ownership or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person
or warrants, rights or options for the purchase or acquisition from such Person of such shares (or
such other interests), and all of the other ownership or profit interests in such Person (including
shares or partnership, member or trust interests therein), whether voting or nonvoting, and whether
or not such shares, warrants, options, rights or other interests are outstanding on any date of
determination.
“Joinder Agreement” is defined in Section 12(i).
“Limited Liability Company Agreement” shall mean the Second Amended and Restated Limited
Liability Company Agreement of the Company, dated as of June 26, 2008, entered into by the Company,
Parent, as the sole equity member, and the Independent Manager identified (and as that term is
defined) therein, as such Second Amended and Restated Limited Liability Company Agreement may be
amended or otherwise modified from time to time as permitted by this Agreement, the Note Agreement
and the other Financing Documents.
“Note Agreement” is defined in Recital paragraph A.
“Notes” is defined in Recital paragraph A
“Organizational Documents” shall mean, with respect to any Pledged Company or any Pledgor, as
applicable, its articles of incorporation, charter, bylaws, partnership agreement, certificate of
limited partnership, limited liability company operating agreement or member agreement, any similar
organizational agreement, and any agreement among the owners or holders of the Equity Interests in
such Pledged Company or Pledgor.
“Parent” is defined in the introductory paragraph.
“Pledged Collateral” shall mean and include all of the following:
(i) all Equity Interests and securities (collectively, “Investments”) listed on Schedule 1
attached hereto in respect of any Pledged Company identified thereon, and all rights and privileges
pertaining thereto, including, without limitation, all present and future Equity Interests and
securities receivable in respect of or in exchange for any such Investments, all rights under any
Organizational Documents and other similar agreements relating to any Investments, all rights to
subscribe for Equity Interests or securities incident to or arising from ownership of any
Investments, all cash, interest, additional Equity Interests or securities and other dividends or
distributions paid or payable on or in respect of any such Investments, and all books and records
(whether paper, electronic or any other medium) pertaining to the foregoing, including, without
limitation, all stock record and transfer books;
(ii) all other Equity Interests and securities (collectively, “Additional Investments”) at any
time owned or acquired by any Pledgor (including any Additional Pledgor) in respect of any Pledged
Company, and all rights and privileges pertaining thereto, including, without limitation, all
present and future Equity Interests and securities receivable in respect of or in exchange for any
Additional Investments, all rights under any Organizational Documents and other similar agreements
relating to any Additional Investments, all rights to subscribe for
3
Equity Interests or securities, incident to or arising from ownership of any Additional
Investments, all cash, interest, additional Equity Interests or securities and other dividends or
distributions paid or payable on or in respect of any Additional Investments, and all books and
records (whether paper, electronic or other medium) pertaining to the foregoing, including, without
limitation, all stock record and transfer books;
(iii) all books, records, ledgers, ledger cards, files correspondence, computer programs
software, disks, tapes and related data that at any time evidence or relate to any of the foregoing
or are otherwise necessary or helpful in the collection thereof or realization thereon; and
(iv) whatever is received when any of the foregoing is sold, exchanged, replaced or otherwise
disposed of, including all proceeds (as defined in the Code) thereof.
“Pledged Company” and “Pledged Companies” are defined in Recital paragraph C. For the
avoidance of doubt, TWCC shall not in any event constitute a Pledged Company (and the term “Pledged
Company” shall not include TWCC).
“Pledge Documents” is defined in Section 3.
“Pledgor” and “Pledgors” are defined in the introductory paragraph.
“Purchaser” and “Purchasers” are defined in Recital paragraph A.
“Secured Obligations” shall mean all indebtedness, liabilities and obligations of any nature
of the Company or any other Obligor, now or hereafter existing under or pursuant to or arising out
of or in connection with the Notes, the Note Agreement or the other Financing Documents, in the
case of each thereof as the same may be amended, supplemented, extended, renewed or replaced and in
effect from time to time, including without limitation, (i) the payment of the principal of,
Make-Whole Amount, if any, and interest (including interest which, but for the filing of a petition
in bankruptcy with respect to the Company or another Obligor would accrue) on the Notes, and (ii)
the due performance and observance of, and compliance with, all covenants, agreements, terms and
conditions of the Notes, the Note Agreement and each other Financing Document required to be
observed, performed or complied with by the Company or any other Obligor.
“Secured Party” is defined in the introductory paragraph.
2. Grant of Security Interests.
(a) In order to secure the prompt payment and performance in full of all Secured Obligations
in accordance with the Note Agreement and the other Financing Documents, each Pledgor hereby sells,
assigns, conveys, mortgages, pledges, hypothecates, transfers, confirms and grants unto the Secured
Party, for the equal and ratable benefit and security of the Noteholders, a lien on and a first
priority security interest in all of such Pledgor’s now existing and hereafter acquired or arising
right, title and interest in, to and under the Pledged Collateral, whether now existing or
hereafter coming into existence, whether now held or owned
4
or hereafter acquired, as now in existence or in effect or as hereafter modified, amended or
supplemented, and wherever the same may be located.
(b) Upon its execution and delivery of this Agreement, and from time to time thereafter as
required by Section 6(g), each Pledgor shall deliver to and deposit with the Secured Party in
pledge, all stock certificates, instruments or other documents evidencing the Pledged Collateral
owned by such Pledgor, together with undated stock powers or other appropriate instruments and
documents, signed in blank by such Pledgor.
(c) Any right, title and interest hereby assigned to the Secured Party hereunder includes,
without limitation, the right to further assign such right, title and interest.
(d) Notwithstanding any provision of this Agreement to the contrary, each Pledgor, shall
remain liable under the Organizational Documents relating to the Equity Interests pledged by such
Pledgor hereunder to observe and perform all the respective conditions and obligations to be
observed and performed thereunder by the owner and holder of such Equity Interests, all in
accordance with and pursuant to the terms and provisions of such Organizational Documents. The
granting of any of the rights inuring to the Secured Party hereunder shall not release such Pledgor
from any of its duties or obligations under the applicable Organizational Documents or constitute
an assumption by the Secured Party or the Noteholders of such duties and obligations. Neither the
Secured Party nor any Noteholder shall have any obligation or liability under any such
Organizational Documents by reason of or arising out of this Agreement or the pledge and assignment
of rights hereunder to the Secured Party or the receipt by the Secured Party of any payment under
or in respect of or relating to any Pledged Collateral or Organizational Documents pursuant hereto,
nor shall the Secured Party or any Noteholder be required or obligated in any manner to perform or
fulfill any of the obligations of such Pledgor under or pursuant to any such Organizational
Documents, or to make any payment thereunder, or to make any inquiry as to the nature or the
sufficiency of any payment received by the Secured Party or the sufficiency of any performance by
any party under any such Organizational Documents, or to present or file any claim, or to take any
action to collect or enforce any performance or the payment of any amounts which may have been
assigned to the Secured Party or to which it may be entitled at any time or times pursuant hereto.
3. Further Assurances.
Concurrently with the execution and delivery of this Agreement, and thereafter at any time and
from time to time upon reasonable request of the Required Holders, each Pledgor shall execute and
deliver to the Secured Party all such financing statements, continuation financing statements,
assignments, certificates and documents of title, affidavits, reports, notices, schedules of
account, letters of authority, further pledges, powers of attorney and all other documents
(collectively, “Pledge Documents”) which the Required Holders may reasonably request, and in form
reasonably satisfactory to the Required Holders, and take such other action as the Required Holders
may reasonably request, to create and maintain, perfect and continue perfected, a Prior Security
Interest in favor of the Secured Party in the Pledged Collateral and to fully consummate the
transactions contemplated by this Agreement. Each Pledgor hereby irrevocably makes, constitutes and
appoints the Secured Party (and any of the Secured Party’s officers or employees or agents
designated by the Secured Party) as such Pledgor’s true and
5
lawful attorney with power to sign the name of such Pledgor on all or any of the Pledge
Documents which the Secured Party determines must be executed, filed, recorded or sent in order to
perfect or continue perfected the Secured Party’s security interest in the Pledged Collateral in
any jurisdiction. Such power, being coupled with an interest, is irrevocable until all of the
Secured Obligations have been indefeasibly paid and performed in full.
4. Pledged Companies Acknowledgment and Assignment of Pledged Collateral.
Each Pledgor shall cause each Pledged Company the Equity Interests in which are pledged or
required to be pledged by such Pledgor hereunder, to execute and deliver to the Secured Party,
concurrently with such pledge, an Acknowledgment Regarding Pledge Agreement (“Acknowledgment”) in
the form attached as Exhibit A hereto. Concurrently with its execution and delivery hereof or of a
Joinder Agreement, (i) each Pledgor of any membership interests in any Pledged Company shall
execute and deliver to the Secured Party, with respect to all relevant Pledged Collateral, a fully
executed Assignment of Membership Interest in the form attached as Exhibit B hereto; and (ii) each
Pledgor of any capital stock in any Pledged Company shall execute and deliver to the Secured Party
a fully executed Stock Power in the form attached as Exhibit C hereto. Each Pledgor hereby
authorizes the Secured Party, after the occurrence and during the continuance of an Event of
Default, and upon the completion of a sale conducted pursuant to Article 9 of the Code, to complete
the Assignment of Membership Interest or Stock Power, as applicable, and if the assignee is not the
Secured Party, to fill in the name of the purchaser of the Pledged Collateral at such sale
conducted pursuant to Article 9 of the Code as the assignee, and the date on which such sale was
conducted, and, thereafter, to deliver a true copy of the fully executed original of such
Assignment of Membership Interest or Stock Power, as the case may be, to the Pledged Company, and,
if any, other members or shareholders of the Pledged Company. Each Pledgor agrees that any Pledged
Company and its constituent members or shareholders shall be entitled to rely conclusively on such
Assignment of Membership Interest or Stock Power and shall have no liability to such Pledgor for
any loss of damage which such Pledgor may incur by reason of such reliance, this sentence being
expressly for the benefit of each such Pledged Company and such members or shareholders.
5. Representations and Warranties.
The Pledgors hereby jointly and severally represent and warrant to the Secured Party as
follows:
(a) Each Pledgor has and will continue to have (or, in the case of after-acquired Pledged
Collateral, at the time such Pledgor acquires rights in such Pledged Collateral, will have and will
continue to have) title to all Pledged Collateral pledged by it hereunder, free and clear of all
Liens except Permitted Liens (other than Permitted Liens of the types described in clauses (iv),
(vii) and (viii) of the definition of that term).
(b) All Equity Interests in any Pledged Company included in the Pledged Collateral have been
duly authorized and validly issued to a Pledgor (as set forth on Schedule 1 hereto as the same may
be updated, restated or otherwise modified from time to time in accordance with the terms hereof),
are fully paid and nonassessable and constitute one hundred
6
percent (100 %) of the issued and outstanding Equity Interests (exclusive of any non-economic
interest held by any Independent Manager) of such Pledged Company.
(c) The security interests in the Pledged Collateral granted hereunder are valid, perfected
and of first priority, subject to no Lien in favor of any other Person except for the junior lien
securing the obligations under the Bank Financing Documents and additional Permitted Liens (other
than Permitted Liens of the types described in clauses (iv), (vii) and (viii) of the definition of
that term).
(d) There are no restrictions upon the transfer of the Pledged Collateral, other than
restrictions thereon set forth in the Financing Documents and the Bank Financing Documents, and
each Pledgor has the power, authority and right to transfer the Pledged Collateral owned by such
Pledgor free of any encumbrances and without obtaining the consent of any other Person.
(e) Each Pledgor has all necessary corporate or limited liability company power to execute and
deliver and perform its obligations under this Agreement.
(f) There are no actions, suits, proceedings or investigations pending or, to the knowledge of
the Pledgors, threatened against any Pledgor with respect to the Pledged Collateral, at law or
equity before any Official Body, which, either individually or in the aggregate, could reasonably
be expected to have a material adverse effect on the Pledged Collateral; and none of the Pledgors
is in violation of any order, writ, injunction or decree of any Official Body which, either
individually or in the aggregate, could reasonably be expected to have a material adverse effect on
such Pledgor’s ability to perform its obligations hereunder and consummate the transactions
contemplated hereby.
(g) This Agreement has been duly executed and delivered and constitutes the valid and legally
binding obligation of each Pledgor, enforceable against such Pledgor in accordance with its terms,
except to the extent that such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforceability of creditor’s rights
generally or by general equitable principles limiting the availability of the right of specific
performance or other equitable remedies.
(h) Neither the execution and delivery by any Pledgor of this Agreement, or of a Joinder
Agreement pursuant to which it shall have become a party hereto as a Pledgor hereunder, nor
compliance by said Pledgor with the terms and provisions hereof, nor the enforcement of any rights
hereunder (including, but not limited to, a foreclosure sale of the Pledged Collateral), will (i)
violate any provision of any Law, or (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any judgment, order, injunction, decree or ruling of any Official Body
to which such Pledgor is subject or any provision of any agreement, understanding or arrangement to
which such Pledgor is a party or by which such Pledgor is bound, or (iii) any Coal Lease or any of
the Coal Supply Contracts or any permit; provided that, the Pledgors make no representation as to
the ability of any Person who acquires the Pledged Collateral upon the exercise of remedies
hereunder to conduct mining operations until such Person has complied with applicable law relating
to the continuation of mining permits in the event of a change of control of a permitee.
7
(i) Each Pledgor’s chief executive office address is as set forth on the signature page hereto
or in the Joinder Agreement to which such Pledgor is a party.
(j) Other then the Limited Liability Company Agreement of the Company, no shareholder or other
similar agreements are applicable to any of the Pledged Collateral; the applicable Organizational
Documents of each Pledged Company contain no restrictions on the rights of owners of Equity
Interests in such Pledged Company other than those that normally would apply to an entity of the
same organizational type organized under the laws of the jurisdiction of organization of such
Pledged Company; and, all rights of each Pledgor in connection with its ownership of each of the
Pledged Companies which is a corporation are evidenced and governed solely by the stock
certificates, instruments or other documents evidencing ownership, the applicable Organizational
Documents of such Pledged Company, and applicable law.
(k) There is no action or legal, administrative or other proceeding pending or, to any
Pledgor’s knowledge, threatened which materially and adversely affects any Pledgor’s title to any
Pledged Collateral or its grant of a security interest hereunder in any Pledged Collateral, nor
does any Pledgor know of any basis for the assertion of any such claim.
(l) True and complete copies of the Organizational Documents of each Pledged Company are
attached to either an Officer’s Certificate of such Pledged Company delivered pursuant to Section
4.3 of the Note Agreement or the Acknowledgment of such Pledged Company which has been delivered to
the Secured Party.
6. General Covenants.
The Pledgors hereby jointly and severally covenant and agree as follows:
(a) Each Pledgor shall do all reasonable acts that may be necessary and appropriate to
maintain, preserve and protect the Pledged Collateral; each Pledgor shall be responsible for the
risk of loss of, damage to, or destruction of the Pledged Collateral owned by such Pledgor, unless
such loss is the result of the gross negligence or willful misconduct of the Secured Party. Each
Pledgor shall notify the Secured Party in writing at least ten (10) Business Days prior to any
change in such Pledgor’s chief executive office address.
(b) Each Pledgor shall appear in and defend any action or proceeding of which such Pledgor is
aware which could reasonably be expected to adversely affect, to any material extent, such
Pledgor’s title to any Pledged Collateral or the security interest and rights created or intended
to be created by this Agreement in any Pledged Collateral or the proceeds thereof; provided,
however, that with the consent of the Secured Party, which shall not be unreasonably withheld or
delayed, such Pledgor may settle any such actions or proceedings with respect to the Pledged
Collateral.
(c) Each Pledgor shall, and shall cause each of the Pledged Companies the Equity Interests in
which are pledged by such Pledgor hereunder to, keep separate, accurate and complete records of the
Pledged Collateral, disclosing the Secured Party’s security interest hereunder.
8
(d) Each Pledgor shall comply with all Laws applicable to the Pledged Collateral except for
any instances of noncompliance therewith that would not individually or in the aggregate materially
impair the use or value of any Pledged Collateral or the Secured Party’s rights therein hereunder.
(e) Each Pledgor shall pay any and all taxes, assessments, duties, fees or imposts of any
nature imposed by any Official Body on any of the Pledged Collateral, except to the extent the same
are being contested in good faith and by appropriate and lawful proceedings diligently conducted
and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP
shall have been made, but only to the extent that failure to discharge any thereof would not result
in any additional liability which would adversely affect to a material extent the financial
condition of any Pledgor or Subsidiary of any Pledgor or which would affect a material portion of
the Pledged Collateral, provided, that such Pledgor and its Subsidiaries will pay all such
liabilities forthwith upon the commencement of proceedings to foreclose any Lien which may have
attached as security therefor.
(f) Each Pledgor shall permit the Secured Party, its officers, employees and agents, at
reasonable times to inspect all books and records related to the Pledged Collateral, subject,
however to limitations of the character set forth in Section 7.2 of the Note Agreement on the
similar inspection rights afforded therein to Noteholders.
(g) To the extent that, following the date hereof, any Pledgor acquires Equity Interests in
any Pledged Company or any rights, property or securities described in the definition of Pledged
Collateral with respect to any Pledged Company, such Equity Interests, rights, property or
securities shall be subject to the terms hereof and, upon such acquisition, shall be deemed to be
hereby pledged, and subject to the lien and security interest hereby granted to the Secured Party;
and, such Pledgor thereupon shall deliver to the Secured Party all such documents and instruments
with respect thereto as shall be required by Section 2(b), together with an updated Schedule 1
hereto.
(h) No Pledgor shall, without the prior written consent of the Secured Party, (i) sell,
assign, transfer, exchange, lease, lend or dispose of (directly or indirectly), or grant any option
with respect to, any of the Pledged Collateral or (ii) create or permit to exist any Lien in or
with respect to the Pledged Collateral, except for the Lien hereof in favor of the Secured Party,
the junior lien in favor of the Bank Lenders and additional Permitted Liens (other than Permitted
Liens of the types described in clauses (iv), (vii) and (viii) of the definition of that term). The
inclusion of “proceeds” as a component of the Pledged Collateral shall not be deemed a consent by
the Secured Party or any Noteholder to any sale, assignment, transfer, exchange, lease, loan,
granting of an option with respect to, or disposition of all or any part of the Pledged Collateral.
(i) No Pledgor other than Parent shall amend in any respect its Organizational Documents
(including any provisions or resolutions relating to Equity Interests), without providing at least
twenty (20) calendar days’ prior written notice to the Noteholders and, in the event such amendment
would be material and adverse to the Noteholders, as determined by the Required Holders in their
sole discretion, obtaining the prior written consent of the Noteholders to such amendment. No
Pledgor shall (i) consent to or vote to approve the amendment in any
9
respect of the Organizational Documents of any Pledged Company (including any provisions
relating to Equity Interests), without providing or causing such Pledged Company to provide at
least twenty (20) calendar days prior written notice to the Noteholders and, in the event such
amendment would be material and adverse to the Noteholders, as determined by the Required
Noteholders in their sole discretion, obtaining the prior written consent of the Noteholders to
such amendment; (ii) consent to or vote to approve the sale or mortgaging of any asset of any
Pledged Company except (A) in the ordinary course of business, (B) for transfers expressly
permitted pursuant to the Note Agreement, and (C) to provide for the Liens of this Agreement and
the other Security Documents in favor of the Secured Party, the junior Liens pursuant to the Bank
Financing Documents in favor of the Bank Lenders, and additional Permitted Liens (other than
Permitted Liens of the types described in clauses (iv), (vii) and (viii) of the definition of that
term set forth in Schedule B to the Note Agreement); or (iii) with respect to a Pledgor of
membership interests in the Company, take any action in furtherance of any modification of the
Organizational Documents of the Company, or any other action, that would have the effect of
constituting member interests in the Company “securities” within the meaning, or otherwise
subjecting such member interests to the coverage, of Article 8 of the Uniform Commercial Code of
any jurisdiction.
(j) Each Pledgor shall, at its own expense, perform and observe all of the terms and
provisions of the applicable Organizational Documents to be performed or observed by such Pledgor,
maintain such applicable Organizational Documents in full force and effect, and enforce such
Pledgor’s rights under such applicable Organizational Documents in accordance with their terms.
Each Pledgor shall promptly deliver to the Secured Party any notice of default which such Pledgor
receives with respect to the applicable Organizational Documents of any Pledged Company.
(k) Except as otherwise permitted in the Note Agreement, no Pledgor shall permit any of its
Subsidiaries which is a Pledged Company to directly or indirectly (i) sell, assign, pledge or
otherwise transfer or dispose of any Indebtedness of, or claim against, or Equity Interests in, any
other Subsidiary of such Pledgor, or (ii) issue or sell any Equity Interests of such Subsidiary.
7. Other Rights With Respect to Pledged Collateral.
(a) So long as no Event of Default shall have occurred and be continuing, each Pledgor shall
be entitled to exercise any and all voting and other consensual and other rights pertaining to the
Pledged Collateral or any part thereof pledged by such Pledgor hereunder, and such Pledgor shall
have the right to deal with such Pledged Collateral and to receive distributions made in respect of
any Equity Interests included in such Pledged Collateral and in the ordinary course of business,
for application to any purpose and in any manner not inconsistent with the terms of this Agreement
(including, without limitation, Section 6(k)), the Note Agreement or any of the other Financing
Documents; provided, however, that such Pledgor shall not exercise or shall refrain from exercising
any such right if it would result in a Potential Default or an Event of Default or have a material
adverse effect on the value of any Pledged Collateral. Without limiting the foregoing and in
addition thereto, no Pledgor shall vote to enable, or take any other action to permit, any Pledged
Company to issue any Equity Interests or enter into or become
10
obligated pursuant to any agreement or undertaking restricting the right or ability of any
Pledgor or the Secured Party to sell, assign or transfer any of the Pledged Collateral.
(b) Upon the occurrence and during the continuance of an Event of Default, the Secured Party,
at the expense of the Pledgors, may: (i) take control of and manage all or any of the Pledged
Collateral; (ii) apply to the payment of any of the Secured Obligations, whether any be due and
payable or not, any moneys, including cash dividends and income from any Pledged Collateral, now or
hereafter in the hands of the Secured Party, on deposit or otherwise, belonging to the Pledgors, as
the Secured Party shall determine; and (iii) do anything which any Pledgor is required but fails to
do hereunder.
(c) If any Pledgor fails to perform any agreement contained herein, the Secured Party may (but
shall have no obligation to) perform or cause the performance of such agreement, and the expenses
of the Secured Party incurred in connection therewith shall be payable by such Pledgor.
(d) Each Pledgor hereby appoints the Secured Party to be such Pledgor’s attorney-in-fact with
full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise,
from time to time (but only upon the occurrence and during the continuance of an Event of Default)
in the Secured Party’s discretion to take any action and to execute any instrument which the
Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments made payable to such
Pledgor representing any dividend or other distribution in respect of any Pledged Collateral or any
part thereof and to give full discharge for the same.
8. Additional Remedies Upon Event of Default.
Upon the occurrence of any Event of Default and for so long as such Event of Default shall be
continuing, the Secured Party shall have, in addition to all rights and remedies of a secured party
under the Code or other applicable Law, and in addition to its rights under Section 7 and under the
other Financing Documents, the following rights and remedies:
(a) The Secured Party may, after ten (10) Business Days’ advance
written notice to a Pledgor, sell, assign, give an option or options to
purchase or otherwise dispose of such Pledgor’s Pledged Collateral or any part
thereof at public or private sale, at any of the Secured Party’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Secured Party may deem commercially reasonable. Each Pledgor
agrees that ten (10) Business Days’ advance notice of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Secured Party shall not be obligated to
make any sale of Pledged Collateral regardless of notice of sale having been
given. The Secured Party may adjourn any public or private sale from time to
time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Each
Pledgor recognizes that the Secured Party may be compelled to
resort to one or more private sales of the Pledged Collateral
to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire Equity Interests,
securities, or other ownership interests included in such
Pledged Collateral for their own account for investment and
not with a view to the distribution or resale thereof.
11
(b) The proceeds of any collection, sale or other disposition of the Pledged Collateral, or
any part thereof, shall, after the Secured Party has made all deductions of reasonable expenses,
including but not limited to reasonable attorneys’ fees and other expenses incurred in connection
with repossession, collection, sale or disposition of such Pledged Collateral or in connection with
the enforcement of the Secured Party’s rights with respect to the Pledged Collateral, including in
any insolvency, bankruptcy or reorganization proceedings, be applied as provided in Section 5.4 of
the Collateral Agency Agreement.
(c) (i) The Secured Party shall have the right to have the Pledged Collateral, or from time to
time any part thereof, transferred into the name of the Secured Party pursuant to Section 3.
(ii) All rights of each Pledgor to exercise the voting and other consensual rights which such
Pledgor would otherwise be entitled to exercise pursuant to Section 7(a) and to receive
distributions in respect of Pledged Collateral shall cease, and all such rights shall thereupon
become vested in the Secured Party, who shall thereafter upon notice to such Pledgor have the sole
right to exercise such voting and other consensual rights and to receive 100% of all such
distributions, which shall be promptly applied by Secured Party as provided in Section 5.4 of the
Collateral Agency Agreement.
(iii) All distributions which are received by any Pledgor contrary to the provisions of
Section 8(b) or Section 8(c)(ii) shall be received in trust for the benefit of the Secured Party,
shall be segregated from other funds of such Pledgor, and forthwith shall be paid over by such
Pledgor to the Secured Party as Pledged Collateral in the same form as received (with any necessary
endorsements), unless all Events of Default shall have been previously cured by the Pledgors or
waived in writing by the Noteholders in the manner provided in the Note Agreement.
(iv) The Secured Party shall have the right to take control of and manage all or any of the
Pledged Collateral.
9. Secured Party’s Duties.
The powers conferred on the Secured Party hereunder are solely to protect its interest in the
Pledged Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Pledged Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Secured Party shall have no duty as to
any Pledged Collateral or as to the taking of any steps to preserve rights against prior parties or
any other rights pertaining to any Pledged Collateral.
10. No Waiver; Cumulative Remedies.
No failure to exercise, and no delay in exercising, on the part of the Secured Party, any
right, power or privilege available it hereunder or under applicable law shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or privilege preclude
any further exercise thereof or the exercise of any other right, power or privilege. The remedies
herein provided are cumulative and not exclusive of any remedies provided under the other Financing
Documents or by Law. Each Pledgor waives any right to require the Secured
12
Party to proceed against
any other Person or to exhaust any of the Pledged Collateral or other security for the Secured
Obligations or to pursue any remedy in the Secured Party’s power.
11. Assignment.
Subject to the provisions of the Collateral Agency Agreement, all rights of the Secured Party
under this Agreement shall inure to the benefit of its successors and assigns (including any
successor Collateral Agent under the Collateral Agency Agreement). All obligations of each Pledgor
hereunder shall bind its successors and assigns; provided, however, no Pledgor may assign or
transfer any of its rights and obligations hereunder or any interest herein.
12. Additional Pledgors; Additional Pledged Collateral.
In the event that, at any time subsequent to the date hereof, any Person (other than TWCC)
shall become a Subsidiary of the Company or of a Guarantor (including any Subsidiary of the Company
which, pursuant to Section 9.2 of the Note Agreement, shall have become a Guarantor subsequent to
the date hereof), then, in each such event (hereinafter referred to as an “Acquisition Event”),
such Person, forthwith upon the occurrence of such Acquisition Event and without further act by any
party, shall be deemed and become a Pledged Company for all purposes of this Agreement, and as
promptly as practical (and in any event not later than sixty (60) days) following such Acquisition
Event:
(i) If such Person shall have become a Subsidiary of a Guarantor and the following
clause (ii) hereof shall not be applicable, the Company shall cause such Guarantor to (A)
join in this Agreement as an Additional Pledgor hereunder and become bound by the terms
hereof by executing and delivering to the Collateral Agent a Joinder Agreement substantially
in the form of Exhibit G(1) to the Note Agreement (a “Joinder Agreement”), completed in a
manner satisfactory to the Collateral Agent, which, without limiting the provisions of said
Section 9.2 of the Note Agreement, shall be effective to confirm the pledge to the Secured
Party hereunder of all right, title and interest of such Guarantor in to and under all
Pledged Collateral relating to such Person and (B) deliver to the Secured Party all such
documents and instruments with respect to such Pledged Collateral as shall be required by
Section 2(b) hereof.
(ii) If such Person shall have become a Subsidiary of the Company or of any Guarantor
which shall have theretofore become an Additional Pledgor hereunder, the Company or such
Additional Pledgor, as the case may be, shall comply with Section 6(g) hereof with respect
to the Pledged Collateral relating to such Person.
(iii) The Pledgors shall furnish to the Secured Party a revised Schedule 1 hereto,
identifying such Person and the Equity Interests in such Person, reflecting the pledge to
the Secured Party hereunder of all Pledged Collateral relating to such Person, and showing
all Equity Interests owned by such Person in any other Person.
13
Nothing in this Section 12 is intended or shall be construed to permit the Company or any
other Obligor to consummate any Acquisition Event or any other transaction that it would not be
permitted to consummate pursuant to the terms of the Note Agreement.
13. Recourse to Parent.
The Secured Party’s and the Noteholders’ recourse against Parent hereunder shall be solely
limited to Parent’s interest in the Pledged Collateral and the enforcement of their respective
rights under this Agreement.
14. Severability.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall (to the full extent permitted by law) not invalidate or render
unenforceable such provision in any other jurisdiction.
15. Governing Law.
This Agreement shall be governed by, and construed and enforced in accordance with, the laws
of the State of New York.
16. Notices.
All notices and other communications hereunder shall be in writing and shall be delivered by
(i) first-class certified mail, postage prepaid, return receipt requested, (ii) express delivery
such as Federal Express or similar service, or (iii) personal delivery, addressed (A) if to a
Pledgor, to the address of such Pledgor set forth on the appropriate signature page hereof or in
the Joinder Agreement to which it is a party, or at such other address as such Pledgor shall have
furnished to the Secured Party and the Noteholders in writing, with a copy to Xxxxxx Xxxxxx
Xxxxxxxxx Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx Xxxxxxxxxxxxx 00000, Attn: Xxxxxxx Xxxxxxx,
Esq., or such other address as the Company or such Pledgor shall have furnished to the Secured
Party and the Noteholders in writing, or (B) if to the Secured Party, to it at One U.S. Bank Plaza,
Mail Code: XX-XX-06CT, Xx. Xxxxx, XX 00000, Attention: Xxxxx Xxxxxx, or at such other address as
the Secured Party shall have furnished to the Pledgors and the Noteholders in writing, or (C) if to
a Noteholder, at the address of such Noteholder specified, or provided for
in accordance with, Section 18 of the Note Agreement or at such other address as such
Noteholder shall have furnished to the Pledgors and the Secured Party in writing. Any notice shall
be deemed to be given only when actually received.
17. Specific Performance.
Each Pledgor acknowledges and agrees that, in addition to the other rights of the Secured
Party hereunder and under the other Financing Documents, because the Secured Party’s remedies at
law for failure of such Pledgor to comply with the provisions hereof relating to the Secured
Party’s rights (i) to inspect the books and records related to the Pledged Collateral, (ii) to
receive the various notifications such Pledgor is required to deliver hereunder, (iii) to obtain
14
copies of agreements and documents as provided herein with respect to the Pledged Collateral, (iv)
to enforce the provisions hereof pursuant to which such Pledgor has appointed the Secured Party its
attorney-in-fact, and (v) to enforce the Secured Party’s remedies hereunder, would be inadequate
and that any such failure would not be adequately compensable in money damages, such Pledgor agrees
that each such provision hereof may be specifically enforced.
18. Consent to Jurisdiction.
EACH OF THE PLEDGORS AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH, OR ANY LEGAL ACTION OR
PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT OBTAINED AGAINST THE PLEDGORS, OR ANY OF
THEM, FOR BREACH HEREOF, OR AGAINST ANY OF THEIR PROPERTIES, MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK BY ANY
NOTEHOLDER OR THE SECURED PARTY OR ON BEHALF OF ANY NOTEHOLDER OR THE SECURED PARTY, AS SUCH
NOTEHOLDER OR THE SECURED PARTY MAY ELECT, AND EACH PLEDGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR PURPOSES OF ANY SUCH LEGAL ACTION OR
PROCEEDING. EACH PLEDGOR HEREBY AGREES THAT SERVICE OF PROCESS IN ANY SUCH PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR
FORM OF MAIL), POSTAGE PREPAID, TO IT AT ITS ADDRESS SPECIFIED IN SECTION 16 HEREOF OR AT SUCH
OTHER ADDRESS OF WHICH THE SECURED PARTY AND EACH NOTEHOLDER SHALL HAVE BEEN NOTIFIED PURSUANT
HERETO. IN ADDITION, EACH PLEDGOR HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY CLAIM THAT
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
19. Waiver of Jury Trial.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT
OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
15
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
20. Entire Agreement; Amendments.
This Agreement together with the other Financing Documents constitutes the entire agreement
between and among the parties with respect to the subject matter hereof and supersedes all prior
agreements relating to a grant of a security interest in the Pledged Collateral by any Pledgor.
This Agreement may not be amended or supplemented, other than pursuant to a Joinder Agreement
entered into as contemplated by Section 12, except by a writing signed by the Secured Party and the
Pledgors.
21. Counterparts.
This Agreement may be executed in any number of counterparts, and by different parties hereto
in separate counterparts, each of which when so executed shall be deemed an original and all of
which taken together shall constitute but one and the same agreement.
22. Descriptive Headings; Etc.
The descriptive section and other subdivision headings which are used in this Agreement are
for the convenience of the parties only and shall not affect the meaning of any provision of this
Agreement. References in this Agreement to a particular section or other subdivision, or to a
particular schedule or exhibit, shall, unless otherwise specified herein, be deemed a reference to
that section or other subdivision of, or that schedule or exhibit to, this Agreement.
23. Consent by Parent.
Parent hereby (i) acknowledges receipt of and consents to and agrees to be bound by the terms
of, the Collateral Agency Agreement and (ii) (a) acknowledges receipt of and consents to and agrees
to be bound by the terms of, the Intercreditor Agreement (b) agrees not to take any action that
would have the effect of contravening the terms thereof, (c) agrees to comply with all terms
thereof requiring its compliance or consent, and (d) agrees that it is not a third-party
beneficiary thereof.
[SIGNATURE PAGES FOLLOW]
16
[SIGNATURE PAGE 1 OF 2 TO
PLEDGE AGREEMENT]
PLEDGE AGREEMENT]
IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
| XXXXXXXXXXXX COAL COMPANY | ||||||
| By | /s/ Xxxxxxx X. Xxxxxx | |||||
| Name: Xxxxxxx X. Xxxxxx | ||||||
| Title: Vice President-Development and Treasurer | ||||||
| Address: | ||||||
| 0 Xxxxx Xxxxxxx Xxxxxx | ||||||
| 0xx Xxxxx | ||||||
| Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000 | ||||||
| XXXXXXXXXXXX MINING LLC | ||||||
| By | /s/ Xxxxxxx X. Xxxxxx | |||||
| Name: Xxxxxxx X. Xxxxxx | ||||||
| Title: Vice President | ||||||
| Address: | ||||||
| 0 Xxxxx Xxxxxxx Xxxxxx | ||||||
| 0xx Xxxxx | ||||||
| Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000 | ||||||
[SIGNATURE PAGE 2 OF 2 TO PLEDGE AGREEMENT]
| U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent | ||||
| By | /s/ Xxxxx X. Xxxxxx | |||
| Name: | Xxxxx X. Xxxxxx | |||
| Title: | Vice President | |||
A. Corporations
| Pledgor | Pledged Company | Type and Amount of Equity Interests | ||
Xxxxxxxxxxxx Mining LLC
|
Western Energy Company Dakota Xxxxxxxxxxxx Corporation Xxxxxxxxxxxx Xxxxxx Corporation |
118,111.429 shares (100%)
1,000 shares (100%) 1,000 shares (100%) |
B. Limited Liability Companies
| Pledgor | Pledged Company | Type and Amount of Equity Interests | ||
Xxxxxxxxxxxx Coal Company
|
Xxxxxxxxxxxx Mining LLC | 100% limited liability company interests |
C. Partnerships
| Pledgor | Pledged Shares | Type and Amount of Ownership | ||||
N/A |
