EXHIBIT 1.1
ARCH WESTERN FINANCE, LLC
$700,000,000
6.75 % Senior Notes Due July 1, 2013
Purchase Agreement
New York, New York
June 19, 2003
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, $700,000,000
principal amount of its 6.75% Senior Notes Due July 1, 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 (the
"Indenture"), dated as of June 25, 2003 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"), dated as
of June 25, 2003, 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, 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. To the extent there are no additional parties listed on
Schedule I other than you, the term Representatives as used herein shall mean
you as the Initial Purchasers, and the terms Representatives and Initial
Purchasers shall mean either the singular or plural as the context requires. 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 June 12,
2003 (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 June 19, 2003
(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.
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(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, (including Canyon Fuel Company, LLC) and (ii)
Arch Western and its subsidiaries (including Canyon Fuel Company, LLC),
(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
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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"), (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
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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 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
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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 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 and, assuming
due authorization, execution and delivery thereof by the Trustee, when executed
and delivered by each of the Issuer and the Guarantors, will constitute 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
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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).
(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, and
assuming due authorization, execution and delivery thereof by the Trustee, when
executed and delivered by Arch Western will constitute 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
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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 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
8
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.
(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
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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 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) Triton
Coal Company, LLC ("Triton") 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 Triton 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 Triton and its consolidated subsidiaries
and delivered their report with respect to the audited consolidated financial
statements and schedules of Triton included in the Final Memorandum, are
independent public accountants with respect to Triton under Rule 101 of ICPA's
Code of Professional Conduct.
10
(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 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, and Canyon Fuel Company, LLC, 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
11
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
Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx 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 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 98.25% of the principal amount thereof, plus accrued interest,
if any, from June 25, 2003 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 June 25, 2003, or
at such time on such later date (not later than July 2, 2003) 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.
12
(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.
(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.
13
(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.
(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, the Registration Rights
Agreement and the Pledge 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,
14
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.
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, the
Subsidiaries of the Company (other than Arch Western) and the Canyon
Fuel 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
15
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, the Subsidiary
Guarantors, the Subsidiaries of the Company (other than Arch Western)
and Canyon Fuel 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, 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 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,
2002 as filed with the Commission on March 13, 2003. 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
16
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, 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, 2002 under "Business--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:
17
(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, and assuming
due authorization, execution and delivery thereof by the Trustee, when
executed and delivered by each of the Issuer, Arch Western and each
Subsidiary Guarantor, will constitute 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 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).
18
(vii) the Pledge Agreement has been duly authorized and,
when executed and delivered by Arch Western, will constitute 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, will be perfected upon (i) the
execution and delivery of the Pledge Agreement by Arch Western and the
Trustee and (ii) 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 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
19
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 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
20
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 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
21
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 three-month period ended March 31, 2003 and as at March
31, 2003, and stating in effect that:
(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 three-month period
ended March 31, 2003 and as at March 31, 2003; 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, 2002, nothing came
to their attention which caused them to believe that:
22
(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
March 31, 2003, 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 March 31, 2003
consolidated balance sheet included in the Final Memorandum,
or for the period from April 1, 2003 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 March 31, 2003 consolidated balance sheet
included in the Final Memorandum, or for the period from April
1, 2003 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
(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; 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
23
interim consolidated financial information of Canyon Fuel for the three-month
period ended March 31, 2003 and as at March 31, 2003, 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 three-month period ended March 31, 2003
and as at March 31, 2003; 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 subsidiaries, as to
transactions and events subsequent to December 31, 2002, 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
March 31, 2003, 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 March 31, 2003
consolidated balance sheet included in the Final Memorandum,
or for the period from April 1, 2003 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.
24
(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 Triton for the three-month period ended
March 31, 2003 and as at March 31, 2003, and stating in effect that:
(i) in their opinion the audited financial statements of
Triton 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 Triton; their
limited review in accordance with the standards established under
Statement on Auditing Standards No. 100, of the unaudited interim
financial information for the three-month period ended March 31, 2003
and as at March 31, 2003; 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 and directors; and
inquiries of certain officials of Triton who have responsibility for
financial and accounting matters of Triton and its subsidiaries, as to
transactions and events subsequent to December 31, 2002, 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
March 31, 2003, 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 Triton and its subsidiaries or capital
stock of Triton or decreases in the stockholders' equity of
the Triton or net current assets of the Triton as compared
with the amounts shown on the March 31, 2003 consolidated
balance sheet included in the Final Memorandum, or for the
period from April 1, 2003 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 Triton 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 Triton and its subsidiaries)
set forth in the Final
25
Memorandum in the Final Memorandum, agrees with the accounting records
of the Triton 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).
(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 Company shall have
furnished to the Representatives an executed copy of an Agreement of Members of
Arch Western pursuant to which Delta Housing Inc. and Arch Western Acquisition
Corporation agreed that the consummation of the transactions contemplated by
this Agreement, the Indenture, the Registration Rights Agreement, the Pledge
Agreement and the Final Memorandum are permitted under the Limited Liability
Company Agreement of Arch Western.
(l) Prior to the Closing Date, the Company shall have
received from PNC Bank, on behalf of the lenders party under the $350,000,000
Amended and Restated Revolving Credit Facility , dated as of April 18, 2002, by
and among the Company and the lenders party thereto (the "Company Credit
Facility"), (i) an irrevocable waiver of any Event of Default (as defined in,
and under, the Company Credit Facility) caused, directly or indirectly, by the
transactions contemplated by this Agreement, the Indenture, the Registration
Rights Agreements, the Pledge Agreement and the Final Memorandum and (ii) an
irrevocable consent to the consummation of such transactions; and such waiver
and consent, a copy of which shall have been furnished to the Representatives
prior to the Closing Date, shall be in full force and effect on the Closing
Date.
26
(m) 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 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
27
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 127 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, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying '
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
28
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 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
29
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).
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
30
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., XxxxXxxxx 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.
"Execution Time" shall mean, the date and time that this
Agreement is executed and delivered by the parties hereto.
31
"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, and in the case of each of the Company and Arch Western shall be
deemed to include Canyon Fuel.
"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.
32
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
By /s/ XXXXX X. XXXXXXXX
-----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President &Treasurer
Arch Coal, Inc.
By /s/ XXXXXX X. XXXXX
-----------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President - Law, General Counsel
Arch Western Resources, LLC
By /s/ XXXXX X. XXXXXXXX
-----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President & Treasurer
Thunder Basin Coal Company, L.L.C.
By /s/ XXXXX X. XXXXXXXX
-----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President & Treasurer
33
Mountain Coal Company, L.L.C.
By /s/ XXXXX X. XXXXXXXX
----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President & Treasurer
Arch of Wyoming, LLC
By /s/ XXXXX X. XXXXXXXX
-----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President & Treasurer
34
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/ XXXXXXXXXXX X. XXXXX
-----------------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Title: Vice President
For themselves and the other several
Initial Purchasers named in
Schedule I to the foregoing Agreement.
35
SCHEDULE I
Principal Amount of
Securities
Initial Purchasers to Be Purchased
------------------ ---------------
Citigroup Global Markets Inc. ...................... US$175,000,000
X.X. Xxxxxx Securities Inc. ........................ 175,000,000
Xxxxxx Xxxxxxx & Co. Incorporated................... 175,000,000
PNC Capital Markets, Inc. .......................... 70,000,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated.................... 24,500,000
Credit Suisse First Boston LLC...................... 24,500,000
Credit Lyonnais Securities (USA) Inc................ 17,500,000
U.S. Bancorp Xxxxx Xxxxxxx Inc. .................... 15,750,000
BNY Capital Markets, Inc. .......................... 15,750,000
BNP Paribas Securities Corp......................... 7,000,000
-------------
Total...................................... US$700.000,000
==============
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
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 Xxx 0000 ("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
