-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Im9U+n7NBtNBvULHeB1MPmca2BdKqwU4x7AAiXCPWejfaj8K+MKdIbQ+ncPfllwe m37WXO0t6/aSW0s2V3Qvig== 0000950130-98-003548.txt : 19980720 0000950130-98-003548.hdr.sgml : 19980720 ACCESSION NUMBER: 0000950130-98-003548 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 128 FILED AS OF DATE: 19980714 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: P&L COAL HOLDINGS CORP CENTRAL INDEX KEY: 0001064728 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 134004153 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-59073 FILM NUMBER: 98665954 BUSINESS ADDRESS: STREET 1: 701 MARKET ST CITY: ST LOUIS STATE: MO ZIP: 63101-1826 BUSINESS PHONE: 3143423400 MAIL ADDRESS: STREET 1: 701 MARKET ST CITY: ST LOUIS STATE: MO ZIP: 63101-1826 S-4 1 REGISTRATION STATEMENT AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 14, 1998. REGISTRATION NO. 333- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- P&L COAL HOLDINGS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1222 13-4004153 (STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER) INCORPORATION OR CLASSIFICATION CODE ORGANIZATION) NUMBER) --------------- 701 MARKET STREET ST. LOUIS, MO 63101-1826 (314) 342-3400 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) --------------- JEFFERY L. KLINGER, ESQ. P&L COAL HOLDINGS CORPORATION 701 MARKET STREET ST. LOUIS, MO 63101-1826 (314) 342-3400 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) --------------- WITH A COPY TO: RISE B. NORMAN, ESQ. SIMPSON THACHER & BARTLETT 425 LEXINGTON AVENUE NEW YORK, NY 10017 (212) 455-2000 --------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: [_] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] --------------- If this form is a post-effective amendment filed pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] --------------- CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
PROPOSED PROPOSED TITLE OF EACH CLASS OF MAXIMUM MAXIMUM AMOUNT OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION REGISTERED REGISTERED PER NOTE OFFERING PRICE(1) FEE - -------------------------------------------------------------------------------------- 8 7/8% Series B Senior Notes due 2008........ $400,000,000 100% $400,000,000 $118,000 - -------------------------------------------------------------------------------------- Guarantees of 8 7/8% Series B Senior Notes due 2008(2)........... $400,000,000 (3) (3) (3) - -------------------------------------------------------------------------------------- 9 5/8% Series B Senior Subordinated Notes due 2008.............. $500,000,000 100% $500,000,000 $147,500 - -------------------------------------------------------------------------------------- Guarantees of 9 5/8% Series B Senior Subordinated Notes due 2008(2)........... $500,000,000 (3) (3) (3) - --------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- (1) Estimated solely for the purpose of calculating the registration fee. (2) See inside facing page for table of additional registrant guarantors. (3) Pursuant to Rule 457(n), no separate filing fee is required for the guarantees. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ---------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. TABLE OF ADDITIONAL REGISTRANT GUARANTORS
STATE OR OTHER ADDRESS INCLUDING ZIP JURISDICTION CODE, AND TELEPHONE EXACT NAME OF OF I.R.S. NUMBER INCLUDING AREA REGISTRANT GUARANTOR INCORPORATION EMPLOYER CODE, OF REGISTRANT AS SPECIFIED OR IDENTIFICATION GUARANTOR'S PRINCIPAL IN ITS CHARTER ORGANIZATION NUMBER EXECUTIVE OFFICES - ----------------------- ------------- -------------- ---------------------------------------- Affinity Mining Company West Virginia 25-1207512 800 Laidley Tower, P.O. Box 1233 Charleston, WV 25324, (304-344-0300) Arid Operations, Inc. Delaware 84-1199578 14062 Denver West Parkway, Suite 110 Golden, CO 80401-3301, (760-337-5552) Big Sky Coal Company Delaware 81-0476071 1300 S. Yale Flagstaff, AZ 86001, (520-774-5253) Blackrock First Capital West Virginia 55-0695451 800 Laidley Tower, P.O. Box 1233 Corporation Charleston, WV 25324, (304-344-0300) Bluegrass Coal Company Delaware 43-1540253 701 Market Street, Suite 710 St. Louis, MO 63101-1826, (314-342-3400) Caballo Coal Company Delaware 83-0309633 Caller Box 3037 Gillette, WY 82717, (307-687-6900) Charles Coal Company Delaware 04-2698757 800 Laidley Tower, P.O. Box 1233 Charleston, WV 25324, (304-344-0300) Coal Properties Corp. Delaware 04-2702708 800 Laidley Tower, P.O. Box 1233 Charleston, WV 25324, (304-344-0300) Colony Bay Coal Company West Virginia 55-0604613 800 Laidley Tower P.O. Box 1233 Charleston, WV 25324, (304-344-0300) Cook Mountain Coal Com- Delaware 55-0732291 800 Laidley Tower, P.O. Box 3506 pany Charleston, WV 25324, (304-344-0300) Cottonwood Land Company Delaware 43-1721982 301 N. Memorial Drive, Suite 334 St. Louis, MO 63102, (314-342-7610) Darius Gold Mine Inc. Delaware 13-2899722 14062 Denver West Parkway Suite 110 Golden, CO 63102, (303-271-3600) EACC Camps, Inc. West Virginia 25-0600150 800 Laidley Tower, P.O. Box 1233 Charleston, WV 25324, (304-344-0300)
i
STATE OR OTHER ADDRESS INCLUDING ZIP JURISDICTION CODE, AND TELEPHONE EXACT NAME OF OF I.R.S. NUMBER INCLUDING AREA REGISTRANT GUARANTOR INCORPORATION EMPLOYER CODE, OF REGISTRANT AS SPECIFIED OR IDENTIFICATION GUARANTOR'S PRINCIPAL IN ITS CHARTER ORGANIZATION NUMBER EXECUTIVE OFFICES - ------------------------ ------------- -------------- ------------------------------------------- Eastern Associated Coal West Virginia 25-1125516 800 Laidley Tower, P.O. Box 1233 Corp. Charleston, WV 25324, (304-344-0300) Eastern Royalty Corp. Delaware 04-2698759 800 Laidley Tower, P.O. Box 1233 Charleston, WV 25324, (304-344-0300) Gold Fields Chile, S.A. Delaware 13-3004607 14062 Denver West Parkway Suite 110 Golden, CO 63102, (303-271-3600) Gold Fields Mining Delaware 36-2079582 14062 Denver West Parkway Corporation Suite 110 Golden, CO 63102, (303-271-3600) Gold Fields Operating Delaware 22-2204381 14062 Denver West Parkway Co.--Ortiz Suite 110 Golden, CO 80401-3301, (303-271-3600) Grand Eagle Mining, Inc. Kentucky 61-1250622 19070 Highway 1078 South Henderson, KY 42420, (502-546-7926) Hayden Gulch Terminal, Delaware 86-0719481 P.O. Box 882323 Inc. Steamboat Springs, CO 80488, (314-342-3400) Independence Material Delaware 43-1750064 701 Market Street, Suite 840 Handling Company St. Louis, MO 63101-1826, (314-342-3400) Interior Holdings Corp. Delaware 43-1700075 701 Market Street, Suite 730 St. Louis, MO 63101-1826, (314-342-3400) James River Coal Delaware 55-0643770 701 Market Street, Suite 712 Terminal Company St. Louis, MO 63101-1826, (314-342-7600) Juniper Coal Company Delaware 43-1744675 701 Market Street, Suite 716 St. Louis, MO 63101-1826, (314-342-3400) Kayenta Mobile Home Delaware 86-0773596 1300 S. Yale Park, Inc. Flagstaff, AZ 86001, (520-774-5253) Martinka Coal Company Delaware 55-0716084 815 Laidley Tower, PO Box 1233 Charleston, WV 25324-0004, (304-344-0300) Midco Supply and Illinois 43-6042249 P.O. Box 14542 Equipment Corporation St. Louis, MO 63178, (314-342-3400) Midwest Coal Resources, Delaware 61-1222931 1951 Barrett Court, Suite 215 Inc. Henderson, KY 42420, (502-827-0800) Mountain View Coal Delaware 25-1474206 800 Laidley Tower, P.O. Box 1233 Company Charleston, WV 25334-0004, (304-344-0300) North Page Coal Corp. West Virginia 31-1210133 800 Laidley Tower, P.O. Box 1233 Charleston, WV 25334-0004, (304-344-0300) Ohio County Coal Company Kentucky 61-1176239 19070 Highway 1078 South Henderson, KY 42420, (502-546-7561) Patriot Coal Company, Delaware 61-1258748 19070 Highway 1078 South L.P. Henderson, KY 42420, (502-546-9430) Peabody America, Inc. Delaware 93-1116066 701 Market Street, Suite 720 St. Louis, MO 63101-1826, (303-271-3600)
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ADDRESS INCLUDING ZIP CODE, AND TELEPHONE EXACT NAME OF STATE OR OTHER I.R.S. NUMBER INCLUDING AREA REGISTRANT GUARANTOR JURISDICTION OF EMPLOYER CODE, OF REGISTRANT AS SPECIFIED INCORPORATION IDENTIFICATION GUARANTOR'S PRINCIPAL IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES - ------------------------ --------------- -------------- ----------------------------------------- Peabody Coal Company Delaware 13-2606920 800 Laidley Tower Charleston, WV 25301, (502-827-0800) Peabody COALSALES Delaware 43-1610419 701 Market Street, Suite 830 Company St. Louis, MO 63101-1826, (314-342-7600) Peabody COALTRADE, Inc. Delaware 43-1666743 4405 Cox Road, Suite 220 Glen Allen, VA 23050-3395, (804-935-0345) Peabody Development Delaware 43-1265557 301 North Memorial Drive Company St. Louis, MO 63102, (314-342-7610) Peabody Energy Delaware 43-1753832 701 Market Street, Suite 830 Solutions, Inc. St. Louis, MO 63101, (314-342-7600) Peabody Holding Company, New York 13-2871045 701 Market Street, Suite 700 Inc. St. Louis, MO 63101-1826, (314-342-3400) Peabody Natural Delaware 51-0332232 701 Market Street, Suite 718 Resources Company St. Louis, MO 63101, (314-342-3400) Peabody Terminals, Inc. Delaware 31-1035824 701 Market Street, Suite 712 St. Louis, MO 63101, (314-342-3400) Peabody Venezuela Coal Delaware 43-1609813 701 Market Street, Suite 715 Corp. St. Louis, MO 63101-1826, (314-342-3400) Peabody Western Coal Delaware 86-0766626 1300 S. Yale Company Flagstaff, AZ 86001, (520-774-5253) Pine Ridge Coal Company Delaware 55-0737187 810 Laidley Tower Charleston, WV 25324, (304-344-0300) Powder River Coal Delaware 43-0996010 1013 East Boxelder Company Gillette, WY 82718, (307-687-6900) Rio Escondido Coal Corp. Delaware 74-2666822 P.O. Box 66746 St. Louis, MO 63166, (314-342-3400) Seneca Coal Company Delaware 84-1273892 1300 S. Yale Flagstaff, AZ 86001, (520-774-5253) Sentry Mining Company Delaware 43-1540251 701 Market Street, Suite 700 St. Louis, MO 63101-1826, (314-342-3400) Snowberry Land Company Delaware 43-1721980 301 N. Memorial Drive, Suite 333 St. Louis, MO 63102, (314-342-3400) Sterling Smokeless Coal West Virginia 55-0463558 800 Laidley Tower, P.O. Box 1233 Company Charleston, WV 25324, (314-344-0300) Thoroughbred, L.L.C. Delaware 43-1686687 701 Market Street, Suite 815 St. Louis, MO 63101-1826, (314-342-3400)
iii EXPLANATORY NOTE THIS REGISTRATION STATEMENT COVERS THE REGISTRATION OF AN AGGREGATE PRINCIPAL AMOUNT OF $400,000,000 OF 8 7/8% SERIES B SENIOR NOTES DUE 2008 (THE "SENIOR EXCHANGE NOTES") AND AN AGGREGATE PRINCIPAL AMOUNT OF $500,000,000 OF 9 5/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008 (THE "SENIOR SUBORDINATED EXCHANGE NOTES" AND TOGETHER WITH THE SENIOR EXCHANGE NOTES, THE "EXCHANGE NOTES") OF P&L COAL HOLDINGS CORPORATION (THE "COMPANY") THAT MAY BE EXCHANGED FOR EQUAL PRINCIPAL AMOUNTS OF THE COMPANY'S OUTSTANDING 8 7/8% SENIOR NOTES DUE 2008 AND 9 5/8% SENIOR SUBORDINATED NOTES DUE 2008, RESPECTIVELY (THE "EXCHANGE OFFERS"). THIS REGISTRATION STATEMENT ALSO COVERS THE REGISTRATION OF THE EXCHANGE NOTES FOR RESALE BY LEHMAN BROTHERS INC. IN MARKET-MAKING TRANSACTIONS. THE COMPLETE PROSPECTUS RELATING TO THE EXCHANGE OFFERS (THE "EXCHANGE OFFER PROSPECTUS") FOLLOWS IMMEDIATELY AFTER THIS EXPLANATORY NOTE. FOLLOWING THE EXCHANGE OFFER PROSPECTUS ARE CERTAIN PAGES OF THE PROSPECTUS RELATING SOLELY TO SUCH MARKET-MAKING TRANSACTIONS (THE "MARKET-MAKING PROSPECTUS"), INCLUDING ALTERNATE FRONT AND BACK COVER PAGES, A SECTION ENTITLED "RISK FACTORS--TRADING MARKET FOR THE EXCHANGE NOTES" TO BE USED IN LIEU OF THE SECTION ENTITLED "RISK FACTORS--LACK OF PUBLIC MARKET FOR THE EXCHANGE NOTES," AND ALTERNATE SECTIONS ENTITLED "USE OF PROCEEDS" AND "PLAN OF DISTRIBUTION". IN ADDITION, THE MARKET-MAKING PROSPECTUS WILL NOT INCLUDE THE FOLLOWING CAPTIONS (OR THE INFORMATION SET FORTH UNDER SUCH CAPTIONS) IN THE EXCHANGE OFFER PROSPECTUS: "PROSPECTUS SUMMARY--THE EXCHANGE OFFERS", "RISK FACTORS--CONSEQUENCES OF FAILURE TO EXCHANGE", "THE SENIOR EXCHANGE OFFER", "THE SENIOR SUBORDINATED EXCHANGE OFFER", AND "CERTAIN FEDERAL INCOME TAX CONSEQUENCES". ALL OTHER SECTIONS OF THE EXCHANGE OFFER PROSPECTUS WILL BE INCLUDED IN THE MARKET-MAKING PROSPECTUS. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED , 1998 PRELIMINARY PROSPECTUS PEABODY P&L COAL HOLDINGS CORPORATION OFFERS TO EXCHANGE $400,000,000 OF ITS 8 7/8% SERIES B SENIOR NOTES DUE 2008 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR $400,000,000 OF ITS OUTSTANDING 8 7/8% SENIOR NOTES DUE 2008 AND $500,000,000 OF ITS 9 5/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR $500,000,000 OF ITS OUTSTANDING 9 5/8% SENIOR SUBORDINATED NOTES DUE 2008 THE EXCHANGE OFFERS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED. ---------- P&L Coal Holdings Corporation ("Peabody" or the "Company"), hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying Letters of Transmittal, to exchange an aggregate of up to $400,000,000 principal amount of 8 7/8% Series B Senior Notes due 2008 (the "Senior Exchange Notes") and an aggregate of up to $500,000,000 principal amount of 9 5/8% Series B Senior Subordinated Notes due 2008 (the "Senior Subordinated Exchange Notes" and together with the Senior Exchange Notes, the "Exchange Notes") of the Company for an identical face amount of the issued and outstanding 8 7/8% Senior Notes due 2008 (the "Old Senior Notes" and together with the Senior Exchange Notes, the "Senior Notes") and 9 5/8% Senior Subordinated Notes due 2008 (the "Old Senior Subordinated Notes" and together with the Senior Subordinated Exchange Notes, the "Senior Subordinated Notes", and together with the Old Senior Notes, the "Old Notes") respectively, of the Company from the Holders (as defined) thereof. As of the date of this Prospectus, there is $400,000,000 aggregate principal amount of the Old Senior Notes and $500,000,000 aggregate principal amount of the Old Senior Subordinated Notes outstanding. The terms of the Senior Exchange Notes and of the Senior Subordinated Exchange Notes are identical in all material respects to the Old Senior Notes and to the Old Senior Subordinated Notes respectively, except that the Exchange Notes have been registered under the Securities Act of 1933, as amended (the "Securities Act"), and therefore will not bear legends restricting their transfer and will not contain certain provisions providing for an increase in the interest rate on the Old Senior Notes and on the Old Senior Subordinated Notes under certain circumstances described in the Senior Notes Registration Rights Agreement (as defined) and in the Senior Subordinated Notes Registration Rights Agreement (as defined) respectively, which provisions will terminate as to all of the Senior Notes and Senior Subordinated Notes (collectively, the "Notes") upon the consummation of the Senior Note Exchange Offer (as defined) and the Senior Subordinated Note Exchange Offer (as defined, collectively, the "Exchange Offers"). Interest on the Exchange Notes will be payable semi-annually on May 15 and November 15 of each year, commencing November 15, 1998. Prior to May 15, 2003, each series of the Exchange Notes will be redeemable at a redemption price equal to 100% of the principal amount thereof plus either the Senior Notes Make Whole Premium (as defined) or the Senior Subordinated Notes Make Whole Premium (as defined), plus, to the extent not included in either the Senior Notes Make Whole Premium or the Senior Subordinated Notes Make Whole Premium, accrued and unpaid interest and Liquidated Damages (as defined), if any, to the date of redemption. On or after May 15, 2003, each series of Exchange Notes will be subject to redemption at the option of the Company, in whole or in part, at the redemption prices set forth herein, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of redemption. In addition, at any time prior to May 15, 2001, the Company may, at its option, redeem up to 35% of the aggregate principal amount of each series of the Exchange Notes at a redemption price equal to (i) 108.875% of the principal amount of the Senior Exchange Notes and (ii) 109.675% of the principal amount of the Senior Subordinated Exchange Notes, in each case plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of redemption, with the net proceeds of one or more Equity Offerings (as defined); provided that, in each case, at least 65% of the aggregate principal amount of Senior Exchange Notes and at least 65% of the aggregate principal amount of Senior Subordinated Exchange Notes remain outstanding immediately after the occurrence of each such redemption. See "Description of the Senior Exchange Notes--Optional Redemption" and "Description of the Senior Subordinated Exchange Notes--Optional Redemption." Upon the occurrence of a Change of Control (as defined), the holders of each series of the Exchange Notes (the "Holders") will have the right to require the Company to repurchase such series of Exchange Notes, in whole or in part, at a price equal to 101% of the respective principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase. See "Description of the Senior Exchange Notes--Repurchase at the Option of Holders--Change of Control" and "Description of the Senior Subordinated Exchange Notes--Repurchase at the Option of Holders--Change of Control." The Senior Exchange Notes will be general unsecured obligations of the Company, will rank senior in right of payment to all subordinated Indebtedness (as defined) of the Company and will rank pari passu in right of payment with all current and future unsecured senior Indebtedness of the Company. All borrowings under the Senior Credit Facilities (as defined) are secured by a first priority Lien (as defined) on certain of the assets of the Company and its Domestic Subsidiaries (as defined). Certain of the Company's current and future Restricted Subsidiaries (as defined) that are Domestic Subsidiaries (the "Guarantors") will jointly and severally guarantee the Senior Exchange Notes on a senior basis (the "Senior Subsidiary Guarantees"). As of March 31, 1998, after giving pro forma effect to the Transactions (as defined), approximately $920.0 million would have been outstanding under the Senior Credit Facilities. See "Capitalization," "Description of the Senior Exchange Notes", "Description of the Senior Subordinated Exchange Notes" and "Description of Certain Indebtedness." The Senior Subordinated Exchange Notes will be general unsecured obligations of the Company, subordinate in right of payment to all existing and future Senior Debt (as defined) of the Company, including all borrowings under the Senior Credit Facilities. The Guarantors will jointly and severally guarantee the Senior Subordinated Exchange Notes on a senior subordinated basis (the "Subordinated Subsidiary Guarantees" and, together with the Senior Subsidiary Guarantees, the "Subsidiary Guarantees"). As of March 31, 1998, after giving pro forma effect to the Transactions, the Company would have had approximately $2,098.0 million of Indebtedness outstanding (excluding $293.9 million of non- recourse indebtedness of Citizens Power (as defined)), of which $1,318.8 million would have been Senior Debt (excluding letters of credit). See "Capitalization" and "Description of the Senior Subordinated Exchange Notes-- Subordination." (continued on next page) (continued from previous page) The Old Senior Notes and Old Senior Subordinated Notes were issued and sold on May 18, 1998 in a transaction not registered under the Securities Act in reliance upon an exemption from the registration requirements thereof. In general, the Old Senior Notes and Old Senior Subordinated Notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act. The Exchange Notes are being offered hereby in order to satisfy certain obligations of the Company contained in the Senior Note Registration Rights Agreement and the Senior Subordinated Note Registration Rights Agreement. Based on interpretations by the staff of the Securities and Exchange Commission (the "Commission") set forth in no-action letters issued to third parties, the Company believes that the Senior Exchange Notes issued pursuant to the Senior Note Exchange Offer and in exchange for Old Senior Notes and that the Senior Subordinated Exchange Notes issued pursuant to the Senior Subordinated Note Exchange Offer in exchange for Old Senior Subordinated Notes may be offered for resale, resold or otherwise transferred by any holder thereof (other than any such holder that is an "affiliate" of the Company within the meaning of Rule 405 promulgated under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holder's business, such holder has no arrangement with any person to participate in the distribution of such Exchange Notes, and neither such holder nor any such other person is engaging in or intends to engage in a distribution of such Exchange Notes. However, the Company has not sought, and does not intend to seek, its own no-action letter, and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offers. This Prospectus, as it may be amended or supplemented, may be used by a participating non-affiliated broker-dealer in connection with resales of the Exchange Notes where such Exchange Notes were acquired by such participating broker-dealer as a result of market-making activities or other trading activities. Notwithstanding the foregoing, each broker-dealer that receives Senior Exchange Notes or Senior Subordinated Exchange Notes for its own account pursuant to the Exchange Offers, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Letters of Transmittal state that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. See "Plan of Distribution". Any person participating in the Exchange Offers who does not acquire the Exchange Notes in the ordinary course of business must comply with the registration and prospectus delivery requirements of the Securities Act. The Old Notes are designated for trading in the Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") market. There is no established trading market for the Exchange Notes. The Company does not currently intend to list the Exchange Notes on any securities exchange or to seek approval for quotation through any automated quotation system. Accordingly, there can be no assurance as to the development or liquidity of any market for the Exchange Notes. The Exchange Offers are not conditioned upon any minimum aggregate principal amount of Old Senior Notes or Old Senior Subordinated Notes being tendered for exchange. The date of acceptance and exchange of the Old Senior Notes and the Old Senior Subordinated Notes (the "Exchange Date") will be the fourth business day following the Expiration Date (as defined). Old Senior Notes and Old Senior Subordinated Notes tendered pursuant to the Exchange Offers may be withdrawn at any time prior to the Expiration Date. The Company will not receive any proceeds from the Exchange Offers. The Company will pay all of the expenses incident to the Exchange Offers. FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE EXCHANGE NOTES, SEE "RISK FACTORS" BEGINNING ON PAGE 19. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is , 1998 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus. P&L Coal Holdings Corporation and its subsidiaries, including predecessors, are collectively referred to herein as "Peabody" or the "Company" unless the context otherwise requires. The estimates of the Company's proven and probable reserves as of October 1, 1996 set forth herein have been reviewed by the John T. Boyd Company ("Boyd") as of such date. All references to "tons" are references to short tons and all references to low sulfur coal are references to coal with a sulfur content of 1% or less by weight. For definitions of certain coal-related terms see "Coal Industry Overview" and "Glossary of Selected Terms." References to years relate to calendar years, unless otherwise noted. The market data presented herein are based upon estimates by management of the Company, utilizing various third party sources where available. While management believes that such estimates are reasonable and reliable, in certain cases, such estimates cannot be verified by information available from independent sources. Accordingly, no assurance can be given that such market data are accurate in all material respects. Prospective investors should carefully consider the information set forth under the heading "Risk Factors." THE COMPANY OVERVIEW Peabody is the largest and one of the fastest growing private sector coal producers in the world. Over the last seven years, management has transformed the Company from a largely high sulfur, high cost domestic coal producer to a predominantly low sulfur, low cost international coal company. In fiscal 1998, the Company sold 167.5 million tons of coal worldwide, which were used to generate more than 9% of the total electricity produced in the United States. Based on the most recent data available, the Company's coal satisfied approximately 2.5% of the world's 1995 electricity demands. Peabody's U.S. market share was approximately 14.4% in 1997, approximately twice the market share of its nearest competitor. Peabody has approximately 9.4 billion tons of proven and probable coal reserves, which is the largest reserve base of any private sector coal producing company in the United States. In fiscal 1998, the Company generated pro forma operating revenues of more than $2.2 billion and pro forma EBITDA (as defined) of $439.0 million. The Company currently owns and operates 24 mines in the United States and three mines in New South Wales, Australia and also sells coal produced by third-party contractors from reserves controlled by the Company. In addition to its U.S. and Australian coal businesses, the Company is also one of the leading marketers of power in the United States through Citizens Power LLC (together with its direct and indirect subsidiaries, "Citizens Power"), has a small gold and copper exploration concession in Chile and has an equity interest in a southern California landfill project. Peabody also has joint venture interests in Black Beauty Coal Company ("Black Beauty"), Indiana's largest coal producer, in Dominion Terminal Associates, one of the largest U.S. coal export terminals and in certain other coal transportation facilities. The Company produces approximately 72% of its coal from the western United States, compared to approximately 23% from the eastern United States and approximately 5% from Australia. Peabody's coal production in the western United States has grown from 37 million tons in 1990 to 114 million tons in fiscal 1998. The Company's highly productive, primarily non-union western operations produce low sulfur coal, which is attractive to utilities operating under restrictions of the Clean Air Act of 1970 (the "Clean Air Act"). Peabody's large and diverse customer base includes more than 150 customers in 17 countries. In 1997, Peabody supplied 92% of its U.S. production to U.S. electric utilities, 5% to the export market and 3% to the U.S. industrial sector. Peabody has a large portfolio of long-term coal supply agreements ("CSAs"). In fiscal 1998, 92% of Peabody's sales volume was sold under CSAs. As of March 31, 1998, the Company had CSAs for more than 1.0 1 billion tons of coal, with terms ranging from one to 17 years and with an average volume-weighted remaining term of 5.7 years. As its CSAs expire, the Company intends to negotiate new contracts in order to maintain its high percentage of volume sold through CSAs and low percentage of volume sold in the spot market. Over the last ten years, coal consumption in the United States has generally experienced steady annual growth, reaching a record level of approximately 1.1 billion tons in 1996. This steady growth in coal consumption is correlated to similar growth in the electric generation industry that in 1997 accounted for more than 87% of domestic coal consumption. In 1997, coal-fired power plants generated approximately 57% of the nation's electricity, followed by nuclear (20%), hydroelectric (11%) and gas-fired (9%) facilities. Furthermore, because coal is one of the least expensive and most abundant and reliable resources for the production of electricity, the Company believes coal will become increasingly important as electricity markets are deregulated in the United States and privatized around the world. See "Coal Industry Overview." A substantial majority of the Company's equity is owned by Lehman Brothers Merchant Banking Partners II L.P., LB I Group Inc. and their affiliated co- investors (collectively, "Lehman Merchant Banking"), each of which is an affiliate of Lehman Brothers Inc. ("Lehman Brothers" or the "Initial Purchaser"). COMPETITIVE STRENGTHS The Company believes that it benefits from the following competitive strengths, which have enabled it to become the largest private sector producer of coal in the world: Market Leader. The Company is the largest private sector producer of coal in the world with a market share of 14.4% in the United States in fiscal 1998 and a market share of approximately 3.0% worldwide in 1995, according to the latest available data. In 1997, the Company had a 35% market share in the Powder River Basin, the largest and fastest growing U.S. coal production region and the United States' largest known source of low cost, low sulfur coal. The Company also has the largest reserve base of any U.S. coal producer, with approximately 9.4 billion tons of proven and probable coal reserves which, based on current rates of production, the Company believes could last for more than 50 years. Diversity of Operations and Customers. The Company's mining operations are broad and diverse and serve a wide range of customers. The Company owns and operates 24 U.S. mines and sells coal to more than 150 U.S. power plants, including many of the largest U.S. utilities. The Company also exports coal to customers in 15 foreign countries. Approximately 72% of the Company's coal production comes from the western United States, while 10% comes from Appalachia, 13% from the Illinois Basin and 5% from Australia. Because of the geographical mix of its reserves, the Company can source coal from several regions, increasing its ability to meet the various needs of its customers and reducing customers' transportation costs. Through Citizens Power, the Company engages in power and energy sales and trading, transaction and asset restructuring and fuel and power integration. High Percentage of Low Sulfur Coal. The Clean Air Act Amendments of 1990 (the "Clean Air Act Amendments") require electric utilities to reduce sulfur dioxide ("SO/2/") and other acidic emissions from coal-fired power plants in a two- phase process that began in 1995 ("Phase I") and will further reduce emissions by 2000 ("Phase II"). Utilities may choose to meet these standards by (i) burning low sulfur coal or other low sulfur fuels, (ii) installing flue gas desulfurization equipment ("scrubbers") or (iii) purchasing or trading emission allowances. Power plants that do not use their full allotment of emission allowances provided under the Clean Air Act Amendments can sell their extra emission allowances on the open market or use them at their other facilities to offset emissions from higher sulfur coal. To date, the majority of affected utilities have chosen to switch to low sulfur coal at the expense of high sulfur coal due to the high cost of scrubbers and the availability of low cost, low sulfur coal in the Powder River Basin. According to the Department of Energy, high sulfur coal production declined 17.6% from 1990 to 1996, while low sulfur coal production increased 18.0% 2 over the same period. The Company has increased its sales of low sulfur coal from 52.6 million tons to 135.5 million tons during the same period of time. As of October 1, 1996, 47% of Peabody's proven and probable coal reserves was of low sulfur coal and 81% of its 1998 coal sales was of low sulfur coal. As a result of its significant presence in the Powder River Basin, which has very low sulfur coal, Peabody is well positioned to benefit from the impact of the Clean Air Act Amendments. Over 57% of Peabody's total production and 55% of sales come from the Powder River Basin, where Peabody has a 35% market share. Resource Data International Inc. ("RDI") estimates that production from coal mines in the Powder River Basin is expected to grow from 272.7 million tons to 421.3 million tons between 1997 and 2015. Portfolio of Long-Term Contracts. Peabody has a large portfolio of CSAs. As of March 31, 1998, the Company had CSAs for more than 1.0 billion tons of coal, with terms ranging from one to 17 years and with an average volume-weighted remaining term of 5.7 years. As a result, its exposure to any fluctuation in spot market prices is relatively limited. The Company has historically replaced CSAs as they have expired. Efficient Operations. Through its high production volume, centralized information technology system, marketing programs and land management functions, the Company is able to achieve operating and corporate efficiencies. From fiscal 1990 to fiscal 1998, the Company has increased its sales volume from 93.3 million tons to 167.5 million tons (including recent acquisitions) while simultaneously reducing the number of employees in its coal operations from 10,700 to 7,500. During this period, the Company increased its average productivity (in terms of coal production per manshift) by 179% in the United States and, since the acquisition of Peabody Resources Limited ("Peabody Resources") in 1993, by 37% in Australia. According to the U.S. Department of Labor, the Company's four Powder River Basin mines were the four most productive coal mines in the United States in 1996 as measured in tons per manshift. Innovative Research and Development. Peabody emphasizes research and development of new technologies in the coal industry. Since the Company is one of the largest users of equipment in the industry, manufacturers work with it to design and to produce equipment that will bring added value to the coal industry. Some of the Company's recent efforts have led to several innovations, including state-of-the-art haul trucks, the adaptation of global positioning satellite technology and nuclear quality analysis equipment. As a result of these efforts, many of the Company's mines have become among the most productive in the industry. Experienced Management. Irl F. Engelhardt, who became Chief Executive Officer of the Company in 1991, and other members of the senior management team have a proven record of increasing productivity, making strategic acquisitions and developing and maintaining strong customer relations. The management team, whose members have an average of 19 years experience in the coal industry and 15 years experience with the Company, has transformed the Company into a predominantly low sulfur, low cost international coal company. STRATEGY Anticipating the effect of the Clean Air Act Amendments, Peabody endeavored to become the leading low sulfur coal producer in the United States. In 1990, low sulfur coal constituted only 56% of the Company's sales volume; by 1998, it had increased to 81%. In 1990, 77% of the Company's U.S. coal production came from union mines; by 1998, the percentage had dropped to 35%. The Company has concentrated on controlling costs, and the average cost per ton declined 25% during the same period, aided by the expansion of its low-cost Powder River Basin operations. The Company also anticipated the growth in international coal demand, primarily in Asia and the Pacific Rim. This anticipated growth was the impetus for the acquisition of Peabody Resources in 1993, a leading Australian coal producer. To capitalize on U.S. electricity deregulation and the convergence of U.S. energy markets, the Company acquired Citizens Power, a leading power trading and energy contract restructuring firm, in 1997. 3 As the chart below shows, the Company has demonstrated the ability to transform itself in response to changing market conditions. TRANSFORMATION OF PEABODY 1990 TO 1998(/1/)
1990 1998 % CHANGE ------- ----- -------- Sales Volume (mm tons)............................. 93.3 167.5 80 % U.S. Market Share(/2/)............................. 9.1% 14.4% 58 Low Sulfur Sales Volume (mm tons).................. 52.6 135.5 158 Coal Reserve Base (mm tons)........................ 7,000 9,365(/3/) 34 Low Sulfur Reserves (mm tons)...................... 2,500 4,392(/3/) 76 Productivity tons/manshift (U.S. mines)............ 32.9 91.8 179 Average Cost(/4/)/Ton Sold ($)..................... 19.33 10.21 (47) Non-Union Production (mm tons)..................... 20.9 98.1 369
- -------- Source: Peabody. (1) Fiscal year 1990 and fiscal 1998. (2) Market share is calculated by dividing Peabody's U.S. sales volume by total demand for coal in the United States as reported by RDI. (3) As of October 1, 1996. (4) Operating costs and expenses, excluding Depreciation, Depletion and Amortization, Selling and Administrative Expenses and Net Loss/(Gain). In the future, the Company's strategy will concentrate on the following five principal objectives: Capitalize on U.S. Electricity Deregulation. Using its extensive customer base, its portfolio of CSAs and its access to the energy trading and contract restructuring capabilities of Citizens Power, the Company intends to build on the opportunities presented by electricity deregulation. The Company estimates that as much as 200 million tons of additional coal could be consumed annually if the electricity market were rationalized and the most efficient coal-fired power plants were used to their full capacity. The Company believes that its ability to furnish low cost fuel and/or low cost electricity from generating sources with access to low cost fuel will allow it to capitalize on these opportunities. Expand Low Sulfur and International Operations. In a deregulated environment, coal-fired generation will remain a competitive source of power and the Company intends to continue expanding into growing segments of the coal market. The Company expects growth to come from expansion of its low sulfur, low cost coal operations in the Powder River Basin, as well as expansion of its international operations. The Company believes increased participation in the expanding Black Beauty joint venture and possible development of new "greenfield" mining operations on low sulfur reserves in the western United States will provide the opportunity to enhance the size and profitability of the Company. Further Reduce Costs. Peabody continues its focus on cost reductions at its current operations. The Company believes that prudent capital investment in new production technologies and the adoption of innovative labor-management practices under the Labor Management Positive Change Program, a program designed to improve the competitiveness of its unionized mines, will enable it to continue to increase productivity. Streamlining of the Company's selling and administrative functions will further reduce expenses, which the Company believes to be among the lowest among major coal producers on a per ton basis, as will careful management of the Company's workers' compensation, reclamation and retiree health care costs and a continued focus on worker safety. Leverage Energy Marketing with Citizens Power. The Company will focus on the strategic integration of its extensive coal customer base with the energy trading and contract restructuring capabilities of Citizens Power. Through Citizens Power, the Company expects to offer a variety of innovative coal sales transactions and energy contract restructuring products to help electric utility customers remain competitive in a deregulated environment. For example, coal contracts may be restructured with power off-takes to compensate for lower coal 4 prices, or non-utility generating ("NUG") contracts may be restructured using low-priced generation from coal tolling agreements as a replacement. As energy markets converge, the Company is prepared to offer a variety of energy products to suit these changing market circumstances. Pursue Strategic Acquisitions. Peabody may pursue strategic acquisitions and/or joint ventures within the U.S. and Australian coal industries, and as appropriate opportunities arise, the Company may acquire other strategic energy assets including electric generating facilities, natural gas and energy production assets. THE ACQUISITION AND THE FINANCINGS On March 2, 1998, the Company entered into a purchase agreement (the "Purchase Agreement") with The Energy Group PLC ("The Energy Group"). The Purchase Agreement provides for the purchase by the Company from The Energy Group (the "Acquisition") of all the common stock of Peabody Holding Company, Inc., a New York corporation ("Peabody Holding Company"), and certain other subsidiaries of The Energy Group (as more fully described below, the "Acquired Companies"). The Acquisition was conditioned upon the tender offer by Texas Utilities Company ("TU") to purchase all the outstanding common shares of The Energy Group being declared unconditional in all respects and not at that time being publicly opposed by the board of directors of The Energy Group. See "The Acquisition." On May 19, 1998, TU's tender offer was declared unconditional and the Acquisition was consummated. The Acquisition was funded by (i) $920.0 million of borrowings by the Company pursuant to a $920.0 million senior secured term facility (the "Term Loan Facility"), (ii) the offerings of $400.0 million aggregate principal amount of Senior Notes and $500.0 million aggregate principal amount of Senior Subordinated Notes (the "Offerings") and (iii) an equity contribution to the Company by Lehman Merchant Banking and members of the Company's management of $480.0 million. Such amounts were used to (a) pay an estimated $2,065.0 million for the equity of the Acquired Companies, (b) repay U.S. long-term debt of $3.0 million, (c) pay Citizens Power Obligations (as defined) of $92.0 million, (d) capitalize Citizens Power's energy trading operations with $50.0 million, (e) increase cash balances by $12.4 million and (f) pay an estimated $75.0 million in transaction fees and expenses incurred in connection with the Transactions. The Company also entered into a $480.0 million senior revolving credit facility (the "Revolving Credit Facility") to provide for the Company's working capital requirements following the Acquisition. The Company also assumed (i) the 5% Subordinated Note (as defined) of $200.5 million and (ii) Peabody Resources Debt (as defined) of $77.0 million. The Revolving Credit Facility and the Term Loan Facility (collectively the "Senior Credit Facilities") are provided by a group of banks led by Lehman Commercial Paper Inc. ("LCPI"), an affiliate of the Initial Purchaser. The Senior Credit Facilities and the Offerings are collectively referred to herein as the "Financings." The Acquisition, the Financings and certain distributions to The Energy Group made prior to the consummation of the Acquisition and the Financings are collectively referred to as the "Transactions." See "The Acquisition," "Use of Proceeds," "Capitalization" and "Description of Certain Indebtedness." 5 The sources and uses of the funds for the Transactions, assuming they were consummated on March 31, 1998, are shown on the table below. SOURCES OF FUNDS
AMOUNT ------------- (IN MILLIONS) Senior Credit Facilities(/1/) Revolving Credit Facility....................................... $ -- Term Loan Facility.............................................. 920.0 Senior Notes...................................................... 398.8 Senior Subordinated Notes......................................... 498.6 Assumption of 5% Subordinated Note................................ 200.5 Assumption of Peabody Resources Debt(/2/)......................... 77.0 Equity Contribution(/3/).......................................... 480.0 -------- Total Sources................................................. $2,574.9 ======== USES OF FUNDS Purchase of Equity of the Acquired Companies...................... $2,065.0 Repayment of Existing U.S. Long-Term Debt......................... 3.0 Assumption of Peabody Resources Debt(/2/)......................... 77.0 Assumption of 5% Subordinated Note................................ 200.5 Capitalization of Citizens Power.................................. 50.0 Payment of Citizens Power Obligations(/4/)........................ 92.0 Increase in Cash Balance.......................................... 12.4 Estimated Transaction Fees and Expenses........................... 75.0 -------- Total Uses.................................................... $2,574.9 ========
- -------- (1) The Company received commitments of up to $1,400.0 million for the Senior Credit Facilities, of which $920.0 million was borrowed under the Term Loan Facility and $480.0 million is in the form of the Revolving Credit Facility. On a pro forma basis at March 31, 1998, the Company would have drawn $920.0 million under the Term Loan Facility and would have had no amounts outstanding under the Revolving Credit Facility, which is expected to provide working capital going forward. See "Description of Certain Indebtedness." (2) Peabody Resources' pro rata share of indebtedness incurred in the expansion of the Warkworth mine and the development of the Bengalla mine. Peabody Resources has a 43.75% interest in the Warkworth joint venture and a 35% interest in the Bengalla joint venture and manages both joint ventures. Includes $32.3 million of indebtedness incurred in April 1998. See "Description of Certain Indebtedness." (3) Equity contribution to the Company by Lehman Merchant Banking and members of the Company's management of $480.0 million. (4) Payment of remaining purchase price obligations to the former owners of Citizens Power, which was acquired on May 19, 1997. See "Description of Certain Indebtedness" and "Related Party Transactions." 6 THE EXCHANGE OFFERS SENIOR EXCHANGE NOTES THE SENIOR EXCHANGE OFFER... The Company is offering to exchange pursuant to the Senior Exchange Offer up to $400,000,000 aggregate principal amount of its new 8 7/8% Series B Senior Notes due 2008 (the "Senior Exchange Notes") for a like aggregate principal amount of its outstanding 8 7/8% Senior Notes due 2008 (the "Old Senior Notes" and together with the Senior Exchange Notes, the "Senior Notes"). The terms of the Senior Exchange Notes are identical in all material respects (including principal amount, interest rate and maturity) to the terms of the Old Senior Notes for which they may be exchanged pursuant to the Senior Exchange Offer, except that the Senior Exchange Notes are freely transferrable by Holders thereof (other than as provided herein), and are not subject to any covenant regarding registration under the Securities Act. See "The Senior Exchange Offer". INTEREST PAYMENTS........... Interest on the Senior Exchange Notes shall accrue from the last interest payment date (May 15 or November 15) on which interest was paid on the Old Senior Notes so surrendered or, if no interest has been paid on such Notes, from May 18, 1998. MINIMUM CONDITION........... The Senior Exchange Offer is not conditioned upon any minimum aggregate principal amount of Old Senior Notes being tendered for exchange. EXPIRATION DATE; WITHDRAWAL OF TENDER................... The Senior Exchange Offer will expire at 5:00 p.m., New York City time, on , 1998, unless the Senior Exchange Offer is extended, in which case the term "Senior Expiration Date" means the latest date and time to which the Senior Exchange Offer is extended. Tenders may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Senior Expiration Date. See "The Senior Exchange Offer--Withdrawal Rights". SENIOR EXCHANGE DATE........ The date of acceptance (the "Senior Exchange Date") for exchange of the Old Senior Notes will be the fourth business day following the Senior Expiration Date. CONDITIONS TO THE SENIOR EXCHANGE OFFER.............. The Senior Exchange Offer is subject to certain customary conditions, which may be waived by the Company. The Company currently expects that each of the conditions will be satisfied and that no waivers will be necessary. See "The Senior Exchange Offer--Certain Conditions to the Senior Exchange Offer". The Company reserves the right to terminate or amend the Senior Exchange Offer at any time prior to the Senior Expiration Date upon the occurrence of any such condition. PROCEDURES FOR TENDERING OLD SENIOR NOTES............ Each holder of Old Senior Notes wishing to accept the Senior Exchange Offer must complete, sign and date a letter of transmittal (the "Senior Letter of Transmittal"), or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Senior Letter of Transmittal, or such facsimile, together with the Old Senior Notes and any other required documentation to the Senior Exchange Agent (as defined) at the address set forth therein. See 7 "The Senior Exchange Offer--Procedures for Tendering Old Senior Notes" and "Plan of Distribution". USE OF PROCEEDS............. There will be no proceeds to the Company from the exchange of Senior Notes pursuant to the Senior Exchange Offer. FEDERAL INCOME TAX The exchange of Senior Notes pursuant to the CONSEQUENCES................ Senior Exchange Offer will not be a taxable event for federal income tax purposes. See "Certain U.S. Federal Income Tax Consequences". SPECIAL PROCEDURES FOR BENEFICIAL OWNERS........... Any beneficial owner whose Old Senior Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such beneficial owner's own behalf, such beneficial owner must, prior to completing and executing the Senior Letter of Transmittal and delivering the Old Senior Notes, either make appropriate arrangements to register ownership of the Old Senior Notes in such beneficial owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. See "The Senior Exchange Offer--Procedures for Tendering Old Senior Notes". GUARANTEED DELIVERY Holders of Old Senior Notes who wish to tender PROCEDURES ................. their Old Senior Notes and whose Old Senior Notes are not immediately available or who cannot deliver their Old Senior Notes, the Senior Letter of Transmittal or any other documents required by the Senior Letter of Transmittal to the Senior Exchange Agent prior to the Senior Expiration Date must tender their Old Senior Notes according to the guaranteed delivery procedures set forth in "The Senior Exchange Offer--Procedures for Tendering Old Senior Notes". ACCEPTANCE OF OLD SENIOR NOTES AND DELIVERY OF SENIOR EXCHANGE NOTES ...... The Company will accept for exchange any and all Old Senior Notes which are properly tendered in the Senior Exchange Offer prior to 5:00 p.m., New York City time, on the Senior Expiration Date. The Senior Exchange Notes issued pursuant to the Senior Exchange Offer will be delivered promptly following the Senior Expiration Date. See "The Senior Exchange Offer--Acceptance of Old Senior Notes for Exchange; Delivery of Senior Exchange Notes". EFFECT ON HOLDERS OF OLD SENIOR NOTES................ As a result of the making of, and upon acceptance for exchange of all validly tendered Old Senior Notes pursuant to the terms of the Senior Exchange Offer, the Company will have fulfilled a covenant contained in the Registration Rights Agreement (the "Senior Registration Rights Agreement") dated May 18, 1998, between the Company and Lehman Brothers Inc. (the "Initial Purchaser") relating to the Senior Notes, and, accordingly, there will be no increase in the interest rate on the Old Senior Notes pursuant to the terms of the Senior Registration Rights Agreement, and the holders of the Old Senior Notes will have no further registration or other rights under the Senior Registration Rights Agreement. Holders of the Old Senior Notes who do not 8 tender their Old Senior Notes in the Senior Exchange Offer will continue to hold such Old Senior Notes and will be entitled to all the rights and limitations applicable thereto under the Senior Note Indenture (as defined), except for any such rights under the Senior Registration Rights Agreement that by their terms terminate or cease to have further effectiveness as a result of the making of, and the acceptance for exchange of all validly tendered Old Senior Notes pursuant to, the Senior Exchange Offer. All untendered Old Senior Notes will continue to be subject to the restrictions on transfer provided for in the Old Senior Notes and in the Senior Note Indenture. To the extent that Old Senior Notes are tendered and accepted in the Senior Exchange Offer, the trading market for untendered Old Senior Notes could be adversely affected. CONSEQUENCE OF FAILURE TO Holders of Old Senior Notes who do not exchange EXCHANGE.................... their Old Senior Notes for Senior Exchange Notes pursuant to the Senior Exchange Offer will continue to be subject to the restrictions on transfer of such Old Senior Notes as set forth in the legend thereon as a consequence of the offer or sale of the Old Senior Notes pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Old Senior Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register the Old Senior Notes under the Securities Act. EXCHANGE AGENT.............. State Street Bank and Trust Company is serving as exchange agent (the "Senior Exchange Agent") in connection with the Senior Exchange Offer. See "The Senior Exchange Offer--Exchange Agent". SENIOR SUBORDINATED EXCHANGE NOTES THE SENIOR SUBORDINATED EXCHANGE OFFER.............. The Company is offering to exchange pursuant to the Senior Subordinated Exchange Offer up to $500,000,000 aggregate principal amount of its new 9 5/8% Series B Senior Subordinated Notes due 2008 (the "Senior Subordinated Exchange Notes" and together with the "Senior Exchange Notes", the "Exchange Notes") for a like aggregate principal amount of its outstanding 9 5/8% Senior Subordinated Notes due 2008 (the "Old Senior Subordinated Notes" and together with the Senior Subordinated Exchange Notes, the "Senior Subordinated Notes" and together with the Old Senior Notes, the "Old Notes"). The terms of the Senior Subordinated Exchange Notes are identical in all material respects (including principal amount, interest rate and maturity) to the terms of the Old Senior Subordinated Notes for which they may be exchanged pursuant to the Senior Subordinated Exchange Offer, except that the Senior Subordinated Exchange Notes are freely transferrable by Holders thereof (other than as provided herein), and are not subject to any covenant regarding registration under the Securities Act. See "The Senior Subordinated Exchange Offer". 9 INTEREST PAYMENTS........... Interest on the Senior Subordinated Exchange Notes shall accrue from the last interest payment date (May 15 or November 15) on which interest was paid on the Old Senior Subordinated Notes so surrendered or, if no interest has been paid on such Notes, from May 18, 1998. MINIMUM CONDITION........... The Senior Subordinated Exchange Offer is not conditioned upon any minimum aggregate principal amount of Old Senior Subordinated Notes being tendered for exchange. EXPIRATION DATE; WITHDRAWAL OF TENDER................... The Senior Subordinated Exchange Offer will expire at 5:00 p.m., New York City time, on , 1998, unless the Senior Subordinated Exchange Offer is extended, in which case the term "Senior Subordinated Expiration Date" means the latest date and time to which the Senior Subordinated Exchange Offer is extended. Tenders may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Senior Subordinated Expiration Date. See "The Senior Subordinated Exchange Offer--Withdrawal Rights". SENIOR SUBORDINATED The date of acceptance ("the Senior EXCHANGE DATE............... Subordinated Exchange Date") for exchange of the Old Senior Subordinated Notes will be the fourth business day following the Senior Subordinated Expiration Date. CONDITIONS TO THE SENIOR SUBORDINATED EXCHANGE OFFER....................... The Senior Subordinated Exchange Offer is subject to certain customary conditions, which may be waived by the Company. The Company currently expects that each of the conditions will be satisfied and that no waivers will be necessary. See "The Senior Subordinated Exchange Offer--Certain Conditions to the Senior Subordinated Exchange Offer". The Company reserves the right to terminate or amend the Senior Subordinated Exchange Offer at any time prior to the Senior Subordinated Expiration Date upon the occurrence of any such condition. PROCEDURES FOR TENDERING OLD SENIOR SUBORDINATED NOTES....................... Each holder of Old Senior Subordinated Notes wishing to accept the Senior Subordinated Exchange Offer must complete, sign and date a letter of transmittal (the "Senior Subordinated Letter of Transmittal"), or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Senior Subordinated Letter of Transmittal, or such facsimile, together with the Old Senior Subordinated Notes and any other required documentation to the Senior Subordinated Exchange Agent (as defined) at the address set forth therein. See "The Senior Subordinated Exchange Offer--Procedures for Tendering Old Senior Subordinated Notes" and "Plan of Distribution". USE OF PROCEEDS............. There will be no proceeds to the Company from the exchange of Senior Subordinated Notes pursuant to the Senior Subordinated Exchange Offer. FEDERAL INCOME TAX The exchange of Senior Subordinated Notes CONSEQUENCES................ pursuant to the Senior Subordinated Exchange Offer will not be a taxable event for federal income tax purposes. See "Certain U.S. Federal Income Tax Consequences". 10 SPECIAL PROCEDURES FOR BENEFICIAL OWNERS........... Any beneficial owner whose Old Senior Subordinated Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such beneficial owner's own behalf, such beneficial owner must, prior to completing and executing the Senior Subordinated Letter of Transmittal and delivering the Old Senior Subordinated Notes, either make appropriate arrangements to register ownership of the Old Senior Subordinated Notes in such beneficial owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. See "The Senior Subordinated Exchange Offer--Procedures for Tendering Old Senior Subordinated Notes". GUARANTEED DELIVERY Holders of Old Senior Subordinated Notes who PROCEDURES.................. wish to tender their Old Senior Subordinated Notes and whose Old Senior Subordinated Notes are not immediately available or who cannot deliver their Old Senior Subordinated Notes, the Senior Subordinated Letter of Transmittal or any other documents required by the Senior Subordinated Letter of Transmittal to the Senior Subordinated Exchange Agent prior to the Senior Subordinated Expiration Date must tender their Old Senior Subordinated Notes according to the guaranteed delivery procedures set forth in "The Senior Subordinated Exchange Offer-- Procedures for Tendering Old Senior Subordinated Notes". ACCEPTANCE OF OLD SENIOR SUBORDINATED NOTES AND DELIVERY OF SENIOR SUBORDINATED EXCHANGE NOTES....................... The Company will accept for exchange any and all Old Senior Subordinated Notes which are properly tendered in the Senior Subordinated Exchange Offer prior to 5:00 p.m., New York City time, on the Senior Subordinated Expiration Date. The Senior Subordinated Exchange Notes issued pursuant to the Senior Subordinated Exchange Offer will be delivered promptly following the Senior Subordinated Expiration Date. See "The Senior Subordinated Exchange Offer--Acceptance of Old Senior Subordinated Notes for Exchange; Delivery of Senior Subordinated Exchange Notes". EFFECT ON HOLDERS OF OLD SENIOR SUBORDINATED NOTES... As a result of the making of, and upon acceptance for exchange of all validly tendered Old Senior Subordinated Notes pursuant to the terms of the Senior Subordinated Exchange Offer, the Company will have fulfilled a covenant contained in the Registration Rights Agreement (the "Senior Subordinated Registration Rights Agreement") dated May 18, 1998, between the Company and the Initial Purchaser relating to the Senior Subordinated Notes, and, accordingly, there will be no increase in the interest rate on the Old Senior Subordinated Notes pursuant to the terms of the Senior Subordinated Registration Rights 11 Agreement, and the holders of the Old Senior Subordinated Notes will have no further registration or other rights under the Senior Subordinated Registration Rights Agreement. Holders of the Old Senior Subordinated Notes who do not tender their Old Senior Subordinated Notes in the Senior Subordinated Exchange Offer will continue to hold such Old Senior Subordinated Notes and will be entitled to all the rights and limitations applicable thereto under the Senior Subordinated Note Indenture (as defined), except for any such rights under the Senior Subordinated Registration Rights Agreement that by their terms terminate or cease to have further effectiveness as a result of the making of, and the acceptance for exchange of all validly tendered Old Senior Subordinated Notes pursuant to, the Senior Subordinated Exchange Offer. All untendered Old Senior Subordinated Notes will continue to be subject to the restrictions on transfer provided for in the Old Senior Subordinated Notes and in the Senior Subordinated Note Indenture. To the extent that Old Senior Subordinated Notes are tendered and accepted in the Senior Subordinated Exchange Offer, the trading market for untendered Old Senior Subordinated Notes could be adversely affected. CONSEQUENCE OF FAILURE TO Holders of Old Senior Subordinated Notes who do EXCHANGE.................... not exchange their Old Senior Subordinated Notes for Senior Subordinated Exchange Notes pursuant to the Senior Subordinated Exchange Offer will continue to be subject to the restrictions on transfer of such Old Senior Subordinated Notes as set forth in the legend thereon as a consequence of the offer or sale of the Old Senior Subordinated Notes pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Old Senior Subordinated Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register the Old Senior Subordinated Notes under the Securities Act. SENIOR SUBORDINATED EXCHANGE AGENT.............. State Street Bank and Trust Company is serving as exchange agent (the "Senior Subordinated Exchange Agent") in connection with the Senior Subordinated Exchange Offer. See "The Senior Subordinated Exchange Offer--Exchange Agent". TERMS OF THE EXCHANGE NOTES SENIOR EXCHANGE NOTES SECURITIES OFFERED:......... $400.0 million in aggregate principal amount of 8 7/8% Series B Senior Notes due 2008 of the Company. MATURITY DATE:.............. May 15, 2008. INTEREST PAYMENT DATES:..... May 15 and November 15, commencing November 15, 1998. 12 MANDATORY REDEMPTION:....... The Company will not be required to make mandatory redemption or sinking fund payments with respect to the Senior Exchange Notes. OPTIONAL REDEMPTION:........ Prior to May 15, 2003, the Senior Exchange Notes will be redeemable at a redemption price equal to 100% of the principal amount thereof plus the applicable Senior Notes Make Whole Premium, plus, to the extent not included in the Senior Notes Make Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption. For purposes of the foregoing, "Senior Notes Make Whole Premium" means, with respect to a Senior Note, an amount equal to the greater of (a) 104.438% of the outstanding principal amount of such Senior Exchange Note and (b) the excess of (i) the present value of the remaining interest, premium, if any, and principal payments due on such Senior Exchange Note as if such Senior Exchange Note were redeemed on May 15, 2003, computed using a discount rate equal to the Treasury Rate (as defined) plus 50 basis points, over (ii) the outstanding principal amount of such Senior Exchange Note. On or after May 15, 2003, the Senior Exchange Notes will be redeemable at the option of the Company, in whole or in part, at the redemption prices set forth herein, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable date of redemption. In addition, at any time prior to May 15, 2001, on any one or more occasions the Company may, at its option, redeem up to 35% of the aggregate principal amount of the Senior Exchange Notes at a redemption price equal to 108.875% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable date of redemption, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% aggregate principal amount of Senior Exchange Notes remains outstanding immediately after the occurrence of each such redemption. See "Description of the Senior Exchange Notes-- Optional Redemption." CHANGE OF CONTROL:.......... Upon the occurrence of a Change of Control, each Holder of Senior Exchange Notes will have the right to require the Company, and the Company must offer, to purchase all or any part of such Holder's Senior Exchange Notes at a price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase. See "Description of the Senior Exchange Notes-- Repurchase at the Option of Holders--Change of Control." RANKING:.................... The Senior Exchange Notes will be general unsecured obligations of the Company, will rank senior in right of payment to all subordinated Indebtedness of the Company and will rank pari passu in right of payment with all current and future unsecured senior Indebtedness of the Company, including all borrowings under the Senior Credit Facilities. However, all borrowings under the Senior Credit Facilities are secured by a first priority Lien on certain of the assets of the Company and certain of its Domestic Subsidiaries. As of March 31, 1998, on a pro forma basis after 13 giving effect to the Transactions, the Company would have had $920.0 million of Indebtedness outstanding under the Senior Credit Facilities. See "Risk Factors--Risks Relating to the Notes--Substantial Leverage," "Capitalization" and "Description of the Senior Exchange Notes." SENIOR SUBSIDIARY Certain of the Company's current and future GUARANTEES:................. Restricted Subsidiaries that are Domestic Subsidiaries, if any, will jointly and severally guarantee the Company's payment obligations under the Senior Exchange Notes on a senior basis. The Senior Subsidiary Guarantees will rank senior to all existing and future subordinated Indebtedness of the Guarantors and pari passu with all other unsecured senior Indebtedness of the Guarantors, including the guarantees of Indebtedness under the Senior Credit Facilities. Each Guarantor's obligations under the Senior Credit Facilities, however, will be secured by a first priority Lien on certain of the assets of such Guarantor, and the Senior Note Indenture restricts, but does not prohibit, the Guarantors from incurring additional secured Indebtedness. Accordingly, such secured Indebtedness will rank prior to the Senior Subsidiary Guarantees with respect to such assets. See "Risk Factors--Risks Relating to the Notes--Ranking--Secured Indebtedness; Effective Subordination" and "Description of the Senior Exchange Notes-- Senior Subsidiary Guarantees." The Senior Exchange Notes will not be guaranteed by certain other of the Company's Domestic Subsidiaries or by any of the Company's current or future Foreign Subsidiaries (as defined) (the "Non-Guarantor Subsidiaries"). For fiscal 1998, after giving effect to the Transactions, the Non-Guarantor Subsidiaries (as defined) accounted for 11% and 20% of pro forma revenues and EBITDA, respectively, and, as of March 31, 1998, the Non-Guarantor Subsidiaries accounted for 27% of pro forma assets. CERTAIN COVENANTS:.......... The Senior Note Indenture contains certain covenants that, among other things, limit the ability of the Company and its Subsidiaries to (i) incur additional Indebtedness and issue preferred stock, (ii) pay dividends or make certain other restricted payments, (iii) create certain Liens, (iv) enter into certain transactions with affiliates, (v) sell assets of the Company or its Restricted Subsidiaries or (vi) enter into certain mergers and consolidations. In addition, under certain circumstances, the Company will be required to offer to purchase the Senior Exchange Notes with the net cash proceeds of certain sales and other dispositions of assets at a price equal to 100% of the principal amount of the Senior Exchange Notes, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase. Citizens Power will be designated as an Unrestricted Subsidiary (as defined) and will not be subject to many of the covenants under the Senior Note Indenture. See "Description of the Senior Exchange Notes--Certain Covenants" and "-- Repurchase at the Option of Holders--Asset Sales." 14 SENIOR SUBORDINATED EXCHANGE NOTES SECURITIES OFFERED:......... $500.0 million in aggregate principal amount of 9 5/8% Series B Senior Subordinated Notes due 2008 of the Company. MATURITY:................... May 15, 2008. INTEREST PAYMENT DATES:..... May 15 and November 15, commencing November 15, 1998. MANDATORY REDEMPTION:....... The Company will not be required to make mandatory redemption or sinking fund payments with respect to the Senior Subordinated Exchange Notes. OPTIONAL REDEMPTION:........ Prior to May 15, 2003, the Senior Subordinated Exchange Notes will be redeemable at a redemption price equal to 100% of the principal amount thereof plus the applicable Senior Subordinated Notes Make Whole Premium, plus, to the extent not included in the Senior Subordinated Notes Make Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption. For purposes of the foregoing, "Senior Subordinated Notes Make Whole Premium" means, with respect to a Senior Subordinated Exchange Note, an amount equal to the greater of (a) 104.813% of the outstanding principal amount of such Senior Subordinated Exchange Note and (b) the excess of (i) the present value of the remaining interest, premium, if any, and principal payments due on such Senior Subordinated Exchange Note as if such Senior Subordinated Exchange Note were redeemed on May 15, 2003, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (ii) the outstanding principal amount of such Senior Subordinated Note. On or after May 15, 2003, the Senior Subordinated Exchange Notes will be redeemable at the option of Company, in whole or in part, at the redemption prices set forth herein plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable date of redemption. In addition, at any time prior to May 15, 2001, on any one or more occasions the Company may, at its option, redeem up to 35% of the aggregate principal amount of Senior Subordinated Exchange Notes at a redemption price equal to 109.625% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable date of redemption, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% aggregate principal amount of Senior Subordinated Exchange Notes remains outstanding immediately after the occurrence of each such redemption. See "Description of the Senior Subordinated Exchange Notes--Optional Redemption." Upon the occurrence of a Change of Control, CHANGE OF CONTROL:.......... each Holder of Senior Subordinated Exchange Notes will have the right to require the Company, and the Company must offer, to purchase all or any part of such Holder's Senior Subordinated Exchange Notes at a price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase. See "Description of the Senior Subordinated Exchange Notes--Repurchase at the Option of Holders--Change of Control." 15 RANKING:.................... The Senior Subordinated Exchange Notes will be general unsecured obligations of the Company, subordinate in right of payment to all existing and future Senior Debt of the Company and senior in right of payment to or pari passu with all other indebtedness of the Company. On a pro forma basis after giving effect to the Transactions, the Company would have had $2,098.0 million of indebtedness outstanding (excluding $293.9 million of non-recourse indebtedness of Citizens Power), of which $1,318.8 million would have been Senior Debt under the Senior Credit Facilities (excluding letters of credit) and the Senior Notes as of March 31, 1998. See "Risk Factors--Risks Relating to the Notes--Substantial Leverage," "Capitalization" and "Description of the Senior Subordinated Exchange Notes--Subordination." SUBORDINATED SUBSIDIARY GUARANTEES:................ The Company's payment obligations under the Senior Subordinated Exchange Notes will be jointly and severally guaranteed on a senior subordinated basis by the Guarantors. See "Description of the Senior Subordinated Exchange Notes--Subordinated Subsidiary Guarantees." The Senior Subordinated Exchange Notes will not be guaranteed by certain other of the Company's Domestic Subsidiaries or by any of the Company's current or future Foreign Subsidiaries. For fiscal 1998, after giving effect to the Transactions, the Non-Guarantor Subsidiaries accounted for 11% and 20% of pro forma revenues and EBITDA, respectively, and, as of March 31, 1998, the Non-Guarantor Subsidiaries accounted for 27% of pro forma assets. CERTAIN COVENANTS:.......... The Senior Subordinated Note Indenture contains certain covenants that, among other things, limit the ability of the Company and its Subsidiaries to (i) incur additional Indebtedness and issue preferred stock, (ii) pay dividends or make certain other restricted payments, (iii) create certain Liens, (iv) enter into certain transactions with affiliates, (v) sell assets of the Company or its Restricted Subsidiaries or (vi) enter into certain mergers and consolidations. In addition, under certain circumstances, the Company will be required to offer to purchase the Senior Subordinated Exchange Notes with the net cash proceeds of certain sales and other dispositions of assets at a price equal to 100% of the principal amount of the Senior Subordinated Exchange Notes, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase. Citizens Power will be designated as an Unrestricted Subsidiary and will not be subject to many of the covenants under the Senior Subordinated Note Indenture. See "Description of the Senior Subordinated Exchange Notes--Certain Covenants" and "--Repurchase at the Option of the Holders--Asset Sales." FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN EACH SERIES OF THE EXCHANGE NOTES, SEE "RISK FACTORS." 16 SUMMARY COMBINED FINANCIAL DATA The following table sets forth summary combined financial data of the Company. The historical combined financial data for the year ended, and as of, March 31, 1998, for the six months ended, and as of, March 31, 1997 and for the years ended, and as of, September 30, 1996, and 1995 have been derived from, and should be read in conjunction with, the audited combined financial statements of the Company included elsewhere in this Prospectus which have been audited by Ernst & Young LLP, the Company's independent auditors. The table reflects the fact that effective with The Energy Group's spin-off from Hanson PLC ("Hanson"), the Company switched from a fiscal year ended September 30 to a fiscal year ended March 31. The unaudited summary combined financial data for the twelve months ended, and as of, March 31, 1997 and for the year ended, and as of, September 30, 1994 have been derived from Company records. In the opinion of the Company's management, such unaudited financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position and results of operations as of the dates and periods indicated. The unaudited pro forma combined financial data have been derived from, and should be read in conjunction with, the Unaudited Pro Forma Condensed Combined Financial Statements and the related notes thereto included elsewhere herein. The Unaudited Pro Forma Condensed Combined Statement of Operations for the period presented gives pro forma effect to the Transactions as if they had occurred on April 1, 1997. The summary unaudited pro forma combined financial data are intended for informational purposes only and should not be considered indicative of either future results of operations or the results that might have occurred if the Transactions had been consummated on the indicated date or had been in effect for the period presented. The summary unaudited pro forma balance sheet data gives effect to the Transactions, as if they had occurred as of March 31, 1998. See "Unaudited Pro Forma Condensed Combined Financial Statements," "Selected Combined Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the "Combined Financial Statements" and related notes included elsewhere in this Prospectus.
PRO FORMA FISCAL TWELVE SIX YEAR FISCAL YEAR MONTHS MONTHS FISCAL YEARS ENDED SEPTEMBER ENDED ENDED ENDED ENDED 30, --------- ----------- --------- --------- ----------------------------------- MARCH 31, MARCH 31, MARCH 31, MARCH 31, 1998(/1/) 1998(/2/) 1997 1997 1996 1995(/3/) 1994(/4/) --------- ----------- --------- --------- -------- --------- --------- (IN MILLIONS, EXCEPT RATIOS) RESULTS OF OPERATIONS DATA: Tons Sold............... 167.5 167.5 167.4 81.4 163.0 151.0 101.6 Revenues................ $2,244.4 $2,244.4 $2,242.3 $1,064.1 $2,193.6 $2,175.8 $1,844.4 Cost of Goods Sold (includes depreciation, depletion and amortization).......... 1,964.9 1,913.4 1,941.6 924.7 1,891.4 1,861.8 1,631.6 -------- -------- -------- -------- -------- -------- -------- Gross Profit............ $ 279.5 $ 331.0 $ 300.7 $ 139.4 $ 302.2 $ 314.0 $ 212.8 Impairment of Long-Lived Assets(/5/)............ -- -- 890.8 -- 890.8 -- -- Selling and Administrative Expenses............... 83.6 83.6 80.7 41.4 75.7 81.3 73.1 Net Loss/(Gain) on Property and Equipment Disposals.............. (21.8) (21.8) (8.0) (4.1) (13.0) (12.9) (5.9) -------- -------- -------- -------- -------- -------- -------- Operating Profit (Loss)................. $ 217.7 $ 269.2 $ (662.8) $ 102.1 $ (651.3) $ 245.6 $ 145.6 ======== ======== ======== ======== ======== ======== ======== Net Income (Loss)....... $ (22.2) $ 160.3 $ (449.3) $ 58.4 $ (446.3) $ 100.4 $ 79.4 ======== ======== ======== ======== ======== ======== ======== OTHER FINANCIAL DATA: EBITDA(/6/)............. $ 439.0 $ 471.8 $ 431.6 (/7/) $ 203.8 $ 437.4 (/7/) $ 435.9 $ 315.8 Depreciation, Depletion and Amortization....... 221.3 202.6 203.6 101.7 197.9 190.3 170.2 Capital Expenditures Replacement of Equipment and Facilities............ $ 90.9 $ 90.9 $ 89.1 $ 47.3 $ 88.7 $ 122.9 $ 77.3 New Mine and Expanded Capacity.............. 75.4 75.4 59.4 29.2 63.4 65.1 58.4 -------- -------- -------- -------- -------- -------- -------- Total Capital Expenditures.......... $ 166.3 $ 166.3 $ 148.5 $ 76.5 $ 152.1 $ 188.0 $ 135.7 ======== ======== ======== ======== ======== ======== ======== Ratio of Earnings to Fixed Charges(/8/)..... 1.06x 5.77x -- 3.63x -- 3.63x 2.13x Ratio of Net Debt to EBITDA(/9/)............ 4.67x Ratio of EBITDA to Cash Interest Expense(/1//0/)........ 2.28x
PRO FORMA AS OF AS OF MARCH 31, MARCH 31, MARCH 31, 1998(/1/) 1998(/2/) 1997 --------- --------- --------- BALANCE SHEET DATA: Working Capital.................................. $ 389.3 $ 535.9 $ 167.1 Total Assets..................................... 7,279.5 6,355.2 5,025.8 Recourse Debt.................................... 2,098.0 308.4 321.7 Non-Recourse Debt................................ 293.9 293.9 -- Invested Capital................................. 480.0 1,687.8 1,676.8
17 - ------- (1) Reflects the acquisition of Citizens Power effective May 19, 1997, including $10.8 million of EBITDA, $344.2 million of working capital, $1,525.5 million of total assets and $293.9 million of non-recourse indebtedness of Citizens Power as of March 31, 1998 and for the period May 19, 1997 to March 31, 1998. (2) Reflects the acquisition of Citizens Power effective May 19, 1997, including $10.8 million of EBITDA, $294.2 million of working capital, $1,448.5 million of total assets and $293.9 million of non-recourse indebtedness of Citizens Power as of March 31, 1998 and for the period May 19, 1997 to March 31, 1998. (3) Reflects the acquisition of the Caballo and the Rawhide coal mines in the Powder River Basin effective November 1994. (4) The Company experienced a United Mine Workers of America ("UMWA") work stoppage from February 2, 1993 to December 16, 1993, which negatively impacted the Company's Peabody Coal Company and Eastern Associated Coal Corp. operations. (5) Represents a one-time non-cash charge made pursuant to Statement of Financial Accounting Standards ("SFAS") No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121") which had no effect on the Company's cash flow. (6) EBITDA is defined as income before deducting interest expense, income taxes, depreciation, depletion and amortization and excludes any non-cash compensation expense related to management stock transactions. EBITDA has been reduced by costs associated with reclamation, retiree health care and workers' compensation. EBITDA is not a substitute for operating income, net income and cash flow from operating activities as determined in accordance with generally accepted accounting principles as a measure of profitability or liquidity. EBITDA is presented as additional information because management believes it to be a useful indicator of the Company's ability to meet debt service and capital expenditure requirements and because it is expected that certain debt covenants of the Company will utilize EBITDA to measure compliance with such covenants. Because EBITDA is not calculated identically by all companies, the presentation herein may not be comparable to other similarly titled measures of other companies. (7) EBITDA for the the twelve months ended March 31, 1997 and September 30, 1996 excluded an $890.8 million charge for Impairment of Long-Lived Assets. This is a one-time non-cash charge made pursuant to SFAS 121 and had no effect on the Company's cash flow. (8) For purposes of this computation, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of interest expense on all indebtedness plus the interest component of lease rental expense. Earnings were insufficient to cover fixed charges by $702.3 and $702.5 million for the twelve months ended March 31, 1997 and the fiscal year ended September 30, 1996, due to the SFAS 121 charges described above. (9) For the purposes of the calculation, net debt consists of total debt less cash and cash equivalents of $98.9 million. Excludes $293.9 million of non-recourse indebtedness, $10.8 million of EBITDA and $60.4 million of cash of Citizens Power. (10) For the purposes of this calculation, cash interest expense represents total interest expense less non-cash interest charges, including amortization of deferred financing costs and imputed interest from the 5% Subordinated Note. Excludes $10.8 million of EBITDA for Citizens Power. 18 RISK FACTORS Holders of Old Notes should consider carefully, in addition to the other information contained in this Prospectus, the following factors before deciding to tender Old Notes in the Exchange Offers. The risk factors set forth below are generally applicable to the Old Notes as well as the Exchange Notes. THIS PROSPECTUS CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). THESE STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS PROSPECTUS AND INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE COMPANY OR ITS OFFICERS WITH RESPECT TO, AMONG OTHER THINGS, THE USE OF PROCEEDS OF THE OFFERINGS, THE ABILITY TO ENTER INTO AND BORROW FUNDS UNDER THE SENIOR CREDIT FACILITIES, THE TIMING OF THE COMMENCEMENT OF OPERATIONS AT NEW MINES, THE ABILITY TO SUCCESSFULLY IMPLEMENT A NEW ORGANIZATIONAL STRUCTURE AND OPERATING STRATEGIES, INCLUDING THE ACHIEVEMENT OF COST SAVINGS AND TRENDS AFFECTING THE COMPANY'S FINANCIAL CONDITION OR RESULTS OF OPERATIONS. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION, THE STATEMENTS UNDER "PROSPECTUS SUMMARY," "RISK FACTORS," "UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," "BUSINESS," "COAL INDUSTRY OVERVIEW" AND "REGULATORY MATTERS" LOCATED ELSEWHERE HEREIN REGARDING INDUSTRY PROSPECTS AND THE COMPANY'S FINANCIAL POSITION ARE FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS THE DATE HEREOF. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD- LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION, IN CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS UNDER "PROSPECTUS SUMMARY," "RISK FACTORS," "UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," "BUSINESS," "COAL INDUSTRY OVERVIEW" AND "REGULATORY MATTERS." ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS. RISKS RELATING TO THE EXCHANGE NOTES CONSEQUENCES OF FAILURE TO EXCHANGE Holders of Old Notes who do not exchange their Old Notes for Exchange Notes pursuant to the Exchange Offers will continue to be subject to the restrictions on transfer of such Old Notes as set forth in the legend thereon. In general, Old Notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Company does not currently intend to register the Old Notes under the Securities Act. Based on interpretations by the staff of the Commission, the Company believes that Exchange Notes issued pursuant to the Exchange Offers in exchange for Old Notes may be offered for resale, resold or otherwise transferred by Holders thereof (other than any such Holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Old Notes were acquired in the ordinary course of such Holders' business and such Holders have no arrangement with any person to participate in the distribution of such Exchange Notes. Each broker-dealer that receives Exchange Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." To the extent that Old Notes are tendered and accepted in the Exchange Offer, the trading market for untendered and tendered but unaccepted Old Notes will be adversely affected. 19 SUBSTANTIAL LEVERAGE As a result of the Transactions, the Company is highly leveraged and, after giving pro forma effect to the Transactions, the Company would have had total indebtedness of $2,098.0 million, excluding $293.9 million of Citizens Power non-recourse debt, at March 31, 1998 (of which (i) $920.0 million would have consisted of Indebtedness under the Senior Credit Facilities, (ii) $398.8 million would have consisted of the Senior Notes, (iii) $498.6 million would have consisted of the Senior Subordinated Notes and (iv) the balance would have primarily consisted of the 5% Subordinated Note) and equity of $480.0 million. In addition, the Company would have had available borrowings of up to $480.0 million under the Revolving Credit Facility. Also after giving pro forma effect to the Transactions, the Company's ratio of earnings to fixed charges would have been 1.06x for fiscal 1998. The Company and its Restricted Subsidiaries are permitted to incur substantial additional indebtedness in the future. See "Capitalization," "Selected Combined Financial Data," "Description of the Senior Exchange Notes" and "Description of the Senior Subordinated Exchange Notes." The Company's ability to pay principal and interest or Liquidated Damages, if any, on each series of the Notes and to satisfy its other debt service obligations will depend upon the future operating performance of its subsidiaries, which will be affected by prevailing economic conditions in the markets they serve and financial, business and other factors, certain of which are beyond their control. Based upon the current level of operations, management believes that cash flow from operations and available cash, together with available borrowings under the Senior Credit Facilities, will be adequate to meet the Company's future liquidity needs for at least the next several years. There can be no assurance that the Company's business will generate sufficient cash flow from operations or that future borrowings will be available under the Senior Credit Facilities in an amount sufficient to enable the Company to service its indebtedness, including each series of the Notes, or to fund its other liquidity needs. The Company may need to refinance all or a portion of the principal of each series of the Notes on or prior to maturity. There can be no assurance that the Company will be able to effect any such refinancing on commercially reasonable terms or at all. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." The degree to which the Company is leveraged could have important consequences to Holders of each series of the Notes, including, but not limited to: (i) making it more difficult for the Company to satisfy its obligations with respect to each series of the Notes, (ii) increasing the Company's vulnerability to general adverse economic and industry conditions, (iii) limiting the Company's ability to obtain additional financing to fund future working capital, capital expenditures, research and development or other general corporate requirements, (iv) requiring the dedication of a substantial portion of the Company's cash flow from operations to the payment of principal of, and interest on, its indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, research and development or other general corporate purposes, (v) limiting the Company's flexibility in planning for, or reacting to, changes in its business and the industries in which it competes and (vi) placing the Company at a competitive disadvantage vis-a-vis less leveraged competitors. In addition, the Indentures and the Senior Credit Facilities contain financial and other restrictive covenants that limit the ability of the Company to, among other things, borrow additional funds. Failure by the Company to comply with such covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on the Company. In addition, the degree to which the Company is leveraged could prevent it from repurchasing all of the Notes tendered to it upon the occurrence of a Change of Control. See "Description of Certain Indebtedness--The Senior Credit Facilities," "Description of the Senior Exchange Notes--Repurchase at the Option of Holders--Change of Control," and "Description of the Senior Subordinated Exchange Notes--Repurchase at the Option of Holders--Change of Control." RANKING Secured Indebtedness; Effective Subordination. While Holders of Senior Subordinated Notes are contractually subordinated to Senior Debt, holders of any secured indebtedness of the Company or its subsidiaries have claims that are prior to the claims of the Holders of each series of the Notes with respect to the assets securing such other indebtedness. Notably, the Company and certain of its subsidiaries (including the Guarantors) are parties to the Senior Credit Facilities which are secured by certain Liens on the Guarantors. The 20 Senior Notes are effectively subordinated to all such secured indebtedness. In the event of any distribution or payment of the assets of the Company in any foreclosure, dissolution, winding-up, liquidation, reorganization or other bankruptcy proceeding, holders of secured Indebtedness will have a prior claim to the assets of the Company that constitute their collateral. Holders of the Senior Notes will participate ratably with all holders of unsecured Indebtedness of the Company that is deemed to be of the same class as the Senior Notes, and potentially with all other general creditors of the Company, based upon the respective amounts owed to each holder or creditor, in the remaining assets of the Company. In any of the foregoing events, there can be no assurance that there would be sufficient assets to pay amounts due on the Senior Notes. As a result, Holders of Senior Notes may receive less, ratably, than holders of secured indebtedness. As of May 19, 1998, Citizens Power and its subsidiaries were the only Unrestricted Subsidiaries of the Company. As of March 31, 1998, Citizens Power had an aggregate of $293.9 million of indebtedness which is not recourse to the Company and its other subsidiaries. The covenants under the Indentures do not restrict the ability of Unrestricted Subsidiaries to incur additional non- recourse indebtedness. As of March 31, 1998, on a pro forma basis after giving effect to the Transactions, $920.0 million of secured Indebtedness of the Company and its subsidiaries (all of which are borrowings under the Senior Credit Facilities) would have been outstanding, and $480.0 million would have been available for additional borrowing under the Senior Credit Facilities, including letters of credit. The Indentures permit the incurrence of substantial additional secured indebtedness by the Company and its Restricted Subsidiaries in the future. Subordination of Senior Subordinated Notes. The Senior Subordinated Notes are subordinated in right of payment to all current and future Senior Debt of the Company and the Guarantors, which includes borrowings under the Senior Credit Facilities and the Senior Notes. However, the Senior Subordinated Note Indenture provides that the Company will not, and will not permit any of the Guarantors to, incur or otherwise become liable for any indebtedness that is subordinate or junior in right of payment to any Senior Debt and senior in any respect in right of payment to the Senior Subordinated Notes or any of the Subordinated Subsidiary Guarantees. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, the holders of Senior Debt will be entitled to be paid in full in cash or Cash Equivalents (as defined) before any payment may be made with respect to the Senior Subordinated Notes. In addition, the subordination provisions of the Senior Subordinated Note Indenture provide that payments with respect to the Senior Subordinated Notes will be blocked in the event of a payment default on Senior Debt and may be blocked for up to 179 days each year in the event of certain non-payment defaults on Senior Debt. In the event of a bankruptcy, liquidation or reorganization of the Company, Holders of the Senior Subordinated Notes will participate ratably with all holders of subordinated indebtedness of the Company that are deemed to be of the same class as the Senior Subordinated Notes, and potentially with all other general creditors of the Company, based upon the respective amounts owed to each holder or creditor, in the remaining assets of the Company. In any of the foregoing events, there can be no assurance that there would be sufficient assets to pay amounts due on the Senior Subordinated Notes. As a result, Holders of Senior Subordinated Notes may receive less, ratably, than the holders of Senior Debt. As of March 31, 1998, on a pro forma basis after giving effect to the Transactions, the aggregate amount of Senior Debt of the Company and its subsidiaries (including borrowings under the Senior Credit Facilities) would have been $1,318.8 million, and $480.0 million would have been available for additional borrowing under the Senior Credit Facilities, including letters of credit. The Senior Subordinated Note Indenture permits the incurrence of substantial additional indebtedness, including Senior Debt, by the Company and its Restricted Subsidiaries in the future. See "Description of Certain Indebtedness." HOLDING COMPANY STRUCTURE; EFFECTIVE SUBORDINATION The Company has no operations of its own and derives substantially all of its revenue from its subsidiaries. Holders of indebtedness of, and trade creditors of, subsidiaries of the Company would generally be entitled to payment of their claims from the assets of the affected subsidiaries before such assets were made available for 21 distribution to the Company. Each of the Indentures permits the incurrence of substantial additional indebtedness by the Company and its Restricted Subsidiaries and permits significant investments by the Company in Restricted Subsidiaries and requires certain Restricted Subsidiaries that are Domestic Subsidiaries to guarantee each series of the Notes. In the event of a bankruptcy, liquidation or reorganization of a subsidiary, holders of any of such subsidiary's indebtedness will have a claim to the assets of the subsidiary that is prior to the Company's interest in those assets. As of March 31, 1998, on a pro forma basis after giving effect to the Transactions, the aggregate amount of indebtedness and other liabilities of the Company's Restricted Subsidiaries (including trade payables, land reclamation and environmental liabilities, workers' compensation liabilities and retiree health care liabilities) would have been approximately $5,445.6 million and $480.0 million would have been available to the subsidiaries for additional borrowings under the Senior Credit Facilities including letters of credit. If any subsidiary indebtedness were to be accelerated, there can be no assurance that the assets of such subsidiary would be sufficient to repay such indebtedness or that the assets of the Company and of the other subsidiaries would be sufficient to repay in full the indebtedness of the Company, including the Notes. See "Description of Certain Indebtedness." The Notes are not guaranteed by certain of the Company's Domestic Subsidiaries or by any Foreign Subsidiaries of the Company. In fiscal 1998, after giving effect to the Transactions, the Non-Guarantor Subsidiaries accounted for 11% and 20% of pro forma revenues and EBITDA, respectively, and as of March 31, 1998, the Non-Guarantor Subsidiaries accounted for 27% of pro forma assets. The claims of creditors (including trade creditors) of any Non- Guarantor Subsidiary will generally have priority as to the assets of such subsidiaries over the claims of the holders of the Notes. As of March 31, 1998, after giving effect to the Transactions, the amount of liabilities of such Non-Guarantor Subsidiaries would have been $1,578.4 million. RESTRICTIVE DEBT COVENANTS Each of the Indentures and the Senior Credit Facilities contains covenants that restrict, among other things, the ability of the Company to incur additional indebtedness, pay dividends, make certain investments and capital expenditures, enter into transactions with affiliates, allow its Restricted Subsidiaries to make certain payments, make certain asset dispositions, merge or consolidate with, or transfer substantially all of its assets to another person, encumber assets under certain circumstances or restrict dividends and other payments from Restricted Subsidiaries. In addition, the Senior Credit Facilities restrict the Company from prepaying certain of its indebtedness, including the Notes. Under the Senior Credit Facilities, the Company is also required to maintain specified financial covenants, including a minimum fixed charge coverage ratio and maximum leverage ratio (each as defined in the Senior Credit Facilities). No assurance can be given that the Company's future operating results will be sufficient to enable compliance with such covenants, or in the event of a default, to remedy such default. In the event of a default under the Senior Credit Facilities, the Company could be prohibited from making payments of principal and interest on the Notes and all amounts due under the Senior Credit Facilities could be declared immediately due and payable. See "Description of Certain Indebtedness," "Description of the Senior Exchange Notes--Certain Covenants" and "Description of the Senior Subordinated Exchange Notes--Certain Covenants." LIMITATION ON CHANGE OF CONTROL OFFER Upon the occurrence of a Change of Control, each Holder of either series of Notes will have the right to require the Company to purchase all or a portion of such Holder's Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the purchase date. Further, the provisions of the Indentures may not afford Holders protection in the event of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction involving the Company, if such transaction does not result in a Change of Control. A change in control may result in a default under the Senior 22 Credit Facilities. Upon a default under the Senior Credit Facilities or other future Senior Debt, the lenders thereunder could prohibit the Company from repurchasing the Notes or could require the payment in full of all such Senior Debt before repurchase of the Notes. The Senior Subordinated Indenture requires that prior to a repurchase of the Senior Subordinated Notes upon a Change of Control, the Company must either repay all outstanding indebtedness under the Senior Credit Facilities or obtain any required consent to such repurchase. If the Company does not obtain such consent or repay its outstanding indebtedness under the Senior Credit Facilities, the Company would remain effectively prohibited from offering to purchase the Senior Subordinated Notes. In such case, the Company's failure to offer to purchase the Senior Subordinated Notes could become an Event of Default (as defined) under the Senior Subordinated Indenture. If a Change of Control were to occur, there can be no assurance that the Company would have sufficient financial resources or would be able to arrange financing to repay all of its obligations under the Senior Credit Faculties, the Indentures and other indebtedness that may become payable upon the occurrence of such Change of Control. See "Description of Certain Indebtedness," "Description of the Senior Exchange Notes--Repurchase at the Option of Holders--Change of Control" and "Description of the Senior Subordinated Exchange Notes--Repurchase at the Option of Holders--Change of Control." LACK OF MARKET FOR THE EXCHANGE NOTES The Exchange Notes are being offered to the holders of the Old Notes. The Old Notes were offered and sold in May 1998 to a small number of institutional investors and are eligible for trading in the Private Offerings, Resales and Trading through Automated Linkages (PORTAL) Market. The Company does not intend to apply for a listing of the Exchange Notes on a securities exchange or on any automated dealer quotation system. There is currently no established market for the Exchange Notes and there can be no assurance as to the liquidity of markets that may develop for the Exchange Notes, the ability of the holders of the Exchange Notes to sell their Exchange Notes or the price at which such holders would be able to sell their Exchange Notes. If such markets were to exist, the Exchange Notes could trade at prices that may be lower than the initial market value thereof depending on many factors, including prevailing interest rates, the Company's operating results and the markets for similar securities. The Initial Purchaser has advised the Company that it currently intends to make a market with respect to the Exchange Notes. However, the Initial Purchaser is not obligated to do so, and any market making with respect to the Exchange Notes may be discontinued at any time without notice. In addition, such market making activity may be limited during the pendency of the Exchange Offer or the effectiveness of a shelf registration statement in lieu thereof. Because Lehman Brothers Inc. is an affiliate of the Company, following consummation of the Exchange Offer, Lehman Brothers Inc. will be required to deliver a current "market-maker" prospectus and otherwise comply with the registration requirements of the Securities Act in connection with any secondary market sale of the Exchange Notes, which may affect its ability to continue market-making activities. See "Plan of Distribution". The liquidity of, and trading market for, the Notes also may be adversely affected by general declines in the market for similar securities. Such a decline may adversely affect such liquidity and trading markets independent of the financial performance of, and prospects for, the Company. FRAUDULENT CONVEYANCE Under applicable provisions of federal bankruptcy law or comparable provisions of state fraudulent transfer law, if, among other things, the Company or any Guarantor, at the time it incurred the indebtedness evidenced by each series of the Notes or its Subsidiary Guarantee, (i) (a) was or is insolvent or rendered insolvent by reason of such occurrence or (b) was or is engaged in a business or transaction for which the assets remaining with the Company or such Guarantor constituted unreasonably small capital or (c) intended or intends to incur, or believed or believes that it would incur, debts beyond its ability to pay such debts as they mature and (ii) the Company, 23 or such Guarantor received or receives less than reasonably equivalent value or fair consideration for the incurrence of such indebtedness, then each series of the Notes and the Subsidiary Guarantees, and any pledge or other security interest securing such indebtedness, could be voided, or claims in respect of either series of the Notes or the Subsidiary Guarantees could be subordinated to all other debts of the Company or such Guarantor, as the case may be. In addition, the payment of interest and principal by the Company pursuant to either series of the Notes or the payment of amounts by a Guarantor pursuant to a Subsidiary Guarantee could be voided and required to be returned to the person making such payment, or to a fund for the benefit of the creditors of the Company or such Guarantor, as the case may be. The measures of insolvency for purposes of the foregoing considerations will vary depending upon the law applied in any proceeding with respect to the foregoing. Generally, however, the Company or a Guarantor would be considered insolvent if (i) the sum of its debts, including contingent liabilities, were greater than the saleable value of all of its assets at a fair valuation or if the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature or (ii) it could not pay its debts as they become due. On the basis of historical financial information, recent operating history and other factors, the Company believes that on a consolidated basis after giving effect to the Transactions, it will not be insolvent, will not have unreasonably small capital for the business in which it is engaged and will not incur debts beyond its ability to pay such debts as they mature. There can be no assurance, however, as to what standard a court would apply in making such determinations or that a court would agree with the Company's or the Guarantors' conclusions in this regard. Certain subsidiaries of the Company that are endorsing Subsidiary Guarantees on each series of the Notes have significant liabilities associated with reclamation, workers' compensation (including black-lung), and retiree health care. See "--Government Regulation of the Mining Industry" and "-- Postretirement Benefits and Pension Plan Liabilities." The Company has not analyzed the solvency of these subsidiaries with respect to the standards a court would apply in making a determination as to the solvency of such subsidiaries on a stand-alone basis. There can be no assurance that funds may be realized on such Subsidiary Guarantees or that the guarantees issued by such Guarantor (if a court were to determine that such Guarantor did not receive fair consideration or reasonably equivalent value for such guarantee) would not be voided or subordinated under constructive fraudulent conveyance laws. RISKS RELATING TO THE COMPANY RELIANCE ON LONG-TERM COAL SUPPLY CONTRACTS A substantial portion of the Company's coal is sold pursuant to CSAs, which are important to the stability and profitability of the Company's operations. The execution of a satisfactory CSA is frequently the basis on which the Company undertakes the development of coal reserves required to be supplied under the contract. Peabody has a large portfolio of CSAs. In fiscal 1998, 92% of Peabody's sales volume was sold under CSAs. At March 31, 1998, the Company's CSAs had terms ranging from one to 17 years and had an average volume-weighted remaining term of 5.7 years. Many of the Company's CSAs contain price reopener provisions which provide for the contract price to be adjusted upward or downward at specified times. Failure of the parties to agree on a price pursuant to such reopener provisions may lead to early termination of the contracts. Over the last few years, several of the Company's CSAs have been renegotiated, bringing the contract prices closer to the then current market prices, thus leading to a reduction in the revenues from such contracts. A similar reduction in contract prices has also 24 been experienced in relation to the replacement of expiring contracts. The CSAs also typically contain force majeure provisions allowing temporary suspension of performance by the Company or the customer during the duration of certain events beyond the control of the affected party. Most CSAs contain provisions requiring the Company to deliver coal within certain ranges for specific coal characteristics such as Btus, sulfur, ash, grindability and ash fusion temperature. Failure to meet these specifications could result in economic penalties or termination of the contracts. The Company restructures its CSAs in the normal course of business. In connection with such restructurings, the Company recognized gains ranging from $4.4 million in fiscal 1993 to $49.3 million in fiscal 1998. There can be no assurance that the Company will be able to realize such gains in connection with future CSA restructurings. The operating profit margins realized by the Company under its CSAs depend on a variety of factors. In addition, price adjustment, price reopener and other provisions may reduce the insulation from any short-term coal price volatility provided by such contracts. If a substantial portion of the Company's CSAs were modified or terminated, the Company could be materially adversely affected to the extent that it is unable to find alternate buyers for its coal at the same level of profitability. Because the price of coal has declined in recent years, many of the Company's CSAs are for prices above current spot market prices. There can be no assurance that the Company will be able to replace these contracts at the same prices or with similar profit margins when they expire. In addition, certain CSAs are the subject of ongoing litigation. See "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business--Long-Term Coal Contracts" and "Business--Legal Proceedings." TRANSPORTATION RISKS Coal producers depend upon rail, barge, trucking, overland conveyor and other systems to provide access to markets. While customers typically arrange and pay for transportation of coal from the mine to the point of use, disruption of these transportation services because of weather-related problems, strikes, lock-outs or other events could temporarily impair the Company's ability to supply coal to its customers and thus could adversely affect the Company's business, financial condition and results of operations. For example, the high volume of coal shipped from all southern Powder River Basin mines (approximately 270 million tons in 1997, or 25% of all U.S. coal shipments) could create temporary congestion on the rail system accessing that region. Transportation costs represent a significant portion of the total cost of coal, and as a result, the cost of delivery is a critical factor in a customer's purchasing decision. Increases in transportation costs could make coal a less competitive source of energy or could make certain of the Company's operations less competitive than other sources of coal. Such increases could have a material adverse effect on the Company's ability to compete and on its business, financial condition and results of operations. In Australia, the Company transports coal using the Hunter River Valley Railroad and the coal loading terminal at the Port of Newcastle. The Port of Newcastle has had problems with ship congestion in the past. Such congestion could delay shipments from Peabody Resources' Warkworth mine and the Bengalla mine, currently under construction. RISKS INHERENT TO MINING The Company's mining operations are subject to conditions beyond the Company's control which can increase the cost of mining at particular mines for varying lengths of time. These conditions include weather and natural disasters, unexpected maintenance problems, key equipment failures, variations in coal seam thickness, variations in the amount of rock and soil overlying the coal deposit, variations in rock and other natural materials and variations in geological and other conditions. RESTRUCTURING OF AUSTRALIAN COAL INDUSTRY The coal mining industry in Australia is going through a process of restructuring in an effort to improve the industry's international competitiveness. This restructuring is directed at improving workforce flexibility through 25 training workers to perform multiple tasks and eliminating existing inflexibilities in work practices. Certain major coal mining companies have also attempted to employ non-union labor and to move away from negotiated collective bargaining awards to individual contracts of employment. While to date these changes have been accomplished without major industrial disruption, there can be no assurance that this state of affairs will continue or that further restructuring will not cause major work stoppages in the future. GOVERNMENT REGULATION OF THE MINING INDUSTRY General. The coal mining industry is subject to regulation by federal, state and local authorities on matters such as employee health and safety, permitting and licensing requirements, air quality standards, water pollution, plant and wildlife protection, reclamation and restoration of mining properties after mining is completed, the discharge of materials into the environment, surface subsidence from underground mining and the effects that mining has on groundwater quality and availability. In addition, the industry is affected by significant legislation mandating certain benefits for current and retired coal miners. Numerous governmental permits and approvals are required for mining operations. The Company may be required to prepare and present to federal, state or local authorities data pertaining to the effect or impact that any proposed exploration for or production of coal may have upon the environment. All requirements imposed by any such authority may be costly and time-consuming and may delay commencement or continuation of exploration or production operations. The possibility exists that new legislation and/or regulations and orders may be adopted which may materially adversely affect the Company's mining operations, its cost structure and/or its customers' ability to use coal. New legislation, including proposals related to the protection of the environment which would further regulate and tax the coal industry, may also require the Company or its customers to change their operations significantly or incur increased costs. Such factors and legislation, if enacted, could have a material adverse effect on the Company's business, financial condition and results of operations. See "Regulatory Matters." Reclamation and Mine Closure Accruals. The Federal Surface Mining Control and Reclamation Act of 1977 ("SMCRA") and similar state statutes require that mine property be restored in accordance with specified standards and an approved reclamation plan and require that the Company obtain and periodically renew permits for mining operations. The Company accrues for the costs of final mine closure over the estimated useful mining life of the property and expenses current mine disturbance as part of the ongoing mining process. The establishment of the final mine closure reclamation liability and the current disturbance is based upon permit requirements and requires various estimates and assumptions, principally associated with costs and production levels. Annually, the Company reviews its entire environmental liability under SMCRA and makes necessary adjustments, including mine reclamation plan and permit changes and revisions to costs and production levels to optimize mining and reclamation efficiency. The economic impact of such adjustments is recorded to the cost of coal sales. The long-term reclamation costs, mine-closing costs and other environmental liability accruals totaled approximately $490.1 million on the Company's pro forma balance sheet as of March 31, 1998, $20.3 million of which is categorized as Other Noncurrent Liabilities and $8.5 million of which is a current liability. The amount that was included as an operating expense for the pro forma twelve month period ended March 31, 1998 was $12.4 million, while the related cash expense for such liability in such period was $39.1 million. Although the Company's management believes it is making adequate provisions for all expected reclamation and other costs associated with mine closures, future operating results would be adversely affected if such accruals were later determined to be insufficient. Impact of Clean Air Act Amendments on Coal Consumption. The Clean Air Act and the Clean Air Act Amendments, and corresponding state laws that regulate the emissions of materials into the air, affect coal mining operations both directly and indirectly. Direct impacts on coal mining and processing operations may occur through Clean Air Act permitting requirements and/or emissions control requirements relating to particulate matter (e.g., "fugitive dust"), including future regulation of fine particulate matter measuring 2.5 micrometers in diameter or smaller. In July 1997, the U.S. Environmental Protection Agency ("EPA") adopted new, more stringent National Ambient Air Quality Standards ("NAAQS") for particulate matter and ozone. As a result, some states will be required to change their existing implementation plans to attain and maintain compliance with the new NAAQS. Because coal mining operations emit particulate matter, the Company's 26 mining operations are likely to be affected directly when the revisions to the NAAQS are implemented by the states. State and federal regulations relating to implementation of the new NAAQS may restrict the Company's ability to develop new mines or could require the Company to modify its existing operations. The extent of the potential direct impact of the new NAAQS on the coal industry will depend on the policies and control strategies associated with the state implementation process under the Clean Air Act, but could have a material adverse effect on the Company's business, financial condition and results of operations. The Clean Air Act indirectly affects coal mining operations by extensively regulating the air emissions of SO/2/ and other compounds including nitrogen oxides emitted by coal-fueled utility power plants. Title IV of the Clean Air Act Amendments places limits on SO/2/ emissions from electric power generation plants. The limits set baseline emission standards for such facilities. Reductions in such emissions under Title IV of the Clean Air Act Amendments will occur in two phases: (i) Phase I began in 1995 and applies only to certain identified facilities; and (ii) Phase II is scheduled to begin in 2000 and will apply to all coal-fired power plants, including those subject to the 1995 restrictions. The affected utilities have been and may be able to meet these requirements by, among other methods, switching to lower sulfur coal or other low sulfur fuels, installing pollution control devices such as scrubbers, reducing electricity generating levels or purchasing excess emission allowances from other facilities. See "Coal Industry Overview--Coal Markets." The effect of these provisions of the Clean Air Act Amendments on the Company cannot be fully determined at this time. The Company believes that implementation of Phase II will likely exert a downward pressure on the price of higher sulfur coal, as additional coal-burning utility power plants become subject to the restrictions of Title IV. This price effect is expected to result after the large surplus of emission allowances which has accumulated in connection with Phase I has been reduced, and before utilities electing to comply with Phase II by installing sulfur-reduction technologies are able to implement such a compliance strategy. The extent to which this expected price decrease will materially adversely affect the Company will depend upon a number of factors, including the Company's ability to secure CSAs for its coal reserves with higher sulfur content. The Clean Air Act Amendments also indirectly affect coal mining operations by requiring utilities that currently are major sources of nitrogen oxides in moderate or higher ozone nonattainment areas to install reasonably available control technology ("RACT") for nitrogen oxides, which are precursors of ozone. In addition, the recently issued, stricter ozone NAAQS standards, as discussed above, are expected to be implemented by EPA by 2003. EPA recently announced a proposal (the "SIP call") that would require 22 eastern states to make substantial reductions in nitrogen oxide emissions. EPA expects such states will achieve these reductions by requiring power plants to make substantial reductions in their nitrogen oxide emissions. Installation of RACT and additional control measures required under the SIP call will make it more costly to operate coal-fired plants and, depending on the requirements of individual state attainment plans and the development of revised new source performance standards, could make coal a less attractive fuel alternative in the planning and building of utility power plants in the future. Any reduction in coal's share of the capacity for power generation could have a material adverse effect on the Company's business, financial condition and results of operations. The effect such regulations or other requirements that may be imposed in the future could have on the coal industry in general and on the Company in particular cannot be predicted with certainty. No assurance can be given that the implementation of the Clean Air Act Amendments, the new NAAQS or any other future regulatory provisions will not materially adversely affect the Company. Impact of the Framework Convention on Global Climate Change on the Coal Industry. The United States, Australia and more than 160 other nations are signatories to the 1992 Framework Convention on Global Climate Change (the "Convention") which is intended to limit or capture emissions of greenhouse gases, such as carbon dioxide. In December 1997 in Kyoto, Japan, the signatories to the Convention established a binding set of emissions targets for developed nations (the "Kyoto Protocol"). Although the specific limits vary from country to country, under the terms of the Kyoto Protocol, the United States would be required to reduce emissions to 93% of 1990 levels over a five-year budget period from 2008 through 2012. Although the United States has not ratified the Kyoto Protocol and no comprehensive regulations focusing on greenhouse gas emissions are in place, efforts to control greenhouse gas emissions could result in reduced use of coal if electric power generators switch 27 to lower carbon sources of fuel. It is unclear what impact, if any, greenhouse gas restrictions may have on the Company's operations. There is no guarantee, however, that such restrictions, if established through regulation or legislation, will not have a material adverse effect on the Company's business, financial condition and results of operations. Impact of Federal and State Superfund Statutes on Coal Mining Operations and Past Hard Rock Mining Operations. Risks of environmental liability are inherent with respect to both current and past coal mining and hard rock mining activities. The Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA" or "Superfund") and similar state laws create liability for investigation and remediation in response to releases of substances hazardous to the environment and for damages to natural resources. Under CERCLA and many state Superfund statutes, joint and several liability may be imposed on waste generators, site owners and operators and others regardless of fault. In connection with the spin-off of The Energy Group from Hanson, The Energy Group assumed environmental obligations associated with certain former non- coal mining operations of Gold Fields Mining Corporation ("Gold Fields") and its former parent company. Gold Fields, its predecessors and its former parent company are or may become parties to environmental proceedings which have commenced or may commence in the United States in relation to certain sites previously owned or operated by those entities or companies associated with them. The Company has agreed to indemnify Gold Field's former parent company for any environmental claims resulting from any activities, operations or conditions that occurred prior to the sale of Gold Fields to the Company. Gold Fields is currently involved in environmental investigation or remediation at six sites and is a defendant in litigation with private parties involving three other sites. These nine sites were formerly owned or operated by Gold Fields. EPA has placed three of these sites on the National Priorities List, promulgated pursuant to CERCLA, and one of the sites is on a similar state priority list. There are a number of other sites in the United States which were previously owned or operated by such companies and which could give rise to environmental proceedings in which Gold Fields could incur liabilities. Where such sites were identified, the directors of The Energy Group commissioned, in connection with the spin-off of The Energy Group, a review of publicly available information by independent environmental consultants in order to assess the estimated total amount of the liability per site and the proportion of those liabilities which Gold Fields is likely to bear. The available information on which to base this review was very limited since all of the sites (except for three sites on which no remediation is currently taking place) are no longer owned by Gold Fields. On the basis of that review, The Energy Group has provided for the above environmental liabilities relating to Gold Fields in the total sum of $73.6 million as of March 31, 1997. Significant uncertainty exists as to whether these claims will be pursued against Gold Fields in all cases, and where they are pursued, the amount of the eventual costs and liabilities, which could be greater or less than this provision. As of March 31, 1998, the provision was reduced to $68.6 million to reflect expenditures incurred during the period. The Company believes that the remaining amount of the provision is adequate to cover these environmental liabilities. Although waste substances generated by coal mining and processing are generally not regarded as hazardous substances for the purposes of CERCLA, some products used by coal companies in operations, such as chemicals, and the disposal of such products are governed by the statute. Thus, coal mines currently or previously owned or operated by the Company, and sites to which the Company sent waste materials, may be subject to liability under CERCLA and similar state laws. In addition to the Gold Fields liabilities associated with CERCLA and similar state laws, the Company's current and former coal mining operations presently incur, and will continue to incur, expenditures associated with the investigation and remediation of environmental matters, including acid mine drainage, land subsidence, underground storage tanks, solid and hazardous waste disposal and other matters. While the Company believes that it has identified costs likely to be incurred for these environmental matters, and that those costs are not likely to have a material adverse effect upon its business, financial condition and 28 results of operations, there can be no assurance that total costs and liabilities for these environmental matters will not increase in the future. The magnitude of such additional liabilities and the costs of complying with these environmental laws cannot be predicted with certainty due to the lack of specific information available with respect to many sites, the potential for new or changed laws and regulations and for the development of new remediation technologies and the uncertainty regarding the timing of work with respect to particular sites. As a result, there can be no assurance that material liabilities or costs related to environmental matters will not be incurred in the future or that the Company's liquidity will not be adversely impacted by such environmental liabilities or costs. Black Lung and Workers' Compensation Obligations. Under the Black Lung Benefits Revenue Act of 1977 and the Black Lung Benefits Reform Act of 1977, as amended in 1981, each coal mine operator is required to secure payment of federal black lung benefits to claimants who are current and former employees and to a trust fund for the payment of benefits and medical expenses to claimants who last worked in the coal industry prior to July 1, 1973. Less than 7% of the miners currently seeking federal black lung benefits are awarded such benefits by the federal government. The trust fund is funded by an excise tax on production of up to $1.10 per ton for deep-mined coal and up to $0.55 per ton for surface-mined coal, neither amount to exceed 4.4% of the per ton sales price. This tax is passed on to the purchaser under many of the Company's CSAs. Legislation on black lung reform was introduced but not enacted in the last Congress. It is possible that such legislation will be reintroduced for consideration by the current Congress. Such legislation could restrict the evidence that can be offered by a mining company, establish a standard for evaluation of evidence that greatly favors black lung claimants, allow claimants who have been denied benefits at any time since 1981 to refile their claims for consideration under the new law, make surviving spouse benefits significantly easier to obtain and retroactively waive repayment of preliminarily awarded benefits that are later determined to have been improperly paid. If this or similar legislation is passed, the number of claimants who are awarded benefits could significantly increase. There can be no assurance that such proposed legislation or other proposed changes in black lung legislation will not have an adverse effect on the Company. The U.S. Department of Labor has issued proposed amendments to the regulations implementing the federal black lung laws which, among other things, establish a presumption in favor of a claimant's treating physician and limit a coal operator's ability to introduce medical evidence regarding the claimant's medical condition. If adopted, the amendments could have an adverse impact on the Company, the extent of which cannot be accurately predicted. Additionally, the Company is required to compensate employees for work- related injuries. The Company's workers' compensation liabilities (including black lung claims) totaled approximately $263.8 million on the Company's pro forma balance sheet as of March 31, 1998, $39.9 million of which is a current liability. The amount that was included as an operating expense for the pro forma twelve month period ended March 31, 1998 was $25.2 million, while the related cash expense for such liability was $41.9 million. POSTRETIREMENT BENEFITS AND PENSION PLAN LIABILITIES The Company provides postretirement health and life insurance benefits to eligible union and non-union employees. The Company has calculated the total accumulated postretirement benefit obligation under SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" ("SFAS 106") and estimates that at March 31, 1998, the pro forma present value of such future obligation was approximately $1,036.3 million, $48.9 million of which is a current liability. These obligations have been estimated by the Company based on assumptions described in the notes to the financial statements. If the Company's assumptions do not materialize as expected, cash expenditures and costs that the Company would incur could be materially higher than those reflected in the Company's Unaudited Pro Forma Condensed Combined Financial Statements. 29 REPLACEMENT AND RECOVERABILITY OF RESERVES The Company's future success depends upon its ability to find, develop or acquire additional coal reserves that are economically recoverable. The recoverable reserves of the Company will generally decline as reserves are depleted, except to the extent that the Company conducts successful exploration and development activities or acquires properties containing recoverable reserves. To increase reserves and production, the Company must continue its development, exploration and acquisition activities or undertake other replacement activities. The Company's current strategy includes increasing its reserve base through acquisitions of government leases and other leases and producing properties and continuing to exploit its existing properties. There can be no assurance, however, that the Company's planned development and exploration projects and acquisition activities will result in significant additional reserves or that the Company will have continuing success developing additional mines. For a discussion of the Company's reserves, see "Business--Coal Reserves." Most of the Company's mining operations are conducted on properties owned or leased by the Company. Because title to most of the Company's leased properties and mineral rights is not thoroughly verified until a permit to mine the property is obtained, the Company's right to mine certain of its reserves may be materially adversely affected if defects in title or boundaries exist. In addition, there is no assurance that the Company can successfully negotiate new leases from the government or private parties or mining contracts for properties containing additional reserves or maintain its leasehold interest in properties on which mining operations are not commenced during the term of the lease. See "Business--Coal Reserves." SURETY BONDS Federal and state laws require bonds to secure the Company's obligations to reclaim lands disturbed for mining, to pay federal and state workers' compensation and to satisfy other miscellaneous obligations (the "Surety Bonds"). As of March 31, 1998, the Company had outstanding Surety Bonds with third parties for post-mining reclamation totaling $372.4 million, with an additional $277.3 million in self-bonding obligations. Furthermore, Surety Bonds valued at an additional $123.3 million are in place for federal and state workers' compensation obligations and other miscellaneous obligations. These bonds are typically renewable on a yearly basis. No assurance can be given that the Surety Bond holders will continue to renew the bonds or refrain from demanding additional collateral upon such renewals. Furthermore, as a result of the Financings, the Company is highly leveraged, making it unlikely that the Company will be able to continue its self-bonding program and thus requiring it to obtain additional third-party Surety Bonds. The failure to maintain or the inability to acquire sufficient Surety Bonds, as required by state and federal law, would have a material adverse effect on the Company and therefore create certain risks for the purchasers of the Notes. Such failure could result from a variety of factors including the following: (i) lack of availability, higher expense or unreasonable terms of new Surety Bonds, (ii) restrictions on the demand for collateral by current and future third-party Surety Bond holders due to the terms of the Indentures or the Senior Credit Facilities and (iii) the exercise by third-party Surety Bond holders of their right to refuse to renew the surety. PRICE FLUCTUATIONS AND MARKETS The Company's results of operations are highly dependent upon the prices received for the Company's coal. Although in fiscal 1998, 92% of the Company's sales were made pursuant to CSAs, many of the Company's CSAs contain price reopener provisions which provide for the contract price to be adjusted upward or downward at specified times. See "Business--Long-Term Coal Contracts." Any significant decline in prices for coal could have a material adverse effect on the Company's business, financial condition, results of operations and quantities of reserves recoverable on an economic basis. Should the industry experience significant price declines from current levels or other adverse market conditions, the Company may not be able to generate sufficient cash flow from operations to meet its obligations, including debt service obligations under the Notes, and make planned capital expenditures. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." 30 The availability of a ready market for the Company's coal production also depends on a number of factors, including the demand and supply of low sulfur coal and the availability of emission allowances. See "--Government Regulation of the Mining Industry--Impact of Clean Air Act Amendments on Coal Consumption." COMPETITION The coal industry is highly competitive, with numerous producers in all coal producing regions. The Company competes with other large producers and hundreds of small producers in the United States and abroad. Many of the Company's customers are also customers of the Company's competitors. The markets in which the Company sells its coal are highly competitive and affected by factors beyond the Company's control. Continued demand for the Company's coal and the prices that the Company will be able to obtain will depend primarily on coal consumption patterns of the domestic electric utility industry, which in turn are affected by the demand for electricity, coal transportation costs, environmental and other governmental regulations and orders, technological developments and the availability and price of competing alternative energy sources such as oil, natural gas, nuclear energy and hydroelectric energy. See "Regulatory Matters." In addition, during the mid- 1970s and early 1980s, a growing coal market and increased demand for coal attracted new investors to the coal industry and spurred the development of new mines and added production capacity throughout the industry. Although demand for coal has grown over the recent past, the industry has since been faced with over-capacity, which in turn has increased competition and lowered prevailing coal prices. Moreover, because of greater competition for electricity and increased pressure from customers and regulators to lower electricity prices, public utilities are lowering fuel costs and requiring competitive prices on their purchases of coal. UNIONIZATION OF LABOR FORCE Approximately 56% of the Company's U.S. coal employees, who accounted for 35% of Peabody's U.S. coal production in 1997, are represented by the UMWA. The Australian coal mining industry is highly unionized and the majority of workers employed at Peabody Resources are members of trade unions. Certain of the Company's competitors have non-union work forces. Because of the increased risk of strikes and other work-related stoppages in addition to higher labor costs which may be associated with union operations in the coal industry, the Company's non-unionized competitors may have a competitive advantage in areas where they compete with the Company's unionized operations. If some or all of the Company's current non-union operations were to become unionized, the Company could incur an increased risk of work stoppages and higher labor costs. The ten month long UMWA strike in 1993 had a material adverse effect on the Company. The Company's Peabody Coal Company ("PCC") and Eastern Associated Coal Corp. ("Eastern Associated") subsidiaries operate under a union contract which is in effect through December 31, 2002 and the Company's Peabody Western Coal Company ("Peabody Western") subsidiary operates under a union contract which is in effect through August 31, 2000. Peabody Resources' Warkworth mine operates under a labor agreement which expires in September 1999. Peabody Resources' Ravensworth and Namara mines operated under a labor agreement which expired in March 1998, and while negotiations on a new labor agreement are ongoing and there have been no resulting work stoppages since the expiration of the agreement, there can be no assurance that such negotiations will be successful. There can be no assurance that the Company's unionized labor will not go on strike upon expiration of existing contracts. See "Business-- Employees of the Company." CONTROL BY LEHMAN MERCHANT BANKING As a result of the Transactions, a substantial majority of the Company's outstanding equity is owned by Lehman Merchant Banking. Lehman Merchant Banking is able to control the election of the directors of the Company and to determine the corporate and management policies of the Company, including decisions relating to any mergers or acquisitions of the Company, sales of all or substantially all of the Company's assets and other significant corporate transactions, which transactions may result in a Change of Control under the Indentures. See "Ownership of Capital Stock." 31 DEPENDENCE ON KEY PERSONNEL The Company's business is managed by a number of key personnel, the loss of which could have a material adverse effect on the Company. In addition, as the Company's business develops and expands, the Company believes that its future success will depend greatly on its continued ability to attract and retain highly skilled and qualified personnel. The Company is negotiating employment agreements with certain senior executive officers. There can be no assurance that key personnel will continue to be employed by the Company or that the Company will be able to attract and retain qualified personnel in the future. Failure by the Company to retain or attract such key personnel could have a material adverse effect on the Company. See "Management." LIMITED RIGHTS OF RECOVERY AGAINST SELLERS The Acquisition is part of the acquisition of The Energy Group by TU. TU acquired The Energy Group pursuant to a competitive bidding process in the United Kingdom. As a result, the Company was subject to certain restrictions on access to information imposed by U.K. law, as well as practical restrictions imposed by the competitive process on its ability to obtain representations, warranties and indemnity rights. Generally, the Company only received representations, warranties and indemnities related to the seller's authority to sell the Acquired Companies, its ownership of the Acquired Companies and certain assignments of the benefit of certain limited tax indemnities from Hanson. Consequently, there may be liabilities and contingencies, such as environmental, tax, employee benefit or other items, relating to the business of the Company for which the Company may not be entitled to indemnification and which could have a material adverse effect on the financial condition of the Company. ABILITY TO IMPROVE PRODUCTIVITY AND REDUCE COSTS The Company has historically improved productivity and reduced costs of its operations. There can be no assurance that the Company will continue to achieve comparable improvements in the future. In addition, while the Company intends to implement plans to reduce operating costs and improve efficiencies, there can be no assurance that such efforts will be successful. IMPACT OF YEAR 2000 ISSUE An issue exists for all companies that rely on computers as the year 2000 approaches. The year 2000 issue (the "Year 2000 Issue") is the result of the past practice in the computer industry of using two digits rather than four to identify the applicable year. This practice may result in incorrect results when computers perform arithmetic operations, comparisons or data field sorting and some non-information systems functions that rely on computers involving years later than 1999. The Company has implemented a program that it anticipates will be able to test its entire system using its internal programming staff and outside computer consultants and intends to make any necessary modifications to prevent disruption to its operations. Costs in connection with any such modifications are not expected to be material. However, if such modifications are not completed in a timely manner, the Year 2000 Issue may have a material adverse effect on the operations of the Company. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Impact of Year 2000 Issue." 32 USE OF PROCEEDS There will be no proceeds to the Company from the exchange of Old Notes for Exchange Notes pursuant to the Exchange Offers. The net proceeds received by the Company from the Offerings of the Old Notes, together with the borrowings under the Term Loan Facility and the equity contribution by Lehman Merchant Banking and management, were used upon consummation of the Acquisition to (i) pay $2,065.0 million for the purchase of the Acquired Companies, (ii) repay existing U.S. long-term debt of $3.0 million, (iii) pay the Citizens Power Obligations of $92.0 million, (iv) capitalize Citizens Power's energy trading operations with $50.0 million, (v) increase cash balances by $12.4 million and (vi) pay an estimated $75.0 million in transaction fees and expenses incurred in connection with the Transactions. See "The Acquisition" and "Capitalization." CAPITALIZATION The following table sets forth the historical and pro forma capitalization of the Company, excluding non-recourse long-term debt of Citizens Power of $293.9 million, as of March 31, 1998, giving effect to the Transactions.
AS OF MARCH 31, 1998 ------------------ ACTUAL PRO FORMA -------- --------- (IN MILLIONS) Senior Credit Facilities Revolving Credit Facility.............................. $ -- $ -- Term Loan Facility..................................... -- 920.0 Senior Notes............................................. -- 398.8 Senior Subordinated Notes................................ -- 498.6 Existing U.S. Long-Term Debt............................. 6.1 3.1 Peabody Resources Debt................................... 44.7 77.0 5% Subordinated Note..................................... 192.6 200.5 Citizens Power Obligations............................... 65.0 -- -------- -------- Total Debt............................................. $ 308.4 $2,098.0 Invested Capital......................................... 1,687.8 480.0 -------- -------- Total Capitalization............................... $1,996.2 $2,578.0 ======== ========
33 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The following Unaudited Pro Forma Condensed Combined Financial Statements of the Company are based on the audited and unaudited financial statements of the Company appearing elsewhere in this Prospectus as adjusted to illustrate the estimated pro forma effects of the Transactions. The unaudited pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable. The Unaudited Pro Forma Condensed Combined Financial Statements and accompanying notes should be read in conjunction with the Combined Financial Statements of the Company and other financial information pertaining to the Company appearing elsewhere in this Prospectus, including "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Unaudited Pro Forma Condensed Combined Financial Statements have been prepared to give pro forma effect to the Transactions as if such transactions had occurred on April 1, 1997 for the statement of operations for the year ended March 31, 1998 (the "Unaudited Pro Forma Condensed Combined Statements of Operations") and on March 31, 1998 for the balance sheet data (the "Unaudited Pro Forma Condensed Combined Balance Sheet" together with the Unaudited Pro Forma Condensed Combined Statements of Operations comprise the "Unaudited Pro Forma Condensed Combined Financial Statements"). The unaudited pro forma adjustments are based upon preliminary estimates. Actual adjustments will be based on the final purchase price subject to purchase price adjustments and other analyses of fair values. The Unaudited Pro Forma Condensed Combined Financial Statements should be read in conjunction with the Combined Financial Statements and notes of the Company included elsewhere in this Prospectus. The unaudited pro forma data are for informational purposes only and may not be indicative of the results that actually would have occurred had the Transactions been in effect on the dates indicated or results that may be obtained in the future. Moreover, the Unaudited Pro Forma Condensed Combined Statements of Operations do not reflect any cost reductions associated with any reorganization plans currently under consideration. The Unaudited Pro Forma Condensed Combined Financial Statements reflect the Acquisition with an estimated equity purchase price of $2,065.0 million plus estimated transaction costs of $75.0 million. The Acquisition was financed with $480.0 million of equity contributed by Lehman Merchant Banking and members of the Company's management and borrowings of $1,817.4 million, of which $145.0 million was used to repay existing debt and to capitalize Citizens Power. 34 UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF MARCH 31, 1998
PURCHASE HISTORICAL ACCOUNTING FINANCING PRO FORMA MARCH 31, 1998(/1/) ADJUSTMENTS(/2/) ADJUSTMENTS(/3/) MARCH 31, 1998 ------------------- ---------------- ---------------- -------------- (IN MILLIONS) ASSETS: Current Assets Cash and Equivalents... $ 96.9 $ -- $ 62.4 j $ 159.3 Accounts Receivable.... 326.5 -- -- 326.5 Receivables From Affiliates............ 112.7 -- (141.0)k (28.3) Materials and Supplies.............. 67.3 -- -- 67.3 Coal Inventory......... 197.5 -- -- 197.5 Other Current Assets... 1,325.2 -- -- 1,325.2 --------- ------ --------- --------- Total Current Assets.............. $ 2,126.1 $ -- $ (78.6) $ 2,047.5 Property, Plant and Mine Development Land and Coal Interests............. 3,075.9 897.6 c -- 3,973.5 Building and Improvements.......... 721.9 -- -- 721.9 Machinery and Equipment............. 1,441.1 -- -- 1,441.1 Less--Accumulated Depreciation, Depletion and Amortization.......... (1,565.4) (18.5)b -- (1,583.9) --------- ------ --------- --------- Property, Plant and Mine Development, Net................... $ 3,673.5 $879.1 $ -- $ 4,552.6 Investments and Other Assets................. 479.4 (13.2)b 75.0 l 576.2 35.0 c Goodwill................ 76.2 27.0 d -- 103.2 --------- ------ --------- --------- Total Assets......... $ 6,355.2 $927.9 $ (3.6) $ 7,279.5 ========= ====== ========= ========= LIABILITIES AND INVESTED CAPITAL: Current Liabilities Short-term Borrowings and Current Maturities of Long-term Debt Recourse............. $ 33.8 $ -- $ (0.8)n $ 81.8 48.8 m Non-Recourse(/4/).... 12.8 -- -- 12.8 Income Taxes Payable... 2.4 -- -- 2.4 Deferred Income Taxes................. 6.0 -- -- 6.0 Accounts Payable and Accrued Expenses...... 1,535.2 20.0 e -- 1,555.2 --------- ------ --------- --------- Total Current Liabilities......... $ 1,590.2 $ 20.0 $ 48.0 $ 1,658.2 Long-term Debt, Less Current Maturities Recourse............. 274.6 7.9 f 1,800.9 m 2,016.2 27.0 d (2.2)n (92.0)n Non-Recourse(/4/).... 281.1 -- -- 281.1 Deferred Income Taxes... 661.6 222.8 g -- 884.4 Accrued Reclamation and Other Environmental Liabilities............ 416.4 45.0 a -- 461.4 Workers' Compensation Obligations............ 260.9 (37.0)h -- 223.9 Accrued Postretirement Benefit Costs.......... 876.2 111.0 h -- 987.2 Obligation to Industry Fund................... 97.0 (31.0)h -- 66.0 Other Noncurrent Liabilities............ 209.4 20.0 e -- 221.1 (8.3)h --------- ------ --------- --------- Total Liabilities.... $ 4,667.4 $377.4 $ 1,754.7 $ 6,799.5 Total Invested Capital.. 1,687.8 550.5 i (1,758.3)o 480.0 --------- ------ --------- --------- Total Liabilities and Invested Capital.... $ 6,355.2 $927.9 $ (3.6) $ 7,279.5 ========= ====== ========= =========
See notes to Unaudited Pro Forma Condensed Combined Balance Sheet. 35 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF MARCH 31, 1998 1. Includes the assets and liabilities of Citizens Power, consisting of $344.2 million worth of capital, $1,525.5 million total assets, $293.9 of non- recourse indebtedness and $1,353.9 of total liabilities as of March 31, 1998. 2. Reflects the effect of the pro forma purchase accounting adjustments at March 31, 1998. (a) To reflect the fair value of the Company's reclamation obligations due to changes in accounting method. (b) To reflect the fair value of certain assets totaling $31.7 million which includes $4.0 million of intangibles. (c) Reflects the excess purchase price plus net impact of purchase price accounting adjustments. The preliminary purchase price allocation is reflected as fair valuing certain assets (land, coal resources and other investments). The actual allocation of the purchase price may be different and may impact other asset classifications. (d) To reflect the issuance of an additional note in connection with the additional purchase price for the acquisition of Citizens Power. (e) To reflect the cost associated with the Company's restructuring plan. (f) To reflect fair value of the 5% Subordinated Note due to the change in discount rate from 12.8% to 12.0%. (g) Reflects the deferred tax effects of the pro forma adjustments as required by SFAS No. 109, "Accounting for Income Taxes." (h) Reflects adjusting employee-related liabilities to their estimated fair value based on a discount rate of 7.25%. (i) Reflects the net effect of pro forma purchase accounting adjustments (a-h) on invested capital. 3. Reflects the pro forma effect of the Financings as of March 31, 1998. (j) To reflect the increase in Cash and Equivalents from the Financings. (k) Reflects the cash distribution to The Energy Group occurring prior the consummation of the Transactions. (l) Reflects the debt issuance costs, including the underwriting discounts related to the Offerings. (m) Reflects the incurrence of $920.0 million of debt under the Senior Credit Facilities, $398.8 million of Senior Notes, $498.6 million of Senior Subordinated Notes and $32.3 million of Peabody Resources Debt incurred in April 1998. (n) Reflects the repayment of all debt except for the 5% Subordinated Note, debt associated with Patriot Coal, the Peabody Resources Debt and the non-recourse debt associated with Citizens Power. (o) Reflects the net effect of pro forma debt adjustments (j-n) on invested capital and the contribution of $480.0 million of equity. 4. Represents the non-recourse indebtedness of Citizens Power. 36 UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 1998
HISTORICAL PRO FORMA YEAR YEAR ENDED PURCHASE ENDED MARCH 31, ACCOUNTING FINANCING MARCH 31, 1998(/1/) ADJUSTMENTS(/2/) ADJUSTMENTS(/2/) 1998(/1/) ---------- ---------------- ---------------- --------- (IN MILLIONS, EXCEPT RATIOS) REVENUES Sales.......................................... $2,075.1 $ -- $ -- $2,075.1 Other Revenue.................................. 169.3 -- -- 169.3 -------- ------ ------- -------- Total Revenues............................... $2,244.4 $ -- $ -- $2,244.4 OPERATING COSTS AND EXPENSES Operating Costs and Expenses................... 1,710.8 32.8a -- 1,743.6 Depreciation, Depletion and Amortization....... 202.6 18.7b 221.3 Selling and Administrative Expenses............ 83.6 -- -- 83.6 Net Loss/(Gain) on Property and Equipment Disposals..................................... (21.8) -- -- (21.8) -------- ------ ------- -------- OPERATING PROFIT (LOSS).......................... $ 269.2 $(51.5) $ -- $ 217.7 Interest Expense............................... (33.6) -- (8.3)d (207.7) -- -- (165.8)e -- Interest Income................................ 14.9 -- (12.3)f 2.6 -------- ------ ------- -------- INCOME (LOSS) BEFORE INCOME TAX.................. $ 250.5 $(51.5) $(186.4) $ 12.6 Income Tax Provision (Benefit) ................ 90.2 (6.9)c (48.5)c 34.8 -------- ------ ------- -------- NET INCOME (LOSS)................................ $ 160.3 $(44.6) $(137.9) $ (22.2) ======== ====== ======= ======== Other Data: EBITDA(/3/).................................... $ 439.0 Depreciation, Depletion and Amortization....... 221.3 Capital Expenditures........................... 166.3 Ratio of Earnings to Fixed Charges(/4/)........ 1.06x Ratio of Net Debt to EBITDA(/5/)............... 4.67x Ratio of EBITDA to Cash Interest Expense(/6/).. 2.28x
See notes to Unaudited Pro Forma Condensed Combined Statement of Operations. 37 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1998 1. Includes the results of Citizens Power, which had revenues of $26.4 million and EBITDA of $10.8 million for the period May 19, 1997 to March 31, 1998. 2. Reflects the Statement of Operations as if the Transactions had taken place effective April 1, 1997. (a) Reflects the impact of adjusting employee-related liabilities to their estimated fair value at the beginning of plan year based on a discount rate of 7.25%. The increased cost primarily relates to the elimination of unrecognized actuarial gains included in the historical combined financial statements. (b) Reflects an increase in depreciation depletion, and amortization expense due to the impact of fair valuing certain assets at purchase date. (c) Reflects the tax effects of the pro forma adjustments at a combined federal and state income tax rate of approximately 25% because the Company expects to be an alternative minimum tax ("AMT") tax payer for the forseeable future. (d) Reflects the additional interest expense resulting from the capitalization of fees and other deferred financing costs in conjunction with the Financings totaling $75.0 million, which will be amortized over approximately nine years. (e) Reflects the increase in interest expense associated with the Senior Credit Facilities, the Senior Notes and the Senior Subordinated Notes and other debt amortization costs related to the Transactions. For purposes of this calculation, the assumed interest rate is 8.00% for the Senior Credit Facilities and the yield interest rates of 8.92% for the Senior Notes and 9.67% for the Senior Subordinated Notes applied to the discounted value of the respective Notes. (f) Reflects the decrease in interest income, assuming no excess cash for investment. 3. EBITDA is defined as income before deducting interest expense, income taxes, depreciation, depletion and amortization and excludes any non-cash compensation expense related to management stock transactions. EBITDA has been reduced by costs associated with reclamation, retiree health care and workers' compensation. EBITDA is not a substitute for operating income, net income and cash flow from operating activities as determined in accordance with generally accepted accounting principles as a measure of profitability or liquidity. EBITDA is presented as additional information because management believes it to be a useful indicator of the Company's ability to meet debt service and capital expenditure requirements and because it is expected that certain debt covenants of the Company will utilize EBITDA to measure compliance with such covenants. Because EBITDA is not calculated identically by all companies, the presentation herein may not be comparable to other similarly titled measures of other companies. 4. For purposes of this computation, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of interest on indebtedness plus the interest component of lease rental expense. 5. For the purpose of this calculation, net debt consists of total debt less cash and cash equivalents of $98.9 million. Excludes $293.9 million of non- recourse indebtedness, $10.8 million of EBITDA and $60.4 million of cash of Citizens Power. 6. For the purpose of this calculation, cash interest expense represents total interest expense less non-cash interest charges, including amortization of deferred financing costs and imputed interest from the 5% Subordinated Note. Excludes $10.8 million of EBITDA for Citizens Power. 38 SELECTED COMBINED FINANCIAL DATA The following selected historical combined financial data for the year ended, and as of, March 31, 1998, for the six months ended, and as of, March 31, 1997 and for the years ended, and as of, September 30, 1996 and 1995 have been derived from, and should be read in conjunction with, the audited combined financial statements of the Company included elsewhere in this Prospectus which have been audited by Ernst & Young LLP, the Company's independent auditors. The table reflects the fact that effective with The Energy Group's spin-off from Hanson, the Company switched from a fiscal year ended September 30 to a fiscal year ended March 31. The unaudited selected combined financial data for the year ended, and as of, September 30, 1994 and 1993 and for the twelve months ended, and as of, March 31, 1997 have been derived from the Company's records. In the opinion of the Company's management, such unaudited financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position and results of operations as of the dates and periods indicated. The selected financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Combined Financial Statements of the Company and related notes included elsewhere in this Prospectus.
FISCAL YEAR TWELVE MONTHS SIX MONTHS FISCAL YEARS ENDED ENDED ENDED ENDED SEPTEMBER 30, ----------- ------------- ---------- --------------------------------------------------- MARCH 31, MARCH 31, MARCH 31, 1998(/1/) 1997 1997 1996 1995(/2/) 1994(/4/) 1993(/3/)(/4/) ----------- ------------- ---------- -------- --------- --------- -------------- (IN MILLIONS, EXCEPT RATIO) RESULTS OF OPERATIONS DA- TA: Tons Sold................ 167.5 167.4 81.4 163.0 151.0 101.6 85.7 Revenues................. $2,244.4 $2,242.3 $1,064.1 $2,193.6 $2,175.8 $1,844.4 $1,580.1 Cost of Goods Sold (includes depreciation, depletion and amortization)........... 1,913.4 1,941.6 924.7 1,891.4 1,861.8 1,631.6 1,482.8 -------- -------- -------- -------- -------- -------- -------- Gross Profit............. $ 331.0 $ 300.7 $ 139.4 $ 302.2 $ 314.0 $ 212.8 $ 97.3 Impairment of Long-Lived Assets(/5/)............. -- 890.8 -- 890.8 -- -- -- Selling and Administra- tive Expenses........... 83.6 80.7 41.4 75.7 81.3 73.1 69.0 Net Loss/(Gain) on Property and Equipment Disposals............... (21.8) (8.0) (4.1) (13.0) (12.9) (5.9) (6.8) -------- -------- -------- -------- -------- -------- -------- Operating Profit (Loss).. $ 269.2 $ (662.8) $ 102.1 $ (651.3) $ 245.6 $ 145.6 $ 35.1 ======== ======== ======== ======== ======== ======== ======== Net Income (Loss)........ $ 160.3 $ (449.3) $ 58.4 $ (446.3) $ 100.4 $ 79.4 $ (40.7) ======== ======== ======== ======== ======== ======== ======== OTHER FINANCIAL DATA: EBITDA (/6/)............ $ 471.8 $ 431.6 (/7/) $ 203.8 $ 437.4 (/7/) $ 435.9 $ 315.8 $ 163.3 Depreciation, Depletion and Amortization....... 202.6 203.6 101.7 197.9 190.3 170.2 128.2 Capital Expenditures Replacement of Equip- ment and Facilities............. $ 90.9 $ 89.1 $ 47.3 $ 88.7 $ 122.9 $ 77.3 $ 63.7 New Mine and Expanded Capacity............... 75.4 59.4 29.2 63.4 65.1 58.4 96.6 -------- -------- -------- -------- -------- -------- -------- Total Capital Expendi- tures................. $ 166.3 $ 148.5 $ 76.5 $ 152.1 $ 188.0 $ 135.7 $ 160.3 ======== ======== ======== ======== ======== ======== ======== Ratio of Earnings to Fixed Charges (/8/).. 5.77x -- 3.63x -- 3.63x 2.13x -- AS OF AS OF MARCH 31, MARCH 31, AS OF SEPTEMBER 30, ----------- ------------- ---------------------------------------------- 1998(/1/) 1997 1996 1995 1994 1993 ----------- ------------- ---------- -------- --------- --------- BALANCE SHEET DATA: Working Capital (defi- ciency)................ $ 535.9 $ 167.1 $ (129.5) $ (104.3) $ 280.5 $ 99.7 Total Assets............ 6,355.2 5,025.8 4,916.7 5,676.9 5,560.1 5,263.3 Recourse Debt........... 308.4 321.7 456.9 600.8 578.4 550.0 Non-Recourse Debt....... 293.9 -- -- -- -- -- Invested Capital........ 1,687.8 1,676.8 1,383.7 1,651.0 1,656.6 1,376.9
- ------- (1) Reflects the acquisition of Citizens Power effective May 19, 1997, including $10.8 million of EBITDA, $294.2 million of working capital, $1,448.5 million of total assets and $293.9 million of non-recourse indebtedness of Citizens Power as of March 31, 1998 and for the period May 19, 1997 to March 31, 1998. (2) Reflects the acquisition of the Caballo and the Rawhide coal mines in the Powder River Basin effective November 1994. (3) Reflects the acquisition of the Company's Australian and Lee Ranch operations effective April 1993 and June 1993, respectively. (4) The Company experienced a UMWA work stoppage from February 2, 1993 to December 16, 1993, which negatively impacted the Company's Peabody Coal Company and Eastern Associated Coal Corp. operations. (5) Represents a one-time non-cash charge made pursuant to SFAS 121, which had no effect on the Company's cash flow. (6) EBITDA is defined as income before deducting interest expense, income taxes, depreciation, depletion and amortization and excludes any non-cash compensation expense related to management stock transactions. EBITDA has been reduced by costs associated with reclamation, retiree health care and workers' compensation. EBITDA is not a substitute for operating income, net income and cash flow from operating activities as determined in accordance with generally accepted accounting principles as a measure of profitability or liquidity. EBITDA is presented as additional information because management believes it to be a useful indicator of the Company's ability to meet debt service and capital expenditure requirements and because it is expected that certain debt covenants of the Company will utilize EBITDA to measure compliance with such covenants. Because EBITDA is not calculated identically by all companies, the presentation herein may not be comparable to other similarly titled measures of other companies. (7) EBITDA for twelve months ended March 31, 1997 and the twelve months ended September 30, 1996 excluded an $890.8 million charge for Impairment of Long-Lived Assets. This is a one-time non-cash charge made pursuant to SFAS 121 which had no effect on the Company's cash flow. (8) For purposes of this computation, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of interest expense on all indebtedness plus the interest component of lease rental expense. Earnings were insufficient to cover fixed charges by $702.3 million, $702.5 million and $21.8 million for the twelve months ended March 31, 1997, the fiscal year ended September 30, 1996 and the fiscal year ended September 30, 1993, respectively, due to the SFAS 121 charges described above. 39 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with "Selected Combined Financial Data" and the audited and unaudited Combined Financial Statements of the Company and the notes thereto included elsewhere in this Prospectus. The financial statements contained in this Prospectus are of the Company's predecessors. Prior to March 7, 1997, the Company was a wholly-owned indirect subsidiary of Hanson. During 1996 and 1997, Hanson spun-off its operations into four separate companies. As part of this tax-free distribution plan, on February 24, 1997 Hanson spun off The Energy Group to hold the energy business of Hanson. In addition, on March 7, 1997, a subsidiary of Hanson sold the outstanding common stock of Peabody Holding Company to a subsidiary of The Energy Group and combined it with other Hanson energy companies, including Peabody Resources, in The Energy Group. GENERAL Peabody is the largest and one of the fastest growing private sector coal producers in the world. The Company currently owns and operates 24 mines in the United States and three mines in New South Wales, Australia and also sells coal produced by third-party contractors from reserves controlled by the Company. The Company's total U.S. and Australian annual sales have increased from 93.3 million tons in the year ended September 30, 1990 to 167.5 million tons in the year ended March 31, 1998 (81.4 million tons in the six months ended March 31, 1997). Management estimates the Company's U.S. market share has grown from 9% in the year ended September 30, 1990. For the year ended March 31, 1998, the Company's estimated U.S. market share was 14.4%. The Company's U.S. operations are managed through six principal units: Powder River Coal Company ("Powder River"), Peabody Western, Eastern Associated, PCC, Lee Ranch Coal Company ("Lee Ranch") and Patriot Coal Company ("Patriot Coal"). In 1997, the Company's 24 U.S. mines sold coal to more than 150 U.S. power plants, including many of the largest U.S. utilities. The Company's Australian subsidiary, Peabody Resources, is one of Australia's ten largest coal producers. Peabody Resources manages and owns or holds joint venture interests in three surface mines in New South Wales, Australia and the Company believes that it is well positioned to serve the growing market in the Pacific Rim. A fourth mine, Bengalla, is currently under development and is scheduled to begin operations in calendar year 1999. For the year ended March 31, 1998, the Company's share of sales from these mines totaled 7.3 million tons, and its share of the proven and probable reserves associated with these operations totaled 290 million tons. As of October 1, 1996, Peabody owned or controlled approximately 9.4 billion tons of proven and probable coal reserves, an increase from approximately 7.0 billion tons in 1990. The Company has the largest coal reserve base of any private sector coal producing company in the United States. The Company has a substantial base of low sulfur coal reserves, which consisted of approximately 4.4 billion tons as of October 1, 1996, and additional low sulfur coal reserves are available for lease from private parties or federal, state or tribal governments, especially in the Powder River Basin. A substantial portion of the remaining high sulfur coal reserves are located near coal-fired power stations which the Company believes may make them attractive for development because of lower transportation costs. The Clean Air Act Amendments limit the ability of some of the Company's customers to burn higher sulfur coals unless they install scrubbers or purchase emission allowances. The development of the Company's high sulfur coal reserves is dependent on the cost of such emission allowances, the cost and availability of low sulfur coal and whether electric utilities install scrubbers to meet the more stringent SO/2/ emissions requirements of Phase II of the Clean Air Act Amendment in 2000. Approximately 50% of the Company's current high sulfur coal production was sold to power plants which have already installed scrubbers. Approximately 92% of the Company's U.S. coal sales volume for the twelve months ended March 31, 1998 was sold to domestic electric utilities, approximately 5% was exported to electric utility and steel making customers and approximately 3% was sold to U.S. industrial customers. For the year ended March 31, 1998, 40 92% of Peabody's sales volume was sold under CSAs and as of March 31, 1998 the Company had CSAs for approximately 1.0 billion tons of coal. At March 31, 1998, Peabody's CSAs had terms ranging from one to 17 years, with an average volume-weighted remaining term of 5.7 years. Such contracts are negotiated in the ordinary course of business. Most of the Company's U.S. coal supply contracts which have terms greater than one year are subject to periodic price adjustments or "reopener" provisions under which the contract price is subject to periodic adjustment by either party to reflect the changes in the market price of coal. Furthermore, a majority of the Company's coal supply contracts with terms greater than one year currently have prices which exceed the price at which such coal could be sold in the spot market. Over the last few years, several of these contracts have been renegotiated, bringing the contract prices closer to the then current spot market prices, thus leading to a reduction in the revenues from such contracts. A similar reduction in contract prices has also been experienced in relation to the replacement of expiring contracts. The Company restructures its CSAs in the normal course of business. In connection with such restructurings, the Company recognized gains ranging from $4.4 million in fiscal 1993 to $49.3 million for the fiscal year ended March 31, 1998. There can be no assurance that the Company will be able to realize such gains in connection with future restructurings of CSAs. For the fiscal year ended March 31, 1998, approximately 73% of Peabody Resources' 7.3 million-ton share of coal produced by the Australian mines was sold under CSAs to the New South Wales power utility, Macquarie Generation. The remainder was exported to Pacific Rim countries. Coal from the Ravensworth and Narama mines is sold to Macquarie Generation under contracts which expire in 2000 and 2012, respectively. The contracts have price adjustment provisions which are based on the qualities of coal delivered and changes in indices of mining costs. All of the output from the Warkworth mine is exported; approximately 75% is sold under contracts, including contracts with the other joint venture partners in Warkworth, and approximately 25% is sold on the spot market. Peabody Resources' Australian export contracts normally provide for annual price renegotiations. To date, the effect of expiring and repriced contracts has been mitigated by lower operating costs and expansions and acquisitions that increased sales volumes. The Company believes that based on RDI's estimates of future coal prices and the Company's portfolio of CSAs, the adverse impact of expiring and repriced contracts will be smaller in the next five years than it was in the past five years. There can be no assurance that any reductions in revenues resulting therefrom will continue to be mitigated by improvements in productivity or increased sales volumes or will not be affected by greater than expected declines in coal prices. The following table indicates the recent historical trends in spot market pricing by supply region in the United States for the coal industry. HISTORICAL STEAM COAL SPOT PRICES (Nominal Dollars per Ton, Free on Board at Mine)
POUNDS BTUS SO/2/ PER MILLION ESTIMATED REGION/BASIN PER POUND BTUS 1995 1996 1997 - -------------------------- --------- ----------------- ------ ------ --------- Central Appalachia........ greater than 12,500 less than or equal to 1.2 $25.00 $26.78 $27.16 greater than 12,500 1.21-1.70 24.63 25.04 25.53 greater than 12,500 1.71-2.5 24.27 24.81 25.42 less than 12,500 less than or equal to 1.2 22.06 23.98 24.42 less than 12,500 1.21-1.70 21.17 22.93 23.35 less than 12,500 1.71-2.5 21.13 21.80 22.18 Northeastern Appalachia... greater than 12,750 1.2-2.5 $22.62 $22.70 $23.20 greater than 12,750 greater than 2.5 21.92 21.28 21.46 Illinois Basin............ greater than 11,000 greater than 2.5 $18.62 $18.65 $18.99 less than 11,000 greater than 2.5 17.17 17.15 17.22 Southern Powder River Ba- sin...................... greater than 8,800 less than or equal to 1.2 $ 4.34 $ 4.00 $ 4.00 less than 8,800 less than or equal to 1.2 3.27 3.14 3.12 Northern Powder River Ba- sin...................... greater than 8,800 less than or equal to 1.2 $ 6.09 $ 6.25 $ 6.25 Four Corners.............. greater than 9,500 less than or equal to 1.2 $13.79 $13.81 $14.14
- -------- Source: RDI, Outlook for Coal, Winter 1996 -1997. 41 ACQUISITION OF CITIZENS POWER In May 1997, all of the common membership interests in Citizens Power and its subsidiaries were acquired. Citizens Power markets and trades electric power, other energy-related commodities and power-related commodity risk management products. Citizens Power also provides energy contract restructuring services to the electric power industry. The acquisition of Citizens Power was accounted for as a purchase and, accordingly, the Company's combined financial statements include the operating results of Citizens Power from the closing date forward. RESULTS OF OPERATIONS The following table summarizes the results of operations for the fiscal years ended September 30, 1996 and 1995, the six months ended March 31, 1997 and 1996 and the fiscal year ended March 31, 1998 and the twelve months ended March 31, 1997.
FISCAL YEARS UNAUDITED SIX MONTHS ENDED ENDED TWELVE MONTHS -------------------- SEPTEMBER 30, FISCAL YEAR ENDED UNAUDITED ------------------ ENDED MARCH MARCH 31, MARCH 31, MARCH 31, 31, 1998 1997 1997 1996 1996 1995 ----------- ------------- --------- --------- -------- -------- (IN MILLIONS) Tons Sold............... 167.5 167.4 81.4 77.0 163.0 151.0 Revenues................ $2,244.4 $2,242.3 $1,064.1 $1,069.9 $2,193.6 $2,175.8 Cost of Goods Sold (in- cludes depreciation, depletion and amortiza- tion).................. 1,913.4 1,941.6 924.7 933.1 1,891.4 1,861.8 -------- -------- -------- -------- -------- -------- Gross Profit............ $ 331.0 $ 300.7 $ 139.4 $ 136.8 $ 302.2 $ 314.0 Impairment of Long-Lived Assets(/1/)............ -- 890.8 -- -- 890.8 -- Selling and Administra- tive Expenses.......... 83.6 80.7 41.4 39.9 75.7 81.3 Net Loss/(Gain) on Prop- erty and Equipment Disposals.............. (21.8) (8.0) (4.1) (9.1) (13.0) (12.9) -------- -------- -------- -------- -------- -------- Operating Profit (Loss)................. $ 269.2 $ (662.8) $ 102.1 $ 106.0 $ (651.3) $ 245.6 ======== ======== ======== ======== ======== ========
- -------- (1)Represents a one-time non-cash charge pursuant to SFAS 121 which had no effect on the Company's cash flow. Fiscal Year Ended March 31, 1998 Compared with Twelve Months Ended March 31, 1997 For the year ended March 31, 1998, the Company had revenues of $2.2 billion and operating profit of $269.2 million. The 1998 revenues were $2.1 million higher and operating profit increased $931.9 million compared to the same period in the prior year. The lower earnings in 1997 primarily resulted from a one-time non-cash charge of $890.8 million due to the adoption of the valuation methodology of SFAS 121, which related to the impairment of certain inactive and undeveloped coal reserves. Excluding the impact of this charge, operating income would have been $228.1 million for the twelve months ended March 31, 1997. Coal sales of 167.5 million tons for the fiscal year ended March 31, 1998 approximated volume for the year ended March 31, 1997. Low sulfur coal sales represented 81% of total sales volume for the fiscal year ended March 31, 1998 and sales under CSAs of one year or more represented 92% of sales volume for the same period. Management estimates the Company had a U.S. market share of approximately 14.4% during the period. The Company's mines in Australia had coal sales of 7.3 million tons for both the fiscal year ended March 31, 1998 and the twelve months ended March 31, 1997. Revenues of $2.2 billion for the fiscal year ended March 31, 1998 increased $2.1 million compared to the prior year, primarily as a result of restructuring the Tucson Electric Power contract at the Company's Lee Ranch operation ($49.3 million additional revenue in that period) partially offset by lower export pricing and softer markets in Australia and the Power River Basin. The Company also realized $11.6 million in gains from a CSA restructuring for the twelve months ended March 31, 1997. 42 Operating profit of $269.2 million for the fiscal year ended March 31, 1998 was $41.1 million more than the prior year, excluding the $890.8 million SFAS 121 charge. The improved earnings were primarily due to recognizing $49.3 million gain on the Tucson Electric Power contract restructuring combined with $8.4 million of operating profit contributed by Citizens Power from power trading and price risk management activities during the period and increased gains on property sales. Operating difficulties at the Eastern Associated mines, lower export pricing and lower prices in the Powder River Basin adversely impacted operating income. The Company's productivity in the United States remained strong, with an average of almost 92 tons per manshift for the period, while the Australian operations increased productivity by approximately 7% over the prior year. This had the effect of increasing gross profit margins (excluding Citizens Power) to 14.5% of revenues for the fiscal year ended March 31, 1998 as compared to 13.3% for the prior year. Selling and administrative expenses were 3.7% of revenues in 1998 compared to 3.6% in the prior year. The net gain on property and equipment disposals was $15.8 million favorable to the prior year primarily due to a $14.7 million gain on a sale of property. The Company's Australian operations contributed $44.8 million of operating profit for the fiscal year ended March 31, 1998 and $47.4 million in the prior year. Effective January 1998, a subsidiary of the Company purchased an additional 10% interest in Black Beauty Coal Company for $37.7 million in cash and as a result, increased its ownership in the partnership to 43.3%. Six Months Ended March 31, 1997 Compared with Six Months Ended March 31, 1996 For the six months ended March 31, 1997, the Company had revenues of $1.1 billion and operating profit of $102.1 million. Revenues and operating profit were slightly lower ($5.8 million and $3.9 million, respectively) compared to the six months ended March 31, 1996. The impact of the increased sales volume of 4.4 million tons during the six months ended March 31, 1997 was more than offset by unfavorable pricing variances and lower gains from surplus property sales as compared to the prior period. Coal sales of 81.4 million tons for the six months ended March 31, 1997 increased 6% from 77.0 million tons for the six months ended March 31, 1996. The higher volume was primarily from the Powder River operations, as volumes were increased over 10% due to improved customer demand and the installation of a crusher conveyor system. The Company's mines in Australia had coal sales of 3.5 million tons for the six months ended March 31, 1997, an increase of 19% from the previous period, resulting from favorable customer demand. Low sulfur coal sales represented 81% of total sales volume for the six months ended March 31, 1997 and sales under CSAs represented 89% of total sales volume in that period. Revenues of $1.1 billion for the six months ended March 31, 1997 decreased slightly from the six months ended March 31, 1996. The positive impact of a 6% growth in sales volume was more than offset by a decline in pricing during the period. The decline in pricing was primarily at Powder River as expiring and repriced contracts and a soft spot market reduced the average price per ton. The Company also realized gains from CSA restructurings were $11.6 million and $22.0 million for the six month period ended March 31, 1997 and 1996, respectively. Operating profit of $102.1 million was $3.9 million lower than for the six months ended March 31, 1996. The Company's cost reduction measures and productivity (i.e. tons per manshift) enhancements continued to have a positive impact on operating profit which was more than offset by a decline in coal prices and lower gains from surplus property sales. The success of the cost reduction initiative improved productivity approximately 13%, with the Company's U.S. operating companies averaging 93 tons per employee per manshift for the six month period which represented a Company record. The Company's Australian productivity also showed significant improvement increasing more than 17% from the equivalent period in the previous year. This had the impact of improving gross profit margins to 13.1% of revenues for the six months ended March 31, 1997 as compared to 12.8% of revenues for the six months ended March 31, 1996. Selling and administrative expenses remained substantially stable at 3.9% and 3.7% of revenues for 1997 and 1996, respectively. The Company's Australian operations contributed $22.3 million of operating profit in the six months ended March 31, 1997, up from $16.1 million for the comparable period in 1996. 43 Fiscal Year Ended September 30, 1996 Compared with Fiscal Year Ended September 30, 1995 For the fiscal year ended September 30, 1996, the Company had revenues of $2.2 billion and an operating loss of $651.3 million. The 1996 revenues increased $17.8 million from 1995 levels, while operating profit decreased $896.9 million from 1995. The lower earnings in 1996 were primarily due to a one-time, non-cash charge of $890.8 million as a result of adopting the valuation methodology of SFAS 121, principally related to the impairment of certain inactive and undeveloped coal reserves, primarily high sulfur coal reserves affected by the Clear Air Act Amendments. See note 1 to Combined Financial Statements. Excluding the impact of this charge, operating income would have been $239.5 million for the fiscal year ended September 30, 1996. Coal sales of 163.0 million tons in the fiscal year ended September 30, 1996 increased 8% from 151.0 million tons in the fiscal year ended September 30, 1995. The higher volume was primarily attributable to an 18.5% increase in the Company's Powder River Basin production volume including a full year's contribution from the Caballo and Rawhide mines acquired in November 1994. The Company's Australian operations sold 6.7 million tons of coal in the fiscal year ended September 30, 1996, compared to 7.3 million tons in 1995. The Company's overall production reflected the impact of its continued investment aimed at improving productivity, in particular at Powder River. Low sulfur coal sales represented 82% of total sales volume in the year ended September 30, 1996, up from 80% in 1995. Sales under long-term contracts represented 88% of sales volume in 1996 and management estimates the Company's market share in the United States rose from 14% in the fiscal year ended September 30, 1995 to 15% in the fiscal year ended September 30, 1996. Revenues were $2.2 billion in the fiscal year ended September 30, 1996, which were $17.8 million higher than revenues for the fiscal year ended September 30, 1995. The positive impact of higher sales volumes in 1996 was offset by lower pricing of three high sulfur coal contracts at PCC (estimated at $25 to $30 million) as price per ton was 10% lower than the prior year. Revenues were also adversely affected by reduced demand at the Company's western operations, as customers purchased lower priced hydro-electric generation that was available due to unusually high rain and snowfall in the western United States. Stabilizing spot prices in the higher sulfur markets in the last six months of the year also favorably impacted profits. The Company also realized gains from CSA restructurings totaling $22.0 million and $23.9 million for the fiscal years ended September 30, 1996 and 1995, respectively. Excluding the one-time, non-cash charge of $890.8 million arising from the implementation of SFAS 121, operating income of $239.5 million for the fiscal year ended September 30, 1996 decreased $6.1 million from $245.6 million for the fiscal year ended September 30, 1995. The 1996 operating results were affected by lower customer demand at the Company's western operations, the re- pricing of certain high sulfur coal contracts (which management estimates accounted for a decrease in profit of $25 to $30 million) and operational difficulties at PCC and Eastern Associated during the first nine months of the year. Offsetting the above impacts was a reduction in costs due to measures implemented during 1996 as part of continuing efforts to reduce production costs. These included employee reductions, improvements in working practices permitted under new union contracts and the effects of investment in more efficient equipment. The success of the Company's cost reduction initiatives was evidenced by an improvement in productivity, as tons per manshift improved 17% in absolute terms over 1995 and 3% on a weighted average mine by mine basis taking into account the shift in sources of production. Operating profit in 1996 also included the benefit of $23.3 million related to the reversal of an excess accrual of the Company's liability for the UMWA Combined Fund established under the Coal Industry Retiree Health Benefit Act of 1992 (the "Coal Act"). This reversal resulted from the Company's successful appeal of U.S. government beneficiary assignments and its active participation in the administrative process with respect to this fund. The effect of these items was to reduce gross profit margins to 13.8% in 1996 from 14.4% of revenues for 1995. Selling and administrative costs were $5.6 million lower than in 1995 as the Company continued to streamline and consolidate support functions. As a percentage of revenues, selling and administrative expenses were 3.7% in 1995 and 3.5% in 1996. The Company's Australian operating profits of $48.5 million for the fiscal year ended September 30, 1996 increased from $37.9 million for the fiscal year ended September 30, 1995. The improved earnings were primarily related to increased volume of mining services projects during 1996. 44 INCOME TAXES Since March 7, 1997, the Company has filed one consolidated U.S. federal income tax return with its subsidiaries. At March 31, 1998, U.S. federal and state income taxes were determined on that basis. Prior to March 7, 1997, the Company consisted of two separate U.S. federal consolidated groups, Peabody Holding Company and Peabody Investments, Inc., parent of Gold Fields ("Peabody Investments"). For the fiscal years ended September 30, 1996 and 1995, Peabody Holding Company and its subsidiaries were included in a consolidated federal income tax return with other Hanson affiliates. Peabody Holding Company had a tax sharing arrangement with Hanson whereby federal income taxes were computed as part of a consolidated group of companies. For purposes of these financial statements, Peabody Holding Company determined its federal tax provision (benefit) based on its expected allocated share of the consolidated group tax position. State taxes were determined on a separate return basis. Under the tax sharing arrangement, Hanson allocated the consolidated federal income tax liability to the members of the consolidated group by applying a ratio of each member's separate taxable income to the sum of the separate taxable incomes of all members having taxable income for the years. If the consolidated group had taxable income, a member having a taxable loss did not receive a benefit for that loss. If the consolidated group had a taxable loss, only members having a taxable loss received a benefit for that loss. Peabody Investments was the common parent of a separate consolidated tax group. The group included its interest in the operations of Hanson Natural Resources Company ("HNRC"). HNRC was a partnership which historically included the operations of Lee Ranch, Cavenham Timber and Western Rock Quarries. For purposes of these statements, Peabody Investments determined its federal and state tax provision as if Lee Ranch was the only operation included for the fiscal years ended September 30, 1996 and 1995. The following summarizes the Company's effective tax rates for the periods indicated: Fiscal year ended March 31, 1998...................... 36.0% Six months ended March 31, 1997....................... 32.0% Fiscal years ended: September 30, 1996.................................. 36.5% September 30, 1995.................................. 47.9%
As indicated in the notes to the Combined Financial Statements, the effective tax rates are impacted significantly by changes in valuation allowances, statutory depletion in excess of book depletion and the effect of tax sharing agreements. The Company and its U.S. subsidiaries are expected to be AMT taxpayers prospectively due primarily to the percentage depletion tax deduction. As a result of its AMT status, the Company and its subsidiaries' expected federal and state current income tax provision rate is 12%. The expected federal and state deferred income tax provision rate is 13% for a projected combined federal and state gross income tax provision rate of 25%. Pursuant to The Energy Group spin-off from Hanson in February 1997, The Energy Group entered into Tax Sharing Agreements (each, a "TSA") with both Hanson and Millennium Chemicals Inc. ("Millennium"), a former Hanson company. Hanson has agreed to indemnify The Energy Group for all Peabody Investments' federal and state income tax liabilities arising prior to February 25, 1997, with the exception of those liabilities arising from the operations of Lee Ranch subsequent to its acquisition in June 1993. The Millennium TSA requires Millennium to indemnify The Energy Group and its subsidiaries for all federal income tax liabilities arising from tax years in which Peabody Holding Company and its subsidiaries were members of Hanson's Anglo-American affiliated group (July 3, 1990 through September 30, 1996). With respect to state income taxes, the Millennium TSA indemnifies The Energy Group for Arizona income taxes in the years in which Peabody Holding Company and subsidiaries filed a consolidated return with the Anglo-American group (fiscal years 1994 to 1996). 45 Peabody Holding Company and its subsidiaries have AMT credit carryforwards of approximately $50.6 million (as of the tax year ending June 30, 1997) but are limited to utilization against regular tax liabilities generated by Peabody Holding Company and its subsidiaries' members. As a result, the deferred asset representing the AMT credits is fully offset with a valuation allowance. Peabody Holding Company and its subsidiaries currently have regular tax net operating loss ("NOL") carryforwards of $48.7 million and AMT NOL's of $18.9 million (as of the tax year ending June 30, 1997). All except $4.7 million of the regular tax NOL and $0.7 million of the AMT NOL are limited to utilization against income generated by Peabody Holding Company and its subsidiaries. Deferred tax assets representing the NOLs are fully offset with valuation allowances. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities for the year ended March 31, 1998 was $181.7 million, a decrease of $141.6 million from net cash provided by operating activities for the twelve months ended March 31, 1997. This decrease was primarily due to lower earnings from mining activities and increased working capital requirements due to Citizens Power. Net cash provided by operating activities was $62.8 million for the six months ended March 31, 1997. Net cash provided by operating activities was $211.5 million for the year ended September 30, 1996, compared to $272.5 for the year ended September 30, 1995. The decrease between 1996 and 1995 resulted principally from an increase in working capital requirements. Net cash used in investing activities for the year ended March 31, 1998 was $129.9 million compared to $106.6 million for the year ended March 31, 1997. This increase was primarily the result of increased capital expenditures of $27.8 million, a $20.8 million cash payment for the acquisition of Citizens Power and the $37.7 million cash payment for the additional interest in Black Beauty Coal Company which was partially offset by $57.5 million in proceeds from CSA restructurings. Net cash used in investing activities was $56.2 million for the six months ended March 31, 1997. In the year ended September 30, 1996, net cash used in investing activities was $105.6 million, a decrease of $356.5 million compared to the year ended September 30, 1995. The decrease between 1996 and 1995 was primarily the result of the acquisition of the Caballo and Rawhide coal mines in 1995 for $356.2 million. In addition, approximately $59.6 million in proceeds from contract renegotiations and the sale of a business unit were received in 1995, which was partially offset by a cash settlement received totaling $6.1 million for an arbitrated dispute with a customer for payment of retiree health care and reclamation liabilities under a CSA in 1994. The Company made capital expenditures of $166.3 million and $148.5 million for the years ended March 31, 1998 and 1997, respectively, and $76.5 million in the six months ended March 31, 1997. Capital expenditures totaled $152.1 million and $188.0 million for the years ended September 30, 1996 and 1995, respectively. Of the $166.3 million in capital expenditures for the year ended March 31, 1998, $90.9 million was for replacement capital and $75.4 million was for expanding capacity and developing mines. The Company expects to make $208.1 million of capital expenditures in the twelve months ending March 31, 1999, of which $89.5 million will be for replacement of equipment and facilities and $118.6 million will be for expanding capacity and developing new mines, primarily the new Bengalla mine in Australia. Net cash used in financing activities for the year ended March 31, 1998 was $235.4 million, primarily for dividends and loans to The Energy Group. Net cash provided by financing activities was $94.2 million for the six months ended March 31, 1997. Net cash provided by financing activities was $16.0 million for the year ended September 30, 1996, compared with $179.0 million provided by financing activities for the year ended September 30, 1995, principally representing the contribution to invested capital by Hanson for the acquisition of the Caballo and the Rawhide coal mines in 1995. The Company has five qualified single employer defined benefit pension plans, which the Pension Benefit Guaranty Corporation ("PBGC") calculated as being underfunded. As a result, the Company has entered into an agreement with the PBGC to alleviate the underfunding of Peabody Holdings' pension plans, pursuant to which the Company has agreed to: (i) accelerate minimum funding payments that the Company would otherwise 46 be required to make during 1998, (ii) make certain contributions in excess of such minimum funding and (iii) provide a letter of credit to support a fraction of the pension plans' unfunded liabilities. FINANCING ARRANGEMENTS Prior to the Acquisition, the Company financed its operations and capital and other expenditures through a combination of cash generated from operations, external borrowings, operating leases and loans and invested capital provided most recently by The Energy Group, and prior to February 1997, from Hanson or its U.S. affiliates. The Company's ability to generate cash from operations depends upon numerous factors, some of which are outside the control of the Company, including economic, climatic and geological conditions and changes in taxation regimes in the United States, Australia and other countries in which the Company operates. Historical interest expense, net of interest income, was as follows for the periods indicated (in millions): Fiscal year ended March 31, 1998................................ $18.7 Six months ended March 31, 1997................................. 16.1 Fiscal years ended: September 30, 1996.......................... 51.2 September 30, 1995........................................ 52.9
Third-party long-term debt has remained relatively stable throughout the periods, with the exception of 1997, when Citizens Power, through its subsidiaries, incurred substantial indebtedness in its operations, primarily on a non-recourse basis. In 1996 debt owed to Hanson was converted into equity, resulting in a reduction of interest expense. In addition, the Company received a cash contribution in 1995 which resulted in substantial cash balances on which the Company earned income. As a result of the Acquisition, the Company has substantial indebtedness and significant debt service obligations. As of March 31, 1998, after giving pro forma effect to the Transactions, the Company would have had total indebtedness of approximately $2,098.0 million of which (i) $920.0 million consists of indebtedness under the Senior Credit Facilities, (ii) $398.8 million consists of the Senior Notes, (iii) $498.6 million consists of the Senior Subordinated Notes and (iv) $280.6 million consists of existing indebtedness. The Indentures governing the Senior Notes and Senior Subordinated Notes permit the Company and its Restricted Subsidiaries to incur additional indebtedness, including secured indebtedness, subject to certain limitations. As of March 31, 1998, after giving pro forma effect to the Transactions, the aggregate of Citizens Power's indebtedness that is non recourse and Peabody Resources' Australian indebtedness was $370.8 million. In addition, the Senior Credit Facilities contain additional and more restrictive covenants and will require the Company to maintain specified financial ratios and satisfy certain tests relating to its financial condition. See "Risk Factors" and "Description of Certain Indebtedness." After giving pro forma effect to the Transactions as of March 31, 1998, the Company's ratio of earnings to fixed charges would have been 1.06x. The Company is continually engaged in evaluating potential acquisitions. The Company expects that funding for future acquisitions may come from a variety of sources, depending on the size and nature of any such acquisitions. Potential sources of capital include cash generated from operations, borrowings under the Revolving Credit Facility, additional equity investments from Lehman Merchant Banking and other external debt or equity financing. There can be no assurance that such additional capital sources will be available to the Company on terms which the Company finds acceptable, or at all. In connection with the Acquisition, the Company entered into the Senior Credit Facilities which include a Revolving Credit Facility, providing for aggregate borrowings of up to $480.0 million including letters of credit of $330.0 million. Interest rates on the revolving loans under the Revolving Credit Facility are based on the Base Rate (as defined in the Senior Credit Facilities), or LIBOR (as defined in the Senior Credit Facilities) at the Company's option. The Revolving Credit Facility commitment matures six years after the consummation of the Financings. The Revolving Credit Facility and related Term Loan Facility contain certain restrictions and limitations including but not limited to financial covenants that will require the Company to maintain and achieve certain levels of financial performance and limit the payment of cash dividends and similar restricted payments. 47 The following table sets forth the amortization schedule for the Senior Credit Facilities:
AMORTIZATION TERM LOAN A TERM LOAN B ------------ ----------- ----------- (IN MILLIONS) Year 1 $ 10.0 $ 6.5 Year 2 15.0 6.5 Year 3 20.0 6.5 Year 4 50.0 6.5 Year 5 75.0 6.5 Year 6 100.0 6.5 Year 7 -- 100.0 Year 8 -- 511.0 ------ ------ $270.0 $650.0 ====== ======
The Company's ability to pay principal and interest or Liquidated Damages, if any, on each series of the Notes and to satisfy its other debt service obligations or to fund planned capital expenditures will depend upon the future operating performance of its subsidiaries, which will be affected by prevailing economic conditions in the markets they serve and financial, business and other factors, certain of which are beyond their control. Based upon the current level of operations, management believes that cash flow from operations and available cash, together with available borrowings under the Revolving Credit Facility, will be adequate to meet the Company's future liquidity needs for at least the next several years. There can be no assurance that the Company's business will generate sufficient cash flow from operations or that future borrowings will be available under the Senior Credit Facilities in an amount sufficient to enable the Company to service its indebtedness, including each series of the Notes, or to fund its other liquidity needs. The Company may need to refinance all or a portion of the principal of each series of the Notes on or prior to maturity. There can be no assurance that the Company will be able to effect any such refinancing on commercially reasonable terms or at all. See "Risk Factors." CONTINGENCIES--CERTAIN ENVIRONMENTAL MATTERS The Company's operations are subject to extensive and changing regulations in the United States and Australia regarding environmental matters. As of March 31, 1998, the Company had accrued $445.1 million for reclamation and environmental obligations. The Company's expenditures relating to reclamation and environmental matters were approximately $39.1 million for the year ended March 31, 1998, $20.4 million for the six months ended March 31, 1997, and $70.5 million and $64.4 million for the years ended September 30, 1996 and 1995, respectively. Gold Fields, its predecessors and its former parent company are or may become parties to environmental proceedings which have commenced or may commence in the United States in relation to certain sites previously owned or operated by those entities or companies associated with them. The Company has agreed to indemnify Gold Fields' former parent company for any environmental claims resulting from any activities, operations or conditions that occurred prior to the sale of Gold Fields to the Company. Gold Fields is currently involved in environmental investigation or remediation at six sites and is a defendant in litigation with private parties involving three other sites. These nine sites were formerly owned or operated by Gold Fields. The EPA has placed three of these sites on the National Priorities List, promulgated pursuant to CERCLA, and one of the sites is on a similar state priority list. There are a number of further sites in the United States which were previously owned or operated by such companies and which could give rise to environmental proceedings in which Gold Fields could incur liabilities. Where such sites were identified, the directors of The Energy Group commissioned, in connection with the spin-off of The Energy Group, a review of publicly available information by independent environmental consultants in order to assess the estimated total amount of the liability per site and the proportion of those 48 liabilities which Gold Fields is likely to bear. The available information on which to base this review was very limited because all of the sites except for three (on which no remediation is currently taking place) are no longer owned by Gold Fields. On the basis of that review, The Energy Group provided for an aggregate of $73.6 million as of March 31, 1998 for the above environmental liabilities relating to Gold Fields. Significant uncertainty exists as to whether these claims will be pursued against Gold Fields in all cases, and if they are pursued, the amount of the eventual costs and liabilities, which could be greater or less than this provision. As of March 31, 1998, the provision was reduced to $68.6 million (which is included in the overall liability of $445.1 million) to reflect expenditures incurred during such period. The Company believes that the remaining amount of the provision is adequate to cover these environmental liabilities. See note 18 to the Combined Financial Statements included herein. Although waste substances generated by coal mining and processing are generally not regarded as hazardous substances for the purposes of CERCLA, some products used by coal companies in operations, such as chemicals, and the disposal of such products, are governed by the statute. Thus, coal mines currently or previously owned or operated by the Company, and sites to which the Company sent waste materials, may be subject to liability under CERCLA and similar state laws. While the Company believes that it has identified costs likely to be incurred for environmental matters and that those costs are not likely to have a material adverse effect upon the Company's business or financial position, there can be no assurance that the Company's total costs and liabilities for environmental matters will not increase in the future. The magnitude of such additional liabilities and the costs of complying with environmental laws and containing or remediating contamination cannot be predicted with certainty due to the lack of specific information available with respect to many sites, the potential for new or changed laws and regulations and for the development of new remediation technologies and the uncertainty regarding the timing of work with respect to particular sites. As a result, there can be no assurance that material liabilities or costs related to environmental matters will not be incurred in the future or that the Company's liquidity will not be adversely impacted by such environmental liabilities or costs. FOREIGN CURRENCY The functional currency of the Company's Australian operations is the local currency except that all export sales, which accounted for 25% of the Company's Australian sales by volume in 1998, were priced in U.S. dollars. Assets and liabilities of the Company's Australian operations are generally translated at current exchange rates and related translation adjustments are reported as a component of invested capital. Income statement accounts are translated at the average rates during the period. In recent years, the value of the Australian Dollar versus the U.S. Dollar has declined as summarized below: AUSTRALIAN DOLLAR VS. US DOLLAR
AVERAGE CURRENT ------- ------- March 1998...................................................... .7188 .6720 March 1997...................................................... .7863 .7838 September 1996.................................................. .7703 .7548
The impact of the currency translation in combining the results of operations and financial position of such operations has not been material to the financial position of the Company. INFLATION Inflation in the United States has been relatively low in recent years and did not have a material impact on the Company's results of operations for the year ended March 31, 1998, the twelve months ended March 31, 1997, the six months ended March 31, 1997, or the years ended September 30, 1996 or 1995. 49 IMPACT OF YEAR 2000 ISSUE Some of the Company's older computer programs were written using two digits rather than four to define the applicable year. As a result, those computer programs have time-sensitive software that recognizes a date using "00" as the year 1900 rather than the year 2000. This could cause a system failure or miscalculations resulting in disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices or engage in similar normal business activities. The Company has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter. The total cost of the project associated with the Year 2000 Issue is estimated at approximately $6.3 million, which includes $1.4 million for the purchase of new software and hardware that will be capitalized and $4.9 million that will be expensed as incurred. To date, the Company has incurred and expensed approximately $0.4 million primarily for assessment of the Year 2000 Issue and the development of a modification plan. The project is estimated to be completed no later than June 30, 1999. The Company believes that with modifications to existing software and conversion to new software, the Year 2000 Issue will not present significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Company. The costs of the project and the date on which the Company believes it will complete the appropriate modifications to deal with the Year 2000 Issue are based on management's best estimates, which were derived utilizing numerous assumptions of future events. However, there can be no assurance that these estimates will be achieved. REORGANIZATION PLANS The Company has recently announced a new organizational structure for its U.S. operations. The objective of the new structure is to become a more innovative, agile organization to reduce costs, and to assure that the administrative and support function reside at the appropriate levels of the organization. Under the new organizational structure, operating units (single mines or groups of mines) will report to group executives by region, under the leadership of the President and Chief Operating Officer. Commercial activities, including sales and marketing, mining, business development, land and resource management and commercial services will be under the Chief Commercial Officer. Technical, transactional and administrative support functions will be consolidated as shared services in St. Louis with some functions residing in Charleston, West Virginia, and Gillette, Wyoming. The new structure, which the Company intends to implement by September 30, 1998, is expected to streamline decision making and reporting. It is also expected to result in a reduction of approximately 100 administrative and other support positions throughout the Company, in the closing of offices in Henderson, Kentucky, and Flagstaff, Arizona, and reductions in staffing in the Charleston and Gillette offices. RECENT ACCOUNTING PRONOUNCEMENTS In June 1997, SFAS No. 130, "Reporting Comprehensive Income" was issued which establishes new rules for the reporting and display of comprehensive income and its components. The Company intends to adopt this statement for its 1999 fiscal year.q Also in June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS 131") was issued which establishes standards for disclosure about operating segments in annual financial statements and selected information in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas and major customers. This statement supersedes 50 SFAS No. 14, "Financial Reporting for Segments of a Business Enterprise." The new standard becomes effective for the Company's 1999 fiscal year and requires comparative information from earlier years be restated to conform to requirements of this standard. The Company is evaluating the requirements of SFAS 131 and the effects, if any, on the Company's current reporting and disclosures. In February 1998, SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" was issued which improves and standardizes disclosures by eliminating certain existing reporting requirements and adding new disclosures. The statement addresses disclosure issues only and does not change the measurement of recognition provisions specified in previous statements. The statement supercedes SFAS No. 87, "Employers' Accounting for Pensions," SFAS No. 88, "Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits" and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." The Company intends to adopt this statement for its 1999 fiscal year. In June 1998, SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133") was issued which establishes accounting and reporting standards for derivative instruments and for hedging activities. This Statements amends FASB Statement No. 52, Foreign Currency Translation, to permit special accounting for a hedge of a foreign currency forecasted transaction with a derivative. It supersedes FASB Statements No. 80, Accounting for Future Contracts, No. 105, Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk, and No. 119, Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments. It amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to include in Statement 107 the disclosure provisions about concentrations of credit risk from FASB Statement No. 105. This Statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. The Company is evaluating the requirements of SFAS 133 and the effect, if any, on the Company's current reporting and disclosures. 51 COAL INDUSTRY OVERVIEW The information provided in "Coal Industry Overview" regarding future coal consumption was obtained from the Energy Information Administration ("EIA"), the independent statistical and analytical agency within the U.S. Department of Energy, and RDI. The assumptions upon which EIA's forecasts are based include, among other things, assumptions regarding trends in various economic sectors (residential, transportation, industrial, etc.), economic growth rates, technological improvements and demand for other energy sources and are described more fully in EIA's Annual Energy Outlook 1997. RDI does not set forth the assumptions upon which their projections are based. Although the Company believes that these sources are reliable, it can give no assurance that such projections will prove to have been correct. See "Risk Factors." INTRODUCTION Coal is one of the world's major energy sources whose primary role is to provide fuel for the generation of electricity. According to the EIA, in 1995 26% of the world's primary energy supply came in the form of coal and coal was responsible for approximately 37% of the world's electricity generation. In the United States, coal's share of the domestic primary energy supply was 31% in 1995, while coal's share of U.S. electricity generation has risen consistently to a record level of 57% in 1997. The major coal producers in the world are China, the United States, Russia, Ukraine, India and Australia, although coal is produced in some 60 countries worldwide. The United States enjoys the world's largest reserve base, with an estimated 29% of the world's recoverable bituminous and subbituminous coal reserves, followed by the former Soviet Union, China, India, South Africa and Australia. An estimated 70% of the world's fossil energy resources are in the form of coal. The U.S. coal industry operates under a highly developed regulatory regime which governs all mining and mine safety activities, including environmental issues and land reclamation after completion of mining activities. These include laws requiring that mined lands be restored to a condition equal to or better than that existing before mining. While inherently dangerous, coal mining in the United States has become a relatively safe occupation, relying on sophisticated technology and a skilled work force to become one of the safest, most productive coal markets in the world. See "Regulatory Matters." The coal industry has been heavily influenced in recent years by significant gains in coal mine productivity, changes in air quality laws, growth in utility coal consumption and industry consolidation. According to the U.S. Department of Labor, the number of operating mines declined 51% over the last ten years, while overall coal production increased approximately 20%. During the same period, average coal mine productivity has nearly doubled due to changes in work practices, new technologies and an increase in production in Wyoming's Powder River Basin coal region, where thick, easily accessible coal seams result in high productivity. The overall productivity gains have contributed to stability in coal prices in recent years. A major trend in the industry has been the shift to low sulfur coal production, driven by the Clean Air Act Amendments, which imposed significant restrictions on SO/2/ emissions from coal-fired power plants. COAL CHARACTERISTICS There are four types of coal: lignite, subbituminous, bituminous and anthracite. Each has characteristics that make it more or less qualified for different end uses. In general, coal of all geological composition is characterized by end use as either "steam coal" or "metallurgical coal," sometimes known as "met coal." Steam coal is used by utilities for electricity generation and by industrial facilities to produce steam, electricity or both. Metallurgical coal is refined into coking coal, which is used in the production of steel. Heat value and sulfur content, the most important variables in the profitable marketing and transportation of coal, determine the best end use of a particular type of coal. Heat Value The heat value of coal is commonly measured in British thermal units. A British thermal unit ("Btu") is the amount of heat needed to raise one pound of water one degree Fahrenheit. Coal found in the eastern and midwestern regions of the United States tends to have a heat content ranging from 10,000 to 13,400 Btus per pound. Most coal found in the western United States ranges from 8,000 to 10,000 Btus per pound. 52 Lignite is a brownish-black coal with a heat content that generally ranges from 6,500 to 8,300 Btus per pound. Major lignite operations are located in Texas, North Dakota, Montana and Louisiana. Lignite is used almost exclusively in power plants located adjacent to or near such mines because any transportation costs, coupled with mining costs, would render its use uneconomical. The Company does not have any lignite reserves. Subbituminous coal is a black coal with a heat content that ranges from 7,800 to 9,500 Btus per pound. Most subbituminous reserves are located in Montana, Wyoming, Colorado, New Mexico, Washington and Alaska. Subbituminous coal is used almost exclusively by electric utilities and some industrial consumers. The Company has extensive subbituminous reserves in the Powder River Basin of Wyoming. Bituminous coal is a "soft" black coal with a heat content that ranges from 10,500 to 14,000 Btus per pound. This coal is located primarily in Appalachia, Arizona, the Midwest, Colorado and Utah, and is the type most commonly used for electric power generation in the United States. Bituminous coal is used for utility and industrial steam purposes, and as a feed stock for coke, which is used in steel production. All of the Company's reserves in Arizona, Colorado, Illinois, Indiana, Kentucky and West Virginia, as well as its reserves in New South Wales, Australia, are ranked as bituminous coal. Anthracite coal is a "hard" coal with a heat content that can be as high as 15,000 Btus per pound. A limited amount of anthracite deposits is located primarily in the Appalachian region of Pennsylvania, and is used primarily for industrial and home heating purposes. The Company does not have any anthracite reserves. Sulfur Content Sulfur content can vary from seam to seam and sometimes within each seam. When coal is burned, it produces SO/2/, the amount of which varies depending on the chemical composition and the concentration of sulfur in the coal. Low sulfur coal has a variety of definitions, but it is used in this document to refer to coal with a sulfur content of 1% or less by weight. Demand for low sulfur coal has increased, and is expected to continue to increase, as electric utilities strive to reduce SO/2/ emissions. Phase II requirements are expected to create additional demand for low sulfur coal. As of October 1, 1996, 47% of Peabody's coal reserves and 81% of its fiscal 1998 coal sales were low sulfur. U.S. SO/2/ emissions from electric power generation have decreased 28% from 1980 levels, while U.S. coal consumption has increased 46%. See "Risk Factors--Risks Relating to the Company--Government Regulation of the Mining Industry--Impact of Clean Air Act Amendments on Coal Consumption." Subbituminous coal typically has a lower sulfur content than bituminous coal, but some bituminous coal in southern West Virginia, eastern Kentucky, Colorado and Utah, also has low sulfur content. Higher sulfur coal can be burned in plants equipped with sulfur-reduction technology, as the scrubbing process reduces SO/2/ emissions by 50% to 90%. Plants without scrubbers can burn high sulfur coal by purchasing emission allowances on the open market, which allow the user to emit a ton of SO/2/. Some older coal-fired plants have been retrofitted with scrubbers. Any new coal-fired generation built in the United States will likely use clean coal burning technology. Other Important Characteristics Ash. Ash is the inorganic residue remaining after combustion of coal. As with sulfur content, ash content varies from seam to seam. Ash content is also an important characteristic of coal because power plants must handle and dispose of ash following combustion. Moisture. Moisture content of coal varies by the type of coal, the region where it is mined and the location of coal within a seam. In general, high moisture content decreases the heat value and increases the weight of the coal, thereby making it more expensive to transport. 53 Location/Ease of Extraction. It is generally easier to mine a coal seam that is thick and close to the surface. Typically, coal mining operations will begin at the part of the coal seam that is easiest and most economical to mine. In the coal industry, this characteristic is referred to as "low ratio." As the seam is mined, it becomes more difficult and expensive to mine because the seam either becomes thinner or protrudes more deeply into the earth, requiring removal of the material over the seam (the "overburden"). For example, many seams of coal in the Midwest are 5 to 10 feet thick and hundreds of feet below the surface. In contrast, seams in the Powder River Basin of Wyoming may be 80 feet thick and only 50 feet below the surface. Coking Properties of Metallurgical Coal. When some types of coal are super- heated in the absence of oxygen, they form a hard, dry, caking form of coal called coke, which is chiefly used in the steel production process as a fuel and reducing agent to smelt iron ore in a blast furnace. COAL COSTS Cost Comparison of Fuel Types Coal generated 57% of the electricity in the United States in 1997. Coal attained this dominant market share because of its relatively low cost and its availability throughout the United States. On an average, all-in cost per megawatt-hour ("MWh") basis, coal-fired generation is less expensive than electricity generated from natural gas or nuclear power. Hydroelectric power is inexpensive but is limited geographically and there are few suitable sites for new hydroelectric power dams. The table below illustrates the relative cost advantage of coal over certain other power generation sources. AVERAGE TOTAL GENERATING COSTS(/1/)
1990(/2/) 1997(/3/) --------- --------- Coal........................................................ $20.06 $17.24 Nuclear..................................................... 22.36 18.98 Hydro....................................................... 3.04 5.86 Natural Gas................................................. 28.84 35.12
- -------- (1) Average annual generating costs per MWh produced for all U.S. power plants; costs are all-in and include the cost of fuel, depreciation of plant, and overhead and maintenance. (2) Source: RDI PowerData, 1996, FERC Form 1 Data. (3) Source: Monthly operating data from RDI, 1998 from FERC reports. Cost Structure Coal Prices Coal prices vary dramatically and are affected by a number of factors. Two general characteristics are particularly important; first, coal prices vary widely depending upon the region in which the coal is produced, and second, utility purchases of coal, in which both mine-mouth coal prices and transportation are considered, strongly influence other coal prices. Other factors that influence coal prices are geological characteristics such as seam thickness, overburden ratios and depth of underground reserves, transportation costs, regional coal production capacity relative to demand and coal quality characteristics such as heat value, ash, moisture and sulfur content. Powder River Basin coal is relatively inexpensive to mine ($3 to $5 per ton, based on Company estimates) because the seams are thick and typically close to the surface. As a result, open-cast mining methods are used. The large capital costs associated with dragline mining and truck and shovel mining (a dragline can cost up to $50 million) are amortized over millions of tons of coal produced. Powder River Basin mines are highly productive and labor is a much smaller component of the cost structure. Eastern U.S. coal is more expensive to mine ($15 to $25 per ton, based on Company estimates) than western U.S. coal because it has a high percentage of underground coal and its surface coal tends to have thinner coal seams. Additionally, underground mining has higher labor (including reserves for labor benefits and health care) and capital costs 54 (including modern mining equipment and construction of extensive ventilation systems) than those of surface mining. Industrial coal generally costs more to produce and is shipped in smaller volumes and therefore is priced $3 to $5 per ton more than steam coal used by utilities. Metallurgical coal has higher carbon and lower ash content and is usually priced $4 to $10 per ton higher than steam coal produced in the same regions. Even higher prices are paid for special coking coal with low volatility characteristics. The following chart summarizes recent steam coal prices by supply region. As indicated, in 1997 steam coal prices ranged from $3 to $27 per ton, depending upon the quality and source region of the coal. The chart also indicates generally stable prices over the past three years, after a period in which average coal prices declined by 12% from 1990 to 1995, in nominal dollars. HISTORICAL STEAM COAL SPOT PRICES (Nominal Dollars per Ton, Free on Board at Mine)
BTUS POUNDS SO/2/ PER PER MILLION ESTIMATED REGION/BASIN POUND BTUS 1995 1996 1997 - ----------------------------- ------- ------------ ------ ------ --------- Central Appalachia........... greater than 12,500 less than or equal to 1.2 $25.00 $26.78 $27.16 greater than 12,500 1.21-1.70 24.63 25.04 25.53 greater than 12,500 1.71-2.5 24.27 24.81 25.42 less than 12,500 less than or equal to 1.2 22.06 23.98 24.42 less than 12,500 1.21-1.70 21.17 22.93 23.35 less than 12,500 1.71-2.5 21.13 21.80 22.18 Northeastern Appalachia...... greater than 12,750 1.2-2.5 $22.62 $22.70 $23.20 greater than 12,750 greater than 2.5 21.92 21.28 21.46 Illinois Basin............... greater than 11,000 greater than 2.5 $18.62 $18.65 $18.99 less than 11,000 greater than 2.5 17.17 17.15 17.22 Southern Powder River Basin.. greater than 8,800 less than or equal to 1.2 $ 4.34 $ 4.00 $ 4.00 less than 8,800 less than or equal to 1.2 3.27 3.14 3.12 Northern Powder River Basin.. greater than 8,800 less than or equal to 1.2 $ 6.09 $ 6.25 $ 6.25 Four Corners................. greater than 9,500 less than or equal to 1.2 $13.79 $13.81 $14.14
- -------- Source:RDI, Outlook for Coal, Winter 1996-1997. Transportation Coal for domestic consumption is generally sold at the mine and transportation costs are normally borne by the purchaser. Export coal is usually sold at the loading port, and coal producers are responsible for shipment to the export coal-loading facility and the buyer pays the ocean freight. Coal for electricity generation is purchased on the basis of its delivered cost per million Btus. Most utilities arrange long-term shipping contracts with rail or barge companies to assure stable delivered costs. Transportation is often a large component of the buyer's cost. Although the customer pays the freight, transportation cost is still important to coal mining companies because the customer may choose a supplier largely on the cost of transportation. According to RDI, in 1995, transportation costs represented 69%, 28% and 25% of the overall cost of coal produced in the western United States, eastern United States and mid-western United States, respectively. According to the National Mining Association, in 1996, approximately 75% of all U.S. coal was shipped by rail or barge, making these modes the keys to domestic coal distribution. Trucks and overland conveyors are 55 used to haul coal over shorter distances, while lake carriers and ocean colliers move coal to export markets, although some domestic coal is shipped over the Great Lakes. Railroads move more coal than any other commodity, and in 1996 coal accounted for 22% of total U.S. rail freight revenue and 44% of total freight tonnage. Most coal mines are served by a single rail company, but much of the Powder River Basin is served by two competing rail carriers, the BNSF (Burlington Northern/Santa Fe) and the Union Pacific. Rail competition in this major coal producing region is important, since rail costs constitute up to 75% of the delivered cost of Powder River Basin coal in remote markets. Rail rates for the Powder River Basin are lower when evaluated on a ton per mile basis because the relatively flat and straight rail routes out of the region allow heavily loaded trains to operate with less manpower and locomotive power than rail routes in other regions. COAL REGIONS Coal is mined from coalfields throughout the United States, with the major production centers located in the Powder River Basin (PRB), Central Appalachia, Northern Appalachia, the Illinois Basin and in other western coalfields. The Company operates mines in all of these major coal producing regions. The map below shows the significant U.S. coal supply regions. MAP OF U.S. COAL SUPPLY REGIONS Powder River Basin The Powder River Basin contains some of the most attractive coal reserves in the world. The Powder River Basin covers more than 12,000 square miles in northeastern Wyoming and 7,000 square miles in southeastern Montana. Demonstrated coal reserves total approximately 165 billion tons. Quality varies between lignite and subbituminous, with current production of subbituminous coal averaging 9,100 Btus per pound and 0.5% sulfur in Montana, to 8,600 Btus per pound and 0.3% sulfur in Wyoming. The mines just north and south of Gillette, Wyoming, are categorized as southern Powder River Basin mines. The coal in the southern Powder River Basin is ranked as subbituminous with an extremely favorable sulfur content. 56 Production in the southern Powder River Basin has increased from approximately 7 million tons in 1970 to 270 million tons in 1997, and now accounts for 30% of U.S. electric utility coal consumption by volume. The southern Powder River Basin has grown into the largest coal supply region in the United States. From 1989 to 1996, the region's compounded annual production growth rate was 6.2% compared to an overall compounded annual production growth rate of 1.2% for the total U.S. coal industry. The southern Powder River Basin markets 98% of its coal to U.S. electric utilities, principally in the region between the Rocky Mountains and the Appalachian Mountains. The Company has five active mining operations in the Powder River Basin: one in Montana and four in northeastern Wyoming. Central Appalachia Central Appalachia contains coalfields in eastern Kentucky, southwestern Virginia and central and southern West Virginia. Production in Central Appalachia has decreased slightly from approximately 289 million tons in 1990 to 281 million tons in 1996. Production declined in all major sections of Central Appalachia except for southern West Virginia, which has grown due to the expansion of more economically attractive surface mines. The region has experienced significant consolidation in the last several years due to modest demand growth and strong competition from western coal. Central Appalachian operations market approximately 58% of their coal to electrical utilities, principally in the South Atlantic region. Central Appalachia also sells extensively to the export market and industrial customers. Geologic conditions in Central Appalachia led to the creation of over 100 significant coal-beds, 60 of which are currently mined. A variety of mining techniques are used as seams are found on mountaintops and below valley floors. The coal of Central Appalachia has an average heat content of 12,500 Btus per pound and is generally low sulfur. The Company operates five underground mines in southern West Virginia producing low sulfur steam and metallurgical coal. Northern Appalachia High and medium sulfur coal is found in the Northern Appalachian coalfields of western Pennsylvania, southeastern Ohio and northern West Virginia. Coal demand in the region has increased slightly in recent years and, according to RDI, is expected to remain stable. Production in the region was approximately 156 million tons in 1997, up from 145 million tons in 1995. Much of the production in this region is concentrated in a few highly productive longwall mining operations in southeastern Pennsylvania and northern West Virginia. Despite its medium sulfur content (1.5% to 2.0% sulfur), coal from the Pittsburgh seam produced from these mines is considered attractive to utility coal customers because of its high heat content (approximately 13,000 Btus per pound). The Company operates one mine in this region. Illinois Basin The Illinois Basin is approximately 48,000 square miles in aerial extent under most of Illinois, western Indiana and western Kentucky. The area has experienced significant consolidation in the last several years. The Illinois Basin is a declining production center due to the region's relatively high sulfur coal and competition from lower sulfur western coal. Production in the Illinois Basin peaked at 141 million tons in both 1984 and 1990. Since 1990, production has decreased by 20% due to displacement by lower sulfur, lower cost coal. In 1996, production stabilized in several of the Illinois Basin's sub-regions, including Central Illinois, due to stabilizing demand and limited capacity. Illinois Basin production is marketed primarily to local utility and industrial customers. The Southwestern Illinois sub-region has an expanded customer base, including "scrubbed" utilities in Indiana and Florida. Demonstrated reserves total an estimated 120 billion tons of bituminous coal. The coal seams dip toward the center of the basin and outcrop along its border. Approximately 20 coal seams have been identified in the region. Current production quality ranges from 10,000 to 12,500 Btus per pound and 1% to 4% sulfur, with production averaging 11,300 Btus per pound and 2.6% sulfur. The Company has extensive reserves and nine active mining operations (four surface mines and five underground mines) in the Illinois Basin coal region: six in western Kentucky, two in Indiana and one in Illinois. In addition, the Company has a 43.3% interest in Black Beauty, Indiana's largest coal producer. 57 Western Bituminous Coal Regions The western bituminous coal regions include the Hanna Basin in Wyoming, the Uinta Basin of northwestern Colorado and Utah, the Four Corners Region in New Mexico and Arizona and the Raton Basin in southern Colorado. These regions produce high quality, low sulfur steam coal for selected markets in the region, for export through West Coast ports and for shipments to some Midwestern power plants for which Powder River Basin's subbituminous coals are not suitable. Production in these regions has increased from 104 million tons in 1995 to 108 million tons in 1997. The Company has extensive reserves in these regions, as well as four operating mines. Lignite Production Regions Lignite is mined in North Dakota, Texas and Louisiana. The Company does not have any lignite reserves. Australia The location and quantity of coal reserves in Australia are also well established, and economical coalfields have been identified in all states in Australia except Tasmania and the Northern Territory. The majority of Australia's coal reserves have high heat content, are low sulfur and are located near ocean ports, making Australia the world's leading coal exporter, exporting primarily to the Pacific Rim. The majority of Australian coal production is concentrated in the Bowen Basin in Queensland, in the Hunter River Valley and Southern coalfields of New South Wales and in Northern Victoria. The Company operates three mines and is developing a fourth mine in the Hunter River Valley in New South Wales. World Coal Production Global coal production was approximately 5.1 billion tons in 1995, according to the Organization for Economic Cooperation and Development ("OECD") and the International Energy Agency ("IEA"). The leading producers (in order of volume) are China, the United States, the former Soviet Union (primarily Russia and Ukraine), India and Australia, although coal is produced in many countries. According to the OECD/IEA, world coal consumption will increase 45% between 1995 and 2015. Because coal is used primarily as a fuel for the generation of electricity (coal is currently responsible for 37% of worldwide electricity generation), the growth in coal demand is being driven by worldwide electricity demand, which is projected to increase by 54% between 1995 and 2015, according to the OECD/IEA. Much of this growth is projected to occur in the developing countries of Asia and the Pacific Rim. COAL MINING TECHNIQUES Coal mining operations commonly use four distinct techniques to extract coal from the ground. The most appropriate technique is determined by coal seam characteristics such as location, logistics and recoverable reserve base. Drill hole data are used initially to define the size, depth and quality of the coal reserve area before committing to a specific extraction technique. All coal mining techniques rely heavily on technology; consequently, technological improvements have resulted in increased productivity. The four most common mining techniques are continuous mining, longwall mining, truck and shovel mining and dragline mining. Continuous Mining. Continuous mining is an underground mining method in which main airways and transportation entries are evacuated and remote- controlled continuous miners extract coal from "rooms," leaving "pillars" to support the roof. Shuttle cars are used to transport coal from the face to the conveyor belt for transport to the surface. This method is often used to mine smaller coal blocks or thin seams and seam recovery is typically approximately 50%. Productivity for continuous mining averages 25 to 50 tons per manshift. Longwall Mining. Longwall mining is an underground mining method that uses hydraulic jacks or shields, varying from five feet to 12 feet in height, to support the roof of the mine while a mobile cutting sheerer advances through the coal. Chain belts then move the coal to a standard deep mine conveyer system for delivery to the surface. Continuous mining is used to develop access to long rectangular panels of coal which are then mined 58 with longwall equipment, allowing controlled subsidence behind the advancing machinery. Longwall mining is highly productive, but it is effective only for large blocks of medium to thick coal seams. High capital costs associated with longwall mining demand a large, contiguous reserve base. Seam recovery using longwall mining is typically 70% and productivity averages 48 to 80 tons per manshift. Truck and Shovel Mining. Truck and shovel mining is an open-cast method which uses large electric- powered shovels to remove overburden which is used to backfill pits after the coal is removed. Shovels load coal in haul trucks for transportation to the preparation plant or rail loadout. Seam recovery using the truck and shovel method is typically 90%. Productivity depends on equipment, geological composition and mining ratios and varies between 250 to 400 tons per manshift in the Powder River Basin and 30 to 80 tons per manshift in eastern U.S. regions. Dragline Mining. Dragline mining is an open-cast method which uses large capacity electric-powered draglines to remove overburden to expose the coal seams. Shovels load coal in haul trucks for transportation to the preparation plant and then to the rail loadout. Truck capacity can range from 80 to 300 tons per load. Seam recovery using the dragline method is typically 90% or more and productivity levels are similar to those for truck and shovel mining. Once the raw coal is mined, it is often crushed, sized and washed in preparation plants where the product consistency and heat content are improved. This process involves crushing the coal to the required size, removing impurities and, where necessary, blending with other coal to match customer specification. A coal mine's yield is defined as the ratio of clean output tonnage to raw material tonnage. TECHNOLOGY Coal mining technology is continually evolving, improving, among other things, underground mining systems and larger earth-moving equipment for surface mines. For example, longwall mining technology has increased the average recovery of coal from large blocks of underground coal from 50% to 70%. At larger surface mines, haul trucks have capacities of 240 to 320 tons, which is nearly double the maximum capacity of the largest haul trucks used a decade ago. This increase in capacity, along with larger shovels and draglines, has increased overall mine productivity. According to EIA data, overall coal mine productivity, measured in tons produced per manshift, has increased 96% from 1985 to 1995. COAL MARKETS World Coal Market Approximately 5.1 billion tons of coal were consumed worldwide in 1995. According to EIA's International Energy Outlook 1997, demand is expected to grow at 1.9% per annum through 2015. Coal demand in developing nations is expected to grow at roughly eight times that in industrialized nations. The chart below illustrates historical and projected coal demand. TOTAL WORLD CONSUMPTION, 1995-2015
1995-2015 REGION 1995 2000P 2005P 2010P 2015P CAGR - --------------------------------------- ----- ----- ----- ----- ----- --------- (TONS IN MILLIONS) Industrialized......................... 2,866 2,971 3,017 3,057 3,096 0.4% Developing............................. 2,238 2,648 3,118 3,672 4,285 3.3% ----- ----- ----- ----- ----- Total............................ 5,104 5,619 6,135 6,729 7,381 1.9% ===== ===== ===== ===== =====
- -------- Source:EIA, International Energy Outlook 1997. 59 U.S. Market Approximately 1.1 billion tons of coal were consumed in the United States in 1997 and, according to RDI's Outlook for Coal, Winter 1996-1997, domestic consumption is expected to grow at 1.8% annually from 1995 through 2015. Domestic utility demand for coal, currently 87% of domestic consumption, is projected to increase at an average annual rate of 1.9% from 1995 to 1.2 billion tons in 2015. Coal use at industrial/commercial facilities and at non- utility generators is projected to grow by 16.1 million tons and 4.9 million tons, respectively, from 1997 to 2015. Overall, coal use at coke plants and steel mills is projected to decrease, but steam coal consumption at these plants is expected to increase by 10.6 million tons as a result of deregulation in the market for electricity. HISTORICAL AND PROJECTED U.S. COAL CONSUMPTION, 1995-2015
CAGR SECTOR 1995 1997P 2000P 2005P 2010P 2015P 1995-2015 - ------------------------ ------- ------- ------- ------- ------- ------- --------- (TONS IN MILLIONS) Utility................. 826.9 890.2 944.8 1,002.1 1,084.5 1,209.7 1.9 % Industrial.............. 79.5 82.3 81.3 82.4 92.2 98.4 1.1 % Non-Utility Generators.. 15.9 17.2 21.9 21.9 22.2 22.1 1.7 % Coke Plants/Steel Mills Met Quality........... 30.1 27.8 28.4 24.7 18.5 14.7 (3.5)% Steam Quality......... 5.1 7.0 10.0 12.4 16.9 17.6 6.4 % ------- ------- ------- ------- ------- ------- Total Domestic...... 957.5 1,024.5 1,086.4 1,143.5 1,234.3 1,362.5 1.8 % Export.................. 89.6 95.9 100.8 105.1 109.6 116.0 1.3 % ------- ------- ------- ------- ------- ------- Total............... 1,047.1 1,120.4 1,187.2 1,248.6 1,343.9 1,478.5 1.7 % ======= ======= ======= ======= ======= =======
- -------- Source:RDI, Outlook for Coal, Winter 1996-1997. U.S. Electricity Market As the table below indicates, coal generated 57% of the electricity in the United States in 1997. DOMESTIC ELECTRICITY FUEL SOURCES COMPARISON
1990 1996 1997 ----- ----- ----- Coal....................................................... 55% 56% 57% Nuclear.................................................... 21 22 20 Hydro...................................................... 10 11 11 Natural Gas................................................ 9 9 9 Other...................................................... 5 2 3 ----- ----- ----- Total.................................................. 100% 100% 100% ===== ===== =====
- -------- Source:EIA Monthly Energy Review, February 1998. The domestic coal industry's principal end market users are domestic electric utilities. According to RDI, these utilities are expected to experience a growing demand for coal as demand for electricity increases. Coal-fired generation is used in most cases to meet base-load requirements, so coal use generally grows at the pace of electricity growth. However, in recent years, coal's share of the generation market has gradually increased due to its relative low cost. Although it is anticipated that few, if any, new coal- fired generation plants will be built, coal-fired plants can still take market share (or at least maintain market share in a growing market) due to the potential for increased capacity utilization. In aggregate, domestic coal- fired plants currently run at 65% capacity utilization (optimal sustainable capacity utilization is 85% for a typical plant, though most can run at higher rates for short periods). By 2010, coal-fired plants would have to run at approximately 82% of capacity, assuming all 60 the same plants were running at today's efficiency levels and that market share remains constant. Gas-fired electricity generation, which is used for intermediate and peak-load demand, is anticipated to gain market share at the expense of nuclear generation, or where peak-load capacity is needed. Over the past several years, largely as a result of SO/2/ gas emissions limitations mandated by the Clean Air Act, demand has shifted toward lower sulfur coal. Regional Coal Markets In 1995, Phase I of the Clean Air Act required high sulfur coal plants to reduce their emissions of SO/2/. As a result of large-scale switching to very low sulfur Powder River Basin coal, many Phase I-affected plants overcomplied with the SO/2/ requirements, creating a surplus of emission allowances. This industry-wide surplus led to the formation of a market for SO/2/ emissions credits. In 2000, Phase II of the Clean Air Act will tighten restrictions on sulfur emissions from 2.5 to 1.2 lbs. of SO/2/ per million Btus or lower. Surplus emission credits from Phase I will allow some generators to delay retrofitting old plants with expensive scrubbers. Eventually, owners of these plants will have to retrofit or switch to Phase II compliance coal, most likely Powder River Basin or other western low sulfur coal, as the following exhibit indicates. U.S. COAL DEMAND BY PRODUCTION REGION(/1/)
1996-2015 1996 1997P 2000P 2005P 2010P 2015P CAGR ----- ----- ----- ----- ----- ----- --------- (TONS IN MILLIONS) Northern Appalachia............... 155 156 154 150 156 176 0.7 % Central/Southern Appalachia....... 310 324 330 341 369 407 1.4 % Illinois Basin.................... 116 113 102 99 106 116 0.0 % Southern Powder River Basin....... 253 273 306 329 376 421 2.7 % Northern Powder River Basin....... 37 43 58 67 69 75 3.8 % Other Western United States....... 101 108 145 165 184 201 3.7 % Lignite........................... 90 90 80 84 71 69 (1.4)% Other............................. 11 8 8 9 9 9 (1.1)% ----- ----- ----- ----- ----- ----- Total....................... 1,073 1,115 1,183 1,244 1,340 1,474 1.7 % ===== ===== ===== ===== ===== =====
- -------- Source:RDI Outlook for Coal, Winter 1996-1997. (1) Does not equal consumption due to imports and changes in stockpiles. According to Standard & Poor's DRI World Energy Service--U.S. Outlook Fall 1997, to date, the majority of the utilities affected by the Clean Air Act Amendments have chosen to switch to low sulfur coals at the expense of high sulfur coal due to the high cost of scrubbers and the availability of low cost, low sulfur coal in the Powder River Basin. 61 Export Market The international coal trade outlook for exporters is shown below. EXPORT MARKET--THE INTERNATIONAL COAL TRADE OUTLOOK FOR EXPORTERS
IMPORTERS ----------------------------------------------- 1995 ACTUAL 2015 PROJECTED ----------------------- ----------------------- EXPORTERS EUROPE ASIA OTHER TOTAL EUROPE ASIA OTHER TOTAL - -------------------------------- ------ ---- ----- ----- ------ ---- ----- ----- (TONS IN MILLIONS) Australia....................... 22 120 8 150 18 194 8 220 United States................... 53 18 18 89 72 22 27 121 South Africa.................... 41 21 4 66 36 50 5 91 South America................... 17 0 9 26 55 0 17 72 Canada.......................... 5 27 6 38 8 30 1 39 China........................... 3 24 1 28 0 41 0 41 Other........................... 39 38 11 88 29 57 0 86 ---- ---- ---- ---- ---- ---- ---- ---- Total..................... 180 248 57 485 218 394 58 670 ==== ==== ==== ==== ==== ==== ==== ====
- -------- Source:EIA International Energy Outlook, 1997. As shown in the above table, according to the EIA, the international market for coal is predicted to expand. The primary beneficiaries from this expansion will be Australia (which serves the growing Asian markets), and the new, low sulfur coal producers such as Indonesia, Colombia and Venezuela. The largest growth in coal use is projected to come from Indonesia, India and China, which have extensive coal reserves and are currently investing heavily in new generating plants. The Pacific Rim countries, namely Japan, Taiwan and Korea, are forecast to have some of the fastest growing import demand for coal through 2015; consequently, the countries supplying this area will benefit from this growth. Australia's exports are expected to increase by over 47% during this period, linked primarily to this demand. The demand for metallurgical coal in the international export market has historically been higher than the demand for steam coal. However, metallurgical coal's share of total world coal export market is projected to fall from its 1995 level of 40% to 28% by 2015 as the demand for steam coal by electric utilities is projected to increase more rapidly than the demand for metallurgical coal. DEREGULATION OF THE ELECTRIC UTILITY INDUSTRY In October 1992, the National Energy Policy Act was signed in the United States, giving wholesale suppliers access to the transmission lines of power generators. In April 1996, the Federal Energy Regulatory Commission ("FERC") issued orders establishing rules providing for open access to electricity transmission systems, thereby initiating consumer choice in electricity purchasing and encouraging competition in the generation of electricity. While the underlying deregulation process is still proceeding at a federal level, the detailed implementation and planning has been left to the individual states. As the timing of deregulation has been left to the states, the pace of change differs significantly from state to state. To date, ten states have enacted programs leading to the full deregulation of the retail electricity market; 39 other states are considering such programs. Due to the uncertainty around timing and implementation of deregulation in each state, it is difficult to predict the impact on the electric utilities. Full-scale deregulation of the power industry, when implemented, will enable both industrial and residential customers to shop for the lowest cost supply of power and the best service available. This fundamental change in the power industry is expected to compel electric utilities to be more aggressive in developing and defending market share, to be more focused on their pricing and cost structures and to be more flexible in reacting to changes in the market. A possible consequence of the deregulation is anticipated downward pressure on fuel prices. In addition, there has been a move by the utility companies towards shorter-term contracts compared to the relatively long-term contracts of the recent past that locked in volume and pricing terms. However, because coal-fired generation is competitive with most other forms of generation, a competitive electricity market may stimulate greater demand for coal to be burned in plants with currently unused capacity. The Company estimates that as much as 200 million tons of additional coal could be consumed annually if the electricity market were rationalized and the most efficient coal-fired power plants were used to their full capacity. 62 BUSINESS OVERVIEW Peabody is the largest and one of the fastest growing private sector coal producers in the world. Over the last seven years, management has transformed the Company from a largely high sulfur, high cost domestic coal producer to a predominantly low sulfur, low cost international coal company. In fiscal 1998, the Company sold 167.5 million tons of coal worldwide, which were used to generate more than 9% of the total electricity produced in the United States. Based on the most recent data available, the Company's coal satisfied approximately 2.5% of the world's 1995 electricity demands. Peabody's U.S. market share was approximately 14.4% in 1997, approximately twice the market share of its nearest competitor. Peabody has approximately 9.4 billion tons of proven and probable coal reserves, which is the largest reserve base of any private sector coal producing company in the United States. In fiscal 1998, the Company generated pro forma operating revenues of more than $2.2 billion and pro forma EBITDA of $439.0 million. The Company currently owns and operates 24 mines in the United States and three mines in New South Wales, Australia and also sells coal produced by third-party contractors from reserves controlled by the Company. In addition to its U.S. and Australian coal businesses, the Company is also one of the leading marketers of power in the United States through Citizens Power, has a small gold and copper exploration concession in Chile and has an equity interest in a southern California landfill project. Peabody also has joint venture interests in Black Beauty, Indiana's largest coal producer, in Dominion Terminal Associates, one of the largest U.S. coal export terminals and in certain other coal transportation facilities. The Company produces approximately 72% of its coal from the western United States, compared to approximately 23% from the eastern United States and approximately 5% from Australia. Peabody's coal production in the western United States has grown from 37 million tons in 1990 to 114 million tons in fiscal 1998. The Company's highly productive, primarily non-union western operations produce low sulfur coal, which is attractive to utilities operating under restrictions of the Clean Air Act. Peabody's large and diverse customer base includes more than 150 customers in 17 countries. In 1997, Peabody supplied 92% of its U.S. production to U.S. electric utilities, 5% to the export market and 3% to the U.S. industrial sector. Peabody has a large portfolio of CSAs. In fiscal 1998, 92% of Peabody's sales volume was sold under CSAs. As of March 31, 1998, the Company had CSAs for more than 1.0 billion tons of coal with terms ranging from one to 17 years and with an average volume-weighted remaining term of 5.7 years. As its CSAs expire, the Company intends to negotiate new contracts in order to maintain its high percentage of volume sold through CSAs and low percentage of volume sold in the spot market. COMPANY HISTORY Peabody, Daniels and Co. was founded in 1883 by Francis S. Peabody as a small Chicago retail coal business. Two years later, Daniels sold his interest and the name changed to Peabody & Co. In 1895, Peabody & Co. entered the mining business when it opened its first mine located in Illinois. In 1929, Peabody Coal Company was listed on the Chicago Stock Exchange and later, in 1949, on the New York Stock Exchange. In 1955, Peabody Coal Company, which was still primarily an underground mine operator, merged with Sinclair Coal Company of Kansas City, Missouri, a major surface mining company. By 1968, Peabody Coal Company was operating 37 mines, producing approximately 54 million tons per annum, and had coal reserves exceeding 5 billion tons. Peabody Coal Company entered the Australian market for the first time in 1962 through a joint venture agreement with an Australian construction company and a Japanese trading company. In 1968, Kennecott Copper Corporation acquired Peabody Coal Company, a move that the U.S. Federal Trade Commission ruled in violation of the Clayton Anti- Trust Act. In 1977, after an adverse legal ruling against Kennecott, it sold Peabody Coal Company for $1.1 billion to Peabody Holding Company, a highly leveraged 63 holding company formed by a consortium consisting of Newmont Mining Corp., Williams Cos., Bechtel Group Inc., Boeing Corporation, Fluor Corp. and The Equitable Life Assurance Society. Peabody Holding Company continued to grow during the 1980s through expansion and acquisition. In 1983, Peabody Holding Company opened the North Antelope mine, its first mine in the Powder River Basin and the following year it acquired the West Virginia coal properties of ARMCO Steel to expand both its low sulfur operations and its geographical base. In 1987, Peabody Holding Company purchased Coal Properties Corp. and Eastern Associated, which included seven operating mines and substantial low sulfur reserves. In July 1990, Peabody Holding Company was acquired by Hanson and since then the Company has made ten major acquisitions totaling more than $1.1 billion. In 1993, Hanson acquired the Lee Ranch mine in New Mexico and the following year acquired a one third interest in Black Beauty, which was subsequently increased to a 43.3% interest in February 1998. The Company strengthened its position in the Powder River Basin in 1994 with the acquisitions of the Caballo and Rawhide mines from Exxon Coal USA Inc. In 1993, a major coal operation in Australia, Peabody Resources, was acquired from Costain Group in anticipation of the growing Pacific Rim market for coal. In February 1997, Hanson spun off The Energy Group with its subsidiaries, Eastern Group and Peabody Holding Company, and became a publicly traded company in the United Kingdom. On May 19, 1997, The Energy Group purchased Citizens Power from Lehman Brothers and certain other parties initiating its entry into the rapidly growing power marketing industry. Citizens Power obtained the first marketing license from FERC in 1989. Since that time, it has continued to solidify its position as an innovator in the U.S. power marketing industry. The Company was incorporated under the laws of Delaware on February 27, 1998, in anticipation of consummation of the Acquisition. On May 19, 1997, the Company consummated the Acquisition. See "The Acquisition." The Company's principal executive office is located at 701 Market Street, St. Louis, Missouri 63101-1826, telephone: (314) 342-3400. COMPETITIVE STRENGTHS The Company believes that it benefits from the following competitive strengths, which have enabled it to become the largest private sector producer of coal in the world: Market Leader. The Company is the largest private sector producer of coal in the world with a market share of 14.4% in the United States in fiscal 1998 and a market share of approximately 3.0% worldwide in 1995, according to the latest available data. In 1997, the Company had a 35% market share in the Powder River Basin, the largest and fastest growing U.S. coal production region and the United States' largest known source of low cost, low sulfur coal. The Company also has the largest reserve base of any U.S. coal producer, with approximately 9.4 billion tons of proven and probable coal reserves which based on current rates of production, the Company believes could last for more than 50 years. Diversity of Operations and Customers. The Company's mining operations are broad and diverse and serve a wide range of customers. The Company owns and operates 24 U.S. mines and sells coal to more than 150 U.S. power plants, including many of the largest U.S. utilities. The Company also exports coal to customers in 15 foreign countries. Approximately 72% of the Company's coal production comes from the western United States, while 10% comes from Appalachia, 13% from the Illinois Basin and 5% from Australia. Because of the geographical mix of its reserves, the Company can source coal from several regions, increasing its ability to meet the various needs of its customers and reducing customers' transportation costs. Through Citizens Power, the Company engages in power and energy sales and trading, transaction and asset restructuring and fuel and power integration. High Percentage of Low Sulfur Coal. The Clean Air Act Amendments require electric utilities to reduce SO/2/ and other acidic emissions from coal-fired power plants in a two-phase process that began in 1995 with 64 Phase I. Phase II requires further emission reductions by 2000. Utilities may choose to meet these standards by (i) burning low sulfur coal or other low sulfur fuels, (ii) installing scrubbers or (iii) purchasing or trading emission allowances. Power plants that do not use their full allotment of emission allowances provided under the Clean Air Act Amendments can sell their extra emission allowances on the open market or use them at their other facilities to offset emissions from higher sulfur coal. To date, the majority of affected utilities have chosen to switch to low sulfur coal at the expense of high sulfur coal due to the high cost of scrubbers and the availability of low cost, low sulfur coal from the Powder River Basin. According to the Department of Energy, high sulfur coal production declined 17.6% from 1990 to 1996, while low sulfur coal production increased 18.0% over the same period. The Company has increased its sales of low sulfur coal from 52.6 million tons to 135.5 million tons during the same period of time. As of October 1, 1996, 47% of Peabody's proven and probable coal reserves was of low sulfur coal and 81% of its 1998 coal sales was of low sulfur coal. As a result of its significant presence in the Powder River Basin, which has very low sulfur coal, Peabody is well positioned to benefit from the impact of the Clean Air Act Amendments. Over 57% of Peabody's total production and 55% of sales come from the Powder River Basin, where Peabody has a 35% market share. RDI estimates that production from coal mines in the Powder River Basin is expected to grow from 272.7 million tons to 421.3 million tons between 1997 and 2015. Portfolio of Long-Term Contracts. Peabody has a large portfolio of CSAs. As of March 31, 1998, the Company had CSAs for more than 1.0 billion tons of coal, with terms ranging from one to 17 years and with an average volume- weighted average remaining term of 5.7 years. As a result, its exposure to any fluctuation in spot market prices is relatively limited. The Company has historically replaced CSAs as they have expired. Efficient Operations. Through its production volume, centralized information technology system, marketing programs and land management functions, the Company is able to achieve operating and corporate efficiencies. From fiscal 1990 to fiscal 1998, the Company has increased its sales volume from 93.3 million tons to 167.5 million tons (including recent acquisitions) while simultaneously reducing the number of employees in its coal operations from 10,700 to 7,500. During this period, the Company increased its average productivity (in terms of coal production per manshift) by 179% in the United States and, since the acquisition of Peabody Resources in 1993, by 37% in Australia. According to the U.S. Department of Labor, the Company's four Powder River Basin mines were the four most productive coal mines in the United States in 1996 as measured in tons per manshift. Innovative Research and Development. The Company emphasizes research and development of new technologies in the coal industry. Since the Company is one of the largest users of equipment in the industry, manufacturers work with it to design and to produce equipment that will bring added value to the coal industry. Some of the Company's recent efforts have led to several innovations, including state-of-the-art haul trucks, the adaptation of global positioning satellite technology and nuclear quality analysis equipment. As a result of these efforts, many of the Company's mines have become among the most productive in the industry. Experienced Management. Irl F. Engelhardt, who became Chief Executive Officer of the Company in 1991, and other members of the senior management team have a proven record of increasing productivity, making strategic acquisitions and developing and maintaining strong customer relations. The management team, whose members have an average of 19 years experience in the coal industry and 15 years experience with the Company, has transformed the Company into a predominantly low sulfur, low cost international coal company. STRATEGY Anticipating the effect of the Clean Air Act Amendments, the Company endeavored to become the leading low sulfur coal producer in the United States. In 1990, low sulfur coal constituted only 56% of the Company's sales volume; by 1998, it had increased to 81%. In 1990, 77% of the Company's U.S. coal production came from union mines; by 1998, the percentage had dropped to 35%. The Company has concentrated on controlling costs, and the average cost per ton declined 25% during the same period, aided by the expansion of its low cost Powder River Basin operations. The Company also anticipated the growth in international coal demand, primarily in Asia and the Pacific Rim. This anticipated growth was the impetus for the acquisition of Peabody 65 Resources in 1993. To capitalize on U.S. electricity deregulation and the convergence of U.S. energy markets, the Company acquired Citizens Power, a leading power trading and energy contract restructuring firm in 1997. As the chart below shows, the Company has demonstrated the ability to transform itself in response to changing market conditions. TRANSFORMATION OF PEABODY 1990 TO 1998(/1/)
1990 1998 % CHANGE ----- ----- -------- Sales Volume (mm tons)............................... 93.3 167.5 80% U.S. Market Share(/2/)............................... 9.1% 14.4% 58 Low Sulfur Sales Volume (mm tons).................... 52.6 135.5 158 Coal Reserve Base (mm tons).......................... 7,000 9,365(/3/) 34 Low Sulfur Reserves (mm tons)........................ 2,500 4,392(/3/) 76 Productivity tons/manshift (U.S. mines).............. 32.9 91.8 179 Average Cost(/4/)/Ton Sold ($)....................... 19.33 10.21 (47) Non-Union Production (mm tons)....................... 20.9 98.1 369
- -------- Source: Peabody. (1)Fiscal year 1990 and fiscal 1998. (2)Market share is calculated by dividing Peabody's U.S. sales volume by total demand for coal in the United States. (3)As of October 1, 1996. (4) Operating costs and expenses, excluding Depreciation, Depletion and Amortization, Selling and Administrative Expenses and Net Loss/(Gain). In the future, the Company's strategy will concentrate on the following five principal objectives: Capitalize on U.S. Electricity Deregulation. Using its extensive customer base, portfolio of CSAs and its access to the energy trading and contract restructuring capabilities of Citizens Power, the Company intends to build on the opportunities presented by electricity deregulation. The Company estimates that as much as 200 million tons of additional coal could be consumed annually if the electricity market were rationalized and the most efficient coal-fired power plants were used to their full capacity. The Company believes that its ability to furnish low cost fuel and/or low cost electricity from generating sources with access to low cost fuel will allow it to capitalize on these opportunities. Expand Low Sulfur and International Operations. In a deregulated environment, coal-fired generation will remain a competitive source of power and the Company intends to continue expanding into growing segments of the coal market. The Company expects growth to come from expansion of its low sulfur, low cost coal operations in the Powder River Basin, as well as expansion of its international operations. The Company believes increased participation in the rapidly expanding Black Beauty joint venture, and possible development of new "greenfield" mining operations on low sulfur reserves in the western United States will provide the opportunity to enhance the size and profitability of the Company. Further Reduce Costs. Peabody continues its focus on cost reductions at its current operations. The Company believes that prudent capital investment in new production technologies and the adoption of innovative labor-management practices under the Labor Management Positive Change Program, a program designed to improve the competitiveness of its unionized mines, will enable it to continue to increase productivity. Streamlining of the Company's selling and administrative functions will further reduce expenses, which the Company believes to be among the lowest among major coal producers on a per ton basis, as will careful management of the Company's workers' compensation, retiree, reclamation and health care liability costs and a continued focus on worker safety. Leverage Energy Marketing With Citizens Power. The Company will focus on the strategic integration of its extensive coal customer base with the power trading and contract restructuring capabilities of Citizens Power. Through Citizens Power, the Company expects to offer a variety of innovative coal sales transactions and energy 66 contract restructuring products to help electric utility customers remain competitive in a deregulated environment. For example, coal contracts may be restructured with power off-takes to compensate for lower coal prices, or NUG contracts may be restructured using low-priced generation from coal tolling agreements as a replacement. As energy markets converge, the Company is prepared to offer a variety of energy products to suit these changing market circumstances. Pursue Strategic Acquisitions. The Company may pursue strategic acquisitions and/or joint ventures within the U.S. and Australian coal industries, and as appropriate opportunities arise, the Company may acquire other strategic energy assets including electric generating facilities, natural gas and energy production assets. COAL RESERVES The Company had an estimated 9.4 billion tons of proven and probable reserves as of October 1, 1996, approximately 47% of which was low sulfur coal. The Company's non-operational reserves are generally held by Peabody Development which is responsible for acquiring coal assets for future development and disposing of non-strategic coal interests. Of the Company's reserves, approximately 48% is owned by the Company and approximately 52% is leased. Below is a table summarizing the locations and reserves of the Company's major operating units.
PROVEN AND PROBABLE RESERVES AS OF OCTOBER 1, 1996(/1/) ----------------------------------- (TONS IN MILLIONS) OWNED LEASED TOTAL OPERATING COMPANIES LOCATIONS TONS TONS TONS - ------------------------------------ ----------------------------- ----------- ------------ ----------- Eastern Associated.................. West Virginia 256 720 976 PCC................................. Illinois Basin 638 240 878 Peabody Western..................... Arizona, Colorado and Montana 2 665 667 Powder River........................ Powder River Basin 90 2,413 2,503 Lee Ranch........................... New Mexico 727 7 734 Peabody Resources................... Australia -- 290 290 Peabody Development................. Throughout United States 2,784 437 3,221 Other............................... Throughout United States 8 88 96 ----------- ----------- ----------- Total........................... 4,505 4,860 9,365 =========== =========== ===========
- -------- (1) Reserves have been adjusted to take account of losses involved in producing a saleable product. Reserve estimates are based on geological data assembled and analyzed by the Company's staff, which includes more than 100 geologists and engineers, located both at the individual mines and at the Company's headquarters. The reserve estimates are reviewed periodically to reflect new drilling or other data received and production of coal from the reserves. Accordingly, reserve estimates will change from time to time reflecting mining activities, analysis of new engineering and geological data, changes in reserve holdings, modification of mining methods and other factors. Reserve information, including the quantity and quality (where available) of reserves as well as production rates, surface ownership, lease payments and other information relating to the Company's coal reserve and land holdings, is maintained through a computerized land management system developed by the Company. The Company's reserve base estimates are predicated on information obtained from its extensive drilling program, which totals nearly 500,000 individual drill holes. Data from individual drill holes is input into a computerized drill hole system from which the depth, thickness and, where core drilling is used, the quality of the coal, are determined. The density of the drill pattern determines whether the reserves will be calculated as proven or probable. The drill hole data is then input into the computerized land management system which overlays the geological data with data on ownership or control of the mineral and surface interests to determine 67 the extent of the reserves in a given area. In addition, the Company periodically engages Boyd, independent mining and geological consultants, to review the Company's estimates of its coal reserves. The most recent of these reviews, which was completed October 1, 1996, includes a review of the procedures used by the Company to prepare its internal reserve estimates, verifying the accuracy of selected property reserve estimates and retabulating reserve groups according to standard classifications of reliability. The private leases normally have terms of between 10 and 20 years, and usually give the Company the right to renew the lease for a stated period or to maintain the lease in force until the exhaustion of minable and merchantable coal contained on the relevant site. These private leases provide for royalties to be paid to the lessor either as a fixed amount per ton or as a percentage of the sales price. Many leases also require payment of a lease bonus or minimum royalty, payable either at the time of execution of the lease or in periodic installments. Private leases are invariably maintained by active production. Leases containing unassigned reserves may expire or such leases may be renewed periodically. As mines deplete or reserves are assigned, production is often commenced in a new mine to replace the depleted capacity. With a portfolio of approximately 9.4 billion tons, the Company believes that it has sufficient reserves to replace capacity from depleting mines for the foreseeable future and that its reserve base is one of the Company's strengths. The Company believes that the current level of production at its major mines is sustainable. As of April 1, 1998, the Company held 22 federal coal leases which are administered by the U.S. Department of the Interior pursuant to the Federal Coal Leasing Amendments Act of 1976. These leases cover the Company's principal reserves in Wyoming and other reserves in Montana and Colorado. Each of these leases continues indefinitely provided that there is diligent development of the lease and continued operation of the related mine or mines. The Bureau of Land Management has asserted the right to adjust the terms and conditions of these leases, including rent and royalties, after the first 20 years of their life and at ten yearly intervals thereafter. Annual rents under the Company's federal coal leases are now set at $3.08 per acre. Production royalties on federal leases are set by statute at 12.5% of the gross proceeds of coal mined and sold for surface mined coal and 8% for underground mined coal. Similar provisions govern three coal leases with the Navajo and Hopi Indian tribes. These leases cover coal contained in 65,000 acres of land in northern Arizona lying within the boundaries of the Navajo National and Hopi Indian reservations. Consistent with industry practice, the Company conducts only limited investigation of title to its coal properties prior to leasing. Title to lands and reserves of the lessors or grantors and the boundaries of the Company's leased properties are not completely verified until such time as the Company prepares to mine such reserves. MINING OPERATIONS The following provides a description of the operating characteristics of the principal mines and reserves of each of the Company's U.S. and Australian mining units. Production figures are for fiscal 1998. UNITED STATES Within the United States, the Company has six principal operating companies: Powder River, Peabody Western, Eastern Associated, PCC, Lee Ranch and Patriot Coal. POWDER RIVER Powder River owns and manages four low sulfur, non-union surface mines in Wyoming that produced approximately 91.7 million tons of coal in 1998, or approximately 35% of total coal production in the southern Powder River Basin, the largest U.S. coal producing region. As of March 31, 1998, Powder River employed 1,024 people. According to the U.S. Department of Labor, in 1996 Powder River had the four most productive 68 and efficient mines, as measured in tons per manshift, in the United States: the North Antelope, Rochelle, Caballo and Rawhide mines. In 1997, Powder River shipped approximately 57% of the total coal produced by the Company. The Rochelle, Caballo and North Antelope mines are serviced by the BNSF and Union Pacific railroads, while the Rawhide mine is serviced by the BNSF. The Company's significant reserves in the Powder River Basin enable it to increase and decrease production among Powder River's mines to respond to market conditions. The Company recently announced that it will reduce production at the Rawhide mine and shift production under certain CSAs to its other Powder River Basin mines. Powder River's coal reserves are classified as surface minable and subbituminous with seam thicknesses varying from 70 to 105 feet. The sulfur content of the coal in current production ranges from 0.2% to 0.5% and the heat value ranges from 8,250 to 8,850 Btus per pound. The following table provides a summary of the main characteristics of the principal mines of Powder River:
AVERAGE TYPE SULFUR SEAM 1998 MINE MINE TYPE OF COAL CONTENT THICKNESS PRODUCTION - --------------------------------- --------- ------- ------- --------- ---------- (FEET) (TONS IN MILLIONS) POWDER RIVER North Antelope/Rochelle......... surface steam low 76.0/75.5 60.6 Caballo......................... surface steam low 70.0 20.6 Rawhide......................... surface steam low 105.0 10.5 ------- Total.......................... 91.7 =======
North Antelope/Rochelle The North Antelope/Rochelle Business Unit is composed of two mines: the North Antelope mine and the Rochelle mine which produced approximately 60.6 million tons of coal in 1998. The North Antelope mine is located 65 miles south of Gillette, Wyoming. In 1996 it was ranked as the most productive mine in the United States and is currently among the five largest U.S. coal mines. The mine uses a dragline along with truck and shovel methods to mine coal. The Rochelle mine is located next to the North Antelope mine and was the second largest coal mine in the United States in 1996. In 1996, it was ranked as the second most productive mine in the United States. It uses modern truck and shovel methods and has two 15,000-ton silos and a 55,000-ton slot storage facility. The Rochelle mine produces premium quality coal with a sulfur content averaging 0.22% and a heat value ranging from 8,500 to 8,800 Btus per pound. Raw coal is crushed, sized and stored in three 15,000-ton storage silos and bunkers in preparation for the automatic batch loading system, which can load coal into 100-ton rail cars in 100 to 115 car unit trains at a rate of 6,000 tons per hour. The business unit has dual railroad tracks, capable of loading two trains simultaneously and in an efficient manner. Caballo The Caballo mine is located 20 miles south of Gillette, Wyoming. In 1998, it produced approximately 20.6 million tons of coal. Caballo is a truck and shovel operation with a coal handling system which includes two 12,000-ton silos and two 11,000-ton silos. 69 Rawhide The Rawhide mine is located ten miles north of Gillette, Wyoming. In 1998, it produced approximately 10.5 million tons of low sulfur coal using truck and shovel mining methods. Rawhide has four 11,000-ton silos and two 12,000-ton silos. PEABODY WESTERN Peabody Western, based in Flagstaff, Arizona, manages two surface mines in Arizona, one in Colorado and one in Montana, which together ship approximately 17.8 million tons of low sulfur coal annually and employed 1,027 people as of March 31, 1998. All of Peabody Western's coal is sold to electricity generating plants. The following table provides a summary of the main characteristics of the principal mines of Peabody Western:
AVERAGE TYPE SULFUR SEAM 1998 MINE MINE TYPE OF COAL CONTENT THICKNESS PRODUCTION - ------------------------------ --------- ------- -------- --------- ---------- (FEET) (TONS IN MILLIONS) PEABODY WESTERN Black Mesa................... surface steam low 6.6(/1/) 4.5 Kayenta...................... surface steam low 5.9(/1/) 7.4 Big Sky...................... surface steam low/high 21.4 4.3 Seneca....................... surface steam low 9.9 1.6 ------- Total....................... 17.8 =======
- -------- (1) Up to six seams mined. Black Mesa The Black Mesa mine, located on the Navajo and Hopi Indian reservations in Arizona, produced approximately 4.5 million tons of steam coal in 1998 using two draglines. The mine sells its coal under a CSA. Its coal is crushed, mixed with water and then transported 273 miles through the underground Black Mesa Pipeline to Southern California Edison's Mohave Generating Station near Laughlin, Nevada. The mine and the pipeline were designed to deliver coal exclusively to the power plant, which has no other source of coal. Kayenta The Kayenta mine is adjacent to the Black Mesa mine. Approximately 7.4 million tons of steam coal were produced in 1998 using three draglines in three mining areas. It sells all of its coal under a CSA. The coal is crushed, then carried 17 miles by conveyor belt to storage silos where it is loaded on to a private rail link and transported 83 miles to the Navajo Generating Station, operated by The Salt River Project near Page, Arizona. The mine and the railroad were designed to deliver coal exclusively to the power plant, which has no other source of coal. Big Sky The Big Sky mine is located in the northern end of the Powder River Basin near Colstrip, Montana. The mine produces 4.3 million tons of steam coal annually with one dragline. The coal is shipped by rail to several major electric utility customers in the upper midwestern United States. Seneca The Seneca mine near Hayden, Colorado ships about 1.6 million tons of low sulfur steam coal annually and operates two draglines in two mining areas. The Seneca mine's coal is hauled by truck to a nearby generating station where it is sold under a CSA. 70 EASTERN ASSOCIATED Eastern Associated, based in Charleston, West Virginia, owns or manages four business units consisting of six mines and related facilities in West Virginia and employed 1,618 people as of March 31, 1998. Eastern Associated also controls two mining sites at which coal is produced by contractors and processed at the Company's facilities. These operations produced approximately 16.2 million tons of metallurgical and steam coal in 1998 which was sold to customers in the United States and abroad. Approximately 40% of Eastern Associated's coal is exported to customers in Canada and 12 other countries worldwide. The remainder is sold to customers in the United States. Approximately 55% of Eastern Associated's production is sold to domestic electric utilities under CSAs. The following table provides a summary of the main characteristics of the principal mines of Eastern Associated:
AVERAGE TYPE SULFUR SEAM 1998 MINE MINE TYPE OF COAL CONTENT THICKNESS PRODUCTION - ----------------------------- ----------- --------- ------- --------- ---------- (FEET) (TONS IN MILLIONS) EASTERN ASSOCIATED Big Mountain Robin Hood underground steam low 4.8/5.6 1.8 ....................... Federal No. 2............... underground steam high 6.8 4.4 Pond Fork Business Unit..... underground steam/met low 5.2 2.5 Contract Mines.............. underground met low 2.5/5.6 5.8 Wells Business Unit(/1/).... underground steam/met low 5.2 1.7 ----- Total...................... 16.2 =====
- -------- (1) The Wells Business Unit consists of the Lightfoot No. 1 and No. 2 mines. Big Mountain/Robin Hood The Big Mountain/Robin Hood Business Unit is based near Prenter, West Virginia. Big Mountain No. 16 mine uses continuous miners, which produced 1.3 million tons of steam coal in 1998. Robin Hood No. 9 mine uses continuous miners which produced 500,000 tons of steam and metallurgical coal in 1998. Federal No. 2 The Federal No. 2 mine, near Fairview, West Virginia, produced 4.4 million tons of steam coal in 1998 using longwall mining. Coal produced from the Federal No. 2 mine has a sulfur content only slightly above that of low sulfur coal and, as a result, is more marketable than most high sulfur coal. Pond Fork Business Unit and Contract Mines The Pond Fork Business Unit consists of the Harris No. 1 mine and the Rocklick preparation plant. The Harris No. 1 mine, near Bald Knob, West Virginia, produced approximately 2.5 million tons of low sulfur steam coal in 1998. This business unit uses a longwall and two continuous miner sections. The Harris preparation plant has the capability to load coal on two competing rail systems thereby enabling it to minimize transportation costs. The Rocklick preparation plants process coal produced from Eastern Associated reserves by contract mining companies. This preparation plant, located in West Virginia, along with the Kopperston preparation plant which closed in June 1998, processed approximately 5.8 million tons of steam and metallurgical coal in 1998. 71 Wells The Wells Business Unit in Boone County, West Virginia, produced 1.7 million tons of metallurgical and steam coal during 1998. The business unit consists of the Lightfoot No. 1 and No. 2 mines and the Wells preparation plant. The Lightfoot No. 1 mine, near Wharton, West Virginia, produced approximately 700,000 tons of steam and metallurgical coal in 1998 with two continuous miner sections. The Lightfoot No. 2 mine, also near Wharton, operates two continuous miner sections and produced 1.0 million tons of steam and metallurgical coal during the same year. PEABODY COAL COMPANY ("PCC") PCC, based in Charleston, West Virginia, operates six mines in the midwestern United States which collectively produced 19.4 million tons of coal in 1998. PCC's four underground and two surface mines, along with five preparation plants and three barge loading facilities, are located in Kentucky, Illinois and Indiana and employed 1,893 people as of March 31, 1998. More than 90% of PCC's coal is shipped to 12 electric utilities in seven states, principally in the Midwest. Most of this coal is sold under CSAs of five or more years in length. Eight percent of sales are to U.S. industrial customers who use the coal to produce their own electricity and steam power. About 49% of PCC's coal is transported to customers by river barge, 49% by rail and most of the balance is carried on overland conveyor belts to nearby power plants. The following table provides a summary of the main characteristics of the principal mines of PCC:
AVERAGE TYPE SULFUR SEAM 1998 MINE MINE TYPE OF COAL CONTENT THICKNESS PRODUCTION - ------------------------------ ----------- ------- ------- --------- ---------- (FEET) (TONS IN MILLIONS) PCC Camp No. 1 and No. 11........ underground steam high 5.1/4.9 6.5 Hawthorn..................... surface steam high 3.0 3.3 Marissa...................... underground steam high 6.5 4.0 Midwest Business Unit (Ken(/1/) and Martwick)..... underground steam high 4.5/4.8 1.6 Lynnville 9.0 4.0 Squaw Creek(/1/) surface steam high 6.0 ......................... ----- Total....................... 19.4 =====
- -------- (1) The Ken and Squaw Creek mines were depleted in 1997. Camp The Camp Business Unit, near Morganfield, Kentucky, produced 6.5 million tons of coal in 1998. The Camp No. 1 mine has five continuous miner sections using both continuous haulage systems and shuttle car haulage. The Camp No. 11 mine uses PCC's one longwall mining machine and three continuous miners for development. Hawthorn The Hawthorn mine near Carlisle, Indiana, produced 3.3 million tons of steam coal in 1998 using three draglines. Marissa The Marissa Business Unit, located near Marissa, Illinois, produced 4.0 million tons of coal. It consists of the Marissa underground mine, the Randolph Preparation Plant and associated transportation facilities. The Marissa mine uses six continuous miners. 72 Midwest The Midwest Business Unit near Graham, Kentucky, produced 1.6 million tons of coal in 1998. The business unit consists of the Ken surface mine, which closed in 1997, the Martwick underground mine and the Gibraltar Preparation Plant and Dock. The business unit is also responsible for reclaiming PCC's closed or suspended mining operations throughout the midwest. Lynnville/Squaw Creek The Lynnville/Squaw Creek Business Unit, near Lynnville, Indiana, produced approximately 4.0 million tons of coal in 1998. The Squaw Creek mine, which produced approximately 1.4 million tons of coal, closed in 1997 due to depletion of its reserves. The Lynnville mine uses two draglines and an electric shovel and produced 3.0 million tons of coal in 1998. LEE RANCH The Lee Ranch mine located near Grants, New Mexico, produced 4.7 million tons of low sulfur coal in 1998 and employed 252 people as of March 31, 1998. Lee Ranch shipped its coal to two customers in Arizona and New Mexico under CSAs. It is a surface mine and uses truck and shovel mining. PATRIOT COAL Patriot Coal operates one surface mine and one underground mine in Henderson County, Kentucky and one surface mine in Ohio County, Kentucky. Patriot Coal produced approximately 1.7 million tons of coal in 1998. The underground mine has two continuous miner sections and the surface mines use truck and shovel equipment. The business unit also has a preparation plant and dock. There were 151 persons employed at the three mines and related facilities as of March 31, 1998. AUSTRALIA PEABODY RESOURCES Peabody Resources, headquartered in Sydney, New South Wales, manages and operates the Ravensworth, Narama and Warkworth mines in the Hunter River Valley, New South Wales which together shipped 10.8 million tons of low sulfur coal in 1998. Peabody Resources' share of this production is more than 7.3 million tons, of which 73% is sold domestically under CSAs and 25% is exported to Pacific Rim countries, principally under CSAs. Peabody Resources owns 100% of Ravensworth, 50% of Narama and 43.75% of Warkworth. Peabody Resources employed 1,013 people as of March 31, 1998. Peabody Resources manages and holds a 35% interest in Bengalla, a joint venture which is developing a new surface mine in the upper Hunter River Valley. Peabody Resources also operates a Mining Services Division, based in Brisbane, Queensland, which provides specialist tunneling and underground contract mining services to the mining and civil engineering industries. The following table provides a summary of the main characteristics of Peabody Resources' mines:
COMPANY SHARE OF TYPE SULFUR AVERAGE SEAM 1998 EQUITY MINE MINE TYPE OF COAL CONTENT THICKNESS(/1/) PRODUCTION INTEREST - ------------------------ --------- --------- ------- -------------- ---------- -------- (FEET) (TONS IN MILLIONS) PEABODY RESOURCES Ravensworth............ surface steam low 5.5 4.4 100.00% Narama................. surface steam low 4.8 1.1 50.00% Warkworth.............. surface steam/met low 8.0 1.8 43.75% Bengalla(/2/).......... surface -- low -- -- 35.00% ----- Total................. 7.3 =====
- -------- (1) Includes multiple seams. (2) Under development. It is scheduled to begin production in 1999. 73 Ravensworth/Narama The Ravensworth mine, 12 miles northwest of Singleton, New South Wales, is managed by Peabody Resources under a CSA which expires in 2001 and requires the Company to produce about 4.5 million tons per year from coal reserves owned by Macquarie Generation, one of New South Wales' state electric utilities. The eight coal seams at the Ravensworth mine range from one to 26 feet thick. The overburden is pre-stripped using trucks and power shovels, followed by draglines to uncover the lower two seams. The coal is trucked from the pit to a crushing plant and then shipped raw by overland conveyor belt to Macquarie Generation's nearby Bayswater and Liddell power stations. The Narama mine opened in January 1993 and is operated as an extension of the adjacent Ravensworth facility using similar mining techniques in the same coal seams. The Narama joint venture, of which Peabody Resources owns 50%, holds a 20-year contract running to the year 2012 to supply about 2.3 million tons annually to Macquarie Generation. Warkworth The Warkworth mine, seven miles southwest of Singleton, New South Wales, produced approximately 4.1 million tons of steam and metallurgical coals in 1998 (the Company's portion of which is approximately 1.8 million tons), primarily for export. Peabody Resources manages and owns 43.75% of the Warkworth Associates Joint Venture which owns the mine. Coal at the Warkworth mine is produced from three pits using truck and shovel pre-stripping and dragline stripping techniques to uncover four to six seams. This diverse range of products is processed at Warkworth's preparation plant and blended to customer specifications before being carried by overland conveyor to the Mount Thorley rail loop and then by rail to the port of Newcastle. Warkworth owns 13.9% of the Mount Thorley facility and 4.2% of a coal loading terminal at the port. Bengalla Peabody Resources also manages and holds a 35% interest in the Bengalla joint venture which has been awarded mineral rights and a permit to develop a new surface mine near Muswellbrook, New South Wales, in the upper Hunter River Valley. The Company expects the new mine to produce up to six million tons of steam coal per year for export beginning in 1999. The joint venture partners include Taiwanese and Korean electric utilities and Japanese and Korean trading companies. PEABODY DEVELOPMENT COMPANY As of October 1, 1996, Peabody Development owned or controlled approximately 3.2 billion tons of the Company's unassigned proven and probable reserves and managed over 100,000 acres of land. Peabody Development also operates a computerized land management system which maintains a record of the Company's U.S. coal reserves and coal-related land holdings, and is responsible for the disposal of surplus lands and non-strategic reserves. OTHER Peabody holds a 43.3% interest in Black Beauty, which is Indiana's largest coal producer and which operates ten mines in Indiana and two mines in southern Illinois. Black Beauty is a non-union (except for one of the Illinois operations), relatively low cost producer of high and low sulfur coal which is attractive to midwestern utilities, particularly in Indiana. The other participants are Pittsburg and Midway Coal Mining Co., with a 33.3% interest, and Black Beauty Resources, Inc., with a 23.3% interest. Black Beauty operates 13 mines which shipped 12.6 million tons of coal in 1997. Dominion Terminal Associates is one of the largest U.S. coal export facilities with throughput capacity of approximately 24.0 million tons annually. Dominion Terminal Associates, located in Newport News, Virginia, is 30% owned by the Company. The other participants are Arch Coal, Inc., with a 17.5% interest, The Pittston 74 Company, with a 32.5% interest and Westmoreland Coal Company, with a 20% interest. In addition, the Company owns a 28% interest in LRCS Limited Partnership, which owns a rail spur to the Lee Ranch mine. LONG-TERM COAL CONTRACTS United States Peabody has a large portfolio of CSAs. For the year ended March 31, 1998, 92% of Peabody's sales volume was sold under CSAs. As of March 31, 1998, the Company had CSAs for more than 1.0 billion tons of coal with terms ranging from one to 17 years and with an average volume-weighted remaining term of 5.7 years. Typically, customers enter into CSAs to secure reliable sources of coal at predictable prices, while the Company seeks stable sources of revenue to support the investments required to open, expand, maintain or improve productivity at mines needed to supply such contracts. Such contracts are negotiated in the ordinary course of business. See "--Legal Proceedings." Contract Terms The terms of CSAs result from bidding and extensive negotiations with customers. Consequently, the terms of such contracts typically vary significantly in many respects, including price adjustment features, price reopener terms, coal quality requirements, quantity parameters, flexibility and adjustment mechanics, permitted sources of supply, treatment of environmental constraints, options to extend and force majeure, termination and assignment provisions. Price reopeners are present in most of the recently negotiated contracts over three years in duration and usually occur midway through a contract or every two to three years, depending upon the length of the contract. Reopeners allow the contract price to be renegotiated in order to be in line with the market price prevailing at the time. In some circumstances, the utilities have an option to terminate the contract if prices have increased by over 10% from the price at the commencement of the contract or if the parties do not agree on a new price. The Company attempts to have similar termination rights if the price falls by 10% or if the parties do not agree on a new price. Base prices are set at the start of a contract and are then adjusted at intervals for changes due to inflation and, in many cases, changes in costs such as taxes, reclamation fees, black lung charges and royalties. The inflation adjustments are measured by public indices, the most common of which is the implicit price deflator for the gross domestic product as published by the U.S. Department of Commerce. The base price is then adjusted to a negotiated market price when there is a price reopener. Quality and volumes for the coal are stipulated in CSAs, although buyers normally have the option to vary volume by up to 10% if necessary. Variations to the quality and volumes of coal may lead to adjustments in the contract price. CSAs typically stipulate procedures for quality control, sampling and weighing. Most CSAs contain provisions requiring the Company to deliver coal within certain ranges for specific coal characteristics such as Btus, sulfur, ash, grindability and ash fusion temperature. Failure to meet these specifications could result in economic penalties or termination of the contracts. Contract provisions in some cases set out how coal volumes will be made up in the event of a force majeure, including such events as strikes, adverse mining conditions or serious transportation problems. More recent contracts stipulate that this tonnage can be made up by mutual agreement or at the discretion of the buyer. Buyers often insert similar clauses covering changes in environmental laws. The Company has negotiated the right to supply coal that complies with any new environmental requirements rather than allowing the contract to terminate if the customer claims that the coal type supplied previously may no longer be used. CSAs typically contain termination clauses if either party fails to comply with the terms and conditions of the contract. In certain contracts, the Company has a right of substitution, allowing it to provide coal from different mines as long as it is of a certain specified quality and will be sold at the same delivered cost. The terms set out above are common to most contracts. There are certain contracting terms that differ between a standard "eastern U.S." contract and a standard "western U.S." contract. One difference relates to 75 the sampling locations: in the eastern U.S. region, approximately 50% of customers require that the coal is sampled and weighed at the destination whereas in the western United States all samples are still taken at source. Also, historically, the duration of contracts has been shorter in eastern U.S. regions; they are now more of a similar length, although a larger percentage of eastern U.S. coal is purchased on the spot market compared to western U.S. coal. Traditionally, the eastern U.S. market is a short-term market as there are a larger number of smaller mining operations in the eastern U.S. coal market and customers can therefore negotiate new contracts more frequently in order to obtain a better price. This has also led to a larger number of spot market transactions in eastern U.S. regions. Western U.S. contracts normally stipulate that certain production taxes and coal royalties are reimbursed in full by the buyer rather than being a pricing component within the contract. These items are a significant portion of the western U.S. coal price while they are a less material portion of the eastern U.S. coal price. Historically, CSAs were priced above the spot prices for coal. However, in the past several years the price of coal has been very competitive, with new contracts being priced at or near existing spot rates. The length of sales contracts has decreased significantly over the last two decades as competition in the coal industry has increased and, more recently, as the electricity generators have prepared themselves for the Clean Air Act Amendments and the impending deregulation of their industry. The Company believes that the average length of CSAs was 20 years in the 1970s and 10 years in the 1980s but it fell to one to two years in the early 1990s. However, in the last three years, there has been a return to longer term contracts of five to ten years in length, but customers have insisted on price reopeners every two or three years, which provide them with the security of having coal under contract and knowing that the price will not significantly exceed market. The Company's portfolio of utility coal sales is more heavily weighted towards contract sales, while the coal industry generally has a greater reliance on spot sales. These CSAs tend to limit the Company's exposure to any fluctuation in spot market prices and the uncertainty of marketing its production capacity. The premiums that the Company gains on these contracts allow it to price incrementally on other deals with additional sales being made on the spot market at the market price prevailing at the time of the sale, helping the Company increase its market share. Contract Expirations Peabody's CSAs have an average volume-weighted remaining term of 5.7 years. As the Company's CSAs expire, the Company intends to negotiate new contracts in order to maintain its high percentage of volume sold through CSAs and low percentage of volume sold into the spot market. When a coal company's contracts expire, that company is exposed to the risk of having to sell coal into the spot market, which may be subject to lower and more volatile prices. The total sales commitments corresponding to the contracts set out above are approximately 1.0 billion tons of coal, assuming all the contracts run through to their expiration date. Powder River contracts comprise approximately 53% of this total commitment. This tonnage commitment may vary depending on future performance, buyer contractual elections and other contractual provisions. The Company's profits could decline as its major contracts are repriced from the existing prices to the estimated future spot rates at the contract reopener or expiration dates. The Company has assumed that the volume of coal sales will remain unchanged and new sales outlets will be found as current contracts expire. The challenge for the Company is to negotiate prices at above-spot rates to lessen the potential loss of profits. Australia In fiscal 1998, approximately 73% of Peabody Resources' 7.3 million-ton share of coal produced by the Australian mines was sold under CSAs to the New South Wales power utility, Macquarie Generation. The remainder was exported to Pacific Rim countries. Coal from the Ravensworth and the Narama mines is sold to Macquarie Generation under contracts which expire in 2000 and 2012, respectively. The contracts have price 76 adjustment provisions which are based on the qualities of coal delivered and changes in indices of mining costs. All of the output from the Warkworth mine is exported: 75% is sold under contracts, including contracts with the other joint venture partners in Warkworth, and the remaining 25% is sold on the spot market. Peabody Resources' export contracts normally provide for annual price renegotiations. See "--Legal Proceedings." TRANSPORTATION Coal for domestic consumption is usually sold at the mine and transportation costs are normally borne by the purchaser. Export coal is usually sold at the loading port. The ocean freight is paid by the purchaser. Shipping costs from the mine to the port are usually borne by the producer. The majority of the Company's sales volume is shipped by rail, but a portion of the Company's production is shipped by other modes. For example, coal from the Company's Camp complex in Kentucky is shipped by barge to its customer, TVA's Cumberland plant in Tennessee. Coal from the Black Mesa mine in Arizona is transported by a 273-mile coal-water pipeline to the Mohave Power Station in southern Nevada. Coal from the Seneca mine in Colorado is transported by truck to a nearby power plant. Other mines transport coal by rail and barge or by rail and lake carrier on the Great Lakes. The Company shipped approximately 3.5 million tons in fiscal 1998 to Dominion Terminals Associates' loading port in Newport News, Virginia, a coal loading port in which the Company has a 30% interest. From this facility, one of the largest coal export facilities in the United States, the coal is exported to customers in Japan, Europe and South America. All coal from the Company's Powder River Basin mines is shipped by rail, and two competing railroads, the BNSF and the Union Pacific, serve three of the Company's four southern Powder River Basin mines. Approximately 8,000 unit trains are loaded each year to accommodate the coal shipped by the Company's four mines in the southern Powder River Basin which totaled 91.7 million tons in fiscal 1998. A unit train generally consists of 100 to 110 rail hopper cars, each car capable of holding 100 to 120 tons of coal. Managing the loading of trains and barges is the responsibility of the Company's two transportation departments, with one responsible for the western U.S. coal mines and the other for the eastern U.S. mines. Due to its modern coal-loading facilities and the experience of its transportation coordinators, management believes the Company enjoys good relationships with the rail carriers and barge companies. Peabody Resources ships all of its coal production from the Ravensworth and Narama mines, which account for 75% of its total sales, by overland conveyer to the nearby Macquarie Generation's Bayswater and Liddell power stations. Coal from Peabody Resources' Warkworth operations is shipped to Newcastle by rail, where it is sold to export customers. Peabody Resources owns 13.9% of the Mount Thorley railroad load out facility and 4.2% of the coal loading facility at the port. SALES AND MARKETING COALSALES and COALTRADE undertake the sales and marketing functions for the Company's U.S. operating subsidiaries, including exports from the United States. COALSALES charges each mining subsidiary for acting as an agent in the sale and marketing of the coal produced, and it generates profits through its brokering and agency activities. COALTRADE buys and resells coal produced by a number of third parties. As of March 31, 1998, they had 53 employees located at five sites. The Company annually prepares a marketing plan that sets out the sales targets for the next five years by region, coal type and markets. The strategic plan formulates and concentrates the ongoing work carried out by the sales and marketing teams to increase the Company's sales in different markets and to expand present markets through different sales and marketing initiatives. The sales teams at each location are responsible for formulating the marketing plan for their region. This regional plan is reviewed by the president of each company and then passed on to the marketing services team. The overall group plan is then formalized and authorized. The majority of sales contracts won by the Company are through competitive tenders; although, where the Company is aware of an opportunity, it may approach its customers or potential customers with a sales proposal. The pricing process for these approaches is similar, although pricing for tenders is usually more competitive. 77 COMPETITION The markets in which the Company sells its coal are highly competitive. The top twenty producers in the U.S. coal industry produce approximately 70% of total U.S. coal, although there are approximately 1,000 coal producers in the United States. The Company's principal competitors in its coal operations are other large coal producers. The Company's largest competitors are Cyprus Amax Coal Company, CONSOL Coal Group, ARCO Coal Co., Kennecott Energy Co., Arch Coal, Inc., Zeigler Coal Holding Company, Kerr-McGee Coal Corp. and A.T. Massey Coal Company, which collectively produced approximately 36% of total U.S. coal production in 1996. 1996 U.S. PRODUCTION VOLUMES OF MAJOR COAL PRODUCERS
PRODUCTION COMPANY TOTAL PRODUCTION SHARE GEOGRAPHIC FOCUS - ------------------------ ------------------ ---------- ---------------- (TONS IN MILLIONS) PEABODY................. 156.7 14.7% NATIONAL Cyprus Amax............. 75.4 7.1 National CONSOL.................. 71.6 6.7 NAPP, CAPP, ILB ARCO Coal(/1/).......... 50.9 4.8 SPRB, WB Arch Coal............... 47.4 4.5 CAPP, ILB Kennecott............... 45.1 4.2 SPRB, NPRB, WB A.T. Massey............. 31.9 3.0 CAPP Zeigler Coal............ 31.4 3.0 National Kerr-McGee(/2/)......... 31.3 2.9 SPRB, ILB Texas Utilities......... 29.2 2.7 Texas Lignite ------- ----- Top 10 Total........... 570.9 53.6% Other Producers......... 493.0 46.4 ------- ----- U.S. Total............. 1,063.9 100.0%
- -------- Source:NMA, Facts About Coal, 1997-98 (for individual production); EIA for U.S. total production. Key: NAPP=Northern Appalachia; CAPP=Central Appalachia; SAPP=Southern Appalachia; ILB=Illinois Basin; WB=Western Bituminous; SPRB=Southern Powder River Basin; and NPRB=Northern Powder River Basin. (1) Arch Coal acquired ARCO Coal's U.S. coal reserves in June 1998. (2) Kennecott acquired Kerr-McGee's Powder River Basin coal reserves, which represented approximately 24.5 million tons of coal production in 1996, in June 1998. The markets in which the Company sells its coal are affected by a number of factors beyond the Company's control. Continued demand for the Company's coal and the prices obtained by the Company depend primarily on the coal consumption patterns of the electricity industries in the United States and the Pacific Rim countries, the availability, location (and therefore the cost of transportation), price of competing coal and alternative electricity generation and fuel supply sources such as natural gas, oil, nuclear and hydroelectric. Coal consumption patterns are affected primarily by the demand for electricity, environmental and other governmental regulations and technological developments. In recent years there has been excess coal production capacity in the United States due to increased development of large surface mining operations in the western United States, more efficient mining equipment and techniques and reduced consumption of high sulfur coal. Competition resulting from excess capacity tends to cause producers to reduce prices and to pass productivity gains achieved at the mines through to customers. The Company competes on the basis of coal quality, delivered price, customer service and support and reliability. In the six years ended December 31, 1996, Australian saleable coal production increased by 18% or 3.4% per annum. Total Australian coal production rose 3.1% in 1996. The Company's principal Australian competitors are coal companies owned by large mineral or oil producing companies, although one of the top ten competitors is a state-owned enterprise. SUPPLIERS The main types of goods purchased by the Company are mining equipment and replacement parts, explosives, fuel, tires and lubricants. The Company also purchases coal from third parties to satisfy some of its 78 customer contracts. Purchases of capital goods, materials and services are approximately $550 million per annum, which is approximately 25% of the Company's annual revenue. The supplier base providing these goods has been relatively consistent in recent years as the Company has many long established relationships with its key suppliers. Between 25% and 30% of goods and services are supplied by the top ten suppliers, and some 70% of goods are provided by the top 100 suppliers. It is with these main suppliers that the large contracts are held. The Company does not have any supply arrangements with related parties and all transactions are carried out on an arm's length basis. Peabody considers all suppliers of a particular category of supplies to be interchangeable and does not consider the Company to be vulnerable to over-dependence on any one supplier. Since 1990, the Company has invested approximately $400 million to replace depleting mines with new, more profitable production capacity and to position the Company for continued earnings growth in high growth markets. Approximately $900 million was invested to replace assets at existing operations. Long term planning is essential since there are long lead times between order and delivery for most of the large capital items. A new stripping shovel, for example, may take up to a year to obtain, and a truck between four and six months. Capital equipment suppliers deliver the goods to the mines and help the Company install the equipment. CERTAIN LIABILITIES The Company's long-term liabilities in the United States for pensions, retiree health care, work-related injuries and illnesses, and mine reclamation reflect the Company's commitment to its employees and to environmental stewardship. The total amount of these liabilities reflects the size, diversity and changing nature of the Company, which has been transformed from a historically midwestern, union-oriented, high sulfur producer into a much larger, predominantly low sulfur producer from nearly every U.S. coal region and Australia. The majority of these liabilities relate to the past operations of operating subsidiaries, which used to have a greater number of employees and mines than exist today in the transformed Company. All U.S. coal companies are subject to laws and regulations governing mine reclamation and other environmental liabilities for work-related injuries and illnesses. In addition, labor contracts with the UMWA and voluntary arrangements with non-union employees include long-term benefits, notably health care coverage for retired and future retirees and their dependents. The Company provides reserves for a substantial portion of these obligations. These obligations fall into four principal categories: reclamation, workers' compensation (including black lung), pensions and retiree health care. Reclamation. All coal mining companies must return the land on which they mine to its original state. Reclamation liabilities primarily represent the future costs to restore surface lands to productivity levels equal to or greater than pre-mining conditions, as required by SMCRA. In limited instances, this liability is recoverable from customers under the terms of CSAs. Short-term ongoing reclamation activities are undertaken as areas are disturbed in the mining process. Long-term reclamation and mine closing costs are projected and accrued for during the mine life. Other environmental liabilities such as air and water quality are also recorded. The long-term reclamation costs, mine-closing costs and other environmental liability accruals totaled approximately $490.1 million on the Company's pro forma balance sheet as of March 31, 1998, $20.3 million of which is categorized as Other Noncurrent Liabilities and $8.5 million of which is a current liability. The amount that is included as an operating expense for the pro forma year ended March 31, 1998 was $12.4 million, while the related cash expense for such liability was $39.1 million. See "--Environmental" and "Regulatory Matters." Workers' Compensation. These liabilities represent the actuarial estimates for compensable, work-related injuries (traumatic claims) and occupational disease, primarily black lung disease (pneumoconiosis). The Federal Black Lung Benefits Act requires employers to pay black lung awards to former employees who filed claims after July 1, 1973. Prior claims are paid from the Black Lung Trust Fund, which is supported by an excise tax on all U.S. coal production. On a pro forma basis, these liabilities will be discounted at 7.25%. These liabilities 79 totaled approximately $263.8 million on the Company's pro forma balance sheet as of March 31, 1998, $39.9 million of which is a current liability. The amount that was included as an operating expense for the pro forma year ended March 31, 1998 was $25.2 million, while the related cash expense for such liability was $41.9 million. Pension Related Provisions. These costs represent the unfunded actuarially- estimated cost of paying pension benefits to current active employees when they retire. Provisions for active employees reflect their service to date and additional amounts are provided so that the total liability is accrued when the employee actually retires. Annual contributions to the pension plans are determined by consulting actuaries based on ERISA minimum funding standards. On a pro forma basis, these liabilities will be discounted at 7.25%. These liabilities totaled approximately $11.2 million on the Company's pro forma balance sheet as of March 31, 1998, $13.0 million of which is a current liability. The amount that was included as an operating expense for the pro forma year ended March 31, 1998 was $7.3 million, while the related cash expense for such liability was $5.5 million. Retiree Health Care. Consistent with SFAS 106, the Company records a liability representing the estimated cost of providing retiree health care benefits to current retirees and active employees who will retire in the future. Provisions for active employees represent the amount recognized to date, based on their service to date; additional amounts are provided periodically so that the total liability is accrued when the employee retires. On a pro forma basis, these liabilities will be discounted at 7.25%. A second category of retiree health care obligations represents the liability for future contributions to the UMWA Combined Fund created by federal law in 1992. This multi-employer fund provides health care benefits to a closed group of former employees who retired prior to 1977; no new retirees will be added to this group. The liability is subject to increases or decreases in per capita health care costs, offset by the mortality curve in this aging population of beneficiaries. The retiree health care liabilities totaled approximately $1,036.3 million on the Company's pro forma balance sheet as of March 31, 1998, $48.9 million of which is a current liability. The amount that was included as an operating expense in the pro forma year ended March 31, 1998 was $76.2 million, while the related cash expense for such liability was $49.1 million. Obligations to the Combined Fund totaled $74.8 million on the Company's pro forma balance sheet as of March 31, 1998, $8.8 million of which is a current liability. The amount that was credited to operating income for the pro forma year ended March 31, 1998 was $0.5 million, while the related cash expense for such liability was $11.8 million. The active management of these liabilities is a key focus of senior executives. While variances have occurred within a category of liability, as a whole cash expenses for these liabilities has approximated the amounts charged to earnings. Provisions for these liabilities reflect standard U.S. coal industry accounting practices. These costs are borne by the operating subsidiaries from which the obligations arose. RESEARCH AND DEVELOPMENT The Company places great emphasis on research and development of new technologies in the coal industry. The Company's engineering staff and purchasing departments work with manufacturers to design and produce equipment that management believes will add value to the business. For example, the Company has worked with a manufacturer to design larger trucks to haul overburden and coal at various mines throughout the Company. The Company was the first to use 265-ton haul trucks, which are now standard in the industry. In Arizona, the Company helped to design custom-built 300-ton haul trucks. The Company also conducts research and development in-house. For example, the Company helped develop a remote controlled continuous miner. Previously, continuous miners were driven manually and, due to the difficulty of obtaining a clear view of the coal seam, were not always accurate. Remote controlled continuous miners are now standard throughout the industry. 80 The Company is the largest user of nuclear analyzers among coal producers, according to the manufacturer of this sophisticated equipment. Nuclear quality analyzers allow continuous analysis of certain coal quality parameters such as sulfur content. Their use ensures consistent product quality and helps customers meet stringent air emission requirements. The Company also uses GPS (global positioning satellite) technology extensively in its larger surface mining operations to ensure proper mine layout. CITIZENS POWER Industry Overview Electricity is the most prevalent commodity sold in the U.S. economy, with retail volume in 1997 exceeding $214 billion according to EIA. While the independent power marketing industry is in a developmental stage, in 1997 the volume of megawatt hours traded grew 418% from the volume traded in 1996, according to FERC. The U.S. electricity market is highly fragmented with more than 3,000 entities selling power on a wholesale and retail basis, including more than 200 investor-owned utilities, 50 major federal and municipally-owned utilities and hundreds of municipal power entities and rural co-operatives. Historically, these entities have been highly-regulated, but with the onset of deregulation, the Company expects the role of power marketing companies to continue to grow. The Company believes that deregulation will create new market opportunities for power and fuel trading, energy contract restructuring and for new products, such as options, to facilitate the rationalization of the electricity market. Citizens Power Overview Citizens Power is a licensed power marketer that trades and markets electric power and other energy commodities and related commodity risk management products. According to FERC, for the quarter ended December 31, 1997, Citizens Power was among the top ten of more than 200 FERC-licensed power marketers as measured by number of megawatt hours bought and sold. Citizens Power also structures and trades electricity and fuel-related risk management products and provides services related to the restructuring of generation and transmission assets. Citizens Power obtained the first power marketing license from FERC in 1989. Since that time, the Company has continued to solidify its position as an innovator in the U.S. power marketing industry. At present, Citizens Power is an integrated energy company with business activities in three main areas: (i) power/energy sales and trading, (ii) transaction/asset restructuring and (iii) fuel/power integration. Power/Energy Sales and Trading The Company executes short-term, intermediate-term and long-term trades of both physically and financially settled electricity and natural gas contracts and the Company is also preparing to enter the oil and coal trading markets. The Company's trading activities provide transmission coverage throughout the United States, maximizing access to counterparties and increasing liquidity. The Company uses its trading activities as a platform to develop higher margin structured risk management products and to support its asset restructurings. The Company manages its trading exposure with a value-at-risk measurement, limiting the exposure to certain defined limits. Transaction/Asset Restructuring Transaction restructuring creates value by correcting inefficiencies in ownership, operation, dispatching, pricing, risk allocation, regulation of power supply assets and contractual relationships. The transactions enhance value by using financial leverage and tax-advantaged structures, managing and reducing the forward curve of power costs, reallocating transactional risks and arbitraging supply costs and discount rates. There is approximately 35,000MW of NUG capacity in the United States. This capacity is purchased through long-term contracts which are priced significantly above the current market rates. The Company uses its 81 expertise to restructure these assets, creating solutions for all participants. Each transaction is unique and requires an established trading infrastructure, strong industry-wide relationships and complex negotiations with multiple parties. Although many competitors have attempted to structure their own transactions, the Company believes it is the only power marketer which has successfully closed this type of transaction. Fuel/Power Integration Through Citizens Power's Powerfuels group, the Company restructures fuel contracts by replacing long-term above-market coal contracts with higher profit integrated power/coal/gas transactions. In addition, the Company aggressively pursues coal switching opportunities to obtain new markets by packaging coal, power, technical assistance and financing. Cross-commodity swaps, coal tolling and other structured products provide opportunities to increase overall market share, profitability and risk mitigation. The Company also pursues long-term Orimulsion(R) conversion supply contracts and plant conversion/acquisition projects. Orimulsion is a Venezuelan fuel oil that burns cleanly if scrubbed. Florida is currently examining the use of Orimulsion and, if accepted, the Company believes other states will follow. Information Technology Citizens Power has made significant investments in an integrated information technology infrastructure. The Power Trade System ("PTS") links the risk management, trading and accounting functions providing for integrated market, credit and operational risk management. PTS was designed from the existing infrastructure and developed using the latest client-server technology, allowing for flexible in-house customization and expansion. The system has significant capacity for increasing trading volumes. EMPLOYEES OF THE COMPANY As of March 31, 1998, the Company had a total of 7,344 employees, 5,466 of whom worked in coal production, 1,878 of whom worked in the management of its coal business and 116 of whom worked in Citizens Power. Of these employees, 6,331 worked in the United States and 1,013 worked in foreign countries. Approximately 56% of the Company's U.S. coal employees are affiliated with unions. Relations with organized labor are extremely important to the viability of the Company. Union labor west of the Mississippi is represented by the UMWA and falls under the Western Surface Agreement, which was ratified in 1996 and is effective through August 31, 2000. Union labor east of the Mississippi is also represented by the UMWA but falls under the National Bituminous Coal Wage Agreement ("NBCWA"). On December 16, 1997, the NBCWA, a five-year labor agreement effective from January 1, 1998 to December 31, 2002, was ratified by the UMWA. The agreement, which was ratified 10 months prior to expiration of the current agreement, sets forth terms that both sides felt were positive. The Australian coal mining industry is highly unionized and the majority of workers employed at Peabody Resources are members of trade unions. These employees are represented by three unions: the United Mine Workers, which represents the production employees, and two unions that represent the other staff. Since the Company acquired Peabody Resources in 1993, there have not been any significant disputes or stoppages at mines operated by Peabody Resources. The miners at Warkworth mine signed a three year labor agreement which expires in September 1999. The miners at the Ravensworth and Narama mines signed a two year labor agreement which expired in March 1998, but negotiations are ongoing and there have been no resulting work stoppages to date. LEGAL PROCEEDINGS From time to time, the Company is involved in legal proceedings arising in the ordinary course of its business. Management believes it is adequately reserved for these liabilities and that there is no individual case pending that could have a material adverse effect on the Company or its financial condition or results of 82 operations. The Company's significant legal proceedings are discussed below. Concurrent adverse resolution of such proceedings could have a material effect on the results of operations for a particular interim or annual period. Eastern Enterprises On November 1, 1993, Eastern Enterprises filed suit in the U.S. District Court for the District of Massachusetts against the Social Security Administration and the Combined Fund claiming that the Coal Act, as applied to Eastern Enterprises, violated the due process and taking clauses of the Fifth Amendment. See "Regulatory Matters." In 1994, Eastern Enterprises filed a third party complaint against Peabody Holding Company, Eastern Associated and Eastern Associated's parent company, Coal Properties Corp., seeking indemnification or contribution with respect to any liability that Eastern Enterprises may have under the Coal Act. Eastern Enterprises claimed that the amount of its Coal Act liabilities was approximately $100 million. The District Court held in 1996 that the Coal Act was constitutional. Eastern Enterprises filed an appeal with the First Circuit Court of Appeals, which affirmed the district court's decision. The U.S. Supreme Court accepted Eastern Enterprises' petition for certiorari on the constitutional claims. In a plurality decision issued on June 26, 1998, the Supreme Court found that the Coal Act as applied to Eastern Enterprises violated the takings clause of the Fifth Amendment. The UMWA beneficiaries that were assigned to Eastern Enterprises will continue to receive retiree health care benefits from the Combined Fund. The cost of providing benefits to these "orphans" should be borne by the AML fund, which is provided for in the Coal Act. Peabody Holding Company and its subsidiaries will seek to have the third- party complaint dismissed because Eastern Enterprises now has no liability under the Coal Act. The Company has asserted substantial defenses, but based on the Company's preliminary evaluation of the issues and the potential impact, the Company believes that the matter will be resolved without a material adverse effect on its financial condition or results of operations. Salt River Project Agricultural Improvement and Power District The Salt River Agricultural Improvement and Power District and the other owners of the Navajo Generating Station (collectively "Salt River") filed a lawsuit on September 27, 1996 in the Superior Court of Maricopa County in Arizona seeking a declaratory judgment that certain costs relating to final reclamation, environmental monitoring work and mine decommissioning ("Mine Decommissioning Costs"), and costs relating to life insurance and retiree health care benefits ("Retiree Health Care Costs") are not recoverable by Peabody Western under the terms of a CSA dated February 18, 1977. The contract expires in 2011. Peabody Western filed a Motion to Compel Arbitration of these claims, which was partially granted by the trial court. The trial court ruled that the Mine Decommissioning Costs were subject to arbitration but that the Retiree Health Care Costs were not subject to arbitration. Peabody Western has filed an appeal of the order denying arbitration of the Retiree Health Care Costs with the Arizona Court of Appeals which was recently denied by the Court. Peabody Western has filed a Motion for Reconsideration with the Arizona Court of Appeals. Peabody Western and Salt River are proceeding to arbitrate the Mine Decommissioning Costs issue. If Salt River is successful in the arbitration and litigation, the Company's financial condition and results of operations may be adversely affected. However, based on the Company's preliminary evaluation of the issues and the potential impact on the Company, and while the outcome of litigation and arbitration is subject to uncertainties, the Company believes that the matter will be resolved without a material adverse affect on its financial condition or results of operations. 83 Southern California Edison Company In response to a demand for arbitration by Peabody Western, Southern California Edison Company and the other owners of the Mohave Generating Station (collectively "Edison") filed a lawsuit on June 20, 1996 in the Superior Court of Maricopa County, Arizona. The lawsuit sought a declaratory judgment that Mine Decommissioning Costs and Retiree Health Care Costs are not recoverable by Peabody Western under the terms of a CSA dated May 26, 1976. The contract will expire in 2005. Peabody Western filed a Motion to Compel Arbitration, which was granted, by the trial court. Edison appealed this order to the Arizona Court of Appeals, which denied its appeal. The Arizona Supreme Court recently heard an appeal by Edison on whether these issues are arbitrable under the CSA. The parties have agreed to a stay of the arbitration until the Arizona Supreme Court determines whether the issues are the subject of arbitration under the CSA. If Edison is successful in the matter, the Company's financial condition and results of operations may be adversely affected. However, based on the Company's preliminary evaluation of the issues and the potential impact on the Company, and while the outcome of litigation is subject to uncertainties, the Company believes that the matter will be resolved without a material adverse affect on its financial condition or results of operations. Public Service Company of Colorado In August 1996, Seneca Coal Company ("Seneca") filed a demand for arbitration in accordance with the terms of an Amended Revised Coal Supply Agreement dated December 1, 1971 (the "1971 Agreement") between Seneca and three electric utilities, Public Service Company of Colorado, Salt River Project Agricultural Improvement District and PacifiCorp (the "Hayden Participants"). The Hayden Participants own the Hayden Electric Generating Station at Hayden, Colorado. The arbitration demand requested the entry of an award for Seneca and against the Hayden Participants for amounts attributable to final reclamation, mine decommissioning and environmental monitoring of the Seneca mine and life insurance and post-retirement health care costs ("post- mine closure costs"). In September 1996, the Hayden Participants filed a complaint for declaratory judgment in the District Court for the City and County of Denver seeking a judicial declaration that they were not responsible for post-mine closure costs as a matter of law. The Hayden Participants also requested declaratory and other relief with respect to other claims against Seneca. The arbitration provision in the 1971 Agreement limits the jurisdiction of the arbitrators to resolution of disputed issues of fact but the arbitrators are to determine the arbitrability of any dispute in the first instance. Accordingly, Seneca filed a motion to stay the judicial proceedings with respect to the issue of responsibility under the 1971 Agreement for post-mine closure costs pending the outcome of the arbitration. The District Court granted the motion in January 1997. Seneca has furnished the Hayden Participants with reports prepared by experts regarding estimated post-mine closure costs. Pre-hearing discovery is under way in the arbitration and hearings will take place late in calendar 1998. A decision from the arbitrators is expected in early 1999. The District Court's application of legal principles to the facts as found by the arbitrators will take place thereafter. The outcome of the arbitration and the subsequent judicial proceeding is uncertain. Entry of a judgment that the Hayden Participants are not responsible for post-mine closure costs may adversely affect the Company's financial condition and results of operations. Based on the Company's preliminary evaluation of the issues, and while the outcome of litigation is subject to uncertainties, the Company believes that the dispute will be resolved without a material adverse effect on its financial condition or results of operations. 84 Macquarie Generation In September 1997, Peabody Resources filed a lawsuit against Macquarie Generation in the Supreme Court of New South Wales, Commercial Division, seeking damages for certain coal deliveries which were not paid by Macquarie Generation and for a declaratory judgment regarding the assignment to Macquarie Generation of two long-term CSAs for the Ravensworth and Narama mines. The contracts expire in 2001 and 2012, respectively. Macquarie Generation later agreed that the two contracts were properly assigned to it. Macquarie Generation subsequently filed a cross-claim against Peabody Resources alleging that Peabody Resources breached the labor escalation provisions in the CSAs, committed misrepresentations regarding the labor costs and violated the Australian trade practices and fair trading laws in relation to the Narama contract. Macquarie Generation sought to terminate or rescind the Narama CSA and has sought damages from Peabody Resources for alleged breaches of both contracts. Even though the Company continues delivering coal, Macquarie Generation has unilaterally reduced the price that it is paying for coal deliveries under the Narama contract. Peabody Resources has vigorously opposed Macquarie Generation's claims and will seek to enforce Macquarie Generation's obligations under the contracts. A trial date is set for September 7, 1998. If Macquarie Generation is successful in the litigation, the Company's earnings and cash flow may be adversely affected depending on other sales opportunities. However, based on the Company's preliminary evaluation of the issues and the potential impact on the Company, and while the outcome of litigation is subject to uncertainties, the Company believes that the matter will be resolved without a material adverse effect on its financial condition or results of operations. Minerals Management Services The Minerals Management Service issued a preliminary administrative decision in August 1992, determining that Powder River had underpaid royalties owed to the federal government. Since that time, no further action has been taken by the agency to issue a final, appealable decision. Pending such decision, the Company plans to appeal. Criminal and civil investigations were begun by the federal government in 1993 and 1996, respectively, to examine Powder River's activities with respect to the transactions at issue in the administrative matter. Powder River has fully cooperated with these investigations by providing documents and witnesses for interview. To date, no civil or criminal charges have been brought against the Company. If such claims are made and a case is successfully argued against the Company, the Company's financial condition and results of operations may be adversely affected. However, based on the Company's preliminary evaluation of the issues and the potential impact on the Company, and while the outcome of any potential litigation is subject to uncertainties, the Company believes that the matter will be resolved without a material adverse affect on its financial condition or results of operations. ENVIRONMENTAL Federal and State Superfund Statutes The Comprehensive Environmental Response, Compensation and Liability Act and similar state laws create liability for investigation and remediation in response to releases of hazardous substances in the environment and for damages to natural resources. Under CERCLA and many state Superfund statutes, joint and several liability may be imposed on waste generators, site owners and operators and others regardless of fault. Gold Fields, its predecessors and its former parent company are or may become parties to environmental proceedings which have commenced or may commence in the United States in relation to certain sites previously owned or operated by those entities or companies associated with them. The Company has agreed to indemnify Gold Fields' former parent company for any environmental claims resulting from any activities, operations or conditions that occurred prior to the sale of Gold Fields to the Company. Gold Fields is currently involved in environmental investigation or remediation at six sites and is a defendant in litigation with private parties involving three other sites. These nine sites were formerly owned or operated by Gold Fields. EPA has placed three of these sites on the National Priorities List, promulgated pursuant to the CERCLA and one of the sites is 85 on a similar state priority list. There are a number of further sites in the United States which were previously owned or operated by such companies which could give rise to environmental proceedings in which Gold Fields could incur liabilities. Where such sites were identified, the directors of The Energy Group commissioned, in connection with the spin-off of The Energy Group, a review of publicly available information by independent environmental consultants in order to assess the estimated total amount of the liability per site and the proportion of those liabilities which Gold Fields is likely to bear. The available information on which to base this review was very limited since all of the sites except for three sites (on which no remediation is currently taking place) are no longer owned by Gold Fields. On the basis of that review, The Energy Group provided for the above environmental liabilities relating to Gold Fields in the total sum of $73.6 million as of March 31, 1997. Significant uncertainty exists as to whether these claims will be pursued against Gold Fields in all cases, and where they are pursued, the amount of the eventual costs and liabilities, which could be greater or less than this provision. As of March 31, 1998, the provision was reduced to $68.6 million to reflect expenditures incurred during the period. The Company believes that the remaining amount of the provision is adequate to cover these environmental liabilities. Although waste substances generated by coal mining and processing are generally not regarded as hazardous substances for the purposes of CERCLA, some products used by coal companies in operations, such as chemicals, and the disposal of such products are governed by the statute. Thus, coal mines currently or previously owned or operated by the Company, and sites to which the Company sent waste materials, may be subject to liability under CERCLA and similar state laws. See "Risk Factors--Risks Relating to the Company-- Government Regulation of the Mining Industry" and "Regulatory Matters." 86 REGULATORY MATTERS The Company's operations are subject to extensive regulation in the United States and Australia regarding production, sale, distribution, health and safety and environmental matters. UNITED STATES The U.S. coal mining industry is subject to regulation by federal, state and local authorities on matters such as employee health and safety, permitting and licensing requirements, air quality standards, water pollution, plant and wildlife protection, the reclamation and restoration of mining properties after mining has been completed, the discharge of materials into the environment, surface subsidence from underground mining and the effects of mining on groundwater quality and availability. In addition, the industry is affected by significant legislation mandating certain benefits for current and retired coal miners. Numerous federal, state and local governmental permits and approvals are required for mining operations. The Company believes that all permits currently required to conduct its present mining operations have been obtained. The Company may be required to prepare and present to federal, state or local authorities data pertaining to the effect or impact that a proposed exploration for or production of coal may have on the environment. Such requirements could prove costly and time-consuming, and could delay commencement or continuation of exploration or production operations. Future legislation and administrative regulations may emphasize the protection of the environment and, as a consequence, the activities of the Company may be more closely regulated. Such legislation and regulations, as well as future interpretations and more rigorous enforcement of existing laws, may require substantial increases in equipment and operating costs to the Company and delays, interruptions or a termination of operations, the extent of which cannot be predicted. See "Risk Factors--Risks Relating to the Company-- Government Regulation of the Mining Industry." The Company's independent operating subsidiaries endeavor to conduct mining operations in compliance with all applicable federal, state and local laws and regulations. However, because of extensive and comprehensive regulatory requirements, violations during mining operations occur from time to time in the industry. None of the violations to date or the monetary penalties assessed upon the Company's subsidiaries has been material. Mine Health and Safety Stringent health and safety standards have been imposed by federal legislation since the Coal Mine Health and Safety Act of 1969 was adopted. That legislation resulted in increased operating costs and reduced productivity. The Federal Mine Health and Safety Act of 1977 significantly expanded the enforcement of health and safety standards and imposed health and safety standards on all aspects of mining operations. Most of the states in which the Company operates have state programs for mine health and safety regulation and enforcement. In combination, federal and state health and safety regulation in the coal mining industry is perhaps the most comprehensive and pervasive system for protection of employee health and safety affecting any segment of U.S. industry. While regulation has a significant effect on the Company's operating costs, its U.S. competitors are subject to the same degree of regulation. One of the Company's long-term goals is to achieve excellent health and safety performance as measured by accident frequency rates and other measures. The Company believes that attainment of this goal is inherently tied to the attainment of productivity and financial goals. The Company seeks to implement this goal by: training employees in safe work practices; openly communicating with employees; establishing, following and improving safety standards; involving employees in establishing safety standards; and recording, reporting and investigating all accidents, incidents and losses to avoid reoccurrences. As evidence of the effectiveness of the Company's safety program, the Company's accident rate has fallen by 80% during the period from October 1, 1990 to March 31, 1998. 87 INJURY & ILLNESS RATE/(1)/: MINING VS. OTHER U.S. INDUSTRIES, 1995 BAR GRAPH Durable Goods 12.8 Construction 11.6 Manufacturing 10.6 Nondurable Goods 9.9 Agriculture, Forestry & Fishing 9.7 Transportation & Public Utilities 9.1 Wholesale & Retail Trade 7.5 Services 6.4 Mining 6.2 Black Lung Under the Black Lung Benefits Revenue Act of 1977 and the Black Lung Benefits Reform Act of 1977, as amended in 1981, each coal mine operator is required to secure payment of federal black lung benefits to claimants who are current and former employees and to a trust fund for the payment of benefits and medical expenses to claimants who last worked in the coal industry prior to July 1, 1973. Less than 7% of the miners currently seeking federal black lung benefits are awarded such benefits by the federal government. The trust fund is funded by an excise tax on production of up to $1.10 per ton for deep- mined coal and up to $0.55 per ton for surface-mined coal, neither amount to exceed 4.4% of the sales price. This tax is passed on to the purchaser under many of the Company's coal sales agreements. Legislation was introduced in the last Congress on black lung reform. Although this legislation died when Congress adjourned in 1997, it is expected that such legislation will be reintroduced for consideration by the current Congress. The legislation, which is expected to be introduced, would restrict the evidence that can be offered by a mining company, establish a standard for evaluation of evidence that greatly favors black lung claimants, allow claimants who have been denied benefits at any time since 1981 to refile their claims for consideration under the new law, make surviving spouse benefits significantly easier to obtain and retroactively waive repayment of preliminarily awarded benefits that are later determined to have been improperly paid. If this or similar legislation is passed, the number of claimants who are awarded benefits could significantly increase. There can be no assurance that such proposed legislation or other proposed changes in black lung legislation will not have an adverse effect on the Company. The U.S. Department of Labor has issued proposed amendments to the regulations implementing the federal black lung laws which, among other things, establish a presumption in favor of a claimant's treating physician and limit a coal operator's ability to introduce medical evidence regarding the claimant's medical condition. If adopted, the amendments could have an adverse impact on the Company, the extent of which cannot be accurately predicted. Coal Industry Retiree Health Benefit Act of 1992 The Coal Act was enacted to provide for the funding of health benefits for certain UMWA retirees. The Coal Act established the Combined Fund into which "signatory operators" and "related persons" are obligated to pay annual premiums for beneficiaries. The Coal Act also created a second benefit fund ("1992 Fund") for 88 miners who retired between July 21, 1992 and September 30, 1994 and whose former employers are no longer in business. Companies which are liable under the Coal Act must pay premiums to the Combined Fund. Annual payments made by PCC and Eastern Associated under the Coal Act are less than half of the amounts paid prior to the enactment of that Act. Liabilities associated with the Coal Act totaled $74.8 million on the Company's pro forma balance sheet as of March 31, 1998, $8.8 million of which is a current liability. The amount that was credited to operating income for the pro forma twelve month period ended March 31, 1998 was $0.5 million, while the related cash expense for such liability was $11.8 million. Environmental Laws The Company is subject to various federal, state and foreign environmental laws. These laws require approval of many aspects of coal mining operations, and both federal and state inspectors regularly visit the Company's mines and other facilities to ensure compliance. Surface Mining Control and Reclamation Act. SMCRA, which is administered by the Office of Surface Mining Reclamation and Enforcement ("OSM"), establishes mining and reclamation standards for all aspects of surface mining as well as many aspects of deep mining. SMCRA and similar state statutes, among other things, require that mined property be restored in accordance with specified standards and an approved reclamation plan. In addition, the Abandoned Mine Land Fund, which is part of SMCRA, imposes a fee on all current mining operations the proceeds of which are used to restore mines closed before 1977. The maximum tax is $0.35 per ton on surface-mined coal and $0.15 per ton on deep-mined coal. Under many of the CSAs to which the Company is a party, the fee is passed on to the purchaser. The Company accrues for the liability associated with all end of mine reclamation on a rateable basis as the coal reserve is being mined. SMCRA also requires that comprehensive environmental protection and reclamation standards be met during the course of and upon completion of mining activities. For example, SMCRA requires the Company to restore a surface mine to approximate original contour as contemporaneously as practicable with surface coal mining operations. The mine operator must submit a bond or otherwise secure the performance of these reclamation obligations. The issuance and renewal of permits for surface mining operations must be obtained from OSM or, where state regulatory agencies have adopted federally approved state programs under SMCRA, the appropriate state regulatory authority. The Company accrues for the liability associated with all end of mine reclamation on a ratable basis as the coal reserve is being mined. The estimated cost of reclamation, and the corresponding accrual on the Company's financial statements, is restated annually. The earliest a reclamation bond can be released is five years after reclamation to the approximate original contour has been achieved. All states in which the Company's active mining operations are located have achieved primary jurisdiction for SMCRA enforcement through approved state programs. Although the Company does not anticipate significant permit issuance or renewal problems, there can be no assurance that the Company's permits will be renewed or granted in the future or that permit issues will not adversely affect operations. Under previous SMCRA regulations, responsibility for any coal operator currently in violation of SMCRA could be imputed to other companies deemed, according to regulations, to "own or control" the coal operator. Sanctions included being blocked from receiving new permits and rescission or suspension of existing permits. Because of a recent federal court action invalidating these SMCRA ownership and control regulations, the scope and potential impact of the "ownership and control" requirements on the Company are unclear. OSM has responded to the court action by promulgating interim regulations, which more narrowly apply the ownership and control standards to coal companies. Although the federal action should have by analogy a precedential effect on state regulations dealing with "ownership and control," which are in many instances similar to the invalidated federal regulations, it is not certain what impact the federal court decision will have on these state regulations. The Clean Air Act. The Clean Air Act and the Clean Air Act Amendments, and corresponding state laws that regulate the emissions of materials into the air, affect coal mining operations both directly and indirectly. Direct impacts on coal mining and processing operations may occur through Clean Air Act permitting requirements and/or emissions control requirements relating to particulate matter (e.g., "fugitive dust") including future regulation of fine particulate matter measuring 2.5 micrometers in diameter or smaller. In July 1997, EPA adopted new, more stringent NAAQS for particulate matter and ozone. As a result, some states will 89 be required to change their existing implementation plans to attain and maintain compliance with the new NAAQS. Because coal mining operations emit particulate matter, the Company's mining operations and utility customers are likely to be directly affected when the revisions to the NAAQS are implemented by the states. State and federal regulations relating to implementation of the new NAAQS may restrict the Company's ability to develop new mines or could require the Company to modify its existing operations. The extent of the potential direct impact of the new NAAQS on the coal industry will depend on the policies and control strategies associated with the state implementation process under the Clean Air Act, but could have a material adverse effect on the Company's financial condition and results of operations. The Clean Air Act indirectly affects coal mining operations by extensively regulating the air emissions of SO/2/ and other compounds including nitrogen oxides emitted by coal-fueled utility power plants. Title IV of the Clean Air Act Amendments places limits on SO/2/ emissions from electric power generation plants. The limits set baseline emission standards for such facilities. Reductions in such emissions occurred in Phase I in 1995 and additional reductions will occur in Phase II in 2000 and will apply to all coal-fired power plants, including those subject to the 1995 restrictions. The affected utilities have been and may be able to meet these requirements by, among other ways, switching to lower sulfur fuels, installing pollution control devices such as scrubbers, reducing electricity generating levels or purchasing or trading emission allowances. Specific emission sources will receive these emission allowances, which utilities and industrial concerns can trade or sell to allow other units to emit higher levels of SO/2/. The effect of these provisions of the Clean Air Act Amendments on the Company cannot be completely ascertained at this time. The Company believes that implementation of Phase II will likely exert a downward pressure on the price of higher sulfur coal, as additional coal-burning utility power plants become subject to the restrictions of Title IV. This price effect is expected to result after the large surplus of emission allowances which has accumulated in connection with Phase I has been reduced, and before utilities electing to comply with Phase II by installing sulfur-reduction technologies are able to implement such a compliance strategy. The Clean Air Act Amendments also require that utilities that currently are major sources of nitrogen oxides in moderate or higher ozone nonattainment areas install RACT for nitrogen oxides, which are precursors of ozone. In addition, the recently issued, stricter ozone standards, as discussed above, are expected to be implemented by EPA by 2003. The Ozone Transport Assessment Group ("OTAG"), formed to make recommendations to EPA for addressing ozone problems in the eastern United States, submitted its final recommendations to EPA in June 1997. Based on the OTAG's recommendations, EPA recently announced a SIP call, that would require 22 eastern states to make substantial reductions in nitrogen oxide emissions. Under this proposal, EPA expects that states will achieve these reductions by requiring power plants to make substantial reductions in their nitrogen oxide emissions. Installation of RACT and additional control measures required under the SIP call will make it more costly to operate coal-fired utility power plants and, depending on the requirements of individual state attainment plans and the development of revised new source performance standards, could make coal a less attractive fuel alternative in the planning and building of utility power plants in the future. In addition, the Clean Air Act Amendments require a study of utility power plant emissions of certain toxic substances, including mercury, and direct EPA to regulate these substances, if warranted. In a recent report, EPA indicated that although it plans to further study the issue, it does not plan to propose regulations in the near future. However, future federal or state regulatory or legislative activity may seek to reduce mercury emissions and such requirements, if enacted, could result in reduced use of coal if utilities switch to other sources of fuel. Clean Water Act. The Clean Water Act of 1972 affects coal mining operations by imposing restrictions on effluent discharge into water. Regular monitoring, reporting requirements and performance standards are preconditions for the issuance and renewal of permits governing the discharge of pollutants into water. Resource Conservation and Recovery Act. The Resource Conservation and Recovery Act ("RCRA"), which was enacted in 1976, affects coal mining operations by imposing requirements for the treatment, storage and disposal of hazardous wastes. Coal mining operations covered by SMCRA permits are exempted from regulation under RCRA by statute; however the Company cannot predict whether this exclusion will continue. 90 Federal and State Superfund Statutes. CERCLA and similar state laws affect coal mining and hard rock operations by creating liability for investigation and remediation in response to releases of hazardous substances to the environment and for damages to natural resources. Under CERCLA, joint and several liability may be imposed on waste generators, site owners and operators and others regardless of fault. See "Business--Environmental-- Federal and State Superfund Statutes." Global Climate Change. The United States, Australia and over 160 other nations are signatories to the Convention which is intended to limit or capture emissions of greenhouse gases such as carbon dioxide. In December 1997 in Kyoto, Japan, the signatories to the Convention established a binding set of emissions targets for developed nations in the Kyoto Protocol. Although the specific limits under the terms of the Kyoto Protocol vary from country to country, under the terms of the Kyoto Protocol, the United States would be required to reduce emissions to 93% of 1990 levels over a five-year budget period from 2008 through 2012. Although the United States has not ratified the Kyoto Protocol and no comprehensive regulations focusing on greenhouse gas emissions are in place, such restrictions, whether through ratification of the Kyoto Protocol or other efforts to stabilize or reduce greenhouse gas emissions, could adversely impact the price and demand for coal. According to EIA's Annual Energy Outlook for 1998, coal accounts for 34% of greenhouse gas emissions in the United States, and efforts to control greenhouse gas emissions could result in reduced use of coal if electric generators switch to lower carbon sources of fuel. AUSTRALIA The Australian mining industry is regulated by Australian federal, state and local governments with respect to environmental issues such as land reclamation, water quality, air quality, dust control and noise, planning issues such as approvals to expand existing mines or to develop new mines and health and safety issues. The Australian federal government retains control over the level of foreign investment and export approvals. Industrial relations are regulated under both federal and state laws. Australian state governments also require coal companies to post deposits or give other security against land which is being used for mining, with those deposits being returned or security released after satisfactory rehabilitation. Mining and exploration in Australia is generally carried on under leases or licenses granted by state governments. Mining leases, which are typically for an initial term of up to 21 years (but which may be renewed), contain conditions relating to such matters as minimum annual expenditures, restoration and rehabilitation. Surface rights are typically acquired direct from landowners and, in the absence of agreement, there is an arbitration provision in the mining law. Environmental Primary responsibility for environmental regulation in Australia is vested in the state, rather than the federal system. Each state and territory in Australia has its own environmental and planning regime for the development of mines. In addition, each state and territory also has a specific act dealing with mining in particular, regulating the granting of mining licenses and leases. The mining legislation in each state and territory operates concurrently with environmental and planning legislation. The mining legislation governs mining licenses and leases, including the restoration of land, following the completion of mining activities. Apart from the grant of the rights to mine itself (which are covered by the mining statutes), all licensing, permitting, consent and approval requirements are contained in the various state and territory environmental and planning statutes. The particular provisions of the various state and territory environmental and planning statutes vary depending upon the jurisdiction. Despite the variation in particulars, each state and territory has a system involving at least two major phases: obtaining the developmental application and, if that is granted, obtaining the detailed operational pollution control licenses (which authorize emissions up to a maximum level) and pollution control approvals (which authorize the installation of pollution control equipment and devices). In the first regulatory phase, an application to a regulatory authority (be it a local council or a specially constituted planning tribunal) is filed. The relevant authority will either grant a conditional consent, an unconditional consent, or deny the application based on the details of the application and on any submissions or objections 91 lodged by members of the public. If the developmental application is granted, the detailed pollution control license may then be issued and such license may regulate: emissions to atmosphere; emissions in waters; noise impacts (including impacts from blasting); dust impacts; the generation, handling, storage and transportation of waste; and requirements for rehabilitation/restoration of land. Each state and territory in Australia also has either a specific statute or certain sections in other environmental and planning statutes relating to the contamination of land and vesting powers in the various regulatory authorities in respect of the remediation of contaminated land. Those statutes are based on varying policies--the primary difference between the statutes is that in certain states and territories, liability for remediation is placed upon the occupier of land, regardless of the culpability of that occupier for the contamination. In other states and territories, primary liability for remediation is placed on the original polluter, whether or not the polluter still occupies the land. If the original polluter cannot itself carry out the remediation, then a number of the statutes contain provisions which enable recovery of the costs of remediation from the polluter as a debt. Many of the environmental planning statutes across the states and territories contain "third party" appeal rights in relation, particularly, to the first regulatory phase. This means that any party has a right to take proceedings for a threatened or actual breach of the statute, without first having to establish that any particular interest of that person (other than a member of the public) stands to be affected by the threatened or actual breach. As a result, this makes third party challenges to consents for the carrying out of development relatively common. Accordingly, in most states and territories throughout Australia, the carrying out of mining activities involves a number of regulatory phases. Following exploratory investigations pursuant to a mining license, the activity proposed to be carried out must be the subject of an application for the activity or development. This phase of the regulatory process, as noted above, usually involves the preparation of extensive documents to constitute the application, addressing all of the environmental impacts of the proposed activity. It also generally involves extensive notification and consultation with other relevant statutory authorities and members of the public. Once a decision is made that the development can proceed (by the grant of a development consent, permit or other approval) then a formal mining lease can be obtained under the mining statute. In addition, operational licenses and approvals can then be applied for and obtained in relation to pollution control devices and emissions to the atmosphere, to waters and for noise. The obtaining of licenses and approvals, during the operational phase, generally does not involve any extensive notification or consultation with members of the public, as most of these issues are anticipated to be resolved in the first regulatory phase. Occupational Health and Safety The combined effect of various state and federal statutes requires an employer to ensure that persons employed in a mine are safe from injury risks by providing a safe working environment and systems of work; safe machinery, equipment, plant and substances; and appropriate information, instruction, training and supervision. In recognition of the specialized nature of mining and mining activities, specific occupational health and safety obligations have been mandated under state legislation that deals specifically with the coal mining industry. Company employers, owners, directors and managers, persons in control of work places, mine managers, supervisors and employees are all subject to these duties. It is mandatory for an employer to have insurance coverage in respect of the compensation of injured workers; similar schemes are in effect throughout Australia which are of a no fault nature and which provide for benefits up to a prescribed level. The specific benefits vary from jurisdiction to jurisdiction, but generally include the payment of weekly compensation to an incapacitated employee, together with payment of medical, hospital and related expenses. The injured employee has a right to sue his or her employer for further damages if a case in negligence can be established. 92 MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY Set forth below are the names, ages as of March 1, 1998 and current positions with the Company and its subsidiaries of the Company's executive officers and Directors. The terms of the Directors of the Company will expire upon the election and qualification of successors at the annual meetings of stockholders.
NAME AGE POSITION - ------------------------ --- -------------------------------------------------- Irl F. Engelhardt....... 51 Chairman, Chief Executive Officer and Director Richard M. Whiting...... 43 President, Chief Operating Officer and Director William E. James........ 52 Chief Executive Officer--Electricity & Natural Gas and Chairman, Chief Executive Officer, Citizens Power Roger B. Walcott, Jr. .. 42 Executive Vice President W. Howard Carson........ 47 Chief Commercial Officer Robert D. Humphris...... 55 Managing Director--Australia Mark Maisto............. 42 President, Chief Operating Officer, Citizens Power Larry H. Fox............ 57 Vice President--Powder River Basin Operations George J. Holway........ 47 Vice President, Chief Financial Officer Christopher G. Farrand.. 56 Vice President, Corporate Affairs Jeffery L. Klinger...... 50 Vice President, Legal Services and Secretary Richard A. Navarre...... 37 Vice President, Sales & Marketing and President of Peabody COALSALES Company Sharon K. Schergen...... 42 Vice President--Human Resources Alan H. Washkowitz...... 57 Director Henry E. Lentz.......... 53 Director Roger H. Goodspeed...... 47 Director
Irl F. Engelhardt served as President and Chief Executive Officer of Peabody Group from 1990 to 1995 and Chairman and Chief Executive Officer of the Company since 1993 and has been a Director of the Company since June 1998. Since joining Peabody in 1979, he has held various officer level positions at the Company in the executive, sales, business development and administrative areas, including serving as Chairman of Peabody Resources Ltd. (Australia) and Chairman of Citizens Power. Mr. Engelhardt also served as an executive director of The Energy Group from February 1997 to May 1998, Chairman of Cornerstone Construction & Materials, Inc. from September 1994 to May 1995 and Chairman of Suburban Propane Company from May 1995 to February 1996. He also served as a Director and Group Vice President of Hanson Industries from 1995 to 1996. Mr. Engelhardt is past chairman of the National Mining Association, Chairman of the Coal Industry Advisory Board of the International Energy Agency, Chairman of the Center for Energy and Economic Development and a director of Mercantile Bank of St. Louis, N.A. Richard M. Whiting was promoted to President and Chief Operating Officer of the Company in January 1998 and has been a Director of the Company and a member of the Management Committee since June 1998. He served as President of Peabody COALSALES Company from June 1992 to January 1998. Since joining the Company in 1976, Mr. Whiting has held a number of operations, sales and engineering positions both at the corporate offices and at field locations. From 1989 to 1990, Mr. Whiting served as Vice President of Engineering and Operations Support. Mr. Whiting had previously served on the Transportation Committee of the National Mining Association and is currently Chairman of the National Mining Association's Safety and Health Committee. William E. James was elected Chief Executive Officer--Electricity and Natural Gas and Chairman, Chief Executive Officer, Citizen's Power in May 1998. He has also been Chief Executive Officer of Citizens since May 1997, and was Chief Executive Officer from September 1994 of its predecessor, Citizens Lehman Power L.L.C., a joint venture with Lehman Brothers. He also served on the Executive Management Committee of Peabody. He was the co-founder of Citizens Energy Corporation in 1979, and from 1987 to 1996, served as the 93 Chairman and Chief Executive Officer of Citizens Corporation, a diversified international energy holding company. Mr. James is currently a director of Tempus Fugit Corporation and Apanage Corporation. Roger B. Walcott, Jr. joined Peabody in June 1998 as Executive Vice President and a member of Peabody's Management Committee. From 1981 to 1998, he was a Senior Vice President & Director with The Boston Consulting Group where he served a variety of clients in strategy and operational assignments. He was also Chairman of The Boston Consulting Group's Human Resource Capabilities Committee. Mr. Walcott holds an MBA with high distinction from the Harvard Business School and a BA in economics from Duke University. W. Howard Carson was named Chief Commercial Officer and a member of Peabody's Management Committee in June 1998. Prior to that, he had been President of Peabody Western since 1993. Previously, he has served as Vice President of Finance and Administration for PCC from 1991 to 1993. He joined the Company in 1979 from Arthur Andersen and has held numerous financial positions including Vice President of Accounting and Vice President of Corporate Planning for Peabody. Robert D. Humphris has been Managing Director--Australia and a member of Peabody's Management Committee since May 1998. Prior to that, he had been Managing Director of Peabody Resources since April 1993. He has held management positions at various mining companies in the United Kingdom and Australia, including Managing Director of mining operations for Costain Australia Limited, which was subsequently acquired by Hanson. He was actively involved in Costain's real estate and construction activities in Australia. Mr. Humphris is a past chairman of the New South Wales Minerals Council of the Australian Coal Association. He is a member of the Coal Industry Advisory Board of the International Energy Agency, the Business Council of Australia and the State Minerals Advisory Council. He has been named to the managing board of the Port of Newcastle in Australia. Mark Maisto has been President and Chief Operating Officer of Citizens Power since February 1998. He joined the Company in 1997 as Executive Vice President of Citizens Power. Prior to joining Citizens Power he was a Senior Vice President at Lehman Brothers. At Lehman Brothers, he specialized in corporate and project finance working with electric utility companies. Prior to joining Lehman Brothers in 1987, Mr. Maisto was employed at GE Capital, where he was Director--Utility Finance. Mr. Maisto holds an M.B.A. from New York University. Larry H. Fox was named Vice President--Powder River Basin Operations in June 1998. Prior to that, he was President of Powder River since 1989. Mr. Fox previously served as Vice President of Powder River and General Manager of North Antelope Coal Company. Prior to that he also held several mine operations positions within the Company, including Mine Superintendent at the Big Sky mine in Montana and Director of Operations for the Rocky Mountain Division. He joined the Company in 1962. Mr. Fox currently serves as President of the Wyoming Mining Association and is a member of the Wyoming Coal Operators Committee. George J. Holway was appointed to his current position as Vice President and Chief Financial Officer in June 1998. Prior to that, he had been Vice President of Corporate Development with responsibilities for the Company's mining business development and land functions. After first joining the Company in 1980, Mr. Holway served in several financial positions at Peabody Holding Company including Vice President and Controller of Peabody Holding Company from 1990 to 1992. In 1992, he left the Company to become Chief Financial Officer of Zeigler Coal Holding Company, a position he held until he rejoined the Company in November 1996. Prior to joining the Company in 1980, Mr. Holway was employed by Arthur Andersen & Co.. Christopher G. Farrand has been Vice President of Corporate Affairs of the Company since June 1992. From April 1991 to June 1992, he served as President of Peabody Development Company. Between 1981 and 1992 he worked as Vice President of Government Relations for both PCC and Peabody Holding Company. Mr. Farrand joined the Company as Director of Corporate Planning for PCC in 1978. Prior to working for the Company, Mr. Farrand held several positions in the U.S. Department of Interior, including Deputy Under Secretary in 1977 and 1978 and Deputy Assistant Secretary from 1974 to 1976. He currently serves on the board of directors of the National Coal Association and the Keystone Energy Board. 94 Jeffery L. Klinger was named as Vice President of Legal Services and Secretary in May 1998. Prior to that, he had been Vice President, Secretary and Chief Legal Officer since October 1990. From 1986 to October 1990, he served as Eastern Regional Counsel for Peabody Holding Company and from 1982 to 1986 as Director of Legal and Public Affairs, Eastern Division of PCC and joined the Company as Director of Legal and Public Affairs, Indiana Division of PCC from 1978 to 1982. He is a past President of the Indiana Coal Council and is currently a trustee and member of the Executive Committee of the Eastern Mineral Law Foundation. Richard A. Navarre was named as Vice President of Sales & Marketing in May 1998, and has also been President of Peabody COALSALES Company since January of 1998. He previously served as President of Peabody Energy Solutions, Inc. From 1996 to 1997, he was Vice President of Finance and prior to that served as Vice President and Controller of the Company. He joined the Company in 1993 as Director of Financial Planning. Prior to joining Peabody, Mr. Navarre was with KPMG Peat Marwick. Mr. Navarre is a member of the Trade and International Affairs Committee and the Transportation Committee of the National Mining Association. Sharon K. Schergen has been Vice President--Human Resources since 1991 with executive responsibility for employee development, benefits, compensation, employee relations and affirmative action programs. She joined the Company in 1981 as Manager--Salary Administration and has held a series of employee relations, compensation, and salaried benefits positions. Prior to joining Peabody, Ms. Schergen, who earned degrees in social work and psychology and an MBA, was a personnel representative for Ford Motor. Ms. Schergen is a member of the National Mining Association's Human Resource Committee. Alan H. Washkowitz became a Director in May 1998. He is also a Managing Director of Lehman Brothers and the head of the firm's Merchant Banking Group, responsible for the oversight of Lehman Brothers Merchant Banking Portfolio Partnership L.P. Mr. Washkowitz joined Kuhn Loeb & Co. in 1968 and became a general partner of Lehman Brothers in 1978 when Kuhn Loeb & Co. was acquired. Prior to joining the Merchant Banking Group, Mr. Washkowitz headed Lehman Brothers's Financial Restructuring Group. He is currently a director of Illinois Central Corporation, L-3 Communications Corporation, K&F Industries, Inc. and McBride plc. Mr. Washkowitz holds an M.B.A. from Harvard University and a J.D. from Columbia University. Henry E. Lentz became a Director in February 1998. He is also a Managing Director of Lehman Brothers and a principal of the firm's Merchant Banking Group. Mr. Lentz joined Lehman Brothers in 1971 and became a Managing Director in 1976. In 1988, Mr. Lentz left Lehman Brothers to serve as Vice Chairman of Wasserstein Perella Group, Inc. In 1993, he returned to Lehman Brothers as a Managing Director and, prior to joining the Merchant Banking Group, served as head of the firm's worldwide energy practice. Mr. Lentz is currently a director of Rowan Companies, Inc. and Imperial Holly Corporation. Mr. Lentz holds an M.B.A., with honors, from the Wharton School of the University of Pennsylvania. Roger H. Goodspeed became a Director in May 1998. He is also a Managing Director of Lehman Brothers. He joined Lehman Brothers in 1974 and became a Managing Director in 1984. During his tenure at Lehman Brothers, he has served in management positions for several different groups. In 1994, he became Chairman of Citizens Lehman Power, an electric power marketing joint venture 50% owned by Lehman Brothers until the joint venture was sold to The Energy Group in 1997. Mr. Goodspeed remains a director of the ongoing entity, Citizens Power. Mr. Goodspeed received an M.B.A. from the University of California, Los Angeles. COMPENSATION OF DIRECTORS The directors of the Company do not receive compensation for their services as directors. 95 COMPENSATION OF EXECUTIVE OFFICERS The following table sets forth the compensation paid by the predecessors of the Company for the account of each of the chief executive officer and the five most highly compensated executive officers (the "Named Executive Officers") for their services in all capacities to the predecessors of the Company during the fiscal year ended March 31, 1998. SUMMARY COMPENSATION TABLE FOR FISCAL 1998 SALARY AND INCENTIVE COMPENSATION
ANNUAL COMPENSATION LONG-TERM COMPENSATION ------------------------------ --------------------------------------------- NAME AND PRINCIPAL RESTRICTED SECURITIES POSITION DURING FISCAL OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER 1998 SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYMENTS COMPENSATION - ---------------------- -------- -------- ------------ ---------- ------------ -------- ------------ Irl F. Engelhardt....... $550,000 $412,500 $ -- $ -- $ -- $42,644 $ -- Chairman and Chief Executive Officer Peter B. Lilly.......... 333,463 247,715 -- -- -- 32,264 2,498,381(/1/) William E. James........ 300,000 540,000 -- -- -- -- -- Chief Executive Officer--Electric & Natural Gas and Chief Executive Officer of Citizens Power Robert D. 273,225 163,946 -- -- -- 45,304 -- Humphris(/2/).......... Managing Director Peabody Resources Mark Maisto............. 250,000 300,000 -- -- -- -- -- President and Chief Operating Officer of Citizens Power Richard M. Whiting...... 244,851 182,501 -- -- -- 12,326 -- President and Chief Operating Officer
- -------- (1) Mr. Lilly's last date of employment was January 19, 1998. All Other Compensation of $2,498,381 relates to Mr. Lilly's departure from the Company. (2) Mr. Humphris' compensation was converted to U.S. dollars using an exchange rate of $0.75 U.S. per Australian dollar. The exchange rate on March 26, 1998 was $0.6692 U.S. per Australian dollar (for adjustment purposes). PENSION BENEFITS The Company's Salaried Employees Retirement Plan (the "Pension Plan") is a "defined benefit" plan. The Pension Plan provides a monthly annuity to salaried employees when they retire. A salaried employee must have at least five years of service to be vested in the Pension Plan. A full benefit is available to a retiree at age 62. A retiree can begin receiving a benefit as early as age 55; however, a 4% reduction factor applies for each year a retiree receives a benefit prior to age 62. An individual's retirement benefit under the Pension Plan is equal to the sum of (A) 1.112% of the average monthly earnings over 60 consecutive months up to the "covered compensation limit" multiplied by the employee's years of service (not to exceed 35 years) and (B) 1.5% of the average monthly earnings over 60 consecutive months over the "covered compensation limit" multiplied by the employee's years of service (not to exceed 35 years). 96 The estimated annual benefits payable upon retirement at age 62, the normal retirement age, for the Named Executive Officers are as follows: Irl. F. Engelhardt.................................................. $314,460 Richard M. Whiting.................................................. 152,817
Messrs. James, Maisto and Humphris are not eligible for the Pension Plan. The Company has three supplemental retirement plans, which provide pension benefits to executives whose pay exceeds legislative limits for qualified pension plans. BENEFIT PLANS The Company intends to establish or maintain benefit plans for its employees, which will provide substantially similar benefits to those provided by The Energy Group and its affiliates and subsidiaries for the Company's employees prior to the Acquisition. MANAGEMENT INCENTIVE COMPENSATION PLANS The Company expects to establish an incentive compensation plan that will provide a bonus to selected employees based on the participant's base salary, target level, individual performance rating and organizational performance rating. STOCK OPTION PLAN The Company intends to adopt an option plan for key employees of the Company, pursuant to which the Company expects to grant options to purchase shares of Common Stock (inclusive of the grants under the Employment Agreements, see below under "Employment Agreements"). It is expected that the options will have terms as discussed below under "Employment Agreements." EMPLOYMENT AGREEMENTS The Company expects to enter into employment agreements (the "Employment Agreements") with Mr. Engelhardt, the Chairman and Chief Executive Officer (the "CEO"), Messrs. James, Maisto, Whiting, Humphris and certain other key executive officers (collectively, the "Executives"). The CEO's Employment Agreement will provide for an initial term of three years and the other Executives' Employment Agreements will provide for initial terms of two years, each of which shall extend thereafter on a day-to-day basis such that the CEO's Employment Agreement will continually have a three year term and the other Executives, subsequent to their initial one year of employment, will continually have a one-year term. Upon a termination without cause or resignation for good reason, the Executive will be entitled to the following benefits during the Continuation Period (as defined below): (i) base salary, (ii) bonus actually paid in the year prior to such termination, except that, instead of such actual bonus amount, the CEO shall receive an amount equal to 100% of his final base salary in each of the three years following such termination, (iii) a one-time prorated bonus for the year of termination (based on actual performance multiplied by the percentage of the 12-month period such Executive was employed) and (iv) continuation of qualified and nonqualified pension, life insurance, medical, hospitalization and other benefits; provided, however, that the Company shall not be obligated to provide any benefits under tax qualified plans which are not permitted by the terms of each such plan or by applicable law or could jeopardize the plan's tax status; provided, further, that any such coverage shall terminate to the extent that Executive is offered or obtains comparable coverage from any other employer. The "Continuation Period" shall be (i) for the CEO, a period of three years and (ii) for the other Executives, the balance of the initial two- year term if termination occurs during the first year of such initial term, or for a period of one year thereafter. The Employment Agreements will provide for confidentiality during employment and at all times thereafter. It is also expected that the Employment Agreements will include a noncompetition and nonsolicitation covenant which will be effective during the employment term and for one year thereafter. 97 The Executives acquired, in the aggregate, 3% of the Company's initial fully-diluted equity (the "Class B Shares"), issued as Class B Common Stock (as defined) in connection with the Acquisition. With respect to the Class B Shares, the Company shall provide a full recourse loan for the amount of the tax liability to each Executive, and to certain of these Executives, an additional full recourse loan for the amount of the value of the stock, with a five-year principal balloon payment which accelerates to the date which is six months following any termination of employment or disposition of the stock, with interest payable throughout the term of the loan at the applicable federal rate. The Company expects to grant the Executives and other employees options (the "Options") exercisable for common stock to purchase an aggregate of 7% of the Company's initial fully-diluted equity; 50% of the Options shall be granted as "Time Options" in the form of Incentive Stock Options (as defined in Section 422 of the Code), to the extent permitted, and 50% of the Options shall be granted in the form of nonqualified stock options as "Performance Options." Time Options shall become exercisable with respect to 20% of the shares subject to such Options on each of the first five anniversaries of the date of the closing of the transaction if the Executive's employment continues through and including such date, subject to acceleration upon (i) death, (ii) disability (iii) a Change of Control (as defined) or (iv) a Recapitalization Event (as defined). Performance Options shall become exercisable at the end of nine and one-half years, whether or not the applicable performance targets are achieved, but become exercisable earlier with respect to up to 20% of the shares subject to the Performance Options, on each of the first five anniversaries of the date of the closing of the Transactions, to the extent certain performance targets, as determined by the Board of Directors and based on net debt and EBITDA, are met or exceeded. Performance Options accelerate upon (i) a Change of Control, (ii) a Recapitalization Event or (iii) an initial public offering. "Change of Control", for the purposes of this section, shall mean an acquisition of all or substantially all of the direct and indirect assets of the Company and its subsidiaries (by merger, consolidation, Recapitalization Event, stock or asset sale or otherwise), whereby immediately following any such transaction (i) Lehman Merchant Banking owns less than 50% of the Company's outstanding voting securities that Lehman Merchant Banking owned (excluding the sell down of approximately $75 million anticipated to occur after the closing of the Acquisition) after the closing of the Acquisition or (ii) any person individually owns more of the Company's then outstanding voting securities entitled to vote generally than Lehman Merchant Banking. "Recapitalization Event" shall mean a recapitalization, reorganization, stock dividend or other special corporate restructuring which results in an extraordinary distribution to the stockholders of cash and/or securities through the use of leveraging or otherwise but which does not result in a Change of Control. The Company also expects to grant the Executives performance-based options (the "Superperformance Options") exercisable for common stock to purchase an aggregate of 7% of the Company's initial fully-diluted equity. Superperformance Options shall vest upon the earlier of (i) achievement of certain financial performance targets and the earliest of completion of (x) an initial public offering, (y) a Change of Control or (z) a Recapitalization Event; and (ii) nine and one-half years from the date of grant. Vesting of Superperformance Options shall accelerate as follows: (i) upon completion of an initial public offering during the first 36 months following the closing of the Acquisition, at least 2.5% of the Superperformance Options shall vest and the balance shall vest in accordance with the achievement of certain financial performance targets, or (ii) upon a Change of Control or a Recapitalization Event during the first 36 months following the closing of the Acquisition, at least 5.0% of the Superperformance Options shall vest. The Options and the Superperformance Options will have an exercise price equal to the price per share of the Class A Common Stock paid by Lehman Merchant Banking. The Options and the Superperformance Options shall have a 10-year term; provided, however, that exercisable Options shall expire earlier upon termination of employment as follows: (i) upon termination for cause or a resignation without good reason, immediately upon such termination; (ii) upon termination without cause, resignation for good reason, death, disability or retirement, one year after termination of employment. Unexercisable Options and Superperformance Options will terminate upon termination of employment, unless acceleration in connection with such termination is explicitly provided for. 98 Upon a Change of Control, the Board of Directors may terminate the Options and Superperformance Options, so long as the Executives are cashed out at the Change of Control price or are permitted to exercise their Options and Superperformance Options prior to the Change of Control (except as otherwise provided). STOCKHOLDERS AGREEMENTS The Company intends to enter into stockholders agreements with employees of the Company who own shares, or have options to purchase shares, of Common Stock. Such stockholders agreements are expected to contain, among other things, puts/calls, drag-along, tag-along, voting, corporate governance and registration rights provisions. 99 OWNERSHIP OF CAPITAL STOCK The following table sets forth certain information concerning ownership of the capital stock as of July 8, 1998: (i) persons who beneficially own more than 5% of the outstanding shares of capital stock; (ii) each person who is a director of the Company; (iii) each person who is a Named Executive Officer; and (iv) all directors and executive officers of the Company as a group. The Company's capital stock consists of its Class A common stock (the "Class A Common Stock"), its Class B Common Stock, ("Class B Common Stock" and, together with the Class A Common Stock, the "Common Stock") and its Non- Convertible, Exchangeable Preferred Stock (the "Preferred Stock"). Class B Common Stock has voting rights and other attributes similar to Class A Common Stock (except that Class A Common Stock will have a liquidation preference) and will convert to Class A Common Stock upon consummation of a Change of Control, an initial public offering or a Recapitalization Event (as defined) or, in any event, after nine years. Of the $480.0 million equity contribution made in connection with the Acquisition, $100.0 million was in the form of Preferred Stock. The Preferred Stock bears the same voting powers, dividend rights and other rights as, and votes as a single class with, the Common Stock, except for the following: (i) upon the occurrence of any merger, consolidation, sale of all or substantially all assets, liquidation, dissolution or winding up of the Company, the holders of the Preferred Stock will receive a preferential distribution of available assets equal to the cost per share before the holders of the Common Stock receive any distributions (following which the holders of Common Stock will receive a similar preferential distribution of any remaining available assets equal to the same cost per share, and thereafter the shares of Common Stock and Preferred Stock will receive equal distributions per share of any remaining available assets), (ii) the Company may, at any time at its discretion, exchange all or part of the shares of Preferred Stock for an equal number of shares of Common Stock and (iii) the Company may, at its discretion and only for the first six months after the issuance of shares of the Preferred Stock, redeem all or part of the shares of Preferred Stock for an amount equal to the cost per share.
NUMBER OF SHARES BENEFICIALLY OWNED ------------------------------- CLASS A CLASS B PERCENTAGE COMMON COMMON PREFERRED OF STOCK NAME AND ADDRESS OF BENEFICIAL OWNER STOCK STOCK STOCK OUTSTANDING - ------------------------------------ ---------- ------- --------- ----------- Lehman Brothers Merchant Banking Partners II L.P., LB I Group Inc. and their affiliated 19,000,000 -- 5,000,000 97% co-investors.................... c/o Lehman Brothers Holdings Inc. 3 World Financial Center 200 Vesey Street New York, NY 10285 Named Executive Officers......... -- -- (/1/) -- (/1/) All executive officers and direc- tors as a group (16 persons).................... -- -- (/1/) -- -- (/1/) ---------- --- --------- --- 19,000,000 -- (/1/) 5,000,000 97%(/1/) ========== === ========= ===
- -------- (1) Certain employees of the Company will acquire, in the aggregate, 3% of the Company's initial fully-diluted capital stock in the form of 742,268 shares of Class B Common Stock. As of the date hereof, the allocation of the Class B Shares among such employees has not been approved by the Board of Directors. 100 THE ACQUISITION THE ACQUISITION The statements made under this heading relating to the Acquisition are summaries of the agreements described therein, do not purport to be complete and are qualified in their entirety by reference to such agreements. THE PURCHASE AGREEMENT The Company and The Energy Group entered into the Purchase Agreement dated March 2, 1998. The Purchase Agreement provides, among other things, for the purchase by the Company from The Energy Group of the Acquired Companies, consisting of the equity interests described below. As consideration for such interests, the Company paid $2,065.0 million (the "Purchase Price"), subject to further adjustment as described below, to The Energy Group. Pursuant to the Purchase Agreement, upon the consummation of the purchase (the "Closing"), the Company acquired: (i) all of the common stock of Peabody Holding Company, (ii) all of the common stock of Gold Fields, (iii) all of the membership interests of Citizens Power, (iv) the 1% interests in CL Hartford, L.L.C., a Delaware limited liability company, and Citizens Power Sales, a Delaware general partnership ("CP Sales"), both subsidiaries of Citizens Power, (v) all of the shares of Darex Capital Inc., a company incorporated in the Republic of Panama, and (vi) all of the ordinary shares of Peabody Australia Limited, which together with Darex Capital Inc. owns Peabody Resources. The Acquisition was conditioned upon the tender offer by TU to purchase all the outstanding common shares of The Energy Group (the "TU Offer") becoming or being declared unconditional in all respects (see "The Participation Agreement" below) and not at that time being publicly opposed by the board of directors of The Energy Group. For additional information regarding the relationship between the Acquisition and the TU Offer, as well as among Lehman Merchant Banking, the Company and TU, see "The Participation Agreement" below. The Acquisition was further conditioned upon satisfaction or waiver of the following conditions: (i) the consent to the Acquisition by the Australian Foreign Investment Review Board ("FIRB"), (ii) the issuance of an approval order by FERC and (iii) the absence of any statute, rule, regulation, court or executive order, decree, or other order of any kind that would prohibit, restrain or restrict the Acquisition (all aforementioned conditions, the "Purchase Conditions"). FIRB provided its consent to the Acquisition on April 1, 1998 and FERC provided its consent to the Acquisition on April 24, 1998. On May 19, 1998, the TU's tender offer was declared unconditional and the Acquisition was consummated. The Purchase Agreement contains only limited representations from each party relating to corporate authorization, due execution and lack of conflict with organizational documents, material agreements and laws. In addition, The Energy Group has made further representations regarding title to equity interests in the Acquired Companies and capitalization of the Acquired Companies and their subsidiaries (collectively, the "Acquired Group"). See "Risk Factors--Risks Relating to the Company--Limited Rights of Recovery Against Sellers." THE PARTICIPATION AGREEMENT Lehman Merchant Banking and TU entered into the Participation Agreement, dated March 1, 1998 (the "Participation Agreement"), which, among other things, governs the basis on which TU made the TU Offer and the Company agreed to consummate the Acquisition, and also governs the relationship between The Energy Group and the Acquired Group after the Acquisition. Pursuant to the terms of the Participation Agreement, Lehman Merchant Banking agreed to cause the Company to consummate the Acquisition upon satisfaction of the Purchase Conditions according to the terms of the Purchase Agreement. In addition, at the Closing, Lehman Merchant Banking caused the Company to pay the Citizens Power Obligations and to assume all outstanding indebtedness of the Acquired Group, provided that non-recourse debt will remain non-recourse. TU also agreed to cause The Energy Group to provide credit support for certain of Citizens Power's asset restructuring debt in order to make effective consents to the Acquisition by Citizens Power's note holders. 101 Lehman Merchant Banking and TU further agreed that the Purchase Price would be adjusted (i) to the extent the total assets less current liabilities and long-term debt of the Acquired Group shown on an audited balance sheet as of March 31, 1998 differ from agreed-upon projections and (ii) to the extent of any dividends or distributions from, or contributions to, the Acquired Group after March 31, 1998 and before the Closing. The Participation Agreement contains a Company representation and warranty to TU that, for U.S. federal income taxation purposes, The Energy Group's adjusted tax basis in the shares of Peabody Holding Company as of January 31, 1998 was equal to the portion of the Purchase Price allocated to such shares (up to $1.8 billion). Following the Closing, the Company will cause the rest of the Acquired Group to assume such warranty. TU agreed not to revise or amend the terms and conditions of the TU Offer in a manner that could reasonably be expected to materially and adversely affect Lehman Merchant Banking, the Acquired Group, the Acquisition or the Financings and not to waive any conditions of the TU Offer without Lehman Merchant Banking's consent where Lehman Merchant Banking demonstrates that the matter or circumstance giving rise to the right to invoke the condition arose after the date of the Participation Agreement, could reasonably be expected to materially and adversely affect the Acquired Group or the purchase of the equity of the Acquired Companies (including the financing thereof) and is of material significance in the context of the TU Offer. TU has also agreed not to extend the TU Offer to an expiration date beyond four months from the announcement date of the TU Offer. The Company will indemnify TU and its affiliates and subsidiaries (including The Energy Group and its subsidiaries) against all past, present and future claims, suits or liabilities arising from or out of the Acquired Group, including environmental and employee benefits claims or liabilities against PII and Peabody Global Investment, Inc. ("PGII," collectively with PII, the former holding companies for the U.S. Peabody coal business) arising from events occurring prior to the Closing. Similarly, TU has agreed to indemnify Lehman Merchant Banking, the Company and their affiliates and subsidiaries against all past, present and future claims, suits or liabilities relating to The Energy Group, except for those relating to the Acquired Group. The parties have agreed that the Acquired Group will not be liable for any U.S., Australian or United Kingdom tax liability (including subdivisions thereof) of the portion of The Energy Group purchased by TU, and The Energy Group will similarly not be liable for such tax liability of the Acquired Group. The parties have further agreed that TU and The Energy Group, on the one hand and Lehman Merchant Banking, on the other hand, will not be liable to the other for any tax imposed by any jurisdiction as a result of the allocation of the Purchase Price as between the U.S. and Australian tax jurisdictions. In conjunction with the signing of the Participation Agreement, the parties also agreed upon a Tax Allocation Agreement that was entered into among PII, the Company and certain of their affiliates (collectively, the "PII Group") at the Closing and, among other things, allocates the tax liabilities among the entities in the PII Group on the basis of the taxes that would have been incurred if they were stand-alone entities. 102 RELATED PARTY TRANSACTIONS Messrs. Washkowitz, Lentz and Goodspeed, directors of the Company, are investors in Lehman Merchant Banking. Lehman Merchant Banking owns a substantial majority of the Company's outstanding shares of capital stock after the Acquisition. Lehman Brothers and its affiliates received aggregate fees of approximately $90 million in cash for advising on the Acquisition and arranging the financing therefor and were reimbursed for its expenses in connection therewith. In addition, Lehman Brothers received customary fees in connection with advising on and arranging financing for the purchase of The Energy Group by Texas Utilities. From time to time in the future, Lehman Merchant Banking or its affiliates may receive customary fees for services rendered to the Company in connection with financings, divestitures, acquisitions and certain other transactions. See "Management--Directors and Executive Officers of the Company" and "Ownership of Capital Stock." Lehman Brothers and LCPI, the Syndication Agent, Arranger and Administrative Agent for the Senior Credit Facilities, are both affiliates of Lehman Merchant Banking, and both received customary fees for their services in connection with the Financings. See "Description of Certain Indebtedness" and "Plan of Distribution." The Citizens Power Obligations relate to the continuing payment obligations resulting from the May 19, 1997 acquisition of Citizens Power. The Energy Group purchased Citizens Power from Lehman Brothers Holdings Inc. ("LBHI") (which owned 50%), Citizens Energy Corporation (14%), Mr. James (16%) and certain employees of Citizens Power (20%) (collectively, the "Selling Shareholders") for $120 million, which was divided into two parts: (i) an upfront cash payment of $20 million; and (ii) the Citizens Power Obligations, comprised of: (a) a payment based upon the net asset value of Citizens Power ("NAV") as of the date of sale (subject to certain adjustments based upon events between the date of sale and June 30, 1997) up to a maximum of $30 million; and (b) NAV increase payments with respect to the fiscal years ending March 31, 2000, 2001 and 2002, which when combined with initial NAV payment would be no greater than $100 million. The agreement among The Energy Group and the Selling Shareholders protected the Selling Shareholders in the event of any material change, including a change of control at The Energy Group, which would adversely affect Citizens Power's ability to attain the expected NAV increases. As of January 1, 1998, due to the high likelihood of a change of control of The Energy Group, Peabody guaranteed the selling shareholders $65 million of the future payments as follows: (i) $30 million for the initial NAV payment; and (ii) $35 million for the NAV increase payments. As a result of the Transactions, the Company has agreed to indemnify The Energy Group in respect of the Citizens Power Obligations. The Company negotiated to pay the Selling Shareholders $92.0 million in consideration of the Citizens Power Obligations. Mr. Goodspeed, a director of the Company, and certain employees of Citizens Power received a portion of the proceeds received by LBHI. See "Description of Certain Indebtedness." LBHI, an affiliate of Lehman Brothers, agreed to provide a guarantee facility (the "Guaranty Facility") to trading counterparties of CP Sales, a trading subsidiary of Citizens Power, for trades initiated after the Acquisition. The Guaranty Facility will be available for 364 days after the date of the Acquisition. LBHI will be paid a minimum fee to establish the Guaranty Facility and will be reimbursed for the legal and out-of-pocket costs associated with establishing and documenting the Guaranty Facility. An additional fee will be calculated based on the trading volumes of CP Sales and, to the extent such volume-based fee exceeds the minimum, such additional amount will be paid to LBHI. The volume based fee will increase should CP Sales continue to use the Guaranty Facility after six months. LBHI will benefit from cash collateral relative to its exposure on the trading book and financial covenants on Citizens Power and CP Sales, any violation of which would cause the Guaranty Facility to terminate. TRANSACTIONS WITH AFFILIATES COALSALES purchased 126,601 tons of coal from Black Beauty for $3.0 million in fiscal 1998 and continues to purchase coal from Black Beauty in the ordinary course of business. Certain executive officers of 103 the Company, which is a non-controlling general partner of Black Beauty, serve on the partnership committee of Black Beauty. Partnership committee members of Black Beauty do not receive a fee for their services. STOCKHOLDERS AGREEMENTS The Company will enter into stockholders agreements which are expected to contain, among other things, drag-along, tag-along, voting, corporate governance and registration rights provisions. 104 DESCRIPTION OF CERTAIN INDEBTEDNESS The following are summaries of the material terms and conditions of the Senior Credit Facilities and certain indebtedness and do not purport to be complete and are qualified in their entirety by reference to the Senior Credit Facilities and the other agreements summarized below. THE SENIOR CREDIT FACILITIES The Senior Credit Facilities are provided by a syndicate of banks and other financial institutions led by LCPI, as Arranger and Syndication Agent and by the First National Bank of Chicago as Administrative Agent. The Senior Credit Facilities provide for $920.0 million of term loans and for $480.0 million in revolving credit loans. The Revolving Credit Facility will includes borrowing capacity available for letters of credit and for borrowings on same-day notice (the "Swingline Loans"). The Term Loan Facility is comprised of a $270.0 million Tranche A Term Loan, which has a maturity of six years and a $650.0 million Tranche B Term Loan, which has a maturity of eight years. The Revolving Credit Facility commitment terminates six years after the date of initial funding of the Senior Credit Facilities. All borrowings under the Senior Credit Facilities bear interest, at the Company's option, at either: (A) a "base rate" equal to, for any day, the higher of: (a) 0.50% per annum above the latest Federal Funds Rate; and (b) the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent under the Senior Credit Facilities, as such bank's "corporate base rate," "reference rate," "prime rate" or the substantial equivalent thereof plus (i) in the case of the Tranche A Term Loan, the Revolving Credit Facility and the Swingline Loans, a debt to EBITDA- dependent rate ranging from 1.250% to 0.500% per annum or (ii) in the case of the Tranche B Term Loan, a debt to EBITDA-dependent rate ranging from 1.375% to 1.000% per annum or (B) a "LIBOR rate" equal to, for any Interest Period (as in the Senior Credit Facilities), with respect to LIBOR Loans comprising part of the same borrowing, the London Interbank Offered Rate of interest per annum for such Interest Period as determined by the Administrative Agent, plus (i) in the case of the Tranche A Term Loan and the Revolving Credit Facility, a debt to EBITDA-dependent rate ranging from 2.250% to 1.500% per annum or (ii) in the case of the Tranche B Term Loan, a debt to EBITDA-dependent rate ranging from 2.375% to 2.000% per annum. The Company must pay a commitment fee calculated at a debt to EBITDA- dependent rate ranging from .500% to .375% per annum of the available unused commitment under the Revolving Credit Facility, in each case in effect on each day. Such fees are payable quarterly in arrears and upon termination of the Revolving Credit Facility. The Company must pay a letter of credit fee calculated at a debt to EBITDA- dependent rate ranging from 2.250% to 1.500% per annum of the face amount of each letter of credit and a fronting fee calculated at a rate equal to 0.250% per annum of the aggregate face amount of each letter of credit. Such fees are payable quarterly in arrears and upon the termination of the Revolving Credit Facility. In addition, the Company is required to pay customary transaction charges in connection with any letters of credit. The foregoing debt to EBITDA-dependent rates range from the high rate specified if the ratio of debt to EBITDA is greater than 4.75 to 1.0 to the low rate specified if such ratio is less than 3.75 to 1.0. The Term Loans are subject to the following amortization schedule:
AMORTIZATION TERM LOAN A TERM LOAN B ------------ ----------- ----------- (IN MILLIONS) Year 1 $ 10.0 $ 6.5 Year 2 15.0 6.5 Year 3 20.0 6.5 Year 4 50.0 6.5 Year 5 75.0 6.5 Year 6 100.0 6.5 Year 7 -- 100.0 Year 8 -- 511.0 ------ ------ $270.0 $650.0 ====== ======
105 Borrowings under the Senior Credit Facilities will be subject to mandatory prepayment (i) with the net proceeds of any incurrence of indebtedness (other than indebtedness permitted therein), (ii) with the proceeds of certain asset sales and (iii) on an annual basis with (A) 75% of the Company's excess cash flow (as defined in the Senior Credit Facilities) if the ratio of the Company's debt to EBITDA is greater than 4.0 to 1.0 or (B) 50% of such excess cash flow if such ratio is less than or equal to 4.0 to 1.0. The Company's obligations under the Senior Credit Facilities are secured by a lien on certain of the tangible and intangible assets of the Company and its direct and indirect domestic subsidiaries (other than Citizens Power and its subsidiaries), including: (i) a pledge by the Company and its direct and indirect domestic subsidiaries (other than Citizens Power and its subsidiaries) of all of the capital stock of their respective domestic subsidiaries and 65% of the capital stock of the Company's first-tier foreign subsidiaries, (ii) certain coal reserves of the Company and its direct and indirect domestic subsidiaries, (iii) certain CSAs and other material contracts to which the Company or any of its direct or indirect domestic subsidiaries (other than Citizens Power and its subsidiaries) is a party and (iv) substantially all other personal property of the Company. In addition, indebtedness under the Senior Credit Facilities will be guaranteed by the Company's direct and indirect domestic subsidiaries (other than Citizens Power and its subsidiaries). See "Description of the Senior Subordinated Notes-- Subordination" and "Risk Factors--Risks Relating to the Notes--Ranking." The Senior Credit Facilities contain customary covenants and restrictions on the Company's ability to engage in certain activities. In addition, the Senior Credit Facilities provide that the Company must meet or exceed certain interest coverage ratios and must not exceed a leverage ratio. The Senior Credit Facilities also include customary events of default. 5% SUBORDINATED NOTE A note (the "5% Subordinated Note") which matures on March 1, 2007 is held by Prudential Insurance Company of America. On a pro forma basis, as of March 31, 1998, $200.5 million of aggregate principal amount would have been outstanding under the note. The note is a subordinated and unsecured obligation of the Company's subsidiary, Peabody Holding Company. The terms of the note permit the merger, consolidation or the sale of assets of Peabody Holding Company, as long as the successor corporation following the merger or consolidation (if Peabody Holding Company does not survive) expressly assumes payment of principal and interest on and performance of the covenants and conditions of the note. CITIZENS POWER OBLIGATIONS On May 19, 1997, The Energy Group purchased Citizens Power from LBHI (which owned 50%), Citizens Energy Corporation (14%), Mr. James (16%) and certain employees of Citizens Power (20%) for $120 million, which was divided into two parts: (i) an upfront cash payment of $20 million; and (ii) future payments (the "Citizens Power Obligations"), comprised of: (a) a NAV payment based upon the NAV as of the date of sale (subject to certain adjustments based upon events between the date of sale and June 30, 1997) up to a maximum of $30 million; and (b) NAV increase payments with respect to the fiscal years ending March 31, 2000, 2001 and 2002, which when combined with the initial NAV payment would be no greater than $100 million. The agreement among The Energy Group and the Selling Shareholders protected the Selling Shareholders in the event of any material change, including a change of control at The Energy Group, which would adversely affect Citizens Power's ability to attain the expected NAV increases. As of January 1, 1998, due to the high likelihood of a change of control of The Energy Group, Peabody guaranteed the Selling Shareholders $65 million of the future payments as follows: (i) $30 million for the initial NAV payment; and (ii) $35 million for the NAV increase payments. As a result of the Transactions, the Company has agreed to indemnify The Energy Group in respect of the Citizens Power Obligations. The Company has negotiated to pay the Selling Shareholders $92.0 million in consideration of the Citizens Power Obligations. Mr. Goodspeed, who will be a director of the Company after the Acquisition, and certain employees of Citizens Power will receive a portion of the proceeds received by LBHI. 106 CITIZENS POWER NON-RECOURSE INDEBTEDNESS Citizens Power issued non-recourse notes to finance four asset restructuring transactions. Four special purpose limited liability companies were formed to carry out these transactions. Notes issued in connection with these transactions had an aggregate principal amount outstanding of $293.9 million at March 31, 1998. SURETY BONDS Federal and state laws require Surety Bonds to secure the Company's obligations to reclaim lands disturbed for mining, to pay federal and state workers' compensation and to satisfy other miscellaneous obligations. The amount of these bonds varies constantly, depending upon the amount of acreage disturbed and the degree to which each property has been reclaimed. Under federal law, partial bond release is provided as mined lands (i) are backfilled and graded to approximate original contour, (ii) are re-vegetated and (iii) achieve pre-mining vegetative productivity levels on a sustained basis for a period of five to ten years. As of March 31, 1997, the Company had outstanding surety bonds with third parties for post-mining reclamation totaling $372.4 million, with an additional $277.3 million in self-bonding obligations. Surety bonds valued at an additional $123.3 million are in place for federal and state workers' compensation obligations and other miscellaneous obligations. PEABODY RESOURCES PERFORMANCE BONDS Peabody Finance Limited, a subsidiary of Peabody Resources, has A$80.0 million outstanding in performance bonds (the "Performance Bonds") associated with the mining operations in Australia. Each of the Performance Bonds is guaranteed by The Energy Group. In each case, the guarantee is an unconditional and irrevocable guarantee of Peabody Finance Limited's obligations under the relevant bond facility, to be released only when all amounts under the facility have been repaid or all outstanding Performance Bonds issued under the facility have expired and the facility itself has expired or been cancelled. The Company expects that these guarantees will be replaced by letters of credit under the Senior Credit Facilities. PEABODY RESOURCES DEBT Peabody Resources has incurred obligations in connection with its joint venture ownership interests in the Narama mine, the Warkworth mine and the Bengalla mine. Peabody Resources has incurred debt in connection with a construction loan for the ongoing development of the new Bengalla mine and is obligated for its pro rata share of loans and operating leases in connection with the expansion and operation of the Warkworth mine. The total joint venture debt attributable to Peabody Resources was $19.5 million as of March 31, 1998. Peabody Resources also has a $131.5 million (A$200 million) standby commercial paper facility under which it borrows short-term funds for working capital purposes. The facility is administered by a local Australian bank and is supported by a guarantee from The Energy Group. As of March 31, 1998, borrowings under the facility totaled approximately $10.5 million (A$15 million), which matures on May 8, 1998. In April 1998, Peabody Resources drew $32.3 million (A$50 million), which matures on July 28, 1998, in connection with a distribution to The Energy Group. The average interest rate on existing borrowings is approximately 4.95%. Upon final maturity of borrowings existing on the closing of the Transactions, it is expected that the facility size will be reduced and that the guarantee will be replaced with a letter of credit issued under the Senior Credit Facilities. Peabody Resources' joint venture indebtedness and commercial paper obligations are collectively referred to as "Peabody Resources Debt." 107 THE SENIOR EXCHANGE OFFER GENERAL The Company hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Senior Letter of Transmittal (which together constitute the Senior Exchange Offer), to exchange up to $400 million aggregate principal amount of Senior Exchange Notes for a like aggregate principal amount of Old Senior Notes properly tendered on or prior to the Senior Expiration Date and not withdrawn as permitted pursuant to the procedures described below. The Senior Exchange Offer is being made with respect to all of the Old Senior Notes. As of the date of this Prospectus, $400 million aggregate principal amount of the Old Senior Notes is outstanding. This Prospectus, together with the Senior Letter of Transmittal, is first being sent on or about , 1998, to all holders of Old Senior Notes known to the Company. The Company's obligation to accept Old Senior Notes for exchange pursuant to the Senior Exchange Offer is subject to certain conditions set forth under "--Certain Conditions to the Senior Exchange Offer" below. The Company currently expects that each of the conditions will be satisfied and that no waivers will be necessary. PURPOSE OF THE SENIOR EXCHANGE OFFER The Old Senior Notes were issued on May 18, 1998 in a transaction exempt from the registration requirements of the Securities Act. Accordingly, the Old Senior Notes may not be reoffered, resold, or otherwise transferred unless so registered or unless an applicable exemption from the registration and prospectus delivery requirements of the Securities Act is available. In connection with the issuance and sale of the Old Senior Notes, the Company entered into the Senior Registration Rights Agreement, which requires the Company to file with the Commission a registration statement relating to the Senior Exchange Offer not later than 90 days after the date of issuance of the Old Senior Notes, and to use its best efforts to cause the registration statement relating to the Senior Exchange Offer to become effective under the Securities Act not later than 180 days after the date of issuance of the Old Senior Notes and the Senior Exchange Offer to be consummated not later than 30 days after the date of the effectiveness of the Registration Statement (or use its best efforts to cause to become effective by the 180th calendar day after the date of issuance a shelf registration statement with respect to resales of the Old Senior Notes). A copy of the Senior Registration Rights Agreement has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The Senior Exchange Offer is being made by the Company to satisfy its obligations with respect to the Senior Registration Rights Agreement. The term "holder," with respect to the Senior Exchange Offer, means any person in whose name Old Senior Notes are registered on the books of the Company or any other person who has obtained a properly completed bond power from the registered holder, or any person whose Old Senior Notes are held of record by The Depository Trust Company. Other than pursuant to the Senior Registration Rights Agreement, the Company is not required to file any registration statement to register any outstanding Old Senior Notes. Holders of Old Senior Notes who do not tender their Old Senior Notes or whose Old Senior Notes are tendered but not accepted would have to rely on exemptions to registration requirements under the securities laws, including the Securities Act, if they wish to sell their Old Senior Notes. The Company is making the Senior Exchange Offer in reliance on the position of the staff of the Commission as set forth in certain interpretive letters addressed to third parties in other transactions. However, the Company has not sought its own interpretive letter and there can be no assurance that the staff would make a similar determination with respect to the Senior Exchange Offer as it has in such interpretive letters to third parties. Based on these interpretations by the Staff, the Company believes that the Senior Exchange Notes issued pursuant to the Senior Exchange Offer in exchange for Old Senior Notes may be offered for resale, resold and otherwise transferred by a Holder (other than any Holder who is a broker- dealer or an "affiliate" of the Company within the meaning of Rule 405 of the Securities Act) without further compliance with the registration and 108 prospectus delivery requirements of the Securities Act, provided that such Senior Exchange Notes are acquired in the ordinary course of such Holder's business and that such Holder is not participating, and has no arrangement or understanding with any person to participate, in a distribution (within the meaning of the Securities Act) of such Senior Exchange Notes. See "--Resale of Senior Exchange Notes". Each broker-dealer that receives Senior Exchange Notes for its own account in exchange for Old Senior Notes, where such Old Senior Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Senior Exchange Notes. See "Plan of Distribution". TERMS OF THE EXCHANGE The Company hereby offers to exchange, subject to the conditions set forth herein and in the Senior Letter of Transmittal accompanying this Prospectus, $1,000 in principal amount of Senior Exchange Notes for each $1,000 in principal amount of the Old Senior Notes. The terms of the Senior Exchange Notes are identical in all material respects to the terms of the Old Senior Notes for which they may be exchanged pursuant to this Senior Exchange Offer, except that the Senior Exchange Notes will generally be freely transferable by Holders thereof and will not be subject to any covenant regarding registration. The Senior Exchange Notes will evidence the same indebtedness as the Old Senior Notes and will be entitled to the benefits of the Senior Note Indenture. See "Description of the Senior Exchange Notes". The Senior Exchange Offer is not conditioned upon any minimum aggregate principal amount of Old Senior Notes being tendered for exchange. The Company has not requested, and does not intend to request, an interpretation by the staff of the Commission with respect to whether the Senior Exchange Notes issued pursuant to the Senior Exchange Offer in exchange for the Old Senior Notes may be offered for sale, resold or otherwise transferred by any holder without compliance with the registration and prospectus delivery provisions of the Securities Act. Instead, based on an interpretation by the staff of the Commission set forth in a series of no- action letters issued to third parties, the Company believes that Senior Exchange Notes issued pursuant to the Senior Exchange Offer in exchange for Old Senior Notes may be offered for sale, resold and otherwise transferred by any Holder of such Senior Exchange Notes (other than any such holder that is a broker-dealer or is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Senior Exchange Notes are acquired in the ordinary course of such holder's business and such holder has no arrangement or understanding with any person to participate in the distribution of such Senior Exchange Notes and neither such holder nor any other such person is engaging in or intends to engage in a distribution of such Senior Exchange Notes. Since the Commission has not considered the Senior Exchange Offer in the context of a no-action letter, there can be no assurance that the staff of the Commission would make a similar determination with respect to the Senior Exchange Offer. Any holder who is an affiliate of the Company or who tenders in the Senior Exchange Offer for the purpose of participating in a distribution of the Senior Exchange Notes cannot rely on such interpretation by the staff of the Commission and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of Senior Exchange Notes. Each broker- dealer that receives Senior Exchange Notes for its own account in exchange for Old Senior Notes, where such Old Senior Notes were acquired by such broker- dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Senior Exchange Notes. See "Plan of Distribution". Interest on the Senior Exchange Notes will accrue from the last interest payment date on which interest was paid on the Old Senior Notes so surrendered or, if no interest has been paid on such Old Senior Notes, from May 18, 1998. 109 Tendering holders of the Old Senior Notes will not be required to pay brokerage commissions or fees or, subject to the instructions in the Senior Letter of Transmittal, transfer taxes with respect to the exchange of the Old Senior Notes pursuant to the Senior Exchange Offer. EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENT The Senior Exchange Offer will expire at 5:00 p.m., New York City time, on , 1998 unless the Company, in its sole discretion, has extended the period of time for which the Senior Exchange Offer is open (such date, as it may be extended, is referred to herein as the "Senior Expiration Date"). The Senior Expiration Date will be at least 20 business days after the commencement of the Senior Exchange Offer in accordance with Rule 14e-1(a) under the Exchange Act. The Company expressly reserves the right, at any time or from time to time, to extend the period of time during which the Senior Exchange Offer is open, and thereby delay acceptance for exchange of any Old Senior Notes, by giving oral or written notice to the Senior Exchange Agent and by giving written notice of such extension to the holders thereof no later than 9:00 a.m. New York City time on the next business day after the previously scheduled Senior Expiration Date. During any such extension, all Old Senior Notes previously tendered will remain subject to the Senior Exchange Offer unless properly withdrawn. The Company expressly reserves the right to (i) terminate or amend the Senior Exchange Offer and not to accept for exchange any Old Senior Notes not theretofore accepted for exchange upon the occurrence of any of the events specified below under "--Certain Conditions to the Senior Exchange Offer" which have not been waived by the Company and (ii) amend the terms of the Senior Exchange Offer in any manner which, in its good faith judgment, is advantageous to the holders of the Old Senior Notes, whether before or after any tender of the Old Senior Notes. If any such termination or amendment occurs, the Company will notify the Senior Exchange Agent and will either issue a press release or give oral or written notice to the holders of the Old Senior Notes as promptly as practicable. For purposes of the Senior Exchange Offer, a "business day" means any day other than Saturday, Sunday or a date on which banking institutions are required or authorized by New York State law to be closed, and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. Unless the Company terminates the Senior Exchange Offer prior to 5:00 p.m., New York City time, on the Senior Expiration Date, the Company will exchange the Senior Exchange Notes for the Old Senior Notes on the Senior Exchange Date. PROCEDURES FOR TENDERING OLD SENIOR NOTES The tender to the Company of Old Senior Notes by a Holder thereof as set forth below and the acceptance thereof by the Company will constitute a binding agreement between the tendering holder and the Company upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Senior Letter of Transmittal. A Holder of Old Senior Notes may tender the same by (i) properly completing and signing the Senior Letter of Transmittal or a facsimile thereof (all references in this Prospectus to the Senior Letter of Transmittal shall be deemed to include a facsimile thereof) and delivering the same, together with the certificate or certificates representing the Old Senior Notes being tendered and any required signature guarantees and any other documents required by the Senior Letter of Transmittal, to the Senior Exchange Agent at its address set forth below on or prior to the Senior Expiration Date (or complying with the procedure for book-entry transfer described below) or (ii) complying with the guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF OLD SENIOR NOTES, SENIOR LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY. NO OLD SENIOR NOTES OR SENIOR LETTERS OF TRANSMITTAL SHOULD BE SENT TO THE COMPANY. If tendered Old Senior Notes are registered in the name of the signer of the Senior Letter of Transmittal and the Senior Exchange Notes to be issued in exchange therefor are to be issued (and any untendered Old Senior 110 Notes are to be reissued) in the name of the registered holder (which term, for the purposes described herein, shall include any participant in The Depository Trust Company (also referred to as a "book-entry transfer facility") whose name appears on a security listing as the owner of Old Senior Notes), the signature of such signer need not be guaranteed. In any other case, the tendered Old Senior Notes must be endorsed or accompanied by written instruments of transfer in form satisfactory to the Company and duly executed by the registered holder, and the signature on the endorsement or instrument of transfer must be guaranteed by a bank, broker, dealer, credit union, savings association, clearing agency or other institution (each an "Eligible Institution") that is a member of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Exchange Act. If the Senior Exchange Notes and/or Old Senior Notes not exchanged are to be delivered to an address other than that of the registered holder appearing on the note register for the Old Senior Notes, the signature in the Senior Letter of Transmittal must be guaranteed by an Eligible Institution. The Senior Exchange Agent will make a request within two business days after the date of receipt of this Prospectus to establish accounts with respect to the Old Senior Notes at the book-entry transfer facility for the purpose of facilitating the Senior Exchange Offer, and subject to the establishment thereof, any financial institution that is a participant in the book-entry transfer facility's system may make book-entry delivery of Old Senior Notes by causing such book-entry transfer facility to transfer such Old Senior Notes into the Senior Exchange Agent's account with respect to the Old Senior Notes in accordance with the book-entry transfer facility's procedures for such transfer. Although delivery of Old Senior Notes may be effected through book- entry transfer into the Senior Exchange Agent's account at the book-entry transfer facility, an appropriate Senior Letter of Transmittal with any required signature guarantee and all other required documents must in each case be transmitted to and received or confirmed by the Senior Exchange Agent at its address set forth below on or prior to the Senior Expiration Date, or, if the guaranteed delivery procedures described below are complied with, within the time period provided under such procedures. If a holder desires to accept the Senior Exchange Offer and time will not permit a Senior Letter of Transmittal or Old Senior Notes to reach the Senior Exchange Agent before the Senior Expiration Date or the procedure for book- entry transfer cannot be completed on a timely basis, a tender may be effected if the Senior Exchange Agent has received at its address set forth below on or prior to the Senior Expiration Date, a letter, telegram or facsimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight courier) from an Eligible Institution setting forth the name and address of the tendering holder, the names in which the Old Senior Notes are registered and, if possible, the certificate numbers of the Old Senior Notes to be tendered, and stating that the tender is being made thereby and guaranteeing that within three business days after the Senior Expiration Date, the Old Senior Notes in proper form for transfer (or a confirmation of book-entry transfer of such Old Senior Notes into the Senior Exchange Agent's account at the book-entry transfer facility), will be delivered by such Eligible Institution together with a properly completed and duly executed Senior Letter of Transmittal (and any other required documents). Unless Old Senior Notes being tendered by the above-described method are deposited with the Senior Exchange Agent within the time period set forth above (accompanied or preceded by a properly completed Senior Letter of Transmittal and any other required documents), the Company may, at its option, reject the tender. Copies of the notice of guaranteed delivery ("Senior Notice of Guaranteed Delivery") which may be used by Eligible Institutions for the purposes described in this paragraph are available from the Senior Exchange Agent. A tender will be deemed to have been received as of the date when (i) the tendering holder's properly completed and duly signed Senior Letter of Transmittal accompanied by the Old Senior Notes (or a confirmation of book- entry transfer of such Old Senior Notes into the Senior Exchange Agent's account at the book-entry transfer facility) is received by the Senior Exchange Agent, or (ii) a Senior Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to similar effect (as provided above) from an Eligible Institution is received by the Senior Exchange Agent. Issuances of Senior Exchange Notes in exchange for Old Senior Notes tendered pursuant to a Senior Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to similar effect (as provided above) by an Eligible Institution will be made only against deposit of the Senior Letter of Transmittal (and any other required documents) and the tendered Old Senior Notes. 111 All questions as to the validity, form, eligibility (including time of receipt) and acceptance of Old Senior Notes tendered for exchange will be determined by the Company in its sole discretion, which determination shall be final and binding. The Company reserves the absolute right to reject any and all tenders of any particular Old Senior Notes not properly tendered or not to accept any particular Old Senior Notes which acceptance might, in the judgment of the Company or its counsel, be unlawful. The Company also reserves the absolute right to waive any defects or irregularities or conditions of the Senior Exchange Offer as to any particular Old Senior Notes either before or after the Senior Expiration Date (including the right to waive the ineligibility of any holder who seeks to tender Old Senior Notes in the Senior Exchange Offer). The interpretation of the terms and conditions of the Senior Exchange Offer (including the Senior Letter of Transmittal and the instructions thereto) by the Company shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Senior Notes for exchange must be cured within such reasonable period of time as the Company shall determine. Neither the Company, the Senior Exchange Agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of Old Senior Notes for exchange, nor shall any of them incur any liability for failure to give such notification. If the Senior Letter of Transmittal is signed by a person or persons other than the registered holder or holders of Old Senior Notes, such Old Senior Notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered holder or holders appear on the Old Senior Notes. If the Senior Letter of Transmittal or any Old Senior Notes or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. By tendering, each holder will represent to the Company that, among other things, the Senior Exchange Notes acquired pursuant to the Senior Exchange Offer are being acquired in the ordinary course of business of the person receiving such Senior Exchange Notes, whether or not such person is the holder, that neither the holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of such Senior Exchange Notes and that neither the holder nor any such other person is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company, or if it is an affiliate it will comply with the registration and prospectus requirements of the Securities Act to the extent applicable. Each broker-dealer that receives Senior Exchange Notes for its own account in exchange for Old Senior Notes where such Old Senior Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities must acknowledge that it will deliver a prospectus in connection with any resale of such Senior Exchange Notes. Lehman Brothers Inc.'s ability to make a market in the Senior Exchange Notes will be subject to the availability of a current market-maker prospectus. See "Plan of Distribution." TERMS AND CONDITIONS OF THE SENIOR LETTER OF TRANSMITTAL The Senior Letter of Transmittal contains, among other things, the following terms and conditions, which are part of the Senior Exchange Offer: The party tendering Notes for exchange (the "Transferor") exchanges, assigns and transfers the Old Senior Notes to the Company and irrevocably constitutes and appoints the Senior Exchange Agent as the Transferor's agent and attorney- in-fact to cause the Old Senior Notes to be assigned, transferred and exchanged. The Transferor represents and warrants that it has full power and authority to tender, exchange, assign and transfer the Old Senior Notes and to acquire Senior Exchange Notes issuable upon the exchange of such tendered Notes, and that, when the same are accepted for exchange, the Company will acquire good and unencumbered title to the tendered Old Senior Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The Transferor also warrants that it will, upon request, execute and deliver any additional documents deemed by the Senior Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of tendered Old Senior Notes or transfer ownership of such Old Senior Notes 112 on the account books maintained by a book-entry transfer facility. The Transferor further agrees that acceptance of any tendered Old Senior Notes by the Company and the issuance of Senior Exchange Notes in exchange therefor shall constitute performance in full by the Company of certain of its obligations under the Senior Registration Rights Agreement. All authority conferred by the Transferor will survive the death or incapacity of the Transferor and every obligation of the Transferor shall be binding upon the heirs, legal representatives, successors, assigns, executors and administrators of such Transferor. The Transferor certifies that it is not an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act and that it is acquiring the Senior Exchange Notes offered hereby in the ordinary course of such Transferor's business and that such Transferor has no arrangement with any person to participate in the distribution of such Senior Exchange Notes. Each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of Senior Exchange Notes. Each Transferor which is a broker-dealer receiving Senior Exchange Notes for its own account must acknowledge that it will deliver a prospectus in connection with any resale of such Senior Exchange Notes. By so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. In connection with the offering of the Old Senior Notes, the Company agreed to file and maintain, subject to certain limitations, a registration statement that would allow Lehman Brothers Inc. to engage in market-making transactions with respect to the Senior Exchange Notes. The Company has agreed to bear registration expenses incurred under such agreement. WITHDRAWAL RIGHTS Tenders of Old Senior Notes may be withdrawn at any time prior to the Senior Expiration Date. For a withdrawal to be effective, a written notice of withdrawal sent by telegram, facsimile transmission (receipt confirmed by telephone) or letter must be received by the Senior Exchange Agent at the address set forth herein prior to the Senior Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having tendered the Old Senior Notes to be withdrawn (the "Depositor"), (ii) identify the Old Senior Notes to be withdrawn (including the certificate number or numbers and principal amount of such Old Senior Notes), (iii) specify the principal amount of Old Senior Notes to be withdrawn, (iv) include a statement that such holder is withdrawing his election to have such Old Senior Notes exchanged, (v) be signed by the holder in the same manner as the original signature on the Senior Letter of Transmittal by which such Old Senior Notes were tendered or as otherwise described above (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Senior Note Trustee under the Senior Note Indenture register the transfer of such Old Senior Notes into the name of the person withdrawing the tender and (vi) specify the name in which any such Old Senior Notes are to be registered, if different from that of the Depositor. The Senior Exchange Agent will return the properly withdrawn Old Senior Notes promptly following receipt of notice of withdrawal. If Old Senior Notes have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn Old Senior Notes or otherwise comply with the book-entry transfer facility procedure. All questions as to the validity of notices of withdrawals, including time of receipt, will be determined by the Company and such determination will be final and binding on all parties. Any Old Senior Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Senior Exchange Offer. Any Old Senior Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of Old Senior Notes tendered by book-entry transfer into the Senior Exchange Agent's account at the book-entry transfer facility pursuant to the book-entry transfer procedures described above, such Old Senior Notes will be credited to an account with such book-entry transfer facility specified by the holder) as soon as practicable after withdrawal, rejection of tender or termination of the Senior Exchange Offer. Properly withdrawn Old Senior Notes may be retendered by following one of the procedures described under "--Procedures for Tendering Old Senior Notes" above at any time on or prior to the Senior Expiration Date. 113 ACCEPTANCE OF OLD SENIOR NOTES FOR EXCHANGE; DELIVERY OF SENIOR EXCHANGE NOTES Upon satisfaction or waiver of all of the conditions to the Senior Exchange Offer, the Company will accept, promptly on the Exchange Date, all Old Senior Notes properly tendered and will issue the Senior Exchange Notes promptly after such acceptance. See "--Certain Conditions to the Senior Exchange Offer" below. For purposes of the Senior Exchange Offer, the Company shall be deemed to have accepted properly tendered Old Senior Notes for exchange when, as and if the Company has given oral or written notice thereof to the Senior Exchange Agent. For each Old Senior Note accepted for exchange, the holder of such Old Senior Note will receive a Senior Exchange Note having a principal amount equal to that of the surrendered Old Senior Note. In all cases, issuance of Senior Exchange Notes for Old Senior Notes that are accepted for exchange pursuant to the Senior Exchange Offer will be made only after timely receipt by the Senior Exchange Agent of certificates for such Old Senior Notes or a timely book-entry confirmation of such Old Senior Notes into the Senior Exchange Agent's account at the book-entry transfer facility, a properly completed and duly executed Senior Letter of Transmittal and all other required documents. If any tendered Old Senior Notes are not accepted for any reason set forth in the terms and conditions of the Senior Exchange Offer or if Old Senior Notes are submitted for a greater principal amount than the holder desires to exchange, such unaccepted or non-exchanged Old Senior Notes will be returned without expense to the tendering holder thereof (or, in the case of Old Senior Notes tendered by book-entry transfer into the Senior Exchange Agent's account at the book-entry transfer facility pursuant to the book-entry transfer procedures described above, such non- exchanged Old Senior Notes will be credited to an account maintained with such book-entry transfer facility) as promptly as practicable after the expiration of the Senior Exchange Offer. CERTAIN CONDITIONS TO THE SENIOR EXCHANGE OFFER Notwithstanding any other provision of the Senior Exchange Offer, or any extension of the Senior Exchange Offer, the Company shall not be required to accept for exchange, or to issue Senior Exchange Notes in exchange for, any Old Senior Notes and may terminate or amend the Senior Exchange Offer (by oral or written notice to the Senior Exchange Agent or by a timely press release) if at any time before the acceptance of such Old Senior Notes for exchange or the exchange of the Senior Exchange Notes for such Old Senior Notes, any of the following conditions exist: (a) any action or proceeding is instituted or threatened in any court or by or before any governmental agency or regulatory authority or any injunction, order or decree is issued with respect to the Senior Exchange Offer which, in the sole judgment of the Company, might materially impair the ability of the Company to proceed with the Senior Exchange Offer or have a material adverse effect on the contemplated benefits of the Senior Exchange Offer to the Company; or (b) any change (or any development involving a prospective change) shall have occurred or be threatened in the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Company that is or may be adverse to the Company, or the Company shall have become aware of facts that have or may have adverse significance with respect to the value of the Old Senior Notes or the Senior Exchange Notes or that may materially impair the contemplated benefits of the Senior Exchange Offer to the Company; or (c) any law, rule or regulation or applicable interpretations of the staff of the Commission is issued or promulgated which, in the good faith determination of the Company, do not permit the Company to effect the Senior Exchange Offer; or (d) any governmental approval has not been obtained, which approval the Company, in its sole discretion, deems necessary for the consummation of the Senior Exchange Offer; or (e) there shall have been proposed, adopted or enacted any law, statute, rule or regulation (or an amendment to any existing law, statute, rule or regulation) which, in the sole judgment of the Company, 114 might materially impair the ability of the Company to proceed with the Senior Exchange Offer or have a material adverse effect on the contemplated benefits of the Senior Exchange Offer to the Company; or (f) there shall occur a change in the current interpretation by the staff of the Commission which permits the Senior Exchange Notes issued pursuant to the Senior Exchange Offer in exchange for Old Senior Notes to be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act provided that such Senior Exchange Notes are acquired in the ordinary course of such Holders' business and such holders have no arrangement with any person to participate in the distribution of such Senior Exchange Notes; or (g) there shall have occurred (i) any general suspension of, shortening of hours for, or limitation on prices for, trading in securities on any national securities exchange or in the over-the-counter market (whether or not mandatory), (ii) any limitation by any governmental agency or authority which may adversely affect the ability of the Company to complete the transactions contemplated by the Senior Exchange Offer, (iii) a declaration of a banking moratorium or any suspension of payments in respect of banks by Federal or state authorities in the United States (whether or not mandatory), (iv) a commencement of a war, armed hostilities or other international or national crisis directly or indirectly involving the United States, (v) any limitation (whether or not mandatory) by any governmental authority on, or other event having a reasonable likelihood of affecting, the extension of credit by banks or other leading institutions in the United States, or (vi) in the case of any of the foregoing existing at the time of the commencement of the Senior Exchange Offer, a material acceleration or worsening thereof. The Company expressly reserves the right to terminate the Senior Exchange Offer and not accept for exchange any Old Senior Notes upon the occurrence of any of the foregoing conditions (which represent all of the material conditions to the acceptance by the Company of properly tendered Old Senior Notes). In addition, the Company may amend the Senior Exchange Offer at any time prior to the Senior Expiration Date if any of the conditions set forth above occur. Moreover, regardless of whether any of such conditions has occurred, the Company may amend the Senior Exchange Offer in any manner which, in its good faith judgment, is advantageous to holders of the Old Senior Notes. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any such condition or may be waived by the Company in whole or in part at any time and from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. If the Company waives or amends the foregoing conditions, it will, if required by law, extend the Senior Exchange Offer for a minimum of five business days from the date that the Company first gives notice, by public announcement or otherwise, of such waiver or amendment, if the Senior Exchange Offer would otherwise expire within such five business-day period. Any determination by the Company concerning the events described above will be final and binding upon all parties. In addition, the Company will not accept for exchange any Old Senior Notes tendered, and no Senior Exchange Notes will be issued in exchange for any such Old Senior Notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or the qualification of the Senior Note Indenture under the Trust Indenture Act of 1939, as amended. In any such event the Company is required to use every reasonable effort to obtain the withdrawal of any stop order at the earliest possible time. The Senior Exchange Offer is not conditioned upon any minimum principal amount of Old Senior Notes being tendered for exchange. 115 SENIOR EXCHANGE AGENT State Street Bank & Trust Company has been appointed as the Senior Exchange Agent for the Senior Exchange Offer. All executed Senior Letters of Transmittal should be directed to the Senior Exchange Agent at one of the addresses set forth below: By Hand/Overnight Courier: By Mail: State Street Bank and Trust Company State Street Bank and Trust Company Two International Place P.O. Box 778 Boston, Massachusetts 02110 Boston, Massachusetts 02102 Attn: Corporate Trust Department Attn: Corporate Trust Department Kellie Mullen Kellie Mullen By Facsimile: (617) 664-5314 Attn.: Corporate Trust Department Telephone: (617) 664-5587 Questions and requests for assistance, requests for additional copies of this Prospectus or of the Senior Letter of Transmittal and requests for Senior Notices of Guaranteed Delivery should be directed to the Senior Exchange Agent at the address and telephone number set forth in the Senior Letter of Transmittal. DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ON THE SENIOR LETTER OF TRANSMITTAL, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE OR TELEX NUMBER OTHER THAN THE ONES SET FORTH ON THE SENIOR LETTER OF TRANSMITTAL, WILL NOT CONSTITUTE A VALID DELIVERY. SOLICITATION OF TENDERS; FEES AND EXPENSES The Company has not retained any dealer-manager in connection with the Senior Exchange Offer and will not make any payments to brokers, dealers or others soliciting acceptances of the Senior Exchange Offer. The Company, however, will pay the Senior Exchange Agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith. The Company will also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this and other related documents to the beneficial owners of the Old Senior Notes and in handling or forwarding tenders for their customers. The estimated cash expenses to be incurred in connection with the Senior Exchange Offer will be paid by the Company and are estimated in the aggregate to be approximately $ which includes fees and expenses of the Senior Exchange Agent, Senior Note Trustee, registration fees, accounting, legal, printing and related fees and expenses. No person has been authorized to give any information or to make any representations in connection with the Senior Exchange Offer other than those contained in this Prospectus. If given or made, such information or representations should not be relied upon as having been authorized by the Company. Neither the delivery of this Prospectus nor any exchange made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the respective dates as of which information is given herein. The Senior Exchange Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Old Senior Notes in any jurisdiction in which the making of the Senior Exchange Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. However, the Company may, at its discretion, take such action as it may deem necessary to make the Senior Exchange Offer in any such jurisdiction and extend the Senior Exchange Offer to holders of Old Senior Notes in such jurisdiction. In any jurisdiction in which the securities laws or blue sky laws of which require the Senior Exchange Offer to be made by a licensed broker or dealer, the Senior Exchange Offer is being made on behalf of the Company by one or more registered brokers or dealers which are licensed under the laws of such jurisdiction. 116 TRANSFER TAXES The Company will pay all transfer taxes, if any, applicable to the exchange of Old Senior Notes pursuant to the Senior Exchange Offer. If, however, certificates representing Senior Exchange Notes or Old Senior Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Old Senior Notes tendered, or if tendered Old Senior Notes are registered in the name of any person other than the person signing the Senior Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Old Senior Notes pursuant to the Senior Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Senior Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. ACCOUNTING TREATMENT The Senior Exchange Notes will be recorded at the carrying value of the Old Senior Notes as reflected in the Company's accounting records on the date of the exchange. Accordingly, no gain or loss for accounting purposes will be recognized by the Company upon the exchange of Senior Exchange Notes for Old Senior Notes. Expenses incurred in connection with the issuance of the Senior Exchange Notes will be amortized over the term of the Senior Exchange Notes. CONSEQUENCES OF FAILURE TO EXCHANGE Holders of Old Senior Notes who do not exchange their Old Senior Notes for Senior Exchange Notes pursuant to the Senior Exchange Offer will continue to be subject to the restrictions on transfer of such Old Senior Notes as set forth in the legend thereon. Old Senior Notes not exchanged pursuant to the Senior Exchange Offer will continue to remain outstanding in accordance with their terms. In general, Old Senior Notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register the Old Senior Notes under the Securities Act. Participation in the Senior Exchange Offer is voluntary, and holders of Old Senior Notes should carefully consider whether to participate. Holders of Old Senior Notes are urged to consult their financial and tax advisors in making their own decision on what action to take. As a result of the making of, and upon acceptance for exchange of all validly tendered Old Senior Notes pursuant to the terms of, this Senior Exchange Offer, the Company will have fulfilled a covenant contained in the Senior Registration Rights Agreement. Holders of Old Senior Notes who do not tender their Old Senior Notes in the Senior Exchange Offer will continue to hold such Old Senior Notes and will be entitled to all the rights and limitations applicable thereto under the Senior Note Indenture, except for any such rights under the Senior Registration Rights Agreement that by their terms terminate or cease to have further effectiveness as a result of the making of this Senior Exchange Offer. All untendered Old Senior Notes will continue to be subject to the restrictions on transfer set forth in the Senior Note Indenture. To the extent that Old Senior Notes are tendered and accepted in the Senior Exchange Offer, the trading market for untendered Old Senior Notes could be adversely affected. The Company may in the future seek to acquire, subject to the terms of the Senior Note Indenture, untendered Old Senior Notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. The Company has no present plan to acquire any Old Senior Notes which are not tendered in the Senior Exchange Offer. RESALE OF SENIOR EXCHANGE NOTES The Company is making the Senior Exchange Offer in reliance on the position of the staff of the Commission as set forth in certain interpretive letters addressed to third parties in other transactions. However, 117 the Company has not sought its own interpretive letter and there can be no assurance that the Staff would make a similar determination with respect to the Senior Exchange Offer as it has in such interpretive letters to third parties. Based on these interpretations by the staff, the Company believes that the Senior Exchange Notes issued pursuant to the Senior Exchange Offer in exchange for Old Senior Notes may be offered for resale, resold and otherwise transferred by a Holder (other than any Holder who is a broker-dealer or an "affiliate" of the Company within the meaning of Rule 405 of the Securities Act) without further compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such Senior Exchange Notes are acquired in the ordinary course of such Holder's business and that such Holder is not participating, and has no arrangement or understanding with any person to participate, in a distribution (within the meaning of the Securities Act) of such Senior Exchange Notes. However, any holder who is an "affiliate" of the Company or who has an arrangement or understanding with respect to the distribution of the Senior Exchange Notes to be acquired pursuant to the Senior Exchange Offer, or any broker-dealer who purchased Old Senior Notes from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act (i) could not rely on the applicable interpretations of the staff and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act. A broker-dealer who holds Old Senior Notes that were acquired for its own account as a result of market-making or other trading activities may be deemed to be an "underwriter" within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of Senior Exchange Notes. Each such broker-dealer that receives Senior Exchange Notes for its own account in exchange for Old Senior Notes, where such Old Senior Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge in the Senior Letter of Transmittal that it will deliver a prospectus in connection with any resale of such Senior Exchange Notes. Lehman Brothers Inc.'s ability to make a market in the Senior Exchange Notes will be subject to the availability of a current market-maker prospectus. See "Plan of Distribution." In addition, to comply with the securities laws of certain jurisdictions, if applicable, the Senior Exchange Notes may not be offered or sold unless they have been registered or qualified for sale in such jurisdiction or an exemption from registration or qualification is available and is complied with. The Company has agreed, pursuant to the Senior Registration Rights Agreement and subject to certain specified limitations therein, to register or qualify the Senior Exchange Notes for offer or sale under the securities or blue sky laws of such jurisdictions as any Holder of the Senior Exchange Notes reasonably requests in writing. Such registration or qualification may require the imposition of restrictions or conditions (including suitability requirements for offerees or purchasers) in connection with the offer or sale of any Senior Exchange Notes. 118 THE SENIOR SUBORDINATED EXCHANGE OFFER GENERAL The Company hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Senior Subordinated Letter of Transmittal (which together constitute the Senior Subordinated Exchange Offer), to exchange up to $500 million aggregate principal amount of Senior Subordinated Exchange Notes for a like aggregate principal amount of Old Senior Subordinated Notes properly tendered on or prior to the Senior Subordinated Expiration Date and not withdrawn as permitted pursuant to the procedures described below. The Senior Subordinated Exchange Offer is being made with respect to all of the Old Senior Subordinated Notes. As of the date of this Prospectus, $500 million aggregate principal amount of the Old Senior Subordinated Notes is outstanding. This Prospectus, together with the Senior Subordinated Letter of Transmittal, is first being sent on or about , 1998, to all holders of Old Senior Subordinated Notes known to the Company. The Company's obligation to accept Old Senior Subordinated Notes for exchange pursuant to the Senior Subordinated Exchange Offer is subject to certain conditions set forth under "--Certain Conditions to the Senior Subordinated Exchange Offer" below. The Company currently expects that each of the conditions will be satisfied and that no waivers will be necessary. PURPOSE OF THE SENIOR SUBORDINATED EXCHANGE OFFER The Old Senior Subordinated Notes were issued on May 18, 1998 in a transaction exempt from the registration requirements of the Securities Act. Accordingly, the Old Senior Subordinated Notes may not be reoffered, resold, or otherwise transferred unless so registered or unless an applicable exemption from the registration and prospectus delivery requirements of the Securities Act is available. In connection with the issuance and sale of the Old Senior Subordinated Notes, the Company entered into the Senior Subordinated Registration Rights Agreement, which requires the Company to file with the Commission a registration statement relating to the Senior Subordinated Exchange Offer not later than 90 days after the date of issuance of the Old Senior Subordinated Notes, and to use its best efforts to cause the registration statement relating to the Senior Subordinated Exchange Offer to become effective under the Securities Act not later than 180 days after the date of issuance of the Old Senior Subordinated Notes and the Senior Subordinated Exchange Offer to be consummated not later than 30 days after the date of the effectiveness of the Registration Statement (or use its best efforts to cause to become effective by the 180th calendar day after the date of issuance a shelf registration statement with respect to resales of the Old Senior Subordinated Notes). A copy of the Senior Subordinated Registration Rights Agreement has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The Senior Subordinated Exchange Offer is being made by the Company to satisfy its obligations with respect to the Senior Subordinated Registration Rights Agreement. The term "holder," with respect to the Senior Subordinated Exchange Offer, means any person in whose name Old Senior Subordinated Notes are registered on the books of the Company or any other person who has obtained a properly completed bond power from the registered holder, or any person whose Old Senior Subordinated Notes are held of record by The Depository Trust Company. Other than pursuant to the Senior Subordinated Registration Rights Agreement, the Company is not required to file any registration statement to register any outstanding Old Senior Subordinated Notes. Holders of Old Senior Subordinated Notes who do not tender their Old Senior Subordinated Notes or whose Old Senior Subordinated Notes are tendered but not accepted would have to rely on exemptions to registration requirements under the securities laws, including the Securities Act, if they wish to sell their Old Senior Subordinated Notes. The Company is making the Senior Subordinated Exchange Offer in reliance on the position of the staff of the Commission as set forth in certain interpretive letters addressed to third parties in other transactions. However, the Company has not sought its own interpretive letter and there can be no assurance that the staff would make a similar determination with respect to the Senior Subordinated Exchange Offer as it has in such interpretive letters to third parties. Based on these interpretations by the Staff, the Company believes that the 119 Senior Subordinated Exchange Notes issued pursuant to the Senior Subordinated Exchange Offer in exchange for Old Senior Subordinated Notes may be offered for resale, resold and otherwise transferred by a Holder (other than any Holder who is a broker-dealer or an "affiliate" of the Company within the meaning of Rule 405 of the Securities Act) without further compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such Senior Subordinated Exchange Notes are acquired in the ordinary course of such Holder's business and that such Holder is not participating, and has no arrangement or understanding with any person to participate, in a distribution (within the meaning of the Securities Act) of such Senior Subordinated Exchange Notes. See "--Resale of Senior Subordinated Exchange Notes". Each broker-dealer that receives Senior Subordinated Exchange Notes for its own account in exchange for Old Senior Subordinated Notes, where such Old Senior Subordinated Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Senior Subordinated Exchange Notes. See "Plan of Distribution". TERMS OF THE EXCHANGE The Company hereby offers to exchange, subject to the conditions set forth herein and in the Senior Subordinated Letter of Transmittal accompanying this Prospectus, $1,000 in principal amount of Senior Subordinated Exchange Notes for each $1,000 in principal amount of the Old Senior Subordinated Notes. The terms of the Senior Subordinated Exchange Notes are identical in all material respects to the terms of the Old Senior Subordinated Notes for which they may be exchanged pursuant to this Senior Subordinated Exchange Offer, except that the Senior Subordinated Exchange Notes will generally be freely transferable by Holders thereof and will not be subject to any covenant regarding registration. The Senior Subordinated Exchange Notes will evidence the same indebtedness as the Old Senior Subordinated Notes and will be entitled to the benefits of the Senior Subordinated Note Indenture. See "Description of the Senior Subordinated Exchange Notes". The Senior Subordinated Exchange Offer is not conditioned upon any minimum aggregate principal amount of Old Senior Subordinated Notes being tendered for exchange. The Company has not requested, and does not intend to request, an interpretation by the staff of the Commission with respect to whether the Senior Subordinated Exchange Notes issued pursuant to the Senior Subordinated Exchange Offer in exchange for Old Senior Subordinated Notes may be offered for sale, resold or otherwise transferred by any holder without compliance with the registration and prospectus delivery provisions of the Securities Act. Instead, based on an interpretation by the staff of the Commission set forth in a series of no-action letters issued to third parties, the Company believes that Senior Subordinated Exchange Notes issued pursuant to the Senior Subordinated Exchange Offer in exchange for Old Senior Subordinated Notes may be offered for sale, resold and otherwise transferred by any Holder of such Senior Subordinated Exchange Notes (other than any such holder that is a broker-dealer or is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Senior Subordinated Exchange Notes are acquired in the ordinary course of such holder's business and such holder has no arrangement or understanding with any person to participate in the distribution of such Senior Subordinated Exchange Notes and neither such holder nor any other such person is engaging in or intends to engage in a distribution of such Senior Subordinated Exchange Notes. Since the Commission has not considered the Senior Subordinated Exchange Offer in the context of a no-action letter, there can be no assurance that the staff of the Commission would make a similar determination with respect to the Senior Subordinated Exchange Offer. Any holder who is an affiliate of the Company or who tenders in the Senior Subordinated Exchange Offer for the purpose of participating in a distribution of the Senior Subordinated Exchange Notes cannot rely on such interpretation by the staff of the Commission and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of Senior Subordinated Exchange Notes. Each broker-dealer that receives Senior Subordinated Exchange Notes for its own account in exchange for Old Senior Subordinated Notes, where such Old Senior Subordinated Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Senior Subordinated Exchange Notes. See "Plan of Distribution". 120 Interest on the Senior Subordinated Exchange Notes will accrue from the last interest payment date on which interest was paid on the Old Senior Subordinated Notes so surrendered or, if no interest has been paid on such Old Senior Subordinated Notes, from May 18, 1998. Tendering holders of the Old Senior Subordinated Notes will not be required to pay brokerage commissions or fees or, subject to the instructions in the Senior Subordinated Letter of Transmittal, transfer taxes with respect to the exchange of Old Senior Subordinated Notes pursuant to the Senior Subordinated Exchange Offer. EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENT The Senior Subordinated Exchange Offer will expire at 5:00 p.m., New York City time, on , 1998 unless the Company, in its sole discretion, has extended the period of time for which the Senior Subordinated Exchange Offer is open (such date, as it may be extended, is referred to herein as the "Senior Subordinated Expiration Date"). The Senior Subordinated Expiration Date will be at least 20 business days after the commencement of the Senior Subordinated Exchange Offer in accordance with Rule 14e-1(a) under the Exchange Act. The Company expressly reserves the right, at any time or from time to time, to extend the period of time during which the Senior Subordinated Exchange Offer is open, and thereby delay acceptance for exchange of any Old Senior Subordinated Notes, by giving oral or written notice to the Senior Subordinated Exchange Agent and by giving written notice of such extension to the holders thereof no later than 9:00 a.m. New York City time on the next business day after the previously scheduled Senior Subordinated Expiration Date. During any such extension, all Old Senior Subordinated Notes previously tendered will remain subject to the Senior Subordinated Exchange Offer unless properly withdrawn. The Company expressly reserves the right to (i) terminate or amend the Senior Subordinated Exchange Offer and not to accept for exchange any Old Senior Subordinated Notes not theretofore accepted for exchange upon the occurrence of any of the events specified below under "--Certain Conditions to the Senior Subordinated Exchange Offer" which have not been waived by the Company and (ii) amend the terms of the Senior Subordinated Exchange Offer in any manner which, in its good faith judgment, is advantageous to the holders of the Old Senior Subordinated Notes, whether before or after any tender of the Old Senior Subordinated Notes. If any such termination or amendment occurs, the Company will notify the Senior Subordinated Exchange Agent and will either issue a press release or give oral or written notice to the holders of the Old Senior Subordinated Notes as promptly as practicable. For purposes of the Senior Subordinated Exchange Offer, a "business day" means any day other than Saturday, Sunday or a date on which banking institutions are required or authorized by New York State law to be closed, and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. Unless the Company terminates the Senior Subordinated Exchange Offer prior to 5:00 p.m., New York City time, on the Senior Subordinated Expiration Date, the Company will exchange the Senior Subordinated Exchange Notes for the Old Senior Subordinated Notes on the Senior Subordinated Exchange Date. PROCEDURES FOR TENDERING OLD SENIOR SUBORDINATED NOTES The tender to the Company of Old Senior Subordinated Notes by a Holder thereof as set forth below and the acceptance thereof by the Company will constitute a binding agreement between the tendering holder and the Company upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Senior Subordinated Letter of Transmittal. A Holder of Old Senior Subordinated Notes may tender the same by (i) properly completing and signing the Senior Subordinated Letter of Transmittal or a facsimile thereof (all references in this Prospectus to the Senior Subordinated Letter of Transmittal shall be deemed to include a facsimile thereof) and delivering the same, together with the certificate or certificates representing the Old Senior Subordinated Notes being tendered and any required signature guarantees and any other documents required by the Senior Subordinated Letter of Transmittal, to the Senior Subordinated Exchange Agent at its address set forth below on or prior to the Senior 121 Subordinated Expiration Date (or complying with the procedure for book-entry transfer described below) or (ii) complying with the guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF OLD SENIOR SUBORDINATED NOTES, SENIOR SUBORDINATED LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY. NO OLD SENIOR SUBORDINATED NOTES OR SENIOR SUBORDINATED LETTERS OF TRANSMITTAL SHOULD BE SENT TO THE COMPANY. If tendered Old Senior Subordinated Notes are registered in the name of the signer of the Senior Subordinated Letter of Transmittal and the Senior Subordinated Exchange Notes to be issued in exchange therefor are to be issued (and any untendered Old Senior Subordinated Notes are to be reissued) in the name of the registered holder (which term, for the purposes described herein, shall include any participant in The Depository Trust Company (also referred to as a "book-entry transfer facility") whose name appears on a security listing as the owner of Old Senior Subordinated Notes), the signature of such signer need not be guaranteed. In any other case, the tendered Old Senior Subordinated Notes must be endorsed or accompanied by written instruments of transfer in form satisfactory to the Company and duly executed by the registered holder, and the signature on the endorsement or instrument of transfer must be guaranteed by a bank, broker, dealer, credit union, savings association, clearing agency or other institution (each an "Eligible Institution") that is a member of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Exchange Act. If the Senior Subordinated Exchange Notes and/or Old Senior Subordinated Notes not exchanged are to be delivered to an address other than that of the registered holder appearing on the note register for the Old Senior Subordinated Notes, the signature in the Senior Subordinated Letter of Transmittal must be guaranteed by an Eligible Institution. The Senior Subordinated Exchange Agent will make a request within two business days after the date of receipt of this Prospectus to establish accounts with respect to the Old Senior Subordinated Notes at the book-entry transfer facility for the purpose of facilitating the Senior Subordinated Exchange Offer, and subject to the establishment thereof, any financial institution that is a participant in the book-entry transfer facility's system may make book-entry delivery of Old Senior Subordinated Notes by causing such book-entry transfer facility to transfer such Old Senior Subordinated Notes into the Senior Subordinated Exchange Agent's account with respect to the Old Senior Subordinated Notes in accordance with the book-entry transfer facility's procedures for such transfer. Although delivery of Old Senior Subordinated Notes may be effected through book-entry transfer into the Senior Subordinated Exchange Agent's account at the book-entry transfer facility, an appropriate Senior Subordinated Letter of Transmittal with any required signature guarantee and all other required documents must in each case be transmitted to and received or confirmed by the Senior Subordinated Exchange Agent at its address set forth below on or prior to the Senior Subordinated Expiration Date, or, if the guaranteed delivery procedures described below are complied with, within the time period provided under such procedures. If a holder desires to accept the Senior Subordinated Exchange Offer and time will not permit a Senior Subordinated Letter of Transmittal or Old Senior Subordinated Notes to reach the Senior Subordinated Exchange Agent before the Senior Subordinated Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if the Senior Subordinated Exchange Agent has received at its address set forth below on or prior to the Senior Subordinated Expiration Date, a letter, telegram or facsimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight courier) from an Eligible Institution setting forth the name and address of the tendering holder, the names in which the Old Senior Subordinated Notes are registered and, if possible, the certificate numbers of the Old Senior Subordinated Notes to be tendered, and stating that the tender is being made thereby and guaranteeing that within three business days after the Senior Subordinated Expiration Date, the Old Senior Subordinated Notes in proper form for transfer (or a confirmation of book-entry transfer of such Old Senior Subordinated Notes into the Senior Subordinated Exchange Agent's account at the book-entry transfer facility), will be delivered by such Eligible Institution together with a properly completed and duly executed Senior Subordinated Letter of Transmittal (and any other required documents). Unless Old Senior Subordinated Notes being tendered by the above-described method are deposited with the Senior Subordinated Exchange Agent within the time period set forth above 122 (accompanied or preceded by a properly completed Senior Subordinated Letter of Transmittal and any other required documents), the Company may, at its option, reject the tender. Copies of the notice of guaranteed delivery ("Senior Subordinated Notice of Guaranteed Delivery") which may be used by Eligible Institutions for the purposes described in this paragraph are available from the Senior Subordinated Exchange Agent. A tender will be deemed to have been received as of the date when (i) the tendering holder's properly completed and duly signed Senior Subordinated Letter of Transmittal accompanied by the Old Senior Subordinated Notes (or a confirmation of book-entry transfer of such Old Senior Subordinated Notes into the Senior Subordinated Exchange Agent's account at the book-entry transfer facility) is received by the Senior Subordinated Exchange Agent, or (ii) a Senior Subordinated Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to similar effect (as provided above) from an Eligible Institution is received by the Senior Subordinated Exchange Agent. Issuances of Senior Subordinated Exchange Notes in exchange for Old Senior Subordinated Notes tendered pursuant to a Senior Subordinated Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to similar effect (as provided above) by an Eligible Institution will be made only against deposit of the Senior Subordinated Letter of Transmittal (and any other required documents) and the tendered Old Senior Subordinated Notes. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of Old Senior Subordinated Notes tendered for exchange will be determined by the Company in its sole discretion, which determination shall be final and binding. The Company reserves the absolute right to reject any and all tenders of any particular Old Senior Subordinated Notes not properly tendered or not to accept any particular Old Senior Subordinated Notes which acceptance might, in the judgment of the Company or its counsel, be unlawful. The Company also reserves the absolute right to waive any defects or irregularities or conditions of the Senior Subordinated Exchange Offer as to any particular Old Senior Subordinated Notes either before or after the Senior Subordinated Expiration Date (including the right to waive the ineligibility of any holder who seeks to tender Old Senior Subordinated Notes in the Senior Subordinated Exchange Offer). The interpretation of the terms and conditions of the Senior Subordinated Exchange Offer (including the Senior Subordinated Letter of Transmittal and the instructions thereto) by the Company shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Senior Subordinated Notes for exchange must be cured within such reasonable period of time as the Company shall determine. Neither the Company, the Senior Subordinated Exchange Agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of Old Senior Subordinated Notes for exchange, nor shall any of them incur any liability for failure to give such notification. If the Senior Subordinated Letter of Transmittal is signed by a person or persons other than the registered holder or holders of Old Senior Subordinated Notes, such Old Senior Subordinated Notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered holder or holders appear on the Old Senior Subordinated Notes. If the Senior Subordinated Letter of Transmittal or any Old Senior Subordinated Notes or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. By tendering, each holder will represent to the Company that, among other things, the Senior Subordinated Exchange Notes acquired pursuant to the Senior Subordinated Exchange Offer are being acquired in the ordinary course of business of the person receiving such Senior Subordinated Exchange Notes, whether or not such person is the holder, that neither the holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of such Senior Subordinated Exchange Notes and that neither the holder nor any such other person is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company, or if it is an affiliate it will comply with the registration and prospectus requirements of the Securities Act to the extent applicable. 123 Each broker-dealer that receives Senior Subordinated Exchange Notes for its own account in exchange for Old Senior Subordinated Notes where such Old Senior Subordinated Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities must acknowledge that it will deliver a prospectus in connection with any resale of such Senior Subordinated Exchange Notes. Lehman Brothers Inc.'s ability to make a market in the Senior Subordinated Exchange Notes will be subject to the availability of a current market-maker prospectus. See "Plan of Distribution." TERMS AND CONDITIONS OF THE SENIOR SUBORDINATED LETTER OF TRANSMITTAL The Senior Subordinated Letter of Transmittal contains, among other things, the following terms and conditions, which are part of the Senior Subordinated Exchange Offer: The party tendering Notes for exchange (the "Transferor") exchanges, assigns and transfers the Old Senior Subordinated Notes to the Company and irrevocably constitutes and appoints the Senior Subordinated Exchange Agent as the Transferor's agent and attorney-in-fact to cause the Old Senior Subordinated Notes to be assigned, transferred and exchanged. The Transferor represents and warrants that it has full power and authority to tender, exchange, assign and transfer the Old Senior Subordinated Notes and to acquire Senior Subordinated Exchange Notes issuable upon the exchange of such tendered Notes, and that, when the same are accepted for exchange, the Company will acquire good and unencumbered title to the tendered Old Senior Subordinated Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The Transferor also warrants that it will, upon request, execute and deliver any additional documents deemed by the Senior Subordinated Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of tendered Old Senior Subordinated Notes or transfer ownership of such Old Senior Subordinated Notes on the account books maintained by a book-entry transfer facility. The Transferor further agrees that acceptance of any tendered Old Senior Subordinated Notes by the Company and the issuance of Senior Subordinated Exchange Notes in exchange therefor shall constitute performance in full by the Company of certain of its obligations under the Senior Subordinated Registration Rights Agreement. All authority conferred by the Transferor will survive the death or incapacity of the Transferor and every obligation of the Transferor shall be binding upon the heirs, legal representatives, successors, assigns, executors and administrators of such Transferor. The Transferor certifies that it is not an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act and that it is acquiring the Senior Subordinated Exchange Notes offered hereby in the ordinary course of such Transferor's business and that such Transferor has no arrangement with any person to participate in the distribution of such Senior Subordinated Exchange Notes. Each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of Senior Subordinated Exchange Notes. Each Transferor which is a broker-dealer receiving Senior Subordinated Exchange Notes for its own account must acknowledge that it will deliver a prospectus in connection with any resale of such Senior Subordinated Exchange Notes. By so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. In connection with the offering of the Old Senior Subordinated Notes, the Company agreed to file and maintain, subject to certain limitations, a registration statement that would allow Lehman Brothers Inc. to engage in market-making transactions with respect to the Senior Subordinated Exchange Notes. The Company has agreed to bear registration expenses incurred under such agreement. WITHDRAWAL RIGHTS Tenders of Old Senior Subordinated Notes may be withdrawn at any time prior to the Senior Subordinated Expiration Date. For a withdrawal to be effective, a written notice of withdrawal sent by telegram, facsimile transmission (receipt confirmed by telephone) or letter must be received by the Senior Subordinated Exchange Agent at the address set forth herein prior to the Senior Subordinated Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having tendered the Old Senior Subordinated Notes to be withdrawn (the "Depositor"), (ii) identify the Old Senior Subordinated Notes to be withdrawn (including the certificate number or numbers and principal amount of such Old Senior Subordinated Notes), (iii) specify the principal amount of 124 Old Senior Subordinated Notes to be withdrawn, (iv) include a statement that such holder is withdrawing his election to have such Old Senior Subordinated Notes exchanged, (v) be signed by the holder in the same manner as the original signature on the Senior Subordinated Letter of Transmittal by which such Old Senior Subordinated Notes were tendered or as otherwise described above (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Senior Subordinated Note Trustee under the Senior Subordinated Note Indenture register the transfer of such Old Senior Subordinated Notes into the name of the person withdrawing the tender and (vi) specify the name in which any such Old Senior Subordinated Notes are to be registered, if different from that of the Depositor. The Senior Subordinated Exchange Agent will return the properly withdrawn Old Senior Subordinated Notes promptly following receipt of notice of withdrawal. If Old Senior Subordinated Notes have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn Old Senior Subordinated Notes or otherwise comply with the book- entry transfer facility procedure. All questions as to the validity of notices of withdrawals, including time of receipt, will be determined by the Company and such determination will be final and binding on all parties. Any Old Senior Subordinated Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Senior Subordinated Exchange Offer. Any Old Senior Subordinated Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of Old Senior Subordinated Notes tendered by book-entry transfer into the Senior Subordinated Exchange Agent's account at the book-entry transfer facility pursuant to the book-entry transfer procedures described above, such Old Senior Subordinated Notes will be credited to an account with such book-entry transfer facility specified by the holder) as soon as practicable after withdrawal, rejection of tender or termination of the Senior Subordinated Exchange Offer. Properly withdrawn Old Senior Subordinated Notes may be retendered by following one of the procedures described under "--Procedures for Tendering Old Senior Subordinated Notes" above at any time on or prior to the Senior Subordinated Expiration Date. ACCEPTANCE OF OLD SENIOR SUBORDINATED NOTES FOR EXCHANGE; DELIVERY OF SENIOR SUBORDINATED EXCHANGE NOTES Upon satisfaction or waiver of all of the conditions to the Senior Subordinated Exchange Offer, the Company will accept, promptly on the Senior Subordinated Exchange Date, all Old Senior Subordinated Notes properly tendered and will issue the Senior Subordinated Exchange Notes promptly after such acceptance. See "--Certain Conditions to the Senior Subordinated Exchange Offer" below. For purposes of the Senior Subordinated Exchange Offer, the Company shall be deemed to have accepted properly tendered Old Senior Subordinated Notes for exchange when, as and if the Company has given oral or written notice thereof to the Senior Subordinated Exchange Agent. For each Old Senior Subordinated Note accepted for exchange, the holder of such Old Senior Subordinated Note will receive a Senior Subordinated Exchange Note having a principal amount equal to that of the surrendered Old Senior Subordinated Note. In all cases, issuance of Senior Subordinated Exchange Notes for Old Senior Subordinated Notes that are accepted for exchange pursuant to the Senior Subordinated Exchange Offer will be made only after timely receipt by the Senior Subordinated Exchange Agent of certificates for such Old Senior Subordinated Notes or a timely book-entry confirmation of such Old Senior Subordinated Notes into the Senior Subordinated Exchange Agent's account at the book-entry transfer facility, a properly completed and duly executed Senior Subordinated Letter of Transmittal and all other required documents. If any tendered Old Senior Subordinated Notes are not accepted for any reason set forth in the terms and conditions of the Senior Subordinated Exchange Offer or if Old Senior Subordinated Notes are submitted for a greater principal amount than the holder desires to exchange, such unaccepted or non-exchanged Old Senior Subordinated Notes will be returned without expense to the tendering holder thereof (or, in the case of Old Senior Subordinated Notes tendered by book-entry transfer into the Senior Subordinated Exchange Agent's account at the book-entry transfer facility pursuant to the book-entry transfer 125 procedures described above, such non-exchanged Old Senior Subordinated Notes will be credited to an account maintained with such book-entry transfer facility) as promptly as practicable after the expiration of the Senior Subordinated Exchange Offer. CERTAIN CONDITIONS TO THE SENIOR SUBORDINATED EXCHANGE OFFER Notwithstanding any other provision of the Senior Subordinated Exchange Offer, or any extension of the Senior Subordinated Exchange Offer, the Company shall not be required to accept for exchange, or to issue Senior Subordinated Exchange Notes in exchange for, any Old Senior Subordinated Notes and may terminate or amend the Senior Subordinated Exchange Offer (by oral or written notice to the Senior Subordinated Exchange Agent or by a timely press release) if at any time before the acceptance of such Old Senior Subordinated Notes for exchange or the exchange of the Senior Subordinated Exchange Notes for such Old Senior Subordinated Notes, any of the following conditions exist: (a) any action or proceeding is instituted or threatened in any court or by or before any governmental agency or regulatory authority or any injunction, order or decree is issued with respect to the Senior Subordinated Exchange Offer which, in the sole judgment of the Company, might materially impair the ability of the Company to proceed with the Senior Subordinated Exchange Offer or have a material adverse effect on the contemplated benefits of the Senior Subordinated Exchange Offer to the Company; or (b) any change (or any development involving a prospective change) shall have occurred or be threatened in the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Company that is or may be adverse to the Company, or the Company shall have become aware of facts that have or may have adverse significance with respect to the value of the Old Senior Subordinated Notes or the Senior Subordinated Exchange Notes or that may materially impair the contemplated benefits of the Senior Subordinated Exchange Offer to the Company; or (c) any law, rule or regulation or applicable interpretations of the staff of the Commission is issued or promulgated which, in the good faith determination of the Company, do not permit the Company to effect the Senior Subordinated Exchange Offer; or (d) any governmental approval has not been obtained, which approval the Company, in its sole discretion, deems necessary for the consummation of the Senior Subordinated Exchange Offer; or (e) there shall have been proposed, adopted or enacted any law, statute, rule or regulation (or an amendment to any existing law, statute, rule or regulation) which, in the sole judgment of the Company, might materially impair the ability of the Company to proceed with the Senior Subordinated Exchange Offer or have a material adverse effect on the contemplated benefits of the Senior Subordinated Exchange Offer to the Company; or (f) there shall occur a change in the current interpretation by the staff of the Commission which permits the Senior Subordinated Exchange Notes issued pursuant to the Senior Subordinated Exchange Offer in exchange for Old Senior Subordinated Notes to be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act provided that such Senior Subordinated Exchange Notes are acquired in the ordinary course of such Holders' business and such holders have no arrangement with any person to participate in the distribution of such Senior Subordinated Exchange Notes; or (g) there shall have occurred (i) any general suspension of, shortening of hours for, or limitation on prices for, trading in securities on any national securities exchange or in the over-the-counter market (whether or not mandatory), (ii) any limitation by any governmental agency or authority which may adversely affect the ability of the Company to complete the transactions contemplated by the Senior Subordinated Exchange Offer, (iii) a declaration of a banking moratorium or any suspension of payments in respect of banks by Federal or state authorities in the United States (whether or not mandatory), (iv) a commencement of a war, armed hostilities or other international or national crisis directly or indirectly 126 involving the United States, (v) any limitation (whether or not mandatory) by any governmental authority on, or other event having a reasonable likelihood of affecting, the extension of credit by banks or other leading institutions in the United States, or (vi) in the case of any of the foregoing existing at the time of the commencement of the Senior Subordinated Exchange Offer, a material acceleration or worsening thereof. The Company expressly reserves the right to terminate the Senior Subordinated Exchange Offer and not accept for exchange any Old Senior Subordinated Notes upon the occurrence of any of the foregoing conditions (which represent all of the material conditions to the acceptance by the Company of properly tendered Old Senior Subordinated Notes). In addition, the Company may amend the Senior Subordinated Exchange Offer at any time prior to the Senior Subordinated Expiration Date if any of the conditions set forth above occur. Moreover, regardless of whether any of such conditions has occurred, the Company may amend the Senior Subordinated Exchange Offer in any manner which, in its good faith judgment, is advantageous to holders of the Old Senior Subordinated Notes. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any such condition or may be waived by the Company in whole or in part at any time and from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. If the Company waives or amends the foregoing conditions, it will, if required by law, extend the Senior Subordinated Exchange Offer for a minimum of five business days from the date that the Company first gives notice, by public announcement or otherwise, of such waiver or amendment, if the Senior Subordinated Exchange Offer would otherwise expire within such five business-day period. Any determination by the Company concerning the events described above will be final and binding upon all parties. In addition, the Company will not accept for exchange any Old Senior Subordinated Notes tendered, and no Senior Subordinated Exchange Notes will be issued in exchange for any such Old Senior Subordinated Notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or the qualification of the Senior Subordinated Note Indenture under the Trust Indenture Act of 1939, as amended. In any such event the Company is required to use every reasonable effort to obtain the withdrawal of any stop order at the earliest possible time. The Senior Subordinated Exchange Offer is not conditioned upon any minimum principal amount of Old Senior Subordinated Notes being tendered for exchange. SENIOR SUBORDINATED EXCHANGE AGENT State Street Bank and Trust Company has been appointed as the Senior Subordinated Exchange Agent for the Senior Subordinated Exchange Offer. All executed Senior Subordinated Letters of Transmittal should be directed to the Senior Subordinated Exchange Agent at one of the addresses set forth below: By Hand/Overnight Courier: By Mail: State Street Bank and Trust Company State Street Bank and Trust Company P.O. Box 778 Two International Place Boston, Massachusetts 02102 Boston, Massachusetts 02110 Attn: Corporate Trust Department Attn: Corporate Trust Department Kellie Mullen Kellie Mullen By Facsimile: (617) 664-5314 Attn.: Corporate Trust Department Telephone: (617) 664-5587 127 Questions and requests for assistance, requests for additional copies of this Prospectus or of the Senior Subordinated Letter of Transmittal and requests for Senior Subordinated Notices of Guaranteed Delivery should be directed to the Senior Subordinated Exchange Agent at the address and telephone number set forth in the Senior Subordinated Letter of Transmittal. DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ON THE SENIOR SUBORDINATED LETTER OF TRANSMITTAL, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE OR TELEX NUMBER OTHER THAN THE ONES SET FORTH ON THE SENIOR SUBORDINATED LETTER OF TRANSMITTAL, WILL NOT CONSTITUTE A VALID DELIVERY. SOLICITATION OF TENDERS; FEES AND EXPENSES The Company has not retained any dealer-manager in connection with the Senior Subordinated Exchange Offer and will not make any payments to brokers, dealers or others soliciting acceptances of the Senior Subordinated Exchange Offer. The Company, however, will pay the Senior Subordinated Exchange Agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith. The Company will also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this and other related documents to the beneficial owners of the Old Senior Subordinated Notes and in handling or forwarding tenders for their customers. The estimated cash expenses to be incurred in connection with the Senior Subordinated Exchange Offer will be paid by the Company and are estimated in the aggregate to be approximately $ which includes fees and expenses of the Senior Subordinated Exchange Agent, Senior Subordinated Trustee, registration fees, accounting, legal, printing and related fees and expenses. No person has been authorized to give any information or to make any representations in connection with the Senior Subordinated Exchange Offer other than those contained in this Prospectus. If given or made, such information or representations should not be relied upon as having been authorized by the Company. Neither the delivery of this Prospectus nor any exchange made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the respective dates as of which information is given herein. The Senior Subordinated Exchange Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Old Senior Subordinated Notes in any jurisdiction in which the making of the Senior Subordinated Exchange Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. However, the Company may, at its discretion, take such action as it may deem necessary to make the Senior Subordinated Exchange Offer in any such jurisdiction and extend the Senior Subordinated Exchange Offer to holders of Old Senior Subordinated Notes in such jurisdiction. In any jurisdiction in which the securities laws or blue sky laws of which require the Senior Subordinated Exchange Offer to be made by a licensed broker or dealer, the Senior Subordinated Exchange Offer is being made on behalf of the Company by one or more registered brokers or dealers which are licensed under the laws of such jurisdiction. TRANSFER TAXES The Company will pay all transfer taxes, if any, applicable to the exchange of Old Senior Subordinated Notes pursuant to the Senior Subordinated Exchange Offer. If, however, certificates representing Senior Subordinated Exchange Notes or Old Senior Subordinated Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Old Senior Subordinated Notes tendered, or if tendered Old Senior Subordinated Notes are registered in the name of any person other than the person signing the Senior Subordinated Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Old Senior Subordinated Notes pursuant to the Senior Subordinated Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Senior Subordinated Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. 128 ACCOUNTING TREATMENT The Senior Subordinated Exchange Notes will be recorded at the carrying value of the Old Senior Subordinated Notes as reflected in the Company's accounting records on the date of the exchange. Accordingly, no gain or loss for accounting purposes will be recognized by the Company upon the exchange of Senior Subordinated Exchange Notes for Old Senior Subordinated Notes. Expenses incurred in connection with the issuance of the Senior Subordinated Exchange Notes will be amortized over the term of the Senior Subordinated Exchange Notes. CONSEQUENCES OF FAILURE TO EXCHANGE Holders of Old Senior Subordinated Notes who do not exchange their Old Senior Subordinated Notes for Senior Subordinated Exchange Notes pursuant to the Senior Subordinated Exchange Offer will continue to be subject to the restrictions on transfer of such Old Senior Subordinated Notes as set forth in the legend thereon. Old Senior Subordinated Notes not exchanged pursuant to the Senior Subordinated Exchange Offer will continue to remain outstanding in accordance with their terms. In general, Old Senior Subordinated Notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register the Old Senior Subordinated Notes under the Securities Act. Participation in the Senior Subordinated Exchange Offer is voluntary, and holders of Old Senior Subordinated Notes should carefully consider whether to participate. Holders of Old Senior Subordinated Notes are urged to consult their financial and tax advisors in making their own decision on what action to take. As a result of the making of, and upon acceptance for exchange of all validly tendered Old Senior Subordinated Notes pursuant to the terms of, this Senior Subordinated Exchange Offer, the Company will have fulfilled a covenant contained in the Senior Subordinated Registration Rights Agreement. Holders of Old Senior Subordinated Notes who do not tender their Old Senior Subordinated Notes in the Senior Subordinated Exchange Offer will continue to hold such Old Senior Subordinated Notes and will be entitled to all the rights and limitations applicable thereto under the Senior Subordinated Note Indenture, except for any such rights under the Senior Subordinated Registration Rights Agreement that by their terms terminate or cease to have further effectiveness as a result of the making of this Senior Subordinated Exchange Offer. All untendered Old Senior Subordinated Notes will continue to be subject to the restrictions on transfer set forth in the Senior Subordinated Note Indenture. To the extent that Old Senior Subordinated Notes are tendered and accepted in the Senior Subordinated Exchange Offer, the trading market for untendered Old Senior Subordinated Notes could be adversely affected. The Company may in the future seek to acquire, subject to the terms of the Senior Subordinated Note Indenture, untendered Old Senior Subordinated Notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. The Company has no present plan to acquire any Old Senior Subordinated Notes which are not tendered in the Senior Subordinated Exchange Offer. RESALE OF SENIOR SUBORDINATED EXCHANGE NOTES The Company is making the Senior Subordinated Exchange Offer in reliance on the position of the staff of the Commission as set forth in certain interpretive letters addressed to third parties in other transactions. However, the Company has not sought its own interpretive letter and there can be no assurance that the Staff would make a similar determination with respect to the Senior Subordinated Exchange Offer as it has in such interpretive letters to third parties. Based on these interpretations by the staff, the Company believes that the Senior Subordinated Exchange Notes issued pursuant to the Senior Subordinated Exchange Offer in exchange for Old Senior Subordinated Notes may be offered for resale, resold and otherwise transferred by a Holder (other than any Holder who is a broker-dealer or an "affiliate" of the Company within the meaning of Rule 405 of the Securities Act) without further compliance with the registration and prospectus delivery requirements of the 129 Securities Act, provided that such Senior Subordinated Exchange Notes are acquired in the ordinary course of such Holder's business and that such Holder is not participating, and has no arrangement or understanding with any person to participate, in a distribution (within the meaning of the Securities Act) of such Senior Subordinated Exchange Notes. However, any holder who is an "affiliate" of the Company or who has an arrangement or understanding with respect to the distribution of the Senior Subordinated Exchange Notes to be acquired pursuant to the Senior Subordinated Exchange Offer, or any broker- dealer who purchased Old Senior Subordinated Notes from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act (i) could not rely on the applicable interpretations of the staff and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act. A broker-dealer who holds Old Senior Subordinated Notes that were acquired for its own account as a result of market-making or other trading activities may be deemed to be an "underwriter" within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of Senior Subordinated Exchange Notes. Each such broker-dealer that receives Senior Subordinated Exchange Notes for its own account in exchange for Old Senior Subordinated Notes, where such Old Senior Subordinated Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge in the Senior Subordinated Letter of Transmittal that it will deliver a prospectus in connection with any resale of such Senior Subordinated Exchange Notes. Lehman Brothers Inc.'s ability to make a market in the Senior Subordinated Exchange Notes will be subject to the availability of a current market-maker prospectus. See "Plan of Distribution." In addition, to comply with the securities laws of certain jurisdictions, if applicable, the Senior Subordinated Exchange Notes may not be offered or sold unless they have been registered or qualified for sale in such jurisdiction or an exemption from registration or qualification is available and is complied with. The Company has agreed, pursuant to the Senior Subordinated Registration Rights Agreement and subject to certain specified limitations therein, to register or qualify the Senior Subordinated Exchange Notes for offer or sale under the securities or blue sky laws of such jurisdictions as any holder of the Senior Subordinated Exchange Notes reasonably requests in writing. Such registration or qualification may require the imposition of restrictions or conditions (including suitability requirements for offerees or purchasers) in connection with the offer or sale of any Senior Subordinated Exchange Notes. 130 DESCRIPTION OF THE SENIOR EXCHANGE NOTES GENERAL The Old Senior Notes were issued and the Senior Exchange Notes will be issued pursuant to an Indenture (the "Senior Note Indenture") between the Company and State Street Bank and Trust Company, as trustee (the "Senior Note Trustee"). The terms of the Senior Exchange Notes include those stated in the Senior Note Indenture and those made part of the Senior Note Indenture by reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act"). The Senior Exchange Notes are subject to all such terms, and Holders of Senior Exchange Notes are referred to the Senior Note Indenture and the Trust Indenture Act for a statement thereof. The following summary of the material provisions of the Senior Note Indenture does not purport to be complete and is qualified in its entirety by reference to the Senior Note Indenture, including the definitions therein of certain terms used below. Copies of the proposed form of Senior Note Indenture and Senior Registration Rights Agreement are available as set forth below under "Available Information." The definitions of certain terms used in the following summary are set forth below under "-- Certain Definitions." For purposes of this summary, the term "Company" refers only to P&L Coal Holdings Corporation and not to any of its Subsidiaries. On May 18, 1998, the Company issued $400.0 million aggregate principal amount of Old Senior Notes under the Senior Note Indenture. The terms of the Senior Exchange Notes are identical in all material respects to the Old Senior Notes, except for certain transfer restrictions and registration and other rights relating to the exchange of the Old Senior Notes for Senior Exchange Notes. The Senior Note Trustee will authenticate and deliver Senior Exchange Notes for original issue only in exchange for a like principal amount of Old Senior Notes. Any Old Senior Notes that remain outstanding after the consummation of the Senior Exchange Offer, together with the Senior Exchange Notes, will be treated as a single class of securities under the Senior Note Indenture. Accordingly, all references herein to specified percentages in aggregate principal amount of the outstanding Senior Exchange Notes shall be deemed to mean, at any time after the Senior Exchange Offer is consummated, such percentage in aggregate principal amount of the Old Senior Notes and Senior Exchange Notes then outstanding. The Senior Exchange Notes will be general unsecured obligations of the Company and will rank pari passu in right of payment with all current and future senior Indebtedness of the Company, including the Senior Credit Facilities. However, the Company and its Restricted Subsidiaries are parties to Senior Credit Facilities and all borrowings thereunder are secured by a first priority Lien on certain of the assets of the Company and its Restricted Subsidiaries. As a result, the Senior Exchange Notes are effectively subordinated to the Senior Credit Facilities to the extent of such collateral. As of March 31, 1998, on a pro forma basis after giving effect to the Transactions, $920.0 million would have been outstanding under the Senior Credit Facilities. The Senior Note Indenture permits substantial additional borrowings under the Senior Credit Facilities in the future. See "Risk Factors--Risks Relating to the Notes--Ranking--Secured Indebtedness; Effective Subordination." The operations of the Company are conducted through its Subsidiaries and, therefore, the Company is dependent upon the cash flow of its Subsidiaries to meet its obligations, including its obligations under the Senior Exchange Notes. The Senior Exchange Notes will be effectively subordinated to all Indebtedness and other liabilities and commitments (including trade payables and lease obligations) of the Company's Subsidiaries. Any right of the Company to receive assets of any of its Subsidiaries upon the latter's liquidation or reorganization (and the consequent right of the Holders of the Senior Exchange Notes to participate in those assets) will be effectively subordinated to the claims of that Subsidiary's creditors, except to the extent that the Company is itself recognized as a creditor of such Subsidiary, in which case the claims of the Company would still be subordinate to any security in the assets of such Subsidiary and any indebtedness of such Subsidiary senior to that held by the Company. As of March 31, 1998, on a pro forma basis giving effect to the Transactions, the Company's Subsidiaries would have had approximately $5,445.6 million of Indebtedness (including trade payables, land reclamation and environmental liabilities, workers' compensation liabilities and retiree health care liabilities). See "Risk Factors--Risks Relating to the Notes-- Holding Company Structure; Effective Subordination." 131 All of the Company's Subsidiaries other than Citizens Power and its Subsidiaries are Restricted Subsidiaries. However, under certain circumstances, the Company will be able to designate current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the restrictive covenants set forth in the Senior Note Indenture. PRINCIPAL, MATURITY AND INTEREST The Senior Notes are limited in aggregate principal amount to $550.0 million, of which $400.0 million was issued in the Offering, and will mature on May 15, 2008. Interest on the Senior Exchange Notes will accrue at the rate of 8 7/8% per annum and will be payable semi-annually in arrears on May 15 and November 15, commencing on November 15, 1998, to Holders of record on the immediately preceding May 1 and November 1. Additional Senior Notes may be issued from time to time after the Offering, subject to the provisions of the Senior Note Indenture described below under the caption "--Certain Covenants-- Incurrence of Indebtedness and Issuance of Preferred Stock." Interest on the Senior Exchange Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from May 18, 1998. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal, premium, if any, and interest and Liquidated Damages, if any, on the Senior Exchange Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders of the Senior Exchange Notes at their respective addresses set forth in the register of Holders of Senior Exchange Notes; provided that all payments of principal, premium, interest and Liquidated Damages, if any, with respect to Senior Exchange Notes the Holders of which have given wire transfer instructions to the Company will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Senior Note Trustee maintained for such purpose. The Senior Exchange Notes will be issued in denominations of $1,000 and integral multiples thereof. SENIOR SUBSIDIARY GUARANTEES The Company's payment obligations under the Senior Exchange Notes are jointly and severally guaranteed (the "Senior Subsidiary Guarantees") by the Senior Note Guarantors. The obligations of each Senior Note Guarantor under its Senior Subsidiary Guarantee will be limited to the maximum amount that would not constitute a fraudulent conveyance under applicable law. See "Risk Factors--Risks Relating to the Notes--Fraudulent Conveyance Matters." Notwithstanding the foregoing, no Subsidiary of the Company will be required to endorse a Senior Subsidiary Guarantee unless such Subsidiary is required to, and does, simultaneously execute a Guarantee of the Senior Credit Facilities. The Senior Exchange Notes will not be guaranteed by certain of the Company's Domestic Subsidiaries or by any Foreign Subsidiaries of the Company. For the fiscal year ended March 31, 1998, after giving effect to the Transactions, the Non-Guarantor Subsidiaries accounted for 11% and 20% of pro forma revenues and EBITDA, respectively, and, as of March 31, 1998, the Non-Guarantor Subsidiaries accounted for 27% of pro forma assets. The claims of creditors (including trade creditors) of any Non-Guarantor Subsidiary will generally have priority as to the assets of such Subsidiaries over the claims of the holders of the Senior Exchange Notes. As of March 31, 1998, after giving effect to the Transactions, the amount of liabilities of such Non-Guarantor Subsidiaries would have been approximately $1,578.4 million. The Senior Note Indenture provides that no Senior Note Guarantor may consolidate with or merge with or into (whether or not such Senior Note Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with such Senior Note Guarantor unless (i) subject to the provisions of the following paragraph, the Person formed by or surviving any such consolidation or merger (if other than such Senior Note Guarantor) assumes all the obligations of such Senior Note Guarantor pursuant to a supplemental indenture in 132 form and substance reasonably satisfactory to the Senior Note Trustee, under the Senior Exchange Notes, the Senior Note Indenture and the Senior Registration Rights Agreement; (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) the Company would be permitted by virtue of the Company's pro forma Fixed Charge Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the covenant described below under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock." The Senior Note Indenture provides that in the event of (a) a sale or other disposition of all of the assets of any Senior Note Guarantor, by way of merger, consolidation or otherwise, (b) a sale or other disposition of all of the capital stock of any Senior Note Guarantor or (c) the designation of a Senior Note Guarantor as an Unrestricted Subsidiary in accordance with the terms of the Senior Note Indenture, then such Senior Note Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Senior Note Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Senior Note Guarantor) will be released and relieved of any obligations under its Senior Subsidiary Guarantee; provided that the Net Proceeds of any such sale or other disposition are applied in accordance with the applicable provisions of the Senior Note Indenture and any such designation of a Senior Note Guarantor as an Unrestricted Subsidiary complies with all applicable covenants. See "Repurchase at the Option of Holders--Asset Sales." "Senior Note Guarantors" means each of (i) the Company's Domestic Subsidiaries at the date of the closing of the Acquisition, other than Citizens Power and the Subsidiaries of Citizens Power at the date of the Senior Note Indenture and (ii) any other subsidiary that executes a Senior Subsidiary Guarantee in accordance with the provisions of the Senior Note Indenture, and their respective successors and assigns. OPTIONAL REDEMPTION The Senior Exchange Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice. Prior to May 15, 2003, the Senior Exchange Notes will be redeemable at a redemption price equal to 100% of the principal amount thereof plus the applicable Senior Notes Make Whole Premium, plus, to the extent not included in the Senior Notes Make Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption. For purposes of the foregoing, "Senior Notes Make Whole Premium" means, with respect to a Senior Exchange Note, an amount equal to the greater of (a) 104.438% of the outstanding principal amount of such Senior Exchange Note and (b) the excess of (1) the present value of the remaining interest, premium, if any, and principal payments due on such Senior Exchange Note as if such Senior Exchange Note were redeemed on May 15, 2003, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (2) the outstanding principal amount of such Senior Exchange Note. On or after May 15, 2003, the Senior Exchange Notes are redeemable at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on May 15 of the years indicated below:
YEAR PERCENTAGE ---- ---------- 2003.......................................................... 104.438% 2004.......................................................... 102.958% 2005.......................................................... 101.479% 2006 and thereafter........................................... 100.000%
Notwithstanding the foregoing, during the first 36 months after the date of the closing of the Acquisition, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Senior Exchange Notes issued under the Senior Note Indenture at a redemption price of 108.875% of the principal 133 amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the aggregate principal amount of Senior Exchange Notes issued remain outstanding immediately after the occurrence of such redemption (excluding Senior Exchange Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 120 days of the date of the closing of such Equity Offering. SELECTION AND NOTICE If less than all of the Senior Exchange Notes are to be redeemed or purchased in an offer to purchase at any time, selection of Senior Exchange Notes for redemption or purchase will be made by the Senior Note Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Senior Exchange Notes are listed, or, if the Senior Exchange Notes are not so listed, on a pro rata basis, by lot or by such method as the Senior Note Trustee shall deem fair and appropriate; provided that no Senior Exchange Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Senior Exchange Notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any Senior Exchange Note is to be redeemed in part only, the notice of redemption that relates to such Senior Exchange Note shall state the portion of the principal amount thereof to be redeemed. A new Senior Exchange Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Senior Exchange Note. Senior Exchange Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Senior Exchange Notes or portions of them called for redemption. REPURCHASE AT THE OPTION OF HOLDERS CHANGE OF CONTROL Upon the occurrence of a Change of Control, each Holder of Senior Exchange Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Senior Exchange Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within ten days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Senior Exchange Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by the Senior Note Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Senior Exchange Notes as a result of a Change of Control. On the Change of Control Payment Date, the Company will, to the extent lawful, (1) accept for payment all Senior Exchange Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Senior Exchange Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Senior Note Trustee the Senior Exchange Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Senior Exchange Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Senior Exchange Notes so tendered the Change of Control Payment for such Senior Exchange Notes, and the Senior Note Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Senior Exchange Note equal in principal amount to any unpurchased portion of the Senior Exchange Notes surrendered, if any; provided that each such new Senior Exchange Note will be in a principal amount of $1,000 or an integral multiple thereof. The Senior Note Indenture will provide that, prior to complying with the provisions of this covenant, but in any event within 90 days following a Change of 134 Control, the Company will either repay all outstanding Senior Debt other than the Senior Exchange Notes or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt other than the Senior Exchange Notes to permit the repurchase of Senior Exchange Notes required by this covenant. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Change of Control provisions described above will be applicable whether or not any other provisions of the Senior Note Indenture are applicable. Except as described above with respect to a Change of Control, the Senior Note Indenture does not contain provisions that permit the Holders of the Senior Exchange Notes to require that the Company repurchase or redeem the Senior Exchange Notes in the event of a takeover, recapitalization or similar transaction. The Company's other senior indebtedness contains prohibitions on certain events that would constitute a Change of Control. In addition, the exercise by the Holders of Senior Exchange Notes of their right to require the Company to repurchase the Senior Exchange Notes could cause a default under such other senior indebtedness, even if the Change of Control itself does not, due to the financial effect of such repurchases on the Company. Finally, the Company's ability to pay cash to the Holders of Senior Exchange Notes upon a repurchase may be limited by the Company's then existing financial resources. See "Risk Factors--Risks Relating to the Notes--Limitation on Change of Control Offer." The Senior Credit Facilities currently prohibit the Company from purchasing any Senior Exchange Notes or Senior Subordinated Exchange Notes, and also provide that certain change of control events with respect to the Company would constitute a default thereunder. Any future credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing Senior Exchange Notes, the Company could seek the consent of its lenders to the purchase of Senior Exchange Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Senior Exchange Notes. In such case, the Company's failure to purchase tendered Senior Exchange Notes would constitute an Event of Default under the Senior Note Indenture which would, in turn, constitute a default under the Senior Credit Facilities. The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Senior Note Indenture applicable to a Change of Control Offer made by the Company and purchases all Senior Exchange Notes validly tendered and not withdrawn under such Change of Control Offer or if the Company exercises its option to purchase the Senior Exchange Notes. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than a Principal or a Related Party of a Principal (as defined below), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of more than 50% of the Voting Stock of the Company (measured by voting power rather than number of shares) or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. The definition of Change of Control includes a phrase relating to the sale, lease, transfer, conveyance or other disposition of "all or substantially all" of the assets of the Company and its Subsidiaries taken as a whole. 135 Although there is a developing body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of Senior Exchange Notes to require the Company to repurchase such Senior Exchange Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of the closing of the Acquisition or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Principals" means Lehman Brothers Merchant Banking Partners II L.P., any of its respective Affiliates and executive officers of the Company as of the date of the closing of the Acquisition. "Related Party" with respect to any Principal means (A) any controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Principal or (B) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of such Principal and/or such other Persons referred to in the immediately preceding clause (A). ASSET SALES The Senior Note Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value as determined in good faith by the Company (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Senior Note Trustee with respect to any Asset Sale determined to have a value greater that $25.0 million) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Subsidiary is in the form of cash, Cash Equivalents or Marketable Securities; provided that the following amounts shall be deemed to be cash: (w) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Senior Exchange Notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability, (x) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash within 180 days following the closing of such Asset Sale (to the extent of the cash received), (y) any Designated Noncash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale; provided that the aggregate fair market value (as determined above) of such Designated Noncash Consideration, taken together with the fair market value at the time of receipt of all other Designated Noncash Consideration received pursuant to this clause (y) less the amount of Net Proceeds previously realized in cash from prior Designated Noncash Consideration is less than 5% of Total Assets at the time of the receipt of such Designated Noncash Consideration (with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value) and (z) Additional Assets received in an exchange of assets transaction. Within 360 days after the receipt of any cash Net Proceeds from an Asset Sale, the Company or such Restricted Subsidiary, at its option, may apply such cash Net Proceeds, at its option, (a) to repay Indebtedness of the Company or any Restricted Subsidiary that is not subordinated in right of payment to Indebtedness under a Credit Facility, (b) to the acquisition of a majority of the assets of, or a majority of the Voting Stock of, another Permitted Business, the making of a capital expenditure or the acquisition of other assets or Investments that are used or useful in a Permitted Business or (c) to apply the cash Net Proceeds from such Asset Sale to an Investment in Additional Assets. Any cash Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of 136 this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company will be required to make an offer to all Holders of Senior Exchange Notes and all holders of other Indebtedness that ranks pari passu with the Senior Exchange Notes containing provisions similar to those set forth in the Senior Note Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Senior Exchange Notes and such other Indebtedness that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase, in accordance with the procedures set forth in the Senior Note Indenture and such other Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by the Senior Note Indenture. If the aggregate principal amount of Senior Exchange Notes and such other Indebtedness tendered into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Senior Note Trustee shall select the Senior Exchange Notes and such other Indebtedness to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. CERTAIN COVENANTS RESTRICTED PAYMENTS The Senior Note Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Senior Exchange Notes or any Senior Subsidiary Guarantee, except a payment of interest or principal at Stated Maturity or Indebtedness permitted under clause (viii) of the covenant described under "--Incurrence of Indebtedness and Issuance of Preferred Stock;" or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under caption "Incurrence of Indebtedness and Issuance of Preferred Stock;" and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Subsidiaries after the date of the closing of the Acquisition (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (v), (ix), (x) and (xii) of the next succeeding paragraph), is less than the sum, without duplication, of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the closing of the Acquisition to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds or the fair market value of property other than cash received by the Company since the date of the closing of the Acquisition as a contribution to its common equity capital or from the 137 issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company), plus (iii) to the extent that either any Existing Citizens Power Investment or any Restricted Investment that reduced the amount available for Restricted Payments under this clause (c) is sold for cash or otherwise liquidated or repaid for cash or any dividend or payment is received by the Company or a Restricted Subsidiary after the date of the closing of the Acquisition in respect of such Investment, 100% of the amount of Net Proceeds or dividends or payments (including the fair market value of property) received in connection therewith, up to the amount of the Existing Citizens Power Investment on the date of the closing of the Acquisition or the Restricted Investment that reduced this clause (c), as the case may be, and thereafter 50% of the amount of Net Proceeds or dividends or payments (including the fair market value of property) received in connection therewith (except that the amount of dividends or payments received in respect of payments of Obligations in respect of such Investments, such as taxes, shall not increase the amounts under this clause (c)), plus (iv) to the extent that any Unrestricted Subsidiary of the Company is redesignated as a Restricted Subsidiary after the date of the closing of the Acquisition, 100% of the fair market value of the Company's Investment in such Subsidiary as of the date of such redesignation up to the amount of the Restricted Investments made in such Subsidiary that reduced this clause (c) and 50% of the excess of the fair market value of the Company's Investment in such Subsidiary as of the date of such redesignation over (1) the amount of the Restricted Investment that reduced this clause (c) and (2) any amounts that increased the amount available as a Permitted Investment; provided, further, that if Citizens Power or any of its Subsidiaries is designated as a Restricted Subsidiary, the amount of the fair market value of the Investment therein on the date of the Senior Note Indenture shall also be credited to this clause (c); provided, further, that any amounts that increase this clause (c) shall not duplicatively increase amounts available as Permitted Investments. The foregoing provisions will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Senior Note Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (c)(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) dividends or distributions by a Restricted Subsidiary of the Company so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities; (v) Investments in Unrestricted Subsidiaries having an aggregate fair market value not to exceed the amount, at the time of such Investment, substantially concurrently contributed in cash or Cash Equivalents to the common equity capital of the Company after the date of the closing of the Acquisition; provided that any such amount contributed shall be excluded from the calculation made pursuant to clause (c) above; (vi) the payment of dividends on the Company's Common Stock, following the first public offering of the Company's Common Stock after the date of the closing of the Acquisition, of up to 6% per annum of the net proceeds received by the Company in such public offering, other than public offerings with respect to the Company's Common Stock registered on Form S-8; (vii) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any present or former employee 138 or director of the Company (or any of its Restricted Subsidiaries) pursuant to any management equity subscription agreement or stock option agreement or any other management or employee benefit plan in effect as of the date of the closing of the Acquisition; provided that (A) the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $2.0 million in any twelve-month period (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $5.0 million in any calendar year); provided further that such amount in any calendar year may be increased by an amount not to exceed (x) the cash proceeds from the sale of Equity Interests of the Company or a Restricted Subsidiary to members of management and directors of the Company and its Subsidiaries that occurs after the date of the closing of the Acquisition, plus (y) the cash proceeds of key-man life insurance policies received by the Company and its Restricted Subsidiaries after the date of the closing of the Acquisition, less (z) the amount of any Restricted Payments previously made pursuant to clauses (x) and (y) of this subparagraph (vii); and, provided further, that cancellation of Indebtedness owing to the Company from members of management of the Company or any of its Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Company or a Restricted Subsidiary will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of the Senior Note Indenture and (B) no Default or Event of Default shall have occurred and be continuing immediately after such transaction; (viii) repurchases of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options; (ix) the repurchase, redemption or other acquisition or retirement for value of the Senior Subordinated Exchange Notes pursuant to the provisions described under the caption "Description of the Senior Subordinated Exchange Notes--Optional Redemption;" provided that the amount of any Equity Offering used to effect such a repurchase, redemption or other acquisition or retirement for value shall be excluded from the calculation made pursuant to clause (c) above; (x) the repurchase, redemption or other acquisition or retirement for value of the Senior Subordinated Exchange Notes pursuant to the provisions described under the caption "Description of the Senior Subordinated Exchange Notes--Repurchase at the Option of Holders-- Change of Control" and "Description of the Senior Subordinated Exchange Notes--Repurchase at the Option of Holders--Asset Sales;" provided that, as of the date of such repurchase, redemption or other acquisition or retirement for value, no Default or Event of Default shall have occurred and be continuing or, with the passage of time, would occur as a consequence thereof; (xi) the repurchase, redemption or other acquisition or retirement for value of the Senior Subordinated Exchange Notes pursuant to the provisions described under the caption "Description of the Senior Subordinated Exchange Notes--Escrow of Proceeds; Special Mandatory Redemption of Senior Subordinated Exchange Notes;" provided that the amount of any such repurchase, redemption, acquisition or retirement shall be excluded from the calculation made pursuant to clause (c) above; and (xii) other Restricted Payments not otherwise prohibited by this covenant in an aggregate amount not to exceed $25.0 million under this clause (xii). All of the Company's Subsidiaries other than Citizens Power and its Subsidiaries are Restricted Subsidiaries. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. 139 If, at any time, any Unrestricted Subsidiary would fail to meet the requirements in the definition of "Unrestricted Subsidiary" as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Senior Note Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock," the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under the covenant described under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any noncash Restricted Payment or any adjustment made pursuant to paragraph (c) of this covenant shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Senior Note Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $25.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Senior Note Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant "Restricted Payments" were computed. If any Restricted Investment is sold or otherwise liquidated or repaid or any dividend or payment is received by the Company or a Restricted Subsidiary and such amounts may be credited to clause (c) above, then such amounts will be credited only to the extent of amounts not otherwise included in Consolidated Net Income and that do not otherwise increase the amount available as a Permitted Investment. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK The Senior Note Indenture provides that the Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock and the Company's Restricted Subsidiaries may incur Indebtedness or issue Disqualified Stock or preferred stock if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. The provisions of the first paragraph of this covenant will not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company of term Indebtedness under Credit Facilities (and the Guarantee thereof by the Senior Note Guarantors); provided that the aggregate principal amount of all term Indebtedness outstanding under this clause (i) after giving effect to such incurrence does not exceed an amount equal to $920.0 million; (ii) the incurrence by the Company of revolving credit Indebtedness and letters of credit (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company 140 and its Restricted Subsidiaries thereunder) under Credit Facilities (and the Guarantee thereof by the Senior Note Guarantors); provided that the aggregate principal amount of all revolving credit Indebtedness outstanding under this clause (ii) after giving effect to such incurrence does not exceed an amount equal to $480.0 million; (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company, the Senior Note Guarantors and the Senior Subordinated Note Guarantors of Indebtedness represented by the Senior Exchange Notes, the Senior Subordinated Exchange Notes, the Senior Subsidiary Guarantees and the Subordinated Subsidiary Guarantees limited in aggregate principal amount, without duplication, to amounts outstanding under the Senior Note Indenture and the Senior Subordinated Note Indenture as of their respective dates; (v) (A) the guarantee by the Company or any of the Senior Note Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company or (B) the incurrence of Indebtedness of a Restricted Subsidiary to the extent that such Indebtedness is supported by a letter of credit, in each case that was permitted to be incurred by another provision of this covenant; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness (including Capital Lease Obligations) to finance the acquisition (including by direct purchase, by lease or indirectly by the acquisition of the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of such acquisition) or improvement of property (real or personal) in an aggregate principal amount which, when aggregated with the principal amount of all other Indebtedness then outstanding pursuant to this clause (vi) and including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (vi), does not exceed an amount equal to 5% of Total Assets at the time of such incurrence; (vii) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by the Senior Note Indenture to be incurred under the first paragraph hereof or clauses (iii), (iv) or (vii) of this paragraph; (viii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Senior Subordinated Exchange Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (viii); (ix) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred in the ordinary course of business for the purpose of risk management and not for the purpose of speculation; (x) the incurrence by the Company's Unrestricted Subsidiaries of Non- Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (x), and the issuance of preferred stock by Unrestricted Subsidiaries; (xi) the incurrence of Indebtedness solely in respect of performance, surety and similar bonds or completion or performance guarantees (including, without limitation, performance guarantees pursuant to coal supply agreements or equipment leases), to the extent that such incurrence does not result in the incurrence of any obligation for the payment of borrowed money to others; (xii) the incurrence of Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or 141 assumed in connection with the disposition of any business, assets or a Subsidiary; provided, however that (i) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (i)) and (ii) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and its Restricted Subsidiaries in connection with such disposition; (xiii) the guarantee by the Company or any of the Senior Note Guarantors of additional Indebtedness relating to Black Beauty Coal Company not to exceed $50.0 million in aggregate principal amount outstanding at any one time under this clause (xiii); (xiv) the incurrence of Indebtedness relating to the Bengalla Joint Venture or the Warkworth Associates Joint Venture in an aggregate amount not to exceed $100.0 million in aggregate principal amount outstanding at any one time under this clause (xiv); and (xv) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (xv), not to exceed $250.0 million. The Senior Note Indenture also provides that the Company will not incur, and will not permit its Restricted Subsidiaries to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Restricted Subsidiary unless such Indebtedness is also contractually subordinated in right of payment to the Senior Exchange Notes, or the Senior Subsidiary Guarantees, as the case may be, on substantially identical terms; provided, however, that no Indebtedness of the Company or any Restricted Subsidiary shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company or any Restricted Subsidiary solely by virtue of being unsecured. For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xv) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company shall, in its sole discretion, classify or reclassify such item of Indebtedness in any manner that complies with this covenant. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. LIENS The Senior Note Indenture provides that the Company will not and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under the Senior Note Indenture and the Senior Exchange Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES The Senior Note Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary that is not a Senior Note Guarantor to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on 142 its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the foregoing restrictions will not apply to encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of the closing of the Acquisition, (b) the Senior Credit Facilities as in effect as of the date of the closing of the Acquisition, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the Senior Credit Facilities as in effect on the date of the closing of the Acquisition, (c) the Senior Note Indenture, the Senior Subordinated Note Indenture, the Senior Exchange Notes and the Senior Subordinated Exchange Notes, (d) applicable law or any applicable rule, regulation or order, (e) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Senior Note Indenture to be incurred, (f) customary non-assignment provisions in leases and other agreements entered into in the ordinary course of business and consistent with past practices, (g) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (h) any agreement for the sale of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale, (i) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced, (j) secured Indebtedness otherwise permitted to be incurred pursuant to the provisions of the covenant described above under the caption "--Liens" that limits the right of the debtor to dispose of the assets securing such Indebtedness, (k) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business, (l) restrictions on cash or other deposits or net worth imposed by customers or lessors under contracts or leases entered into in the ordinary course of business and (m) any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (l) above, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company's Board of Directors, not materially more restrictive in the aggregate with respect to such dividend and other payment restrictions than those (considered as a whole) contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing. MERGER, CONSOLIDATION, OR SALE OF ASSETS The Senior Note Indenture provides that the Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Senior Registration Rights Agreement, the Senior Exchange Notes and the Senior Note Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Senior Note Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a 143 merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, (A) the entity surviving such consolidation or merger would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock" or (B) the Fixed Charge Coverage Ratio for the Company or the entity or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made would, immediately after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, not be less than such Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction. The Senior Note Indenture also provides that the Company may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. The provisions of this covenant will not be applicable to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and its Restricted Subsidiaries. Notwithstanding the foregoing clause (iv), (i) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (ii) the Company may merge with an Affiliate that has no significant assets or liabilities and was formed solely for the purpose of changing the jurisdiction of organization of the Company in another State of the United States or the form of organization of the Company so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby and provided that the successor assumes all the obligations of the Company under the Senior Registration Rights Agreement, the Senior Exchange Notes and the Senior Note Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Senior Note Trustee. TRANSACTIONS WITH AFFILIATES The Senior Note Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction") involving aggregate payments or consideration in excess of $5.0 million, unless (i) such Affiliate Transaction is on terms that are materially no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Senior Note Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the members of the Board of Directors and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. Notwithstanding the foregoing, the following items shall not be deemed to be Affiliate Transactions: (i) any employment agreement or other compensation plan or arrangement for employees entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Restricted Subsidiary, (ii) transactions between or among the Company and/or its Restricted Subsidiaries, (iii) payment of reasonable fees to officers, directors, employees or consultants of the Company, (iv) Restricted Payments that are permitted by, and Investments that are not prohibited by, the provisions of the Senior Note Indenture described above under the caption "--Restricted Payments," (v) indemnification payments made to officers, directors and employees of the Company or any Restricted Subsidiary pursuant to charter, bylaw, statutory or contractual provisions; (vi) the payment of customary annual management, consulting and advisory fees and related expenses to Lehman Merchant Bank and its Affiliates; (vii) payments by the Company or any of its Restricted Subsidiaries to Lehman Merchant Bank and its Affiliates 144 made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which payments are approved by a majority of the Board of Directors of the Company in good faith; (viii) the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders' agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the date of the closing of the Acquisition and any similar agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the date of the closing of the Acquisition shall only be permitted by this clause (viii) to the extent that the terms of any such amendment or new agreement are not otherwise disadvantageous to the Holders in any material respect; (ix) transactions pursuant to the terms of the Transaction Documents in effect on the date of the closing of the Acquisition; (x) transactions with Unrestricted Subsidiaries, customers, clients, suppliers, joint venture partners or purchasers or sellers of goods or services, in each case in the ordinary course of business (including, without limitation, pursuant to joint venture agreements) and otherwise in compliance with the terms of the Senior Note Indenture which are, in the aggregate (taking into account all the costs and benefits associated with such transactions), materially no less favorable to the Company or its Restricted Subsidiaries than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; (xi) guarantees of performance by the Company and its Restricted Subsidiaries of Unrestricted Subsidiaries in the ordinary course of business, except for guarantees of Obligations in respect of borrowed money; and (xii) pledges of Equity Interests of Unrestricted Subsidiaries for the benefit of lenders of Unrestricted Subsidiaries. ADDITIONAL SENIOR SUBSIDIARY GUARANTEES The Senior Note Indenture provides that if the Company or any of its Domestic Subsidiaries shall acquire or create another Domestic Subsidiary after the date of the Senior Note Indenture and such Domestic Subsidiary provides a guarantee of the Senior Credit Facilities, then such newly acquired or created Domestic Subsidiary shall execute a supplemental indenture in form and substance satisfactory to the Senior Note Trustee providing that such Domestic Subsidiary shall become a Senior Note Guarantor under the Senior Note Indenture, provided, however, this covenant shall not apply to any Domestic Subsidiary that has been properly designated as an Unrestricted Subsidiary in accordance with the Senior Note Indenture for so long as it continues to constitute an Unrestricted Subsidiary. BUSINESS ACTIVITIES The Company will not, and will not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole. PAYMENTS FOR CONSENT The Senior Note Indenture provides that neither the Company nor any of its Restricted Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Senior Exchange Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Senior Note Indenture or the Senior Exchange Notes unless such consideration is offered to be paid or is paid to all Holders of the Senior Exchange Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. REPORTS The Senior Note Indenture provides that, whether or not required by the rules and regulations of the Commission, so long as any Senior Exchange Notes are outstanding, the Company will furnish to the Holders of Senior Exchange Notes (i) all quarterly and annual financial information that would be required to be contained 145 in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the Commission's rules and regulations. In addition, following the consummation of the exchange offer contemplated by the Senior Registration Rights Agreement, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the Company and the Senior Note Guarantors have agreed that, for so long as any Senior Exchange Notes remain outstanding, they will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. EVENTS OF DEFAULT AND REMEDIES The Senior Note Indenture provides that each of the following constitutes an Event of Default: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Senior Exchange Notes; (ii) default in payment when due of the principal of or premium, if any, on the Senior Exchange Notes; (iii) failure by the Company or any of its Subsidiaries to make the offer required or to purchase any of the Senior Exchange Notes as required under the provisions described under the captions "--Change of Control," or "--Asset Sales;" (iv) failure by the Company or any of its Subsidiaries for 30 days after notice to comply with the provisions of the covenants entitled "--Restricted Payments" or "--Incurrence of Indebtedness and Issuance of Preferred Stock;" or failure by the Company or any of its Subsidiaries for 60 days after notice to comply with any of its other agreements in the Senior Note Indenture or the Senior Exchange Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Senior Note Indenture, which default results in the acceleration of such Indebtedness prior to its express maturity and the principal amount of any such Indebtedness aggregates $50.0 million or more; (vi) failure by the Company or any of its Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would be a Significant Subsidiary to pay final judgments aggregating in excess of $50.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vii) except as permitted by the Senior Note Indenture, any Senior Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Senior Note Guarantor, or any Person acting on behalf of any Senior Note Guarantor, shall deny or disaffirm its obligations under its Senior Subsidiary Guarantee; (viii) certain events of bankruptcy or insolvency with respect to the Company, any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would be a Significant Subsidiary; and (ix) any failure of the Company to deposit the required amounts into the Escrow Account pursuant to the Escrow Letter or any failure of the proceeds of the Escrow Account to be applied as required under the Escrow Letter. If any Event of Default occurs and is continuing, the Senior Note Trustee or the Holders of at least 25% in principal amount of the then outstanding Senior Exchange Notes may declare all the Senior Exchange Notes to be due and payable immediately; provided, that so long as any Indebtedness permitted to be incurred pursuant to the Senior Credit Facilities shall be outstanding, such acceleration shall not be effective until the earlier of (i) an acceleration of any such Indebtedness under the Senior Credit Facilities or (ii) five business days after receipt by 146 the Company of written notice of such acceleration of the Senior Exchange Notes. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, any Significant Subsidiary that is a Restricted Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Senior Exchange Notes will become due and payable without further action or notice. Holders of the Senior Exchange Notes may not enforce the Senior Note Indenture or the Senior Exchange Notes except as provided in the Senior Note Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Senior Exchange Notes may direct the Senior Note Trustee in its exercise of any trust or power. The Senior Note Trustee may withhold from Holders of the Senior Exchange Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Senior Exchange Notes pursuant to the optional redemption provisions of the Senior Note Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Senior Exchange Notes. If an Event of Default occurs prior to May 15, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding paying the premium upon redemption of the Senior Exchange Notes prior to May 15, 2003, then the premium specified in the Senior Note Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Senior Exchange Notes. The Holders of a majority in aggregate principal amount of the Senior Exchange Notes then outstanding by notice to the Senior Note Trustee may on behalf of the Holders of all of the Senior Exchange Notes waive any existing Default or Event of Default and its consequences under the Senior Note Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Senior Exchange Notes. The Company is required to deliver to the Senior Note Trustee annually a statement regarding compliance with the Senior Note Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Senior Note Trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Company or any Person controlling such Person, as such, shall have any liability for any obligations of the Company under the Senior Exchange Notes, the Senior Subsidiary Guarantees, the Senior Note Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Senior Exchange Notes by accepting a Senior Exchange Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Senior Exchange Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Senior Exchange Notes ("Legal Defeasance") except for (i) the rights of Holders of outstanding Senior Exchange Notes to receive payments in respect of the principal of, premium, if any, and interest and Liquidated Damages, if any, on such Senior Exchange Notes when such payments are due from the trust referred to below, (ii) the Company's obligations with respect to the Senior Exchange Notes concerning issuing temporary Senior Exchange Notes, registration of Senior Exchange Notes, mutilated, destroyed, lost or stolen Senior Exchange Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Senior Note Trustee, and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the Senior Note 147 Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Senior Note Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Senior Exchange Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Senior Exchange Notes. In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the Company must irrevocably deposit with the Senior Note Trustee, in trust, for the benefit of the Holders of the Senior Exchange Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest and Liquidated Damages, if any, on the outstanding Senior Exchange Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Senior Exchange Notes are being defeased to maturity or to a particular redemption date; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Senior Note Trustee an opinion of counsel in the United States reasonably acceptable to the Senior Note Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of the Senior Note Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders of the outstanding Senior Exchange Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Senior Note Trustee an opinion of counsel in the United States reasonably acceptable to the Senior Note Trustee confirming that the Holders of the outstanding Senior Exchange Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the effective date of such defeasance (v) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Senior Note Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company must have delivered to the Senior Note Trustee, at or prior to the effective date of such defeasance, an opinion of counsel to the effect that at the effective date of such defeasance, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (vii) the Company must deliver to the Senior Note Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Senior Exchange Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (viii) the Company must deliver to the Senior Note Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. TRANSFER AND EXCHANGE A Holder may transfer or exchange Senior Exchange Notes in accordance with the Senior Note Indenture. The Registrar and the Senior Note Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Senior Note Indenture. The Company is not required to transfer or exchange any Senior Exchange Note selected for redemption. Also, the Company is not required to transfer or exchange any Senior Exchange Note for a period of 15 days before a selection of Senior Exchange Notes to be redeemed. The registered Holder of a Senior Exchange Note will be treated as the owner of it for all purposes. 148 AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the Senior Note Indenture or the Senior Exchange Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Senior Exchange Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Senior Exchange Notes), and any existing default or compliance with any provision of the Senior Note Indenture or the Senior Exchange Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Exchange Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Senior Exchange Notes). Without the consent of each Holder affected, an amendment or waiver may not (with respect to any Senior Exchange Notes held by a non-consenting Holder): (i) reduce the principal amount of Senior Exchange Notes whose Holders must consent to an amendment, supplement or waiver, (ii) reduce the principal of or change the fixed maturity of any Senior Exchange Note or alter the provisions with respect to the redemption of the Senior Exchange Notes (other than provisions relating to the covenants described above under the caption "-- Repurchase at the Option of Holders"), (iii) reduce the rate of or change the time for payment of interest on any Senior Exchange Note, (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Senior Exchange Notes (except a rescission of acceleration of the Senior Exchange Notes by the Holders of at least a majority in aggregate principal amount of the Senior Exchange Notes and a waiver of the payment default that resulted from such acceleration), (v) make any Senior Exchange Note payable in money other than that stated in the Senior Exchange Notes, (vi) make any change in the provisions of the Senior Note Indenture relating to waivers of past Defaults or the rights of Holders of Senior Exchange Notes to receive payments of principal of or premium, if any, or interest on the Senior Exchange Notes, (vii) waive a redemption payment with respect to any Senior Exchange Note (other than a payment required by one of the covenants described above under the caption "--Repurchase at the Option of Holders"), (viii) make any change in the foregoing amendment and waiver provisions or (ix) release any Senior Subordinated Note Guarantor from any of its obligations under its Subordinated Subsidiary Guarantee or this Senior Subordinated Note Indenture, except in accordance with the terms of this Senior Subordinated Note Indenture. Notwithstanding the foregoing, without the consent of any Holder of Senior Exchange Notes, the Company and the Senior Note Trustee may amend or supplement the Senior Note Indenture or the Senior Exchange Notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Exchange Notes in addition to or in place of certificated Senior Exchange Notes, to provide for the assumption of the Company's obligations to Holders of Senior Exchange Notes in the case of a merger or consolidation or sale of all or substantially all of the Company's assets, to make any change that would provide any additional rights or benefits to the Holders of Senior Exchange Notes or that does not adversely affect the legal rights under the Senior Note Indenture of any such Holder, to comply with requirements of the Commission in order to effect or maintain the qualification of the Senior Note Indenture under the Trust Indenture Act to provide for the issuance of additional Senior Subordinated Exchange Notes in accordance with the limitations set forth in this Senior Subordinated Note Indenture as of the date hereof or to allow any Senior Subordinated Note Guarantor to execute a supplemental Senior Subordinated Note Indenture and/or a Subordinated Subsidiary Guarantee with respect to the Senior Subordinated Exchange Notes. CONCERNING THE SENIOR NOTE TRUSTEE The Senior Note Indenture contains certain limitations on the rights of the Senior Note Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Senior Note Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. 149 The Holders of a majority in principal amount of the then outstanding Senior Exchange Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Senior Note Trustee, subject to certain exceptions. The Senior Note Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Senior Note Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Senior Note Trustee will be under no obligation to exercise any of its rights or powers under the Senior Note Indenture at the request of any Holder of Senior Exchange Notes, unless such Holder shall have offered to the Senior Note Trustee security and indemnity satisfactory to it against any loss, liability or expense. BOOK-ENTRY, DELIVERY AND FORM The certificates representing the Senior Exchange Notes will be issued in fully registered form. Except as described in the next paragraph, the Senior Exchange Notes initially will be represented by permanent global Senior Exchange Notes, in definitive, fully registered form without interest coupons (the "Global Senior Exchange Notes") and will be deposited with the Senior Note Trustee as custodian for The Depositary Trust Company, New York, New York ("DTC") and registered in the name of a nominee of DTC. Except as set forth below, the Global Senior Exchange Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Senior Exchange Notes may not be exchanged for Senior Exchange Notes in certificated form except in the limited circumstances described below. See "--Exchange of Book-Entry Senior Exchange Notes for Certificated Senior Exchange Notes." Except in the limited circumstances described below, owners of beneficial interests in the Global Senior Exchange Note will not be entitled to receive physical delivery of Certificated Senior Exchange Notes (as defined below). The Senior Note Trustee will act as Paying Agent and Registrar. The Senior Exchange Notes may be presented for registration of transfer and exchange at the offices of the Registrar. DEPOSITORY PROCEDURES The following description of the operations and procedures of DTC are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them from time to time. The Company takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters. DTC has advised the Company that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the "Participants") and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book- entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the Initial Purchaser, banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the "Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants. DTC has also advised the Company that, pursuant to procedures established by it, (i) upon deposit of the Global Senior Exchange Notes, DTC will credit the accounts of Participants designated by the Initial Purchaser with portions of the principal amount of the Global Senior Exchange Notes and (ii) ownership of such interests in the Global Senior Exchange Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the Global Senior Exchange Notes). Investors in the Global Senior Exchange Note may hold their interests therein directly through DTC, if they are Participants in such system, or indirectly through organizations which are Participants in such system. All 150 interests in a Global Senior Exchange Note may be subject to the procedures and requirements of DTC. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Senior Exchange Note to such persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants and certain banks, the ability of a person having beneficial interests in a Global Senior Exchange Note to pledge such interests to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests. EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL SENIOR EXCHANGE NOTES WILL NOT HAVE SENIOR EXCHANGE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF SENIOR EXCHANGE NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR "HOLDERS" THEREOF UNDER THE SENIOR NOTE INDENTURE FOR ANY PURPOSE. Payments in respect of the principal of, and premium, if any, Liquidated Damages, if any, and interest on a Global Senior Exchange Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered Holder under the Senior Note Indenture. Under the terms of the Senior Note Indenture, the Company and the Senior Note Trustee will treat the persons in whose names the Senior Exchange Notes, including the Global Senior Exchange Notes, are registered as the owners thereof for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, neither the Company, the Senior Note Trustee nor any agent of the Company or the Senior Note Trustee has or will have any responsibility or liability for (i) any aspect of DTC's records or any Participant's or Indirect Participant's records relating to or payments made on account of beneficial ownership interests in the Global Senior Exchange Notes, or for maintaining, supervising or reviewing any of DTC's records or any Participant's or Indirect Participant's records relating to the beneficial ownership interests in the Global Senior Exchange Notes or (ii) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. DTC has advised the Company that its current practice, upon receipt of any payment in respect of securities such as the Senior Exchange Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date, in amounts proportionate to their respective holdings in the principal amount of beneficial interests in the relevant security as shown on the records of DTC unless DTC has reason to believe it will not receive payment on such payment date. Payments by the Participants and the Indirect Participants to the beneficial owners of Senior Exchange Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the Senior Note Trustee or the Company. Neither the Company nor the Senior Note Trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the Senior Exchange Notes, and the Company and the Senior Note Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes. The Global Senior Exchange Notes are expected to be eligible to trade in DTC's Same-Day Funds Settlement System and secondary market trading activity in such interests will, therefore, settle in immediately available funds, subject in all cases to the rules and procedures of DTC and its Participants. See "--Same Day Settlement and Payment." Transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same day funds. DTC has advised the Company that it will take any action permitted to be taken by a Holder of Senior Exchange Notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Senior Exchange Notes and only in respect of such portion of the aggregate principal amount of the Senior Exchange Notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the Senior Exchange Notes, DTC reserves the right to exchange the Global Senior Exchange Notes for legended Senior Exchange Notes in certificated form, and to distribute such Senior Exchange Notes to its Participants. 151 Although DTC has agreed to the foregoing procedures to facilitate transfers of interests in the Global Senior Exchange Notes among Participants in DTC, it is under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither the Company nor the Senior Note Trustee nor any of their respective agents will have any responsibility for the performance by DTC or its participants or indirect participants of its obligations under the rules and procedures governing its operations. EXCHANGE OF BOOK-ENTRY SENIOR EXCHANGE NOTES FOR CERTIFICATED SENIOR EXCHANGE NOTES A Global Senior Exchange Note is exchangeable for definitive Senior Exchange Notes in registered certificated form ("Certificated Senior Exchange Notes") if (i) DTC (x) notifies the Company that it is unwilling or unable to continue as depositary for the Global Senior Exchange Notes and the Company thereupon fails to appoint a successor depositary or (y) has ceased to be a clearing agency registered under the Exchange Act, (ii) the Company, at its option, notifies the Senior Note Trustee in writing that it elects to cause the issuance of the Certificated Senior Exchange Notes or (iii) there shall have occurred and be continuing a Default or Event of Default with respect to the Senior Exchange Notes. In addition, beneficial interests in a Global Senior Exchange Note may be exchanged for Certificated Senior Exchange Notes upon request but only upon prior written notice given to the Senior Note Trustee by or on behalf of DTC in accordance with the Senior Note Indenture. In all cases, Certificated Senior Exchange Notes delivered in exchange for any Global Senior Exchange Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures). EXCHANGE OF CERTIFICATED SENIOR EXCHANGE NOTES FOR BOOK-ENTRY SENIOR EXCHANGE NOTES Senior Exchange Notes issued in certificated form may be exchanged for beneficial interests in any Global Senior Exchange Note. SAME DAY SETTLEMENT AND PAYMENT The Senior Note Indenture will require that payments in respect of the Senior Exchange Notes represented by the Global Senior Exchange Notes (including principal, premium, if any, interest and Liquidated Damages, if any) be made by wire transfer of immediately available funds to the accounts specified by the Global Senior Exchange Note Holder. With respect to Senior Exchange Notes in certificated form, the Company will make all payments of principal, premium, if any, interest and Liquidated Damages, if any, by wire transfer of immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each such Holder's registered address. The Senior Exchange Notes represented by the Global Senior Exchange Notes are expected to trade in DTC's Same-Day Funds Settlement System, and any permitted secondary market trading activity in such Senior Exchange Notes will, therefore, be required by DTC to be settled in immediately available funds. The Company expects that secondary trading in any certificated Senior Exchange Notes will also be settled in immediately available funds. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Senior Note Indenture. Reference is made to the Senior Note Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Acquisition" means the acquisition by the Company of: (i) all of the common stock of Peabody Holding Company, (ii) all of the common stock of Gold Fields Mining Corp., (iii) all of the membership interests of 152 Citizens Power, (iv) the 1% interests in CL Hartford, L.L.C., a Delaware limited liability company, and Citizens Power Sales, a Delaware general partnership, both subsidiaries of Citizens Power, (v) all of the shares of Darex Capital Inc., a company incorporated in the Republic of Panama, and (vi) all of the ordinary shares of Peabody Australia LTD, which together with Darex Capital, Inc. owns Peabody Resources. "Additional Assets" means (i) any property or assets (other than Capital Stock, Indebtedness or rights to receive payments over a period greater than 180 days, other than with respect to coal supply contract restructurings) that is usable by the Company or a Restricted Subsidiary in a Permitted Business or (ii) the Capital Stock of a Person that is at the time, or becomes, a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary. "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business consistent with past practices (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Senior Note Indenture described above under the caption "-- Change of Control" and/or the provisions described above under the caption "-- Merger, Consolidation or Sale of Assets" and not by the provisions of the Asset Sale covenant), and (ii) the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company's Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $5.0 million or (b) for Net Proceeds in excess of $5.0 million. Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (iii) a Restricted Payment that is permitted by, or an Investment that is not prohibited by, the covenant described above under the caption "--Restricted Payments," (iv) a disposition of Cash Equivalents or obsolete equipment, (v) foreclosures on assets, (vi) the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof and (vii) the factoring of accounts receivable arising in the ordinary course of business pursuant to arrangements customary in the industry. "Bengalla Joint Venture" means Bengalla Mining Co. Pty Limited, Bengalla Agricultural Co. Pty Limited and Bengalla Coal Sales Co. Pty Ltd. which are the joint venture companies related to the Bengalla mine in New South Wales, Australia. "Black Beauty Coal Company" means the Indiana general partnership among Thoroughbred, L.L.C., Black Beauty Resources, Inc. and Pittsburg and Midway Coal Mining Co., and any Person collectively owned by those three partners including, but not limited to, Eagle Coal Company and Falcon Coal Company. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of 153 corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (a) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed or insured by the U.S. Government or any agency thereof, (b) certificates of deposit and time deposits with maturities of one year or less from the date of acquisition and overnight bank deposits of any lender under the Senior Credit Facilities or of any commercial bank having capital and surplus in excess of $500.0 million, (c) repurchase obligations of any lender under the Senior Credit Facilities or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 90 days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) commercial paper of a domestic issuer rated at least A-2 by Standard and Poor's Rating Group ("S&P") or P-2 by Moody's Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a nationally recognized rating agency if both of S&P and Moody's cease publishing ratings of investments, (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody's, (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any lender under the Senior Credit Facilities or any commercial bank satisfying the requirements of clause (b) of this definition or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Citizens Power" means Citizens Power LLC, a Delaware limited liability company and its direct and indirect Subsidiaries. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (ii) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs, deferred financing fees and original issue discount, noncash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iii) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Consolidated Net Income), plus (iv) depreciation, depletion, amortization (including amortization of goodwill and other intangibles) and other noncash expenses (including, without limitation, writedowns and impairment of property, plant and equipment and intangibles and other long-lived assets) (excluding any such noncash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, depletion, amortization and other noncash expenses were deducted in computing such Consolidated Net Income, minus (v) noncash items increasing such Consolidated Net Income for such period (other than accruals in accordance with GAAP), plus (vi) without duplication for amounts otherwise included in Consolidated Cash Flow, the amount of the Company's and its Restricted Subsidiaries' proportionate share of the Consolidated Cash Flow of Black Beauty Coal Company and its Subsidiaries for such period (calculated in proportion to the Company's and its Restricted Subsidiaries common equity ownership), in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation, depletion and amortization and other noncash expenses of, a Restricted Subsidiary that is not a Senior Note Guarantor shall be added to Consolidated Net Income to compute 154 Consolidated Cash Flow only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary that is not a Senior Note Guarantor shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded, and (v) the Net Income (or loss) of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Restricted Subsidiaries. "Credit Facilities" means, with respect to the Company or any of its Restricted Subsidiaries, one or more debt facilities (including, without limitation, the Senior Credit Facilities) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. Indebtedness under Credit Facilities outstanding on the date on which Senior Notes are first issued and authenticated under the Senior Note Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of the definition of Permitted Indebtedness. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Designated Noncash Consideration" means the fair market value of noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officers' Certificate, setting forth the basis of such valuation, executed by the principal executive officer and the principal financial officer of the Company, less the amount of cash or Cash Equivalents received in connection with a sale of such Designated Noncash Consideration. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Senior Exchange Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption "--Certain Covenants--Restricted Payments." "Domestic Subsidiary" means a Subsidiary that is (i) formed under the laws of the United States of America or a state or territory thereof or (ii) as of the date of determination, treated as a domestic entity or a partnership or a division of a domestic entity for United States federal income tax purposes. 155 "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means any public or private sale of equity securities (excluding Disqualified Stock) of the Company, other than any private sales to an Affiliate of the Company. "Escrow Account" means the escrow account maintained pursuant to the Escrow Letter. "Escrow Letter" means that certain escrow letter dated March 2, 1998, by and among Lazard Brothers & Co., Limited, The Energy Group PLC, Peabody Investments Inc. and P&L Coal Holdings Corporation. "Existing Citizens Power Investment" means the Investments in Citizens Power by the Company and its Restricted Subsidiaries as of the date of the closing of the Acquisition. "Existing Indebtedness" means up to $292.5 million in aggregate principal amount of Indebtedness of the Company and its Restricted Subsidiaries (other than Indebtedness under the Senior Credit Facilities, the Senior Exchange Notes, the Senior Exchange Subordinated Notes and related Guarantees) in existence on the date of the closing of the Acquisition, until such amounts are repaid. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of original issue discount, noncash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letters of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations, but excluding amortization of debt issuance costs) and (ii) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on the portion of Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the effective combined federal, state and local tax rate of such Person for such period, expressed as a decimal, in each case, for the Company and its Restricted Subsidiaries on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person and its Restricted Subsidiaries for any period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to the Fixed Charges of such Person and its Restricted Subsidiaries for such period. In the event that the referrent Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions and including pro forma cost savings permitted by Article 11 of Regulation S-X, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the 156 definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "Foreign Subsidiaries" means Subsidiaries of the Company that are not Domestic Subsidiaries. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of the Senior Note Indenture. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or commodity prices, in each case for the purpose of risk management and not for speculation. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, if and to the extent any of the foregoing (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person, but excluding from the definition of "Indebtedness," any of the foregoing that constitutes (1) an accrued expense, (2) trade payables and (3) Obligations in respect of reclamation, workers' compensation, including black lung, pensions and retiree health care, in each case to the extent not overdue for more than 90 days. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of direct or indirect loans (including guarantees, other than performance guarantees provided for the benefit of Citizens Power, of any portion of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or 157 disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption "--Restricted Payments." "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Marketable Securities" means, with respect to any Asset Sale, any readily marketable equity securities that are (i) traded on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market; and (ii) issued by a corporation having a total equity market capitalization of not less than $250.0 million; provided that the excess of (A) the aggregate amount of securities of any one such corporation held by the Company and any Restricted Subsidiary over (B) ten times the average daily trading volume of such securities during the 20 immediately preceding trading days shall be deemed not to be Marketable Securities; as determined on the date of the contract relating to such Asset Sale. "Net Income" means, with respect to any Person, the net income or loss of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain or loss, together with any related provision for taxes on such extraordinary or nonrecurring gain or loss. "Net Proceeds" means the aggregate proceeds (cash or property) received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any noncash consideration received in any Asset Sale) or the sale or disposition of any Investment, net of the direct costs relating to such Asset Sale, sale or disposition, (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "Non-Guarantor Subsidiaries" means (i) Citizens Power and its direct and indirect Subsidiaries, (ii) the Company's future Unrestricted Subsidiaries and (iii) the Company's current and future Foreign Subsidiaries. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) other than a pledge of the Equity Interests of any Unrestricted Subsidiaries, (b) is directly or indirectly liable (as a guarantor or otherwise) other than by virtue of a pledge of the Equity Interests of any Unrestricted Subsidiaries, or (c) constitutes the lender; and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness (other than the Senior Exchange Notes being offered hereby) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity. "Obligations" means any principal, premium (if any), interest, penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, Guarantees and other liabilities and amounts payable under the documentation governing any Indebtedness or in respect thereto. "Permitted Business" means coal production, coal mining, coal brokering, coal transportation, mine development, power marketing, electricity generation, power/energy sales and trading, energy transactions/asset 158 restructurings, risk management products associated with energy, fuel/power integration and other energy related businesses, ash disposal, environmental remediation, coal, natural gas, petroleum or other fossil fuel exploration, production, marketing, transportation and distribution and other related businesses, and activities of the Company and its Subsidiaries as of the date of the closing of the Acquisition and any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto. "Permitted Investments" means (a) any Investment in the Company or in a Restricted Subsidiary of the Company; (b) any Investment in Cash Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Restricted Subsidiary of the Company or (ii) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (d) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (e) any Investment existing on the date of the closing of the Acquisition (an "Existing Investment") and any Investment that replaces, refinances or refunds an Existing Investment, provided that the new Investment is in an amount that does not exceed the amount replaced, refinanced or refunded and is made in the same Person as the Investment replaced, refinanced or refunded, (f) advances to employees not in excess of $10.0 million outstanding at any one time; (g) Hedging Obligations permitted under clause (ix) of the "--Incurrence of Indebtedness and Issuance of Preferred Stock" covenant; (h) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case incurred in the ordinary course of business; (i) any Investment in a Permitted Business (whether or not an Investment in an Unrestricted Subsidiary) having an aggregate fair market value, when taken together with all other Investments made pursuant to this clause (i), does not exceed in aggregate amount the sum of (1) 10% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value) plus (2) 100% of the Net Proceeds from the sale or disposition of any Investment previously made pursuant to this clause (i) or 100% of the amount of any dividend, distribution or payment from any such Investment, net of income taxes paid or payable in respect thereof, in each case up to the amount of the Investment that was made pursuant to this clause (i) and 50% of the amount of such Net Proceeds or 50% of such dividends, distributions or payments, in each case received in excess of the amount of the Investments made pursuant to this clause (i); (j) guarantees (including Guarantees) of Indebtedness permitted under the covenant "--Incurrence of Indebtedness and Issuance of Preferred Stock;" (k) any Investment acquired by the Company or any of its Restricted Subsidiaries (A) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (B) as a result of the transfer of title with respect to any secured Investment in default as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to such secured Investment; (l) any Investment in Black Beauty Coal Company having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (l), that are at the time outstanding not to exceed $50.0 million (with any write-down or write-off of any such Investment deemed to remain outstanding); (m) Investments in Citizens Power having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (m), that are at that time outstanding not to exceed $50.0 million at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (n) any Investment in the Bengalla Joint Venture and the Warkworth Associates Joint Venture having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (n), that are at the time outstanding, not to exceed $25.0 million (with any write-down or write-off of any such Investment deemed to remain outstanding); (o) that portion of any Investment by the Company or a Restricted Subsidiary in a Permitted Business to the extent that the Company or such Restricted Subsidiary will receive in a substantially concurrent transaction an amount in cash equal to the amount of such Investment (or the fair market value of such Investment), net of any obligation to pay taxes or other amounts in respect of the receipt of such cash; provided that the receipt of such cash does not carry any obligation by the Company or such Restricted Subsidiary to repay or return such cash; and (p) the forgiveness or cancellation of any payable due from Citizens Power and its direct and indirect Subsidiaries outstanding on the date of the closing of the Acquisition; provided, 159 however, that with respect to any Investment, the Company may, in its sole discretion, allocate all or any portion of any Investment to one or more of the above clauses so that the entire Investment would be a Permitted Investment. "Permitted Liens" means (i) Liens securing Indebtedness under Credit Facilities that were permitted by the terms of the Senior Note Indenture to be incurred; (ii) Liens in favor of the Company; (iii) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (v) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (vi) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance or other kinds of social security; (vii) Liens existing on the date of the closing of the Acquisition; (viii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (ix) Liens on assets of Senior Note Guarantors to secure Senior Debt of such Senior Note Guarantors that was permitted by the Senior Note Indenture to be incurred; (x) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Restricted Subsidiary; (xi) Liens on assets of Foreign Subsidiaries to secure Indebtedness that was permitted by the Senior Note Indenture to be incurred; (xii) statutory liens of landlords, mechanics, suppliers, vendors, warehousemen, carriers or other like Liens arising in the ordinary course of business; (xiii) judgment Liens not giving rise to an Event of Default so long as any appropriate legal proceeding that may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such legal proceeding may be initiated shall not have expired; (xiv) easements, rights-of-way, zoning and similar restrictions and other similar encumbrances or title defects incurred or imposed, as applicable, in the ordinary course of business and consistent with industry practices which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto (as such property is used by the Company or its Subsidiaries) or interfere with the ordinary conduct of the business of the Company or such Subsidiaries; provided, however, that any such Liens are not incurred in connection with any borrowing of money or any commitment to loan any money or to extend any credit; (xv) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (vi) of the second paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock" and other purchase money Liens to finance property or assets of the Company or any Restricted Subsidiary acquired in the ordinary course of business; provided that such Liens are only secured by such property or assets so acquired or improved (including, in the case of the acquisition of Capital Stock of a Person who becomes a Restricted Subsidiary, Liens on the assets of the Person whose Capital Stock was so acquired); (xvi) Liens securing Indebtedness under Hedging Obligations; provided that such Liens are only secured by property or assets that secure the Indebtedness subject to the Hedging Obligation; (xvii) Liens to secure Indebtedness permitted by clause (xv) of the second paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock;" and (xviii) Liens on the Equity Interests of Unrestricted Subsidiaries securing obligations of Unrestricted Subsidiaries not otherwise prohibited by the Senior Note Indenture. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such 160 Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest and premium, if any, on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Senior Exchange Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Senior Exchange Notes on terms at least as favorable to the Holders of Senior Exchange Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Senior Credit Facilities" means those certain Senior Credit Facilities, dated as of May 18, 1998, by and among the Company, the Senior Note Guarantors, Lehman Commercial Paper Inc., as Arranger, Syndication Agent and the Administrative Agent and the other lenders party thereto, including any related notes, guarantees, collateral documents, letters of credit, instruments and agreements executed in connection therewith (and any appendices, exhibits or schedules to any of the foregoing), and in each case as amended, modified, supplemented, restated, renewed, refunded, replaced, restructured, repaid or refinanced from time to time (whether with the original agents and lenders or other agents and lenders or otherwise, and whether provided under the original credit agreement or other credit agreements or otherwise). "Senior Subordinated Note Indenture" means the indenture dated May 18, 1998, governing the Senior Subordinated Notes. "Senior Subordinated Exchange Notes" mean the 9 5/8% Series B Senior Subordinated Exchange Notes of the Company due 2008. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date hereof. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subordinated Subsidiary Guarantees" mean the guarantees endorsed on the Senior Subordinated Exchange Notes by the Subordinated Note Guarantors. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or Senior Note Trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). 161 "Total Assets" means the total assets of the Company and its Restricted Subsidiaries on a consolidated basis determined in accordance with GAAP, as shown on the most recently available consolidated balance sheet of the Company and its Restricted Subsidiaries. "Transaction Documents" means the documents related to (i) the Acquisition (including, without limitation, the purchase agreement, the participation agreement and the escrow agreement), (ii) the Senior Credit Facilities and (iii) the offering of the Old Senior Notes and the Old Senior Subordinated Notes. "Treasury Rate" means the yield to maturity at the time of the computation of the United States Treasury securities with a constant maturity (as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519), which has become publicly available at least two Business Days prior to the date fixed for redemption (or if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the then remaining average life to May 15, 2003; provided, however, that if the average life of such Senior Exchange Note is not equal to the constant maturity of the United States Treasury security for which weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the average life of such Senior Exchange Note is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "Unrestricted Subsidiary" means (i) Citizens Power, any direct or indirect Subsidiary of Citizens Power on the date of the Senior Note Indenture and (ii) any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent that such Person: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any obligation (x) to subscribe for additional Equity Interests in Unrestricted Subsidiaries or (y) to maintain or preserve such Person's net worth (except with respect to Permitted Investments); and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries; provided, however, that the Company and its Restricted Subsidiaries may guarantee the performance of Unrestricted Subsidiaries in the ordinary course of business except for guarantees of Obligations in respect of borrowed money. Any such designation by the Board of Directors shall be evidenced to the Senior Note Trustee by filing with the Senior Note Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by the covenant described above under the caption "Certain Covenants--Restricted Payments." "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Warkworth Associates Joint Venture" means Warkworth Coal Sales Ltd., Warkworth Pastoral Co. Pty, Limited and Warkworth Mining Limited, which are the joint venture companies related to the Warkworth mine in New South Wales, Australia. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. 162 "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such Person. 163 DESCRIPTION OF THE SENIOR SUBORDINATED EXCHANGE NOTES GENERAL The Senior Subordinated Notes were issued and the Senior Subordinated Exchange Notes will be issued pursuant to an Indenture (the "Senior Subordinated Note Indenture") between the Company and State Street Bank and Trust Company, as trustee (the "Senior Subordinated Note Trustee"), in a private transaction that is not subject to the registration requirements of the Securities Act. The terms of the Senior Subordinated Exchange Notes include those stated in the Senior Subordinated Note Indenture and those made part of the Senior Subordinated Note Indenture by reference to the Trust Indenture Act. The Senior Subordinated Exchange Notes are subject to all such terms, and Holders of Senior Subordinated Exchange Notes are referred to the Senior Subordinated Note Indenture and the Trust Indenture Act for a statement thereof. The following summary of the material provisions of the Senior Subordinated Note Indenture does not purport to be complete and is qualified in its entirety by reference to the Senior Subordinated Note Indenture, including the definitions therein of certain terms used below. Copies of the proposed form of Senior Subordinated Note Indenture and Senior Subordinated Registration Rights Agreement are available as set forth below under "Available Information." The definitions of certain terms used in the following summary are set forth below under "--Certain Definitions." For purposes of this summary, the term "Company" refers only to P&L Coal Holdings Corporation and not to any of its Subsidiaries. On May 18, 1998, the Company issued $500.0 million aggregate principal amount of Old Senior Subordinated Notes under the Senior Subordinated Note Indenture. The terms of the Senior Subordinated Exchange Notes are identical in all material respects to the Old Senior Subordinated Notes, except for certain transfer restrictions and registration and other rights relating to the exchange of the Old Senior Subordinated Notes for Senior Subordinated Exchange Notes. The Senior Subordinated Note Trustee will authenticate and deliver Senior Subordinated Exchange Notes for original issue only in exchange for a like principal amount of Old Senior Subordinated Notes. Any Old Senior Subordinated Notes that remain outstanding after the consummation of the Senior Subordinated Exchange Offer, together with the Senior Subordinated Exchange Notes, will be treated as a single class of securities under the Senior Subordinated Note Indenture. Accordingly, all references herein to specified percentages in aggregate principal amount of the outstanding Senior Subordinated Exchange Notes shall be deemed to mean, at any time after the Senior Subordinated Exchange Offer is consummated, such percentage in aggregate principal amount of the Old Senior Subordinated Notes and Senior Subordinated Exchange Notes then outstanding. The Senior Subordinated Exchange Notes will be general unsecured obligations of the Company and will be subordinated in right of payment to all current and future Senior Debt. As of March 31, 1998, on a pro forma basis giving effect to the Transactions, the Company would have had Senior Debt of $1,320.0 million and $480.0 million of available borrowing capacity under the Senior Credit Facilities, including letters of credit. The Senior Subordinated Note Indenture permits the incurrence of additional Senior Debt in the future. The operations of the Company are conducted through its Subsidiaries and, therefore, the Company is dependent upon the cash flow of its Subsidiaries to meet its obligations, including its obligations under the Senior Subordinated Exchange Notes. The Senior Subordinated Exchange Notes will be effectively subordinated to all Indebtedness and other liabilities and commitments (including trade payables and lease obligations) of the Company's Subsidiaries. Any right of the Company to receive assets of any of its Subsidiaries upon the latter's liquidation or reorganization (and the consequent right of the Holders of the Senior Subordinated Exchange Notes to participate in those assets) will be effectively subordinated to the claims of that Subsidiary's creditors, except to the extent that the Company is itself recognized as a creditor of such Subsidiary, in which case the claims of the Company would still be subordinate to any security in the assets of such Subsidiary and any indebtedness of such Subsidiary senior to that held by the Company. As of March 31, 1998, on a pro forma basis giving effect to the Transactions, the Company's Subsidiaries would have had approximately $5,445.6 million of Indebtedness (including trade payables, land reclamation and environmental liabilities, workers' compensation liabilities and retiree health care liabilities). See "Risk Factors--Risks Relating to the Notes-- Holding Company Structure; Effective Subordination." 164 All of the Company's Subsidiaries other than Citizens Power and its Subsidiaries were Restricted Subsidiaries. However, under certain circumstances, the Company will be able to designate current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the restrictive covenants set forth in the Senior Subordinated Note Indenture. PRINCIPAL, MATURITY AND INTEREST The Senior Subordinated Notes are limited in aggregate principal amount to $650.0 million, of which $500.0 million was issued in the Offering, and will mature on May 15, 2008. Interest on the Senior Subordinated Exchange Notes will accrue at the rate of 9 5/8% per annum and will be payable semi-annually in arrears on May 15 and November 15, commencing on November 15, 1998, to Holders of record on the immediately preceding May 1 and November 1. Additional Senior Subordinated Notes may be issued from time to time after the Offering, subject to the provisions of the Senior Subordinated Note Indenture described below under the caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock." Interest on the Senior Subordinated Exchange Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from May 18, 1998. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal, premium, if any, and interest and Liquidated Damages, if any, on the Senior Subordinated Exchange Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders of the Senior Subordinated Exchange Notes at their respective addresses set forth in the register of Holders of Senior Subordinated Exchange Notes; provided that all payments of principal, premium, interest and Liquidated Damages, if any, with respect to Senior Subordinated Exchange Notes the Holders of which have given wire transfer instructions to the Company will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Senior Subordinated Note Trustee maintained for such purpose. The Senior Subordinated Exchange Notes will be issued in denominations of $1,000 and integral multiples thereof. SUBORDINATION The payment of principal of, premium, if any, and interest on the Senior Subordinated Exchange Notes will be subordinated in right of payment, as set forth in the Senior Subordinated Note Indenture, to the prior payment in full in cash of all Senior Debt, whether outstanding on the date of the Senior Subordinated Note Indenture or thereafter incurred. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, an assignment for the benefit of creditors or any marshaling of the Company's assets and liabilities, the holders of Senior Debt will be entitled to receive payment in full in cash of all Obligations due in respect of such Senior Debt (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Debt, whether or not an allowable claim in any such proceeding) before the Holders of Senior Subordinated Exchange Notes will be entitled to receive any payment with respect to the Senior Subordinated Exchange Notes, and until all Obligations with respect to Senior Debt are paid in full, any distribution to which the Holders of Senior Subordinated Exchange Notes would be entitled shall be made to the holders of Senior Debt (except that, in each case, Holders of Senior Subordinated Exchange Notes may receive and retain Permitted Junior Securities and payments made from the trust described under "--Legal Defeasance and Covenant Defeasance"). The Company also may not make any payment upon or in respect of the Senior Subordinated Exchange Notes (except in Permitted Junior Securities or from the trust described under "--Legal Defeasance and Covenant Defeasance") if (i) a default in the payment of the principal of, premium, if any, or interest on Designated Senior Debt occurs and is continuing or (ii) any other default occurs and is continuing with respect to Designated Senior Debt that permits holders of the Designated Senior Debt as to which such default relates to accelerate its maturity 165 (or that would permit such holders to accelerate with the giving of notice or the passage of time or both) and the Senior Subordinated Note Trustee receives a notice of such default (a "Payment Blockage Notice") from the Company or the holders of any Designated Senior Debt. Payments on the Senior Subordinated Exchange Notes may and shall be resumed (a) in the case of a payment default, upon the date on which such default is cured or waived and (b) in case of a nonpayment default, the earlier of the date on which such nonpayment default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Designated Senior Debt has been accelerated. No new period of payment blockage may be commenced with respect to any particular Designated Senior Debt unless and until (i) 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (ii) all scheduled payments of principal, premium, if any, and interest and Liquidated Damages, if any, on the Senior Subordinated Exchange Notes that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Senior Subordinated Note Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been waived for a period of not less than 90 days. The Senior Subordinated Note Indenture will further require that the Company promptly notify holders of Senior Debt if payment of the Senior Subordinated Exchange Notes is accelerated because of an Event of Default. As a result of the subordination provisions described above, in the event of a liquidation or insolvency, Holders of Senior Subordinated Exchange Notes may recover less ratably than creditors of the Company who are holders of Senior Debt. On a pro forma basis, after giving effect to the Transactions, the principal amount of Senior Debt outstanding at March 31, 1998, would have been approximately $1,318.8 million. The Senior Subordinated Note Indenture will limit, subject to certain financial tests, the amount of additional Indebtedness, including Senior Debt, that the Company and its Subsidiaries can incur. See "--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock." "Designated Senior Debt" means (i) any Indebtedness of the Company or any of its Restricted Subsidiaries outstanding under Credit Facilities, (ii) any Indebtedness outstanding under the Senior Note Indenture and (iii) any other Senior Debt permitted under the Senior Subordinated Note Indenture the principal amount of which is $25.0 million or more and that has been designated by the Company as "Designated Senior Debt." "Permitted Junior Securities" means Equity Interests in the Company or any Senior Subordinated Note Guarantor or debt securities that are subordinated to all Senior Debt (and any debt securities issued in exchange for Senior Debt) to substantially the same extent as, or to a greater extent than, the Senior Subordinated Exchange Notes and the Subordinated Subsidiary Guarantees are subordinated to Senior Debt pursuant to Article 10 of the Senior Subordinated Note Indenture. "Senior Debt" means (i) all Indebtedness of the Company or any of its Restricted Subsidiaries outstanding under Credit Facilities and all Hedging Obligations with respect thereto, (ii) any other Indebtedness permitted to be incurred by the Company or any of its Restricted Subsidiaries under the terms of the Senior Subordinated Note Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Senior Subordinated Exchange Notes or any Guarantee of the Senior Subordinated Exchange Notes and (iii) all Obligations with respect to the foregoing. Notwithstanding anything to the contrary in the foregoing, Senior Debt will not include (w) any liability for federal, state, local or other taxes owed or owing by the Company or any Subsidiary, (x) any Indebtedness of the Company or any Subsidiary to any Subsidiaries of the Company or to the Company, (y) any trade payables or (z) any Indebtedness that is incurred in violation of the Senior Subordinated Note Indenture. SUBORDINATED SUBSIDIARY GUARANTEES The Company's payment obligations under the Senior Subordinated Exchange Notes will be jointly and severally guaranteed (the "Subordinated Subsidiary Guarantees") by the Senior Subordinated Note Guarantors. 166 The Subordinated Subsidiary Guarantee of each Senior Subordinated Note Guarantor will be subordinated to the prior payment in full of all Senior Debt of the Senior Subordinated Note Guarantors and the amounts for which the Senior Subordinated Note Guarantors will be liable under the guarantees issued from time to time with respect to Senior Debt. The obligations of each Senior Subordinated Note Guarantor under its Subordinated Subsidiary Guarantee will be limited to the maximum amount that would not constitute a fraudulent conveyance under applicable law. See "Risk Factors--Risks Relating to the Notes--Fraudulent Conveyance Matters." Notwithstanding the foregoing, no Subsidiary of the Company will be required to endorse a Subordinated Subsidiary Guarantee unless such Subsidiary is required to, and does, simultaneously execute a Guarantee of the Senior Credit Facilities. The Senior Subordinated Exchange Notes will not be guaranteed by certain of the Company's Domestic Subsidiaries or by any Foreign Subsidiaries of the Company. For the fiscal year ended March 31, 1998, after giving effect to the Transactions, the Non-Guarantor Subsidiaries accounted for 11% and 20% of pro forma revenues and EBITDA, respectively, and, as of March 31, 1998, the Non- Guarantor Subsidiaries accounted for 27% of pro forma assets. The claims of creditors (including trade creditors) of any Non-Guarantor Subsidiary will generally have priority as to the assets of such Subsidiaries over the claims of the holders of the Senior Subordinated Exchange Notes. As of March 31, 1998, after giving effect to the Transactions, the amount of liabilities of such Non-Guarantor Subsidiaries would have been approximately $1,578.4 million. The Senior Subordinated Note Indenture provides that no Senior Subordinated Note Guarantor may consolidate with or merge with or into (whether or not such Senior Subordinated Note Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with such Senior Subordinated Note Guarantor unless (i) subject to the provisions of the following paragraph, the Person formed by or surviving any such consolidation or merger (if other than such Senior Subordinated Note Guarantor) assumes all the obligations of such Senior Subordinated Note Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Senior Subordinated Note Trustee, under the Senior Subordinated Exchange Notes, the Senior Subordinated Note Indenture and the Senior Subordinated Registration Rights Agreement; (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) the Company would be permitted by virtue of the Company's pro forma Fixed Charge Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the covenant described below under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock." The Senior Subordinated Note Indenture provides that in the event of (a) a sale or other disposition of all of the assets of any Senior Subordinated Note Guarantor, by way of merger, consolidation or otherwise, (b) a sale or other disposition of all of the capital stock of any Senior Subordinated Note Guarantor or (c) the designation of a Senior Subordinated Note Guarantor as an Unrestricted Subsidiary in accordance with the terms of the Senior Subordinated Note Indenture, then such Senior Subordinated Note Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Senior Subordinated Note Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Senior Subordinated Note Guarantor) will be released and relieved of any obligations under its Subordinated Subsidiary Guarantee; provided that the Net Proceeds of any such sale or other disposition are applied in accordance with the applicable provisions of the Senior Subordinated Note Indenture and any such designation of a Senior Subordinated Note Guarantor as an Unrestricted Subsidiary complies with all applicable covenants. See "Repurchase at the Option of Holders--Asset Sales." "Senior Subordinated Note Guarantors" means each of (i) the Company's Domestic Subsidiaries at the date of the closing of the Acquisition, other than Citizens Power and the Subsidiaries of Citizens Power at the date of the Senior Subordinated Note Indenture and (ii) any other subsidiary that executes a Subordinated Subsidiary Guarantee in accordance with the provisions of the Senior Subordinated Note Indenture, and their respective successors and assigns. 167 OPTIONAL REDEMPTION The Senior Subordinated Exchange Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice. Prior to May 15, 2003, the Senior Subordinated Exchange Notes will be redeemable at a redemption price equal to 100% of the principal amount thereof plus the applicable Senior Subordinated Notes Make Whole Premium, plus, to the extent not included in the Senior Subordinated Notes Make Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption. For purposes of the foregoing, "Senior Subordinated Notes Make Whole Premium" means, with respect to a Senior Subordinated Exchange Note, an amount equal to the greater of (a) 104.813% of the outstanding principal amount of such Senior Subordinated Exchange Note and (b) the excess of (1) the present value of the remaining interest, premium, if any, and principal payments due on such Senior Subordinated Exchange Note as if such Senior Subordinated Exchange Note were redeemed on May 15, 2003, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (2) the outstanding principal amount of such Senior Subordinated Exchange Note. On or after May 15, 2003, the Senior Subordinated Exchange Notes are redeemable at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on May 15 of the years indicated below:
YEAR PERCENTAGE ---- ---------- 2003.......................................................... 104.813% 2004.......................................................... 103.208% 2005.......................................................... 101.604% 2006 and thereafter........................................... 100.000%
Notwithstanding the foregoing, during the first 36 months after the date of the closing of the Acquisition, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Senior Subordinated Exchange Notes issued under the Senior Subordinated Note Indenture at a redemption price of 109.625% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the aggregate principal amount of Senior Subordinated Exchange Notes issued remain outstanding immediately after the occurrence of such redemption (excluding Senior Subordinated Exchange Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 120 days of the date of the closing of such Equity Offering. SELECTION AND NOTICE If less than all of the Senior Subordinated Exchange Notes are to be redeemed or purchased in an offer to purchase at any time, selection of Senior Subordinated Exchange Notes for redemption or purchase will be made by the Senior Subordinated Note Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Senior Subordinated Exchange Notes are listed, or, if the Senior Subordinated Exchange Notes are not so listed, on a pro rata basis, by lot or by such method as the Senior Subordinated Note Trustee shall deem fair and appropriate; provided that no Senior Subordinated Exchange Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Senior Subordinated Exchange Notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any Senior Subordinated Exchange Note is to be redeemed in part only, the notice of redemption that relates to such Senior Subordinated Exchange Note shall state the portion of the principal amount thereof to be redeemed. A new Senior Subordinated Exchange Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Senior Subordinated Exchange Note. Senior Subordinated Exchange Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Senior Subordinated Exchange Notes or portions of them called for redemption. 168 REPURCHASE AT THE OPTION OF HOLDERS CHANGE OF CONTROL Upon the occurrence of a Change of Control, each Holder of Senior Subordinated Exchange Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Senior Subordinated Exchange Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within ten days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Senior Subordinated Exchange Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by the Senior Subordinated Note Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Senior Subordinated Exchange Notes as a result of a Change of Control. On the Change of Control Payment Date, the Company will, to the extent lawful, (1) accept for payment all Senior Subordinated Exchange Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Senior Subordinated Exchange Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Senior Subordinated Exchange Note Trustee the Senior Subordinated Exchange Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Senior Subordinated Exchange Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Senior Subordinated Exchange Notes so tendered the Change of Control Payment for such Senior Subordinated Exchange Notes, and the Senior Subordinated Note Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Senior Subordinated Exchange Note equal in principal amount to any unpurchased portion of the Senior Subordinated Exchange Notes surrendered, if any; provided that each such new Senior Subordinated Exchange Note will be in a principal amount of $1,000 or an integral multiple thereof. The Senior Subordinated Note Indenture will provide that, prior to complying with the provisions of this covenant, but in any event within 90 days following a Change of Control, the Company will either repay all outstanding Senior Debt other than the Senior Exchange Notes or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt other than the Senior Exchange Notes to permit the repurchase of Senior Subordinated Exchange Notes required by this covenant. With respect to the Senior Subordinated Exchange Notes, the Company may effect a Change of Control hereunder pursuant to the terms of the Senior Subordinated Note Indenture; provided that the Company complies with the provisions of the Senior Note Indenture under the covenant described under "Description of the Senior Exchange Notes--Repurchase at the Option of Holders--Change of Control." The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Change of Control provisions described above will be applicable whether or not any other provisions of the Senior Subordinated Note Indenture are applicable. Except as described above with respect to a Change of Control, the Senior Subordinated Note Indenture does not contain provisions that permit the Holders of the Senior Subordinated Exchange Notes to require that the Company repurchase or redeem the Senior Subordinated Exchange Notes in the event of a takeover, recapitalization or similar transaction. The Company's other senior indebtedness contains prohibitions on certain events that would constitute a Change of Control. In addition, the exercise by the Holders of Senior Subordinated Exchange Notes of their right to require the Company to repurchase the Senior Subordinated Exchange Notes could cause a default under such other senior indebtedness, even if the Change of Control itself does not, due to the financial effect of such repurchases on the Company. Finally, the Company's ability to pay cash to the Holders of Senior Subordinated Exchange Notes upon a repurchase may be limited by the Company's then existing financial resources. See "Risk Factors--Risks Relating to the Notes--Limitation on Change of Control Offer." 169 The Senior Credit Facilities currently prohibit the Company from purchasing any Senior Exchange Notes or Senior Subordinated Exchange Notes, and also provide that certain change of control events with respect to the Company would constitute a default thereunder. Any future credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing Senior Subordinated Exchange Notes, the Company could seek the consent of its lenders to the purchase of Senior Subordinated Exchange Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Senior Subordinated Exchange Notes. In such case, the Company's failure to purchase tendered Senior Subordinated Exchange Notes would constitute an Event of Default under the Senior Subordinated Note Indenture which would, in turn, constitute a default under the Senior Credit Facilities. In such circumstances, the subordination provisions in the Senior Subordinated Note Indenture would likely restrict payments to the Holders of Senior Subordinated Exchange Notes. See "--Subordination." The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Senior Subordinated Note Indenture applicable to a Change of Control Offer made by the Company and purchases all Senior Subordinated Exchange Notes validly tendered and not withdrawn under such Change of Control Offer or if the Company exercises its option to purchase the Senior Subordinated Exchange Notes. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than a Principal or a Related Party of a Principal (as defined below), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of more than 50% of the Voting Stock of the Company (measured by voting power rather than number of shares) or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. The definition of Change of Control includes a phrase relating to the sale, lease, transfer, conveyance or other disposition of "all or substantially all" of the assets of the Company and its Subsidiaries taken as a whole. Although there is a developing body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of Senior Subordinated Exchange Notes to require the Company to repurchase such Senior Subordinated Exchange Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of the closing of the Acquisition or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Principals" means Lehman Brothers Merchant Banking Partners II L.P., any of its respective Affiliates and executive officers of the Company as of the date of the closing of the Acquisition. "Related Party" with respect to any Principal means (A) any controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Principal or (B) any 170 trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of such Principal and/or such other Persons referred to in the immediately preceding clause (A). ASSET SALES The Senior Subordinated Note Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value as determined in good faith by the Company (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Senior Subordinated Note Trustee with respect to any Asset Sale determined to have a value greater that $25.0 million) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Subsidiary is in the form of cash, Cash Equivalents or Marketable Securities; provided that the following amounts shall be deemed to be cash: (w) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Senior Subordinated Exchange Notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability, (x) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash within 180 days following the closing of such Asset Sale (to the extent of the cash received), (y) any Designated Noncash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale; provided that the aggregate fair market value (as determined above) of such Designated Noncash Consideration, taken together with the fair market value at the time of receipt of all other Designated Noncash Consideration received pursuant to this clause (y) less the amount of Net Proceeds previously realized in cash from prior Designated Noncash Consideration is less than 5% of Total Assets at the time of the receipt of such Designated Noncash Consideration (with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value) and (z) Additional Assets received in an exchange of assets transaction. Within 360 days after the receipt of any cash Net Proceeds from an Asset Sale, the Company or such Restricted Subsidiary, at its option, may apply such cash Net Proceeds, at its option, (a) to repay Senior Debt of the Company or any Restricted Subsidiary including, without limitation, Indebtedness under a Credit Facility and the Senior Exchange Notes, (b) to the acquisition of a majority of the assets of, or a majority of the Voting Stock of, another Permitted Business, the making of a capital expenditure or the acquisition of other assets or Investments that are used or useful in a Permitted Business or (c) to apply the cash Net Proceeds from such Asset Sale to an Investment in Additional Assets. Any cash Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company will be required to make an offer to all Holders of Senior Subordinated Exchange Notes and all holders of other Indebtedness that is not Senior Debt containing provisions similar to those set forth in the Senior Subordinated Note Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Senior Subordinated Exchange Notes and such other Indebtedness that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase, in accordance with the procedures set forth in the Senior Subordinated Note Indenture and such other Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by the Senior Subordinated Note Indenture. If the aggregate principal amount of Senior Subordinated Exchange Notes and such other Indebtedness tendered into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Senior Subordinated Note Trustee shall select the Senior Subordinated Exchange Notes and such other Indebtedness to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. 171 CERTAIN COVENANTS RESTRICTED PAYMENTS The Senior Subordinated Note Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Senior Subordinated Exchange Notes or any Subordinated Subsidiary Guarantee, except a payment of interest or principal at Stated Maturity or Indebtedness permitted under clause (viii) of the covenant described under "--Incurrence of Indebtedness and Issuance of Preferred Stock;" or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under caption "--Incurrence of Indebtedness and Issuance of Preferred Stock;" and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Subsidiaries after the date of the closing of the Acquisition (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (v), and (ix) of the next succeeding paragraph), is less than the sum, without duplication, of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the closing of the Acquisition to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds or the fair market value of property other than cash received by the Company since the date of the closing of the Acquisition as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company), plus (iii) to the extent that either any Existing Citizens Power Investment or any Restricted Investment that reduced the amount available for Restricted Payments under this clause (c) is sold for cash or otherwise liquidated or repaid for cash or any dividend or payment is received by the Company or a Restricted Subsidiary after the date of the closing of the Acquisition in respect of such Investment, 100% of the amount of Net Proceeds or dividends or payments (including the fair market value of property) received in connection therewith, up to the amount of the Existing Citizens Power Investment on the date of the closing of the Acquisition or the Restricted Investment that reduced this clause (c), as the case may be, and thereafter 50% of the amount of Net Proceeds or dividends or payments (including the fair market value of property) received in connection therewith (except that the amount of dividends or payments received in respect of payments of Obligations in respect of such Investments, such as taxes, shall not increase the amounts under this clause (c)), plus (iv) to the extent that any Unrestricted Subsidiary of the Company is redesignated as a Restricted Subsidiary after the date of the closing of the Acquisition, 100% of the fair 172 market value of the Company's Investment in such Subsidiary as of the date of such redesignation up to the amount of the Restricted Investments made in such Subsidiary that reduced this clause (c) and 50% of the excess of the fair market value of the Company's Investment in such Subsidiary as of the date of such redesignation over (1) the amount of the Restricted Investment that reduced this clause (c) and (2) any amounts that increased the amount available as a Permitted Investment; provided, further, that if Citizens Power or any of its Subsidiaries is designated as a Restricted Subsidiary, the amount of the fair market value of the Investment therein on the date of the Senior Subordinated Note Indenture shall also be credited to this clause (c); provided, further, that any amounts that increase this clause (c) shall not duplicatively increase amounts available as Permitted Investments. The foregoing provisions will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Senior Subordinated Note Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (c)(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) dividends or distributions by a Restricted Subsidiary of the Company so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities; (v) Investments in Unrestricted Subsidiaries having an aggregate fair market value not to exceed the amount, at the time of such Investment, substantially concurrently contributed in cash or Cash Equivalents to the common equity capital of the Company after the date of the closing of the Acquisition; provided that any such amount contributed shall be excluded from the calculation made pursuant to clause (c) above; (vi) the payment of dividends on the Company's Common Stock, following the first public offering of the Company's Common Stock after the date of the closing of the Acquisition, of up to 6% per annum of the net proceeds received by the Company in such public offering, other than public offerings with respect to the Company's Common Stock registered on Form S- 8; (vii) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any present or former employee or director of the Company (or any of its Restricted Subsidiaries) pursuant to any management equity subscription agreement or stock option agreement or any other management or employee benefit plan in effect as of the date of the closing of the Acquisition; provided that (A) the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $2.0 million in any twelve-month period (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $5.0 million in any calendar year); provided further that such amount in any calendar year may be increased by an amount not to exceed (x) the cash proceeds from the sale of Equity Interests of the Company or a Restricted Subsidiary to members of management and directors of the Company and its Subsidiaries that occurs after the date of the closing of the Acquisition, plus (y) the cash proceeds of key-man life insurance policies received by the Company and its Restricted Subsidiaries after the date of the closing of the Acquisition, less (z) the amount of any Restricted Payments previously made pursuant to clauses (x) and (y) of this subparagraph (vii); and, provided further, that cancellation of Indebtedness owing to the Company from members of management of 173 the Company or any of its Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Company or a Restricted Subsidiary will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of the Senior Subordinated Note Indenture and (B) no Default or Event of Default shall have occurred and be continuing immediately after such transaction; (viii) repurchases of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options; and (ix) other Restricted Payments not otherwise prohibited by this covenant in an aggregate amount not to exceed $25.0 million under this clause (ix). All of the Company's Subsidiaries other than Citizens Power and its Subsidiaries are Restricted Subsidiaries. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. If, at any time, any Unrestricted Subsidiary would fail to meet the requirements in the definition of "Unrestricted Subsidiary" as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Senior Subordinated Note Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock," the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under the covenant described under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any noncash Restricted Payment or any adjustment made pursuant to paragraph (c) of this covenant shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Senior Subordinated Note Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $25.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Senior Subordinated Note Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant "Restricted Payments" were computed. If any Restricted Investment is sold or otherwise liquidated or repaid or any dividend or payment is received by the Company or a Restricted Subsidiary and such amounts may be credited to clause (c) above, then such amounts will be credited only to the extent of amounts not otherwise included in Consolidated Net Income and that do not otherwise increase the amount available as a Permitted Investment. 174 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK The Senior Subordinated Note Indenture provides that the Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock and the Company's Restricted Subsidiaries may incur Indebtedness or issue Disqualified Stock or preferred stock if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. The provisions of the first paragraph of this covenant will not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company of term Indebtedness under Credit Facilities (and the Guarantee thereof by the Senior Subordinated Note Guarantors); provided that the aggregate principal amount of all term Indebtedness outstanding under this clause (i) after giving effect to such incurrence does not exceed an amount equal to $920.0 million; (ii) the incurrence by the Company of revolving credit Indebtedness and letters of credit (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) under Credit Facilities (and the Guarantee thereof by the Senior Subordinated Note Guarantors); provided that the aggregate principal amount of all revolving credit Indebtedness outstanding under this clause (ii) after giving effect to such incurrence does not exceed an amount equal to $480.0 million; (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company, the Senior Subordinated Note Guarantors and the Senior Note Guarantors of Indebtedness represented by the Senior Exchange Notes, the Senior Subordinated Exchange Notes, the Senior Subsidiary Guarantees and the Subordinated Subsidiary Guarantees limited in aggregate principal amount, without duplication, to amounts outstanding under the Senior Note Indenture and the Senior Subordinated Note Indenture as of their respective dates; (v) (A) the guarantee by the Company or any of the Senior Subordinated Note Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company or (B) the incurrence of Indebtedness of a Restricted Subsidiary to the extent that such Indebtedness is supported by a letter of credit, in each case that was permitted to be incurred by another provision of this covenant; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness (including Capital Lease Obligations) to finance the acquisition (including by direct purchase, by lease or indirectly by the acquisition of the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of such acquisition) or improvement of property (real or personal) in an aggregate principal amount which, when aggregated with the principal amount of all other Indebtedness then outstanding pursuant to this clause (vi) and including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (vi), does not exceed an amount equal to 5% of Total Assets at the time of such incurrence; (vii) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by the Senior Subordinated Note Indenture to be incurred under the first paragraph hereof or clauses (iii), (iv) or (vii) of this paragraph; 175 (viii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Senior Subordinated Exchange Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (viii); (ix) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred in the ordinary course of business for the purpose of risk management and not for the purpose of speculation; (x) the incurrence by the Company's Unrestricted Subsidiaries of Non- Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (x), and the issuance of preferred stock by Unrestricted Subsidiaries; (xi) the incurrence of Indebtedness solely in respect of performance, surety and similar bonds or completion or performance guarantees (including, without limitation, performance guarantees pursuant to coal supply agreements or equipment leases), to the extent that such incurrence does not result in the incurrence of any obligation for the payment of borrowed money to others; (xii) the incurrence of Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary; provided, however that (i) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (i)) and (ii) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and its Restricted Subsidiaries in connection with such disposition; (xiii) the guarantee by the Company or any of the Senior Subordinated Note Guarantors of additional Indebtedness relating to Black Beauty Coal Company not to exceed $50.0 million in aggregate principal amount outstanding at any one time under this clause (xiii); (xiv) the incurrence of Indebtedness relating to the Bengalla Joint Venture or the Warkworth Associates Joint Venture in an aggregate amount not to exceed $100.0 million in aggregate principal amount outstanding at any one time under this clause (xiv); and (xv) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (xv), not to exceed $250.0 million. For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xv) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company shall, in its sole discretion, classify or reclassify such item of Indebtedness in any manner that complies with this covenant. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of 176 Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. LIENS The Senior Subordinated Note Indenture provides that the Company will not and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Indebtedness or trade payables (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under the Senior Subordinated Note Indenture and the Senior Subordinated Exchange Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES The Senior Subordinated Note Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary that is not a Senior Subordinated Note Guarantor to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the foregoing restrictions will not apply to encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of the closing of the Acquisition, (b) the Senior Credit Facilities as in effect as of the date of the closing of the Acquisition, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the Senior Credit Facilities as in effect on the date of the closing of the Acquisition, (c) the Senior Note Indenture, the Senior Subordinated Note Indenture, the Senior Exchange Notes and the Senior Subordinated Exchange Notes, (d) applicable law or any applicable rule, regulation or order, (e) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Senior Subordinated Note Indenture to be incurred, (f) customary non- assignment provisions in leases and other agreements entered into in the ordinary course of business and consistent with past practices, (g) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (h) any agreement for the sale of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale, (i) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced, (j) secured Indebtedness otherwise permitted to be incurred pursuant to the provisions of the covenant described above under the caption "--Liens" that limits the right of the debtor to dispose of the assets securing such Indebtedness, (k) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business, (l) restrictions on cash or other deposits or net worth imposed by customers or lessors under contracts or leases entered into in the ordinary course of business and (m) any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (l) above, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company's Board of Directors, not materially more restrictive in the aggregate with respect to such dividend and other payment 177 restrictions than those (considered as a whole) contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing. MERGER, CONSOLIDATION, OR SALE OF ASSETS The Senior Subordinated Note Indenture provides that the Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Senior Subordinated Registration Rights Agreement, the Senior Subordinated Exchange Notes and the Senior Subordinated Note Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Senior Subordinated Note Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, (A) the entity surviving such consolidation or merger would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock" or (B) the Fixed Charge Coverage Ratio for the Company or the entity or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made would, immediately after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, not be less than such Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction. The Senior Subordinated Note Indenture also provides that the Company may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. The provisions of this covenant will not be applicable to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and its Restricted Subsidiaries. Notwithstanding the foregoing clause (iv), (i) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (ii) the Company may merge with an Affiliate that has no significant assets or liabilities and was formed solely for the purpose of changing the jurisdiction of organization of the Company in another State of the United States or the form of organization of the Company so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby and provided that the successor assumes all the obligations of the Company under the Senior Subordinated Registration Rights Agreement, the Senior Subordinated Exchange Notes and the Senior Subordinated Note Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Senior Subordinated Note Trustee. TRANSACTIONS WITH AFFILIATES The Senior Subordinated Note Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction") involving aggregate payments or consideration in excess of $5.0 million, unless (i) such Affiliate Transaction is on terms that are materially no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the 178 Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Senior Subordinated Note Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the members of the Board of Directors and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. Notwithstanding the foregoing, the following items shall not be deemed to be Affiliate Transactions: (i) any employment agreement or other compensation plan or arrangement for employees entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Restricted Subsidiary; (ii) transactions between or among the Company and/or its Restricted Subsidiaries; (iii) payment of reasonable fees to officers, directors, employees or consultants of the Company; (iv) Restricted Payments that are permitted by, and Investments that are not prohibited by, the provisions of the Senior Subordinated Note Indenture described above under the caption "--Restricted Payments;" (v) indemnification payments made to officers, directors and employees of the Company or any Restricted Subsidiary pursuant to charter, bylaw, statutory or contractual provisions; (vi) the payment of customary annual management, consulting and advisory fees and related expenses to Lehman Merchant Bank and its Affiliates; (vii) payments by the Company or any of its Restricted Subsidiaries to Lehman Merchant Bank and its Affiliates made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which payments are approved by a majority of the Board of Directors of the Company in good faith; (viii) the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders' agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the date of the closing of the Acquisition and any similar agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the date of the closing of the Acquisition shall only be permitted by this clause (viii) to the extent that the terms of any such amendment or new agreement are not otherwise disadvantageous to the Holders in any material respect; (ix) transactions pursuant to the terms of the Transaction Documents in effect on the date of the closing of the Acquisition; (x) transactions with Unrestricted Subsidiaries, customers, clients, suppliers, joint venture partners or purchasers or sellers of goods or services, in each case in the ordinary course of business (including, without limitation, pursuant to joint venture agreements) and otherwise in compliance with the terms of the Senior Subordinated Note Indenture which are, in the aggregate (taking into account all the costs and benefits associated with such transactions), materially no less favorable to the Company or its Restricted Subsidiaries than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; (xi) guarantees of performance by the Company and its Restricted Subsidiaries of Unrestricted Subsidiaries in the ordinary course of business, except for guarantees of Obligations in respect of borrowed money; and (xii) pledges of Equity Interests of Unrestricted Subsidiaries for the benefit of lenders of Unrestricted Subsidiaries. ADDITIONAL SUBORDINATED SUBSIDIARY GUARANTEES The Senior Subordinated Note Indenture provides that if the Company or any of its Domestic Subsidiaries shall acquire or create another Domestic Subsidiary after the date of the Senior Subordinated Note Indenture and such Domestic Subsidiary provides a guarantee of the Senior Credit Facilities, then such newly acquired or created Domestic Subsidiary shall execute a supplemental indenture in form and substance satisfactory to the Senior Subordinated Note Trustee providing that such Domestic Subsidiary shall become a Senior Subordinated Note Guarantor under the Senior Subordinated Note Indenture, provided, however, this covenant shall not apply 179 to any Domestic Subsidiary that has been properly designated as an Unrestricted Subsidiary in accordance with the Senior Subordinated Note Indenture for so long as it continues to constitute an Unrestricted Subsidiary. NO SENIOR SUBORDINATED DEBT The Senior Subordinated Note Indenture provides that (i) the Company will not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Debt and senior in any respect in right of payment to the Senior Subordinated Exchange Notes, and (ii) no Senior Subordinated Note Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to the Senior Subsidiary Guarantees and senior in any respect in right of payment to the Subordinated Subsidiary Guarantees. BUSINESS ACTIVITIES The Company will not, and will not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole. PAYMENTS FOR CONSENT The Senior Subordinated Note Indenture provides that neither the Company nor any of its Restricted Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Senior Subordinated Exchange Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Senior Subordinated Note Indenture or the Senior Subordinated Exchange Notes unless such consideration is offered to be paid or is paid to all Holders of the Senior Subordinated Exchange Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. REPORTS The Senior Subordinated Note Indenture provides that, whether or not required by the rules and regulations of the Commission, so long as any Senior Subordinated Exchange Notes are outstanding, the Company will furnish to the Holders of Senior Subordinated Exchange Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the Commission's rules and regulations. In addition, following the consummation of the exchange offer contemplated by the Senior Subordinated Registration Rights Agreement, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the Company and the Senior Subordinated Note Guarantors have agreed that, for so long as any Senior Subordinated Exchange Notes remain outstanding, they will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. 180 EVENTS OF DEFAULT AND REMEDIES The Senior Subordinated Note Indenture provides that each of the following constitutes an Event of Default: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Senior Subordinated Exchange Notes (whether or not prohibited by the subordination provisions of the Senior Subordinated Note Indenture); (ii) default in payment when due of the principal of or premium, if any, on the Senior Subordinated Exchange Notes (whether or not prohibited by the subordination provisions of the Senior Subordinated Note Indenture); (iii) failure by the Company or any of its Subsidiaries to make the offer required or to purchase any of the Senior Subordinated Exchange Notes as required under the provisions described under the captions "--Change of Control," or "--Asset Sales;" (iv) failure by the Company or any of its Subsidiaries for 30 days after notice to comply with the provisions of the covenants entitled "--Restricted Payments" or "-- Incurrence of Indebtedness and Issuance of Preferred Stock;" or failure by the Company or any of its Subsidiaries for 60 days after notice to comply with any of its other agreements in the Senior Subordinated Note Indenture or the Senior Subordinated Exchange Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Senior Subordinated Note Indenture, which default results in the acceleration of such Indebtedness prior to its express maturity and the principal amount of any such Indebtedness aggregates $50.0 million or more; (vi) failure by the Company or any of its Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would be a Significant Subsidiary to pay final judgments aggregating in excess of $50.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vii) except as permitted by the Senior Subordinated Note Indenture, any Subordinated Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Senior Subordinated Note Guarantor, or any Person acting on behalf of any Senior Subordinated Note Guarantor, shall deny or disaffirm its obligations under its Subordinated Subsidiary Guarantee; (viii) certain events of bankruptcy or insolvency with respect to the Company, any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would be a Significant Subsidiary; and (ix) any failure of the Company to deposit the required amounts into the Escrow Account pursuant to the Escrow Letter or any failure of the proceeds of the Escrow Account to be applied as required under the Escrow Letter. If any Event of Default occurs and is continuing, the Senior Subordinated Note Trustee or the Holders of at least 25% in principal amount of the then outstanding Senior Subordinated Exchange Notes may declare all the Senior Subordinated Exchange Notes to be due and payable immediately; provided, that so long as any Indebtedness permitted to be incurred pursuant to the Senior Credit Facilities shall be outstanding, such acceleration shall not be effective until the earlier of (i) an acceleration of any such Indebtedness under the Senior Credit Facilities or (ii) five business days after receipt by the Company of written notice of such acceleration of the Senior Subordinated Exchange Notes. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, any Significant Subsidiary that is a Restricted Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Senior Subordinated Exchange Notes will become due and payable without further action or notice. Holders of the Senior Subordinated Exchange Notes may not enforce the Senior Subordinated Note Indenture or the Senior Subordinated Exchange Notes except as provided in the Senior Subordinated Note Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Senior Subordinated Exchange Notes may direct the Senior Subordinated Note Trustee in its exercise of any trust or power. The Senior Subordinated Note Trustee may withhold from Holders of the Senior Subordinated Exchange Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company 181 would have had to pay if the Company then had elected to redeem the Senior Subordinated Exchange Notes pursuant to the optional redemption provisions of the Senior Subordinated Note Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Senior Subordinated Exchange Notes. If an Event of Default occurs prior to May 15, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding paying the premium upon redemption of the Senior Subordinated Exchange Notes prior to May 15, 2003, then the premium specified in the Senior Subordinated Note Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Senior Subordinated Exchange Notes. The Holders of a majority in aggregate principal amount of the Senior Subordinated Exchange Notes then outstanding by notice to the Senior Subordinated Note Trustee may on behalf of the Holders of all of the Senior Subordinated Exchange Notes waive any existing Default or Event of Default and its consequences under the Senior Subordinated Note Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Senior Subordinated Exchange Notes. The Company is required to deliver to the Senior Subordinated Note Trustee annually a statement regarding compliance with the Senior Subordinated Note Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Senior Subordinated Note Trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Company or any Person controlling such Person, as such, shall have any liability for any obligations of the Company under the Senior Subordinated Exchange Notes, the Subordinated Subsidiary Guarantees, the Senior Subordinated Note Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Senior Subordinated Exchange Notes by accepting a Senior Subordinated Exchange Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Senior Subordinated Exchange Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Senior Subordinated Exchange Notes ("Legal Defeasance") except for (i) the rights of Holders of outstanding Senior Subordinated Exchange Notes to receive payments in respect of the principal of, premium, if any, and interest and Liquidated Damages, if any, on such Senior Subordinated Exchange Notes when such payments are due from the trust referred to below, (ii) the Company's obligations with respect to the Senior Subordinated Exchange Notes concerning issuing temporary Senior Subordinated Exchange Notes, registration of Senior Subordinated Exchange Notes, mutilated, destroyed, lost or stolen Senior Subordinated Exchange Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Senior Subordinated Note Trustee, and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the Senior Subordinated Note Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Senior Subordinated Note Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Senior Subordinated Exchange Notes. In the event Covenant Defeasance occurs, certain events (not including non- payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Senior Subordinated Exchange Notes. In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the Company must irrevocably deposit with the Senior Subordinated Note Trustee, in trust, for the benefit of the Holders of the Senior Subordinated Exchange Notes, cash in U.S. dollars, non-callable Government Securities, or a combination 182 thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest and Liquidated Damages, if any, on the outstanding Senior Subordinated Exchange Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Senior Subordinated Exchange Notes are being defeased to maturity or to a particular redemption date; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Senior Subordinated Note Trustee an opinion of counsel in the United States reasonably acceptable to the Senior Subordinated Note Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of the Senior Subordinated Note Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders of the outstanding Senior Subordinated Exchange Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Senior Subordinated Note Trustee an opinion of counsel in the United States reasonably acceptable to the Senior Subordinated Note Trustee confirming that the Holders of the outstanding Senior Subordinated Exchange Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the effective date of the defeasance; (v) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Senior Subordinated Note Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company must have delivered to the Senior Subordinated Note Trustee, at or prior to the effective date of such defeasance, an opinion of counsel to the effect that at the effective date of such defeasance, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (vii) the Company must deliver to the Senior Subordinated Note Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Senior Subordinated Exchange Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (viii) the Company must deliver to the Senior Subordinated Note Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. TRANSFER AND EXCHANGE A Holder may transfer or exchange Senior Subordinated Exchange Notes in accordance with the Senior Subordinated Note Indenture. The Registrar and the Senior Subordinated Note Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Senior Subordinated Note Indenture. The Company is not required to transfer or exchange any Senior Subordinated Exchange Note selected for redemption. Also, the Company is not required to transfer or exchange any Senior Subordinated Exchange Note for a period of 15 days before a selection of Senior Subordinated Exchange Notes to be redeemed. The registered Holder of a Senior Subordinated Exchange Note will be treated as the owner of it for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the Senior Subordinated Note Indenture or the Senior Subordinated Exchange Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Senior Subordinated Exchange Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, 183 Senior Subordinated Exchange Notes), and any existing default or compliance with any provision of the Senior Subordinated Note Indenture or the Senior Subordinated Exchange Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Subordinated Exchange Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Senior Subordinated Exchange Notes). Without the consent of each Holder affected, an amendment or waiver may not (with respect to any Senior Subordinated Exchange Notes held by a non- consenting Holder): (i) reduce the principal amount of Senior Subordinated Exchange Notes whose Holders must consent to an amendment, supplement or waiver, (ii) reduce the principal of or change the fixed maturity of any Senior Subordinated Exchange Note or alter the provisions with respect to the redemption of the Senior Subordinated Exchange Notes (other than provisions relating to the covenants described above under the caption "--Repurchase at the Option of Holders"), (iii) reduce the rate of or change the time for payment of interest on any Senior Subordinated Exchange Note, (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Senior Subordinated Exchange Notes (except a rescission of acceleration of the Senior Subordinated Exchange Notes by the Holders of at least a majority in aggregate principal amount of the Senior Subordinated Exchange Notes and a waiver of the payment default that resulted from such acceleration), (v) make any Senior Subordinated Exchange Note payable in money other than that stated in the Senior Subordinated Exchange Notes, (vi) make any change in the provisions of the Senior Subordinated Note Indenture relating to waivers of past Defaults or the rights of Holders of Senior Subordinated Exchange Notes to receive payments of principal of or premium, if any, or interest on the Senior Subordinated Exchange Notes, (vii) waive a redemption payment with respect to any Senior Subordinated Exchange Note (other than a payment required by one of the covenants described above under the caption "--Repurchase at the Option of Holders"), (viii) make any change in the foregoing amendment and waiver provisions or (iv) release any Senior Subordinated Note Guarantor from any of its obligations under its Subordinated Subsidiary Guarantee or this Senior Subordinated Note Indenture, except in accordance with the terms of this Senior Subordinated Note Indenture. In addition, any amendment to the provisions of Article 10 of the Senior Subordinated Note Indenture (which relate to subordination) will require the consent of the Holders of at least 75% in aggregate principal amount of the Senior Subordinated Exchange Notes then outstanding if such amendment would adversely affect the rights of Holders of Senior Subordinated Exchange Notes. Notwithstanding the foregoing, without the consent of any Holder of Senior Subordinated Exchange Notes, the Company and the Senior Subordinated Note Trustee may amend or supplement the Senior Subordinated Note Indenture or the Senior Subordinated Exchange Notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Subordinated Exchange Notes in addition to or in place of certificated Senior Subordinated Exchange Notes, to provide for the assumption of the Company's obligations to Holders of Senior Subordinated Exchange Notes in the case of a merger or consolidation or sale of all or substantially all of the Company's assets, to make any change that would provide any additional rights or benefits to the Holders of Senior Subordinated Exchange Notes or that does not adversely affect the legal rights under the Senior Subordinated Note Indenture of any such Holder, to comply with requirements of the Commission in order to effect or maintain the qualification of the Senior Subordinated Note Indenture under the Trust Indenture Act, to provide for the issuance of additional Senior Subordinated Exchange Notes in accordance with the limitations set forth in this Senior Subordinated Note Indenture as of the date hereof or to allow any Senior Subordinated Note Guarantor to execute a supplemental Senior Subordinated Note Indenture and/or a Subordinated Subsidiary Guarantee with respect to the Senior Subordinated Exchange Notes. CONCERNING THE SENIOR SUBORDINATED NOTE TRUSTEE The Senior Subordinated Note Indenture contains certain limitations on the rights of the Senior Subordinated Note Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Senior Subordinated Note Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. 184 The Holders of a majority in principal amount of the then outstanding Senior Subordinated Exchange Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Senior Subordinated Note Trustee, subject to certain exceptions. The Senior Subordinated Note Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Senior Subordinated Note Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Senior Subordinated Note Trustee will be under no obligation to exercise any of its rights or powers under the Senior Subordinated Note Indenture at the request of any Holder of Senior Subordinated Exchange Notes, unless such Holder shall have offered to the Senior Subordinated Note Trustee security and indemnity satisfactory to it against any loss, liability or expense. BOOK-ENTRY, DELIVERY AND FORM The certificates representing the Senior Subordinated Exchange Notes will be issued in fully registered form. Except as described in the next paragraph, the Senior Subordinated Exchange Notes initially will be represented by permanent global Senior Subordinated Exchange Notes, in definitive, fully registered form without interest coupons (the "Global Senior Subordinated Exchange Notes") and will be deposited with the Senior Subordinated Note Trustee as custodian for DTC and registered in the name of a nominee of DTC. Except as set forth below, the Global Senior Subordinated Exchange Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Senior Subordinated Exchange Notes may not be exchanged for Senior Subordinated Exchange Notes in certificated form except in the limited circumstances described below. See "--Exchange of Book-Entry Senior Subordinated Exchange Notes for Certificated Senior Subordinated Exchange Notes." Except in the limited circumstances described below, owners of beneficial interests in the Global Senior Subordinated Exchange Notes will not be entitled to receive physical delivery of Certificated Senior Subordinated Exchange Notes (as defined below). The Senior Subordinated Note Trustee will act as Paying Agent and Registrar. The Senior Subordinated Exchange Notes may be presented for registration of transfer and exchange at the offices of the Registrar. DEPOSITORY PROCEDURES The following description of the operations and procedures of DTC are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them from time to time. The Company takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters. DTC has advised the Company that DTC is a limited-purpose trust company created to hold securities for the Participants and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the Initial Purchaser, banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the "Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants. DTC has also advised the Company that, pursuant to procedures established by it, (i) upon deposit of the Global Senior Subordinated Exchange Notes, DTC will credit the accounts of Participants designated by the Initial Purchaser with portions of the principal amount of the Global Senior Subordinated Exchange Notes and (ii) ownership of such interests in the Global Senior Subordinated Exchange Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the Global Senior Subordinated Exchange Notes). 185 Investors in the Global Senior Subordinated Exchange Notes may hold their interests therein directly through DTC, if they are Participants in such system, or indirectly through organizations which are Participants in such system. All interests in a Global Senior Subordinated Exchange Note may be subject to the procedures and requirements of DTC. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Senior Subordinated Exchange Note to such persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants and certain banks, the ability of a person having beneficial interests in a Global Senior Subordinated Exchange Note to pledge such interests to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests. EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL SENIOR SUBORDINATED EXCHANGE NOTE WILL NOT HAVE SENIOR SUBORDINATED EXCHANGE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF SENIOR SUBORDINATED EXCHANGE NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR "HOLDERS" THEREOF UNDER THE SENIOR SUBORDINATED NOTE INDENTURE FOR ANY PURPOSE. Payments in respect of the principal of, and premium, if any, Liquidated Damages, if any, and interest on a Global Senior Subordinated Exchange Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered Holder under the Senior Subordinated Note Indenture. Under the terms of the Senior Subordinated Note Indenture, the Company and the Senior Subordinated Note Trustee will treat the persons in whose names the Senior Subordinated Exchange Notes, including the Global Senior Subordinated Exchange Notes, are registered as the owners thereof for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, neither the Company, the Senior Subordinated Note Trustee nor any agent of the Company or the Senior Subordinated Note Trustee has or will have any responsibility or liability for (i) any aspect of DTC's records or any Participant's or Indirect Participant's records relating to or payments made on account of beneficial ownership interests in the Global Senior Subordinated Exchange Notes, or for maintaining, supervising or reviewing any of DTC's records or any Participant's or Indirect Participant's records relating to the beneficial ownership interests in the Global Senior Subordinated Exchange Notes or (ii) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. DTC has advised the Company that its current practice, upon receipt of any payment in respect of securities such as the Senior Subordinated Exchange Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date, in amounts proportionate to their respective holdings in the principal amount of beneficial interests in the relevant security as shown on the records of DTC unless DTC has reason to believe it will not receive payment on such payment date. Payments by the Participants and the Indirect Participants to the beneficial owners of Senior Subordinated Exchange Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the Senior Subordinated Note Trustee or the Company. Neither the Company nor the Senior Subordinated Note Trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the Senior Subordinated Exchange Notes, and the Company and the Senior Subordinated Note Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes. Interests in the Global Senior Subordinated Exchange Notes are expected to be eligible to trade in DTC's Same-Day Funds Settlement System and secondary market trading activity in such interests will, therefore, settle in immediately available funds, subject in all cases to the rules and procedures of DTC and its Participants. See "--Same Day Settlement and Payment." Transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same day funds. DTC has advised the Company that it will take any action permitted to be taken by a Holder of Senior Subordinated Exchange Notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Senior Subordinated Exchange Notes and only in respect of such portion of 186 the aggregate principal amount of the Senior Subordinated Exchange Notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the Senior Subordinated Exchange Notes, DTC reserves the right to exchange the Global Senior Subordinated Exchange Notes for legended Senior Subordinated Exchange Notes in certificated form, and to distribute such Senior Subordinated Exchange Notes to its Participants. Although DTC has agreed to the foregoing procedures to facilitate transfers of interests in the Global Senior Subordinated Exchange Notes among Participants in DTC, it is under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither the Company nor the Senior Subordinated Note Trustee nor any of their respective agents will have any responsibility for the performance by DTC, or its participants or indirect participants of its obligations under the rules and procedures governing its operations. EXCHANGE OF BOOK-ENTRY SENIOR SUBORDINATED EXCHANGE NOTES FOR CERTIFICATED SENIOR SUBORDINATED EXCHANGE NOTES A Global Senior Subordinated Exchange Note is exchangeable for definitive Senior Subordinated Exchange Notes in registered certificated form ("Certificated Senior Subordinated Notes") if (i) DTC (x) notifies the Company that it is unwilling or unable to continue as depositary for the Global Senior Subordinated Exchange Notes and the Company thereupon fails to appoint a successor depositary or (y) has ceased to be a clearing agency registered under the Exchange Act, (ii) the Company, at its option, notifies the Senior Subordinated Note Trustee in writing that it elects to cause the issuance of the Certificated Senior Subordinated Exchange Notes or (iii) there shall have occurred and be continuing a Default or Event of Default with respect to the Senior Subordinated Exchange Notes. In addition, beneficial interests in a Global Senior Subordinated Exchange Note may be exchanged for Certificated Senior Subordinated Exchange Notes upon request but only upon prior written notice given to the Senior Subordinated Note Trustee by or on behalf of DTC in accordance with the Senior Subordinated Note Indenture. In all cases, Certificated Senior Subordinated Exchange Notes delivered in exchange for any Global Senior Subordinated Exchange Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures) and will bear the applicable restrictive legend referred to in "Notice to Investors," unless the Company determines otherwise in compliance with applicable law. EXCHANGE OF CERTIFICATED SENIOR SUBORDINATED EXCHANGE NOTES FOR BOOK-ENTRY SENIOR SUBORDINATED EXCHANGE NOTES Senior Subordinated Exchange Notes issued in certificated form may be exchanged for beneficial interests in any Global Senior Subordinated Exchange Note upon request. SAME DAY SETTLEMENT AND PAYMENT The Senior Subordinated Note Indenture requires that payments in respect of the Senior Subordinated Exchange Notes represented by the Global Senior Subordinated Exchange Notes (including principal, premium, if any, interest and Liquidated Damages, if any) be made by wire transfer of immediately available funds to the accounts specified by the Global Senior Subordinated Exchange Note Holder. With respect to Senior Subordinated Exchange Notes in certificated form, the Company will make all payments of principal, premium, if any, interest and Liquidated Damages, if any, by wire transfer of immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each such Holder's registered address. The Senior Subordinated Exchange Notes represented by the Global Senior Subordinated Exchange Notes are expected to trade in DTC's Same- Day Funds Settlement System, and any permitted secondary market trading activity in such Senior Subordinated Exchange Notes will, therefore, be required by DTC to be settled in immediately available funds. The Company expects that secondary trading in any certificated Senior Subordinated Exchange Notes will also be settled in immediately available funds. 187 CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Senior Subordinated Note Indenture. Reference is made to the Senior Subordinated Note Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Acquisition" means the acquisition by the Company of: (i) all of the common stock of Peabody Holding Company, (ii) all of the common stock of Gold Fields Mining Corp., (iii) all of the membership interests of Citizens Power, (iv) the 1% interests in CL Hartford, L.L.C., a Delaware limited liability company, and Citizens Power Sales, a Delaware general partnership, both subsidiaries of Citizens Power, (v) all of the shares of Darex Capital Inc., a company incorporated in the Republic of Panama, and (vi) all of the ordinary shares of Peabody Australia Ltd., which together with Darex Capital, Inc. owns Peabody Resources. "Additional Assets" means (i) any property or assets (other than Capital Stock, Indebtedness or rights to receive payments over a period greater than 180 days, other than with respect to coal supply contract restructurings) that is usable by the Company or a Restricted Subsidiary in a Permitted Business or (ii) the Capital Stock of a Person that is at the time, or becomes, a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary. "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business consistent with past practices (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Senior Subordinated Note Indenture described above under the caption "--Change of Control" and/or the provisions described above under the caption "--Merger, Consolidation or Sale of Assets" and not by the provisions of the Asset Sale covenant), and (ii) the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company's Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $5.0 million or (b) for Net Proceeds in excess of $5.0 million. Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (iii) a Restricted Payment that is permitted by, or an Investment that is not prohibited by, the covenant described above under the caption "--Restricted Payments," (iv) a disposition of Cash Equivalents or obsolete equipment, (v) foreclosures on assets, (vi) the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof and (vii) the factoring of accounts receivable arising in the ordinary course of business pursuant to arrangements customary in the industry. 188 "Bengalla Joint Venture" means Bengalla Mining Co. Pty Limited, Bengalla Agricultural Co. Pty Limited and Bengalla Coal Sales Co. Pty Ltd. which are the joint venture companies related to the Bengalla mine in New South Wales, Australia. "Black Beauty Coal Company" means the Indiana general partnership among Thoroughbred, L.L.C., Black Beauty Resources, Inc. and Pittsburg and Midway Coal Mining Co., and any Person collectively owned by those three partners including, but not limited to, Eagle Coal Company and Falcon Coal Company. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (a) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed or insured by the U.S. Government or any agency thereof, (b) certificates of deposit and time deposits with maturities of one year or less from the date of acquisition and overnight bank deposits of any lender under the Senior Credit Facilities or of any commercial bank having capital and surplus in excess of $500.0 million, (c) repurchase obligations of any lender under the Senior Credit Facilities or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 90 days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) commercial paper of a domestic issuer rated at least A-2 by S&P or P-2 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency if both of S&P and Moody's cease publishing ratings of investments, (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody's, (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any lender under the Senior Credit Facilities or any commercial bank satisfying the requirements of clause (b) of this definition or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Citizens Power" means Citizens Power LLC, a Delaware limited liability company and its direct and indirect Subsidiaries. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (ii) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs, deferred financing fees and original issue discount, noncash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iii) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Consolidated Net Income), plus (iv) depreciation, depletion, amortization (including amortization of goodwill and other intangibles) and other noncash expenses (including, without limitation, writedowns and impairment of property, plant and equipment and intangibles and 189 other long-lived assets) (excluding any such noncash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, depletion, amortization and other noncash expenses were deducted in computing such Consolidated Net Income, minus (v) noncash items increasing such Consolidated Net Income for such period (other than accruals in accordance with GAAP), plus (vi) without duplication for amounts otherwise included in Consolidated Cash Flow, the amount of the Company's and its Restricted Subsidiaries' proportionate share of the Consolidated Cash Flow of Black Beauty Coal Company and its Subsidiaries for such period (calculated in proportion to the Company's and its Restricted Subsidiaries common equity ownership), in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation, depletion and amortization and other noncash expenses of, a Restricted Subsidiary that is not a Senior Subordinated Note Guarantor shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary that is not a Senior Subordinated Note Guarantor shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded, and (v) the Net Income (or loss) of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Restricted Subsidiaries. "Credit Facilities" means, with respect to the Company or any of its Restricted Subsidiaries, one or more debt facilities (including, without limitation, the Senior Credit Facilities) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. Indebtedness under Credit Facilities outstanding on the date on which Senior Subordinated Exchange Notes are first issued and authenticated under the Senior Subordinated Note Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of the definition of Permitted Indebtedness. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Designated Noncash Consideration" means the fair market value of noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officers' Certificate, setting forth the basis of such valuation, executed by the principal executive officer and the principal financial officer of the Company, less the amount of cash or Cash Equivalents received in connection with a sale of such Designated Noncash Consideration. 190 "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Senior Subordinated Exchange Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption "--Certain Covenants-- Restricted Payments." "Domestic Subsidiary" means a Subsidiary that is (i) formed under the laws of the United States of America or a state or territory thereof or (ii) as of the date of determination, treated as a domestic entity or a partnership or a division of a domestic entity for United States federal income tax purposes. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means any public or private sale of equity securities (excluding Disqualified Stock) of the Company, other than any private sales to an Affiliate of the Company. "Escrow Account" means the escrow account maintained pursuant to the Escrow Letter. "Escrow Letter" means that certain escrow letter dated March 2, 1998, by and among Lazard Brothers & Co., Limited, The Energy Group PLC, Peabody Investments Inc. and P&L Coal Holdings Corporation. "Existing Citizens Power Investment" means the Investments in Citizens Power by the Company and its Restricted Subsidiaries as of the date of the closing of the Acquisition. "Existing Indebtedness" means up to $292.5 million in aggregate principal amount of Indebtedness of the Company and its Restricted Subsidiaries (other than Indebtedness under the Senior Credit Facilities, the Senior Exchange Notes, the Senior Subordinated Exchange Notes and related Guarantees) in existence on the date of the closing of the Acquisition, until such amounts are repaid. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of original issue discount, noncash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letters of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations, but excluding amortization of debt issuance costs) and (ii) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on the portion of Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the effective combined federal, state and local tax rate of such Person for such period, expressed as a decimal, in each case, for the Company and its Restricted Subsidiaries on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person and its Restricted Subsidiaries for any period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to 191 the Fixed Charges of such Person and its Restricted Subsidiaries for such period. In the event that the referrent Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions and including pro forma cost savings permitted by Article 11 of Regulation S-X, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "Foreign Subsidiaries" means Subsidiaries of the Company that are not Domestic Subsidiaries. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of the Senior Subordinated Note Indenture. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or commodity prices, in each case for the purpose of risk management and not for speculation. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, if and to the extent any of the foregoing (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person, but excluding from the definition of "Indebtedness," any of the foregoing that constitutes (1) an accrued expense, (2) trade payables and (3) Obligations in respect of reclamation, workers' compensation, including black lung, pensions and retiree health care, in each case to the extent not overdue for more than 90 days. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, and (ii) the 192 principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of direct or indirect loans (including guarantees, other than performance guarantees provided for the benefit of Citizens Power of any portion of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption "--Restricted Payments." "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Marketable Securities" means, with respect to any Asset Sale, any readily marketable equity securities that are (i) traded on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market; and (ii) issued by a corporation having a total equity market capitalization of not less than $250.0 million; provided that the excess of (A) the aggregate amount of securities of any one such corporation held by the Company and any Restricted Subsidiary over (B) ten times the average daily trading volume of such securities during the 20 immediately preceding trading days shall be deemed not to be Marketable Securities; as determined on the date of the contract relating to such Asset Sale. "Net Income" means, with respect to any Person, the net income or loss of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain or loss, together with any related provision for taxes on such extraordinary or nonrecurring gain or loss. "Net Proceeds" means the aggregate proceeds (cash or property) received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any noncash consideration received in any Asset Sale) or the sale or disposition of any Investment, net of the direct costs relating to such Asset Sale, sale or disposition, (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "Non-Guarantor Subsidiaries" means (i) Citizens Power and its direct and indirect Subsidiaries, (ii) the Company's future Unrestricted Subsidiaries and (iii) the Company's current and future Foreign Subsidiaries. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that 193 would constitute Indebtedness) other than a pledge of the Equity Interests of any Unrestricted Subsidiaries, (b) is directly or indirectly liable (as a guarantor or otherwise) other than by virtue of a pledge of the Equity Interests of any Unrestricted Subsidiaries, or (c) constitutes the lender; and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness (other than the Senior Subordinated Exchange Notes being offered hereby) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity. "Obligations" means any principal, premium (if any), interest, penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, Guarantees and other liabilities and amounts payable under the documentation governing any Indebtedness or in respect thereto. "Permitted Business" means coal production, coal mining, coal brokering, coal transportation, mine development, power marketing, electricity generation, power/energy sales and trading, energy transactions/asset restructurings, risk management products associated with energy, fuel/power integration and other energy related businesses, ash disposal, environmental remediation, coal, natural gas, petroleum or other fossil fuel exploration, production, marketing, transportation and distribution and other related businesses, and activities of the Company and its Subsidiaries as of the date of the closing of the Acquisition and any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto. "Permitted Investments" means (a) any Investment in the Company or in a Restricted Subsidiary of the Company; (b) any Investment in Cash Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Restricted Subsidiary of the Company or (ii) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (d) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (e) any Investment existing on the date of the closing of the Acquisition (an "Existing Investment") and any Investment that replaces, refinances or refunds an Existing Investment, provided that the new Investment is in an amount that does not exceed the amount replaced, refinanced or refunded and is made in the same Person as the Investment replaced, refinanced or refunded, (f) advances to employees not in excess of $10.0 million outstanding at any one time; (g) Hedging Obligations permitted under clause (ix) of the "--Incurrence of Indebtedness and Issuance of Preferred Stock" covenant; (h) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case incurred in the ordinary course of business; (i) any Investment in a Permitted Business (whether or not an Investment in an Unrestricted Subsidiary) having an aggregate fair market value, when taken together with all other Investments made pursuant to this clause (i), does not exceed in aggregate amount the sum of (1) 10% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value) plus (2) 100% of the Net Proceeds from the sale or disposition of any Investment previously made pursuant to this clause (i) or 100% of the amount of any dividend, distribution or payment from any such Investment, net of income taxes paid or payable in respect thereof, in each case up to the amount of the Investment that was made pursuant to this clause (i) and 50% of the amount of such Net Proceeds or 50% of such dividends, distributions or payments, in each case received in excess of the amount of the Investments made pursuant to this clause (i); (j) guarantees (including Guarantees) of Indebtedness permitted under the covenant "--Incurrence of Indebtedness and Issuance of Preferred Stock;" (k) any Investment acquired by the Company or any of its Restricted Subsidiaries (A) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (B) as a result of the transfer of title with respect to any secured Investment in default as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to such secured Investment; (l) any Investment in Black Beauty Coal Company having an aggregate fair market value, taken together with all other Investments 194 made pursuant to this clause (l), that are at the time outstanding not to exceed $50.0 million (with any write-down or write-off of any such Investment deemed to remain outstanding); (m) Investments in Citizens Power having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (m), that are at that time outstanding not to exceed $50.0 million at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (n) any Investment in the Bengalla Joint Venture and the Warkworth Associates Joint Venture having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (n), that are at the time outstanding, not to exceed $25.0 million (with any write-down or write-off of any such Investment deemed to remain outstanding); (o) that portion of any Investment by the Company or a Restricted Subsidiary in a Permitted Business to the extent that the Company or such Restricted Subsidiary will receive in a substantially concurrent transaction an amount in cash equal to the amount of such Investment (or the fair market value of such Investment), net of any obligation to pay taxes or other amounts in respect of the receipt of such cash; provided that the receipt of such cash does not carry any obligation by the Company or such Restricted Subsidiary to repay or return such cash; and (p) the forgiveness or cancellation of any payable due from Citizens Power and its direct and indirect Subsidiaries outstanding on the date of the closing of the Acquisition; provided, however, that with respect to any Investment, the Company may, in its sole discretion, allocate all or any portion of any Investment to one or more of the above clauses so that the entire Investment would be a Permitted Investment. "Permitted Liens" means (i) Liens securing Indebtedness under Credit Facilities that were permitted by the terms of the Senior Subordinated Note Indenture to be incurred; (ii) Liens in favor of the Company; (iii) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (v) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (vi) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance or other kinds of social security; (vii) Liens existing on the date of the closing of the Acquisition; (viii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (ix) Liens on assets of Senior Subordinated Note Guarantors to secure Senior Debt of such Senior Subordinated Note Guarantors that was permitted by the Senior Subordinated Note Indenture to be incurred; (x) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Restricted Subsidiary; (xi) Liens on assets of Foreign Subsidiaries to secure Indebtedness that was permitted by the Senior Subordinated Note Indenture to be incurred; (xii) statutory liens of landlords, mechanics, suppliers, vendors, warehousemen, carriers or other like Liens arising in the ordinary course of business; (xiii) judgment Liens not giving rise to an Event of Default so long as any appropriate legal proceeding that may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such legal proceeding may be initiated shall not have expired; (xiv) easements, rights-of-way, zoning and similar restrictions and other similar encumbrances or title defects incurred or imposed, as applicable, in the ordinary course of business and consistent with industry practices which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto (as such property is used by the Company or its Subsidiaries) or interfere with the ordinary conduct of the business of the Company or such Subsidiaries; provided, however, that any such Liens are not incurred in connection with any borrowing of money or any commitment to loan any money or to extend any credit; (xv) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause 195 (vi) of the second paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock" and other purchase money Liens to finance property or assets of the Company or any Restricted Subsidiary acquired in the ordinary course of business; provided that such Liens are only secured by such property or assets so acquired or improved (including, in the case of the acquisition of Capital Stock of a Person who becomes a Restricted Subsidiary, Liens on the assets of the Person whose Capital Stock was so acquired); (xvi) Liens securing Indebtedness under Hedging Obligations; provided that such Liens are only secured by property or assets that secure the Indebtedness subject to the Hedging Obligation; (xvii) Liens to secure Indebtedness permitted by clause (xv) of the second paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock;" and (xviii) Liens on the Equity Interests of Unrestricted Subsidiaries securing obligations of Unrestricted Subsidiaries not otherwise prohibited by the Senior Subordinated Notes Indenture. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest and premium, if any, on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Senior Subordinated Exchange Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Senior Subordinated Exchange Notes on terms at least as favorable to the Holders of Senior Subordinated Exchange Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Senior Credit Facilities" means those certain Senior Credit Facilities, dated as of May 18, 1998, by and among the Company, the Senior Note Guarantors, Lehman Commercial Paper Inc., as Arranger, Syndication Agent and the Administrative Agent and the other lenders party thereto, including any related notes, guarantees, collateral documents, letters of credit, instruments and agreements executed in connection therewith (and any appendices, exhibits or schedules to any of the foregoing), and in each case as amended, modified, supplemented, restated, renewed, refunded, replaced, restructured, repaid or refinanced from time to time (whether with the original agents and lenders or other agents and lenders or otherwise, and whether provided under the original credit agreement or other credit agreements or otherwise). "Senior Note Indenture" means the indenture dated May 18, 1998, governing the Senior Notes. "Senior Exchange Notes" mean the 8 7/8% Series B Senior Notes of the Company due 2008. "Senior Subsidiary Guarantees" mean the guarantees endorsed on the Senior Subordinated Exchange Notes by the Senior Subordinated Note Guarantors. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date hereof. 196 "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or Senior Subordinated Note Trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "Total Assets" means the total assets of the Company and its Restricted Subsidiaries on a consolidated basis determined in accordance with GAAP, as shown on the most recently available consolidated balance sheet of the Company and its Restricted Subsidiaries. "Transaction Documents" means the documents related to (i) the Acquisition (including, without limitation, the purchase agreement, the participation agreement and the escrow agreement), (ii) the Senior Credit Facilities and (iii) the offering of the Old Senior Notes and the Old Senior Subordinated Notes. "Treasury Rate" means the yield to maturity at the time of the computation of the United States Treasury securities with a constant maturity (as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519), which has become publicly available at least two Business Days prior to the date fixed for redemption (or if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the then remaining average life to May 15, 2003; provided, however, that if the average life of such Senior Subordinated Exchange Note is not equal to the constant maturity of the United States Treasury security for which weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the average life of such Senior Subordinated Exchange Note is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "Unrestricted Subsidiary" means (i) Citizens Power, any direct or indirect Subsidiary of Citizens Power on the date of the Senior Subordinated Note Indenture and (ii) any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent that such Person: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any obligation (x) to subscribe for additional Equity Interests in Unrestricted Subsidiaries (except with respect to Permitted Investments) or (y) to maintain or preserve such Person's net worth; and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries; provided, however, that the Company and its Restricted Subsidiaries may guarantee the performance of Unrestricted Subsidiaries in the ordinary course of business except for guarantees of Obligations in respect of borrowed money. Any such designation by the Board of Directors shall be evidenced to the Senior Subordinated Note Trustee by filing with the Senior Subordinated Note Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by the covenant described above under the caption "Certain Covenants--Restricted Payments." 197 "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Warkworth Associates Joint Venture" means Warkworth Coal Sales Ltd., Warkworth Pastoral Co. Pty, Limited and Warkworth Mining Limited, which are the joint venture companies related to the Warkworth mine in New South Wales, Australia. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such Person. 198 CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in federal income tax consequences different from those discussed below. The exchange of Old Notes for Exchange Notes will not constitute a taxable transaction to Holders for federal income tax purposes. Consequently, no gain or loss will be recognized by Holders upon receipt of the Exchange Notes, the holding period of the Exchange Notes will include the holding period of the Old Notes and the basis of the Exchange Notes will be the same as the basis of the Old Notes immediately before the exchange. IN ANY EVENT, PERSONS CONSIDERING THE EXCHANGE OF OLD NOTES FOR EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISERS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION. 199 PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offers must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Old Notes where such Old Notes were acquired as a result of market-making activities or other trading activities. To the extent any such broker-dealer participates in the Exchange Offers and so notifies the Company, or causes the Company to be so notified in writing, the Company has agreed that a period of 180 days after the date of this Prospectus, it will make this Prospectus, as amended or supplemented, available to such broker-dealer for use in connection with any such resale, and will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker- dealer that requests such documents in the Letters of Transmittal. The Company will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the Exchange Offers may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at prevailing market prices at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the Exchange Offers and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act, and any profit on any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letters of Transmittal state that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The Company has agreed to pay all expenses incident to the Exchange Offers (other than commissions and concessions of any broker-dealers), subject to certain prescribed limitations, and will indemnify the holders of the Old Notes against certain liabilities, including certain liabilities that may arise under the Securities Act. By its acceptance of the Exchange Offers, any broker-dealer that receives Exchange Notes pursuant to the Exchange Offers hereby agrees to notify the Company prior to using the Prospectus in connection with the sale or transfer of Exchange Notes, and acknowledges and agrees that, upon receipt of notice from the Company of the happening of any event which makes any statement in the Prospectus untrue in any material respect or which requires the making of any changes in the Prospectus in order to make the statements therein not misleading or which may impose upon the Company disclosure obligations that may have a material adverse effect on the Company (which notice the Company agrees to deliver promptly to such broker-dealer), such broker-dealer will suspend use of the Prospectus until the Company has notified such broker- dealer that delivery of the Prospectus may resume and has furnished copies of any amendment or supplement to the Prospectus to such broker-dealer. LEGAL MATTERS Certain legal matters will be passed upon for the Company by Simpson Thacher & Bartlett, New York, New York. 200 EXPERTS The reserve reports and estimates of the Company's proven and probable coal reserves included herein have, to the extent described herein, been prepared by the Company and reviewed by Boyd. The Combined Financial Statements and Schedule of P&L Coal Group and the Financial Statement of P&L Coal Holdings Corporation audited by Ernst & Young LLP have been included in reliance on their reports given or their authority as experts in accounting and auditing. AVAILABLE INFORMATION The Company and the Guarantors have filed with the Commission a Registration Statement on Form S-4 (together with all amendments, exhibits, schedules and supplements thereto, the "Registration Statement") under the Securities Act with respect to the Exchange Notes being offered hereby. This Prospectus, which forms a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement. For further information with respect to the Company and the Exchange Notes, reference is made to the Registration Statement. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete, and, where such contract or other document is an exhibit to the Registration Statement, each such statement is qualified by the provisions in such exhibit, to which reference is hereby made. The Company and the Guarantors are not currently subject to the informational requirements of the Exchange Act. As a result of the offering of the Exchange Notes, the Company and the Guarantors will become subject to the informational requirements of the Exchange Act, and, in accordance therewith, will file reports and other information with the Commission. The Registration Statement, such reports and other information can be inspected and copied at the Public Reference Section of the Commission located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 and at regional public reference facilities maintained by the Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such material, including copies of all or any portion of the Registration Statement, can be obtained from the Public Reference Section of the Commission at prescribed rates. Such material may also be accessed electronically by means of the Commission's home page on the Internet (http://www.sec.gov). So long as the Company and the Guarantors are subject to the periodic reporting requirements of the Exchange Act, they are required to furnish the information required to be filed with the Commission to the Trustee and the holders of the Old Notes and the Exchange Notes. The Company and the Guarantors have agreed that, even if they are not required under the Exchange Act to furnish such information to the Commission, they will nonetheless continue to furnish information that would be required to be furnished by the Company and the Guarantors by Section 13 of the Exchange Act, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by the Company's certified independent accountants to the Trustee and the holders of the Old Notes or Exchange Notes as if they were subject to such periodic reporting requirements. 201 GLOSSARY OF SELECTED TERMS Anthracite. The highest rank of economically usable coal with moisture content less than 15% by weight and heating value as high as 15,000 Btus per pound. It is jet black with a high luster. It is mined primarily in Pennsylvania. Appalachian Region. Coal producing states of Alabama, Georgia, eastern Kentucky, Maryland, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia. Ash. Impurities consisting of iron, alumina and other incombustible matter that are contained in coal. Since ash increases the weight of coal, it adds to the cost of handling and can affect the burning characteristics of coal. Bituminous Coal. The most common type of coal with moisture content less than 20% by weight and heating value of 10,500 to 14,000 Btus per pound. It is dense and black and often has well-defined bands of bright and dull material. British Thermal Unit ("Btu"). A measure of the energy required to raise the temperature of one pound of water one degree Fahrenheit. Clean Air Act Amendments of 1990. A comprehensive set of amendments to the federal law governing the nation's air quality. The Clean Air Act was originally passed in 1970 to address significant air pollution problems in our cities. The 1990 amendments broadened and strengthened the original law to address specific problems such as acid deposition, urban smog, hazardous air pollutants and stratospheric ozone depletion. Coal Seam. Coal deposits occur in layers. Each such layer is called a "seam." Coke. A hard, dry carbon substance produced by heating coal to a very high temperature in the absence of air. Coke is used in the manufacture of iron and steel. Its production results in a number of useful byproducts. Coking Coal. Coal used to make coke and interchangeably referred to as metallurgical coal. Continuous Mining. A form of underground room-and-pillar mining which uses a continuous mining machine to cut coal from the seam and load it onto conveyors or into shuttle cars in a continuous operation. Deep Mine. An underground coal mine. Draglines. A large excavating machine used in the surface mining process to remove overburden. Dragline Mining. A form of mining where large capacity electric-powered draglines remove overburden to expose the coal seam. Smaller shovels load coal in haul trucks for transportation to the preparation plant and then to the rail loadout. Federal Energy Regulatory Commission ("FERC"). A regulatory agency within the Department of Energy that has jurisdiction over interstate electricity sales, wholesale electric rates, hydro-electric licensing, natural gas pricing, oil pipeline rates and gas pipeline certification. Fossil Fuel. Fuel such as coal, petroleum or natural gas formed from the fossil remains of organic material. Greenfield. Undeveloped coal reserves. Hard Rock Mine. A mine for hard rock minerals, which include copper, lead, zinc, magnesium, nickel and gold. Coal mines are not considered hard rock mines. Illinois Basin. Coal producing area in Illinois, western Indiana and western Kentucky. Interior Region. Coal producing states of Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, western Kentucky, Louisiana, Missouri, Oklahoma and Texas. Lignite. The lowest rank of coal with a high moisture content of up to 45% by weight and heating value of 6,500 to 8,300 Btus per pound. It is brownish black and tends to oxidize and disintegrate when exposed to air. 202 Longwall Mining. A form of underground mining in which a panel or block of coal, generally 700 feet wide and often over one mile long, is completely extracted. The working area is protected by a moveable, powered roof support system. Metallurgical Coal. The various grades of coal suitable for carbonization to make coke for steel manufacture. Also known as "met" coal, it possesses four important qualities: volatility, which affects coke yield; the level of impurities, which affects coke quality; composition, which affects coke strength; and basic characteristics, which affect coke oven safety. Met coal has a particularly high Btu, but low ash content. Nitrogen Oxide (NO/2/). A gas formed in high temperature environments such as coal combustion. It is a harmful pollutant that contributes to acid rain. NUG. Non-utility generator that sells power to a regulated utility under a long term contract. Organization for Economic Cooperation and Development (OECD). Members of the OECD include Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States and its territories (Guam, Puerto Rico and the U.S. Virgin Islands). Overburden. Layers of earth and rock covering a coal seam. In surface mining operations, overburden is removed prior to coal extraction. Overburden Ratio/Stripping Ratio. The amount of overburden that must be removed to excavate a given quantity of coal. It is commonly expressed in cubic yards per ton of coal or as a ratio comparing the thickness of the overburden with the thickness of the coal bed. Pillar. An area of coal left to support the overlying strata in a mine; sometimes left permanently to support surface structures. Powder River Basin. Coal producing area in northeastern Wyoming and southeastern Montana. This is the largest known source of coal reserves and the largest producing region in the United States. Preparation Plant. Usually located on a mine site, although one plant may serve several mines. A preparation plant is a facility for crushing, sizing and washing coal to prepare it for use by a particular customer. The washing process has the added benefit of removing some of the coal's sulfur content. Probable Reserves. In relation to coal, means reserves for which there is a moderate degree of geological assurance. Coal tonnages are computed by projection data from available seam measurements for a distance beyond coal classed as measured or proven. The assurance, although lower than for proven coal, is high enough to assume continuity between points of measurement. The maximum acceptable distance for projection of indicated probable tonnage is one-half to three-quarters mile from points of observation. Further exploration is necessary to place these reserves in a proven category. Proven Reserves. In relation to coal, means reserves for which there is the highest degree of geological assurance. The sites for measurement are so closely spaced and the geological character so well defined that the thickness, real extent, size, shape and depth of coal are well established. The maximum acceptable distance for projections from seam data points varies with the geological nature of the coal seam being studied, but generally, a radius of one-quarter mile is recognized as the standard. Proven reserves may also be referred to as measured. Reclamation. The process of restoring land and the environment to their original state following mining activities. The process commonly includes "recontouring" or reshaping the land to its approximate original appearance, restoring topsoil and planting native grass and ground covers. Reclamation operations are usually underway before the mining of a particular site is completed. Reclamation is closely regulated by both state and federal law. 203 Recoverable Reserves. The amount of coal that can be recovered from the reserve base. The average recovery factor for underground mines and surface mines is about 57% and 80%, respectively. Using these percentages, there are about 300 billion tons of recoverable reserves in the United States, enough to last more than 300 years at current consumption levels. Roof. The stratum of rock or other mineral above a coal seam; the overhead surface of a coal working place. Same as "back" or "top." Roof Bolt. A long steel bolt driven into the roof of underground excavations to support the roof, preventing and limiting the extent of roof falls. The unit consists of the bolt (up to four feet long), steel plate, expansion shell, and pal nut. The use of roof bolts eliminates the need for timbering by fastening together, or "laminating," several weaker layers of roof strata to build a "beam." Roof Support. Posts, jacks, roof bolts and beams used to support the rock overlying a coal seam in an underground mine. A good roof support plan is part of mine safety and coal extraction. Room and Pillar Mining. The most common method of underground mining in which the mine roof is supported mainly by coal pillars left at regular intervals. Rooms are placed where the coal is mined; pillars are areas of coal left between the rooms. Room-and-pillar mining is done either by conventional or continuous mining. Scrubber (flue gas desulfurization unit). Any of several forms of chemical/physical devices which operate to neutralize sulfur compounds formed during coal combustion. These devices combine the sulfur in gaseous emissions with other chemicals to form inert compounds, such as gypsum, which must then be removed for disposal. Although effective in substantially reducing sulfur from combustion gases, scrubbers require about six to seven percent of a power plant's electrical output and thousands of gallons of water to operate. Steam Coal. Coal used by power plants and industrial steam boilers to produce electricity or process steam. It generally is lower in Btu heat content and higher in volatile matter than metallurgical coal. Subbituminous Coal. Dull, black coal that ranks between lignite and bituminous coal. Its moisture content is between 20% and 30% by weight, and its heat content ranges from 7,800 to 9,500 Btus per pound of coal. Sulfur. One of the elements present in varying quantities in coal that contributes to environmental degradation when coal is burned. Sulfur dioxide (SO/2/) is produced as a gaseous by-product of coal combustion. Sulfur Content. Coal is commonly described by its sulfur content due to the importance of sulfur in environmental regulations. "Low sulfur" coal has a variety of definitions but typically is used to describe coal consisting of 1.0% or less sulfur. A majority of the Company's Appalachian and Powder River Basin reserves are of low sulfur grades. Surface Mine. A mine in which the coal lies near the surface and can be extracted by removing the covering layer of soil (see "Overburden"). About 60% of total U.S. coal production comes from surface mines. Tons. A "short" or net ton is equal to 2,000 pounds. A "long" or British ton is 2,240 pounds; a "metric" ton is approximately 2,205 pounds. The short ton is the unit of measure referred to in this document. Truck and Shovel Mining. A form of mining where large shovels are used to remove overburden, which is used to backfill pits after the coal is removed. Smaller shovels load coal in haul trucks for transportation to the preparation plant or rail loadout. Underground Mine. Also known as a "deep" mine. Usually located several hundred feet below the earth's surface, an underground mine's coal is removed mechanically and transferred by shuttle car or conveyor to the surface. Most underground mines are located east of the Mississippi River and account for about 40% of annual U.S. coal production. Unit Train. A train of 100 or more cars carrying only coal. A typical unit train can carry at least 10,000 tons of coal in a single shipment. Western Bituminous Coal Regions. Coal producing area including, the Hanna Basin in Wyoming, the Uinta Basin of northwestern Colorado and Utah, the Four Corners Region in New Mexico and Arizona and the Raton Basin in southern Colorado. 204 INDEX TO FINANCIAL STATEMENTS P & L COAL HOLDINGS CORPORATION
PAGE ---- Report of Independent Auditors ............................................ F-2 Balance Sheet.............................................................. F-3 Note to Balance Sheet ..................................................... F-4
P&L COAL GROUP
PAGE ---- Report of Independent Auditors ............................................ F-5 Combined Financial Statements: Statements of Combined Operations........................................ F-6 Combined Balance Sheets.................................................. F-7 Statements of Combined Changes in Invested Capital....................... F-8 Statements of Combined Cash Flows........................................ F-9 Notes to Combined Financial Statements................................... F-10
F-1 REPORT OF INDEPENDENT AUDITORS The Board of Directors P&L Coal Holdings Corporation We have audited the accompanying balance sheet of P&L Coal Holdings Corporation as of March 31, 1998. This balance sheet is the responsibility of the Company's management. Our responsibility is to express an opinion on this balance sheet based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe our audit provides a reasonable basis for our opinion. In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of P&L Coal Holdings Corporation at March 31, 1998, in confirmity with generally accepted accounting principles. Ernst & Young LLP St. Louis, MO July 9, 1998 F-2 P&L COAL HOLDINGS CORPORATION BALANCE SHEET
MARCH 31, 1998 --------- ASSETS Current assets Cash and cash equivalents........................................... $ 1 ---- Total current assets.............................................. 1 Noncurrent assets..................................................... -- ---- Total assets...................................................... $ 1 ==== LIABILITIES AND STOCKHOLDER'S EQUITY Total liabilities................................................. $-- ---- Stockholders' equity.................................................. 1 ---- Total liabilities and stockholder's equity........................ $ 1 ====
See accompanying notes to combined financial statements. F-3 P&L COAL HOLDINGS CORPORATION NOTE TO BALANCE SHEET (1) BASIS OF PRESENTATION Description of Business P&L Coal Holdings Corporation (the "Company") was incorporated February 27, 1998 for the purpose of acquiring the coal business and the U.S. energy trading business held by The Energy Group PLC. Details of Stockholder's Equity Stockholder's equity as of March 31, 1998 is summarized as follows:
COMMON PAID-IN CAPITAL IN RETAINED TOTAL STOCK EXCESS OF PAR VALUE EARNINGS STOCKHOLDER'S EQUITY ------ ------------------- -------- -------------------- $0.01 $0.99 $0.00 $1.00
P&L Coal Holdings Corporation common stock has a par value of $.01 per share; 1,000 shares are authorized and 1 share is outstanding at March 31, 1998. Effective May 15, 1998, the Company amended and restated its certificate of incorporation in connection with its acquisition of the businesses discussed above, such acquisition was completed May 19, 1998. The amended capital structure provides for 35 million of authorized shares, comprised of 25 million common shares at $.01 par value per share, and 10 million non- convertible, exchangeable preferred shares at $.01 par value per share. F-4 REPORT OF INDEPENDENT AUDITORS The Board of Directors Peabody Holding Company, Inc. and Subsidiaries We have audited the accompanying combined balance sheets of P&L Coal Group as of March 31, 1998 and 1997 and September 30, 1996, and the related statements of combined operations, combined changes in invested capital, and combined cash flows for the year ended March 31, 1998, for the six months ended March 31, 1997, and for each of the two years in the period ended September 30, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of P&L Coal Group at March 31, 1998 and 1997 and September 30, 1996, and the combined results of its operations and its cash flows for the year ended March 31, 1998, the six months ended March 31, 1997, and each of the two years in the period ended September 30, 1996, in conformity with generally accepted accounting principles. As discussed in Note 1 to the combined financial statements, in 1996 the Company changed its method of accounting for the impairment of long-lived assets and for long-lived assets to be disposed of. Ernst & Young LLP St. Louis, MO April 24, 1998 F-5 P&L COAL GROUP STATEMENTS OF COMBINED OPERATIONS
YEAR ENDED SIX MONTHS YEAR ENDED YEAR ENDED MARCH 31, ENDED MARCH 31, SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1996 1995 ---------- --------------- ------------- ------------- (IN THOUSANDS) REVENUES Sales................. $2,075,134 $1,000,419 $2,075,142 $2,087,656 Other revenues........ 169,328 63,674 118,444 88,180 ---------- ---------- ---------- ---------- Total revenues...... 2,244,462 1,064,093 2,193,586 2,175,836 OPERATING COSTS AND EXPENSES Operating costs and expenses............. 1,710,801 822,938 1,693,543 1,671,433 Depreciation, depletion and amortization......... 202,640 101,730 197,853 190,330 Selling and administrative expenses............. 83,640 41,421 75,699 81,389 Impairment of long- lived assets......... -- -- 890,829 -- Net gain on property and equipment disposals............ (21,806) (4,091) (13,042) (12,928) ---------- ---------- ---------- ---------- OPERATING PROFIT (LOSS)................. 269,187 102,095 (651,296) 245,612 Interest expense...... (33,635) (24,700) (62,526) (58,355) Interest income....... 14,977 8,590 11,355 5,482 ---------- ---------- ---------- ---------- INCOME (LOSS) BEFORE INCOME TAXES........... 250,529 85,985 (702,467) 192,739 Income tax provision (benefit)............ 90,193 27,553 (256,185) 92,352 ---------- ---------- ---------- ---------- NET INCOME (LOSS)....... $ 160,336 $ 58,432 $ (446,282) $ 100,387 ========== ========== ========== ==========
See accompanying notes to combined financial statements. F-6 P&L COAL GROUP COMBINED BALANCE SHEETS
MARCH 31, MARCH 31, SEPTEMBER 30, 1998 1997 1996 ----------- ----------- ------------- (IN THOUSANDS) ASSETS Current assets Cash and cash equivalents............ $ 96,821 $ 281,109 $ 181,533 Accounts receivable, less allowance of $9,100 in 1998, $5,525 in 1997 and $5,072 in 1996... 326,540 220,956 203,493 Receivables from affiliates, net..... 112,763 5,882 1,615 Materials and supplies............... 67,343 67,730 65,264 Coal inventory....................... 197,480 187,381 161,822 Assets from trading and price risk management activities............... 1,295,169 -- -- Deferred income taxes................ -- 133 5,135 Other current assets................. 30,036 27,673 34,311 ----------- ----------- ----------- Total current assets............... 2,126,152 790,864 653,173 Property, plant, equipment and mine development Land and coal interests.............. 3,075,916 3,116,394 3,123,488 Building and improvements............ 721,883 713,979 690,239 Machinery and equipment.............. 1,441,140 1,466,113 1,469,492 Less accumulated depreciation, depletion and amortization.......... (1,565,397) (1,507,695) (1,467,857) ----------- ----------- ----------- Property, plant, equipment and mine development, net...................... 3,673,542 3,788,791 3,815,362 Investments and other assets........... 555,540 446,157 448,158 ----------- ----------- ----------- Total assets....................... $ 6,355,234 $ 5,025,812 $ 4,916,693 =========== =========== =========== LIABILITIES AND INVESTED CAPITAL Current liabilities Short-term borrowings and current maturities of long-term debt........ $ 46,616 $ 121,532 $ 243,273 Income taxes payable................. 2,388 16,088 27,173 Deferred income taxes................ 6,036 -- -- Liabilities from trading and price risk management activities.......... 947,467 -- -- Accounts payable and accrued expenses............................ 587,674 486,168 512,192 ----------- ----------- ----------- Total current liabilities.......... 1,590,181 623,788 782,638 Long-term debt, less current maturities............................ 555,660 200,191 213,594 Deferred income taxes.................. 661,572 589,280 588,952 Accrued reclamation and other environmental liabilities............. 416,361 436,152 451,611 Workers' compensation obligations...... 260,895 284,001 291,619 Accrued postretirement benefit costs... 876,244 860,952 853,625 Obligation to industry fund............ 97,045 123,816 137,683 Other noncurrent liabilities........... 209,434 230,846 213,316 ----------- ----------- ----------- Total liabilities.................. 4,667,392 3,349,026 3,533,038 Invested capital....................... 1,687,842 1,676,786 1,383,655 ----------- ----------- ----------- Total liabilities and invested capital........................... $ 6,355,234 $ 5,025,812 $ 4,916,693 =========== =========== ===========
See accompanying notes to combined financial statements. F-7 P & L COAL GROUP STATEMENTS OF COMBINED CHANGES IN INVESTED CAPITAL
INVESTED CAPITAL -------------- (IN THOUSANDS) SEPTEMBER 30, 1994............................................... $1,656,560 Capital contribution........................................... 206,420 Dividend paid.................................................. (274,600) Net transactions with affiliates............................... (43,730) Foreign currency translation adjustments....................... 5,938 Net income..................................................... 100,387 ---------- SEPTEMBER 30, 1995............................................... $1,650,975 Capital contribution........................................... 284,156 Dividend paid.................................................. (72,830) Net transactions with affiliates............................... (46,114) Foreign currency translation adjustments....................... 13,750 Net loss....................................................... (446,282) ---------- SEPTEMBER 30, 1996............................................... $1,383,655 Capital contribution........................................... 269,168 Net transactions with affiliates............................... (31,670) Foreign currency translation adjustments....................... (2,799) Net income..................................................... 58,432 ---------- MARCH 31, 1997................................................... $1,676,786 Net transactions with affiliates............................... (41,987) Dividend paid.................................................. (65,109) Foreign currency translation adjustments....................... (42,184) Net income..................................................... 160,336 ---------- MARCH 31, 1998................................................... $1,687,842 ==========
See accompanying notes to combined financial statements. F-8 P & L COAL GROUP STATEMENTS OF COMBINED CASH FLOWS
YEAR ENDED SIX MONTHS ENDED YEAR ENDED YEAR ENDED MARCH 31, MARCH 31, SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1996 1995 ---------- ---------------- ------------- ------------- (IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss)....... $160,336 $ 58,432 $ (446,282) $100,387 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, depletion and amortization.......... 202,640 101,730 197,853 190,330 Deferred income taxes................. 65,508 17,529 (281,651) 62,776 Amortization of debt discount.............. 11,205 5,767 10,378 9,792 Net gain on property and equipment disposals............. (21,806) (4,091) (13,042) (12,928) Gain on contract restructuring......... (49,270) (11,624) (22,000) (23,861) Impairment of long- lived assets.......... -- -- 890,829 -- Gain on sale of investments........... (2,199) -- -- -- Change in current assets and liabilities, excluding effects of acquisitions: (Increase) decrease in accounts receivable.......... (70,326) (17,718) 45,908 (5,267) (Increase) decrease in materials and supplies............ (438) (2,526) 8,482 (1,770) Increase in coal inventory........... (16,160) (25,930) (3,373) (21,510) (Increase) decrease in other current assets.............. (3,385) 6,550 (9,736) 14,958 Increase (decrease) in accounts payable and accrued expenses............ 61,707 (25,496) (68,525) 22,342 Increase (decrease) in income taxes payable............. (12,447) (10,964) (31,079) 28,826 Net assets from trading and price risk management activities............ (107,102) -- -- -- Accrued reclamation and related liabilities........... (18,509) (15,385) (28,678) (52,395) Workers' compensation obligations........... (23,106) (7,618) (38,036) (56,318) Accrued postretirement benefit costs......... 15,292 7,324 12,165 13,539 Obligation to industry fund.................. (26,771) (13,867) (32,532) 1,696 Other, net............. 16,509 716 20,854 1,946 -------- -------- ---------- -------- Net cash provided by operating activities.......... 181,678 62,829 211,535 272,543 ======== ======== ========== ======== CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant, equipment and mine development....... (166,336) (76,460) (152,106) (188,006) Acquisitions and equity investments............ (58,715) -- -- (359,557) Proceeds from sale of business unit.......... -- -- -- 27,500 Proceeds from contract restructurings......... 57,460 15,466 29,211 32,125 Proceeds from property and equipment disposals.............. 37,732 4,824 17,255 25,825 -------- -------- ---------- -------- Net cash used in investing activities.......... (129,859) (56,170) (105,640) (462,113) ======== ======== ========== ======== CASH FLOWS FROM FINANCING ACTIVITIES Repayments of short-term borrowings and long- term debt.............. (363,566) (503,138) (862,113) (485,253) Proceeds from short-term borrowings and long- term debt.............. 359,391 367,093 1,037,716 425,833 Capital contribution.... -- 269,168 284,156 206,420 Net transactions with affiliates............. (41,987) (31,670) (46,114) (43,730) Dividend paid........... (65,109) -- (72,830) (274,600) Net change in due to/from affiliates..... (124,118) (7,275) (324,828) 350,323 -------- -------- ---------- -------- Net cash provided by (used in) financing activities.......... (235,389) 94,178 15,987 178,993 Effect of exchange rate changes on cash and equivalents............ (718) (1,261) 5,886 998 -------- -------- ---------- -------- Net increase (decrease) in cash and cash equivalents............ (184,288) 99,576 127,768 (9,579) Cash and cash equivalents at beginning of period.... 281,109 181,533 53,765 63,344 -------- -------- ---------- -------- Cash and cash equivalents at end of period................. $ 96,821 $281,109 $ 181,533 $ 53,765 ======== ======== ========== ========
See accompanying notes to combined financial statements F-9 P & L COAL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying combined financial statements include the combined operations and balance sheets of the coal mining business and the U.S. energy trading business held by The Energy Group, PLC ("The Energy Group") prior to their acquisition by P&L Coal Holdings Corporation on May 19, 1998 (see note 19). These financial statements include the accounts of Peabody Holding Company, Inc. ("Peabody Holding Company"), Gold Fields Mining Corporation ("Gold Fields") which owns Lee Ranch mine ("Lee Ranch"), Citizens Power LLC ("Citizens Power"), Peabody Resources Holdings Pty Ltd. ("Peabody Resources"), an Australian company, which is held by Darex Capital, Inc. and Peabody Australia Ltd. and their majority owned subsidiaries, and certain other accounts of The Energy Group subsidiaries (collectively, the "Company"). Darex Capital, Inc. and Peabody Australia Ltd. assets and operations relate solely to their holdings of Peabody Resources. Prior to March 7, 1997, the Company was a wholly owned indirect subsidiary of Hanson PLC (collectively referred to as "Hanson"). During 1996 and 1997, Hanson demerged its operations into four separate companies. As part of this tax-free distribution plan ("spin-off"), on February 24, 1997 Hanson demerged The Energy Group to hold the energy business of Hanson. In addition, on March 7, 1997, a subsidiary of Hanson sold the outstanding common stock of Peabody Holding Company to a subsidiary of The Energy Group and combined it with other Hanson energy companies to form The Energy Group. Joint ventures are accounted for using the equity method except for undivided interests in Australia, which are reported using pro rata consolidation whereby the Company reports its proportionate share of assets, liabilities, income and expenses. All significant intercompany transactions have been eliminated. The financial statements include the following asset and operating amounts for Australian entities utilizing pro rata consolidation (dollars in thousands):
YEAR ENDED SIX MONTHS YEAR ENDED YEAR ENDED MARCH 31, ENDED MARCH 31, SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1996 1995 ---------- --------------- ------------- ------------- Total revenue............ $ 76,406 $ 41,058 $ 78,388 $80,520 Operating income......... 17,731 $ 8,386 20,632 18,088 MARCH 31, MARCH 30, SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1996 1995 ---------- --------------- ------------- ------------- Total assets............. $139,200 $118,154 $109,169 $84,070
Effective with the date of the spin-off, the Company changed its fiscal year-end from September 30 to March 31. Accordingly, the 1997 results represent only six months of activity. DESCRIPTION OF BUSINESS The Company is engaged principally in the mining of coal for sale primarily to electric utilities in the United States. In addition, during 1998, the Company began marketing and trading electric power and energy-related commodity risk management products through its recently acquired subsidiary, Citizens Power. Citizens Power also provides services and price risk management capabilities to the electric power industry. Price risk management activities include the restructuring of power sales and power supply agreements. Citizens Power balances sales and purchase commitments to mitigate market risk and secure cash flow streams. F-10 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) ACCOUNTING FOR TRADING AND PRICE RISK MANAGEMENT The Company's trading and price risk management activities are accounted for using the fair value method. Under such method, forwards, futures, options, swaps and other financial instruments with third parties are reflected at market value and are included in the Combined Balance Sheets as "Assets and liabilities from trading and price risk management activities". In the absence of quoted value, financial instruments are valued at fair value, considering time value, volatility of the underlying commodity and other factors as determined by the Company's management. Resulting gains or losses are recognized in the profit and loss account in the period of change. SALES The Company incurs certain "add-on" taxes and fees on coal sales. Coal sales are reported including taxes and fees charged by various federal and state governmental bodies. Also included are revenues from trading electric power and related commodity risk management products utilizing the fair value method of accounting. Revenues from trading activities are recognized for the differences between contract and market prices. Revenues from price risk management activities are recognized by discounting the estimated net cash flows from the underlying long-term sales and purchase agreements after providing for appropriate reserves for credit, market risk and other future costs. OTHER REVENUES Other revenues include royalties related to coal lease agreements, earnings in joint ventures, management fees, farm income and contract termination payments (see note 14). CASH AND CASH EQUIVALENTS Cash and cash equivalents are stated at cost, which approximates fair value. Cash equivalents consist of highly liquid investments with an original maturity of three months or less. INVENTORIES Materials and supplies and coal inventory are valued at the lower of average cost or market. Coal inventory costs include labor, supplies, equipment costs, operating overhead and other related costs. PROPERTY, PLANT, EQUIPMENT AND MINE DEVELOPMENT Property, plant, equipment and mine development are recorded at cost. Interest costs applicable to major asset additions are capitalized during the construction period including $1.5 million for the year ended March 31, 1998 and $0.1 million for the six months ended March 31, 1997. No interest was capitalized for the year ended September 30, 1996. Expenditures which extend the useful lives of existing plant and equipment are capitalized. Maintenance and repairs are charged to operating costs and expenses as incurred. Costs incurred to develop coal mines or to expand the capacity of operating mines are capitalized. Development costs incurred to maintain current production capacity at a mine and exploration expenditures are charged to expense as incurred. Certain costs to acquire computer hardware and the development and/or purchase of software for internal use are capitalized and depreciated over the estimated useful lives. Depreciation of plant and equipment is computed using the straight-line method over the estimated useful lives of the various classes of assets, which vary from 3 to 49 years. Depletion of coal lands is computed using the units- of-production method. Mine development costs are principally amortized over the estimated lives of the mines using the straight-line method. F-11 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) ACCRUED RECLAMATION AND OTHER ENVIRONMENTAL LIABILITIES The Company records a liability for the estimated costs to reclaim land as the acreage is disturbed during the ongoing surface mining process. The estimated costs to reclaim support acreage and to perform other related functions at both surface and underground mines are recorded ratably over the lives of the mines. As of March 31, 1998, the Company had $372.4 million in surety bonds outstanding and $13.9 million in letters of credit to secure reclamation. The amount of reclamation self-bonding in certain states in which the Company qualifies approximated $277.3 million at March 31, 1998. Accruals for other environmental matters are recorded in operating expenses when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Accrued liabilities are exclusive of claims against third parties and are not discounted. In general, costs related to environmental remediation are charged to expense. Environmental costs are capitalized only to the extent the capitalization criteria of Emerging Issues Task Force 90-8 are met (see note 17). INCOME TAXES Income taxes are accounted for using a balance sheet approach known as the liability method. The liability method accounts for deferred income taxes by applying statutory tax rates in effect at the date of the balance sheet to differences between the book and tax basis of assets and liabilities. POSTEMPLOYMENT BENEFITS The Company provides postemployment benefits to qualifying employees, former employees and dependents under the provisions of various benefit plans or as required by state or federal or Australian law. The Company accounts for workers' compensation obligations and other Company provided postemployment benefits on the accrual basis of accounting. CONCENTRATION OF CREDIT RISK AND MARKET RISK The Company mines bituminous and subbituminous coal, which is burned to produce steam and generate electricity. Some of the Company's West Virginia mines also produce metallurgical grade bituminous coal, which is used as a raw material in the production of coke for steel manufacturers and foundries. U.S. electric utilities accounted for 88 percent of the Company's sales tonnages for the year ended March 31, 1998, 88 percent for the six months ended March 31, 1997, 87 percent for the year ended September 30, 1996 and 85 percent for the year ended September 30, 1995. Certain U.S. subsidiaries of the Company are party to two separate labor agreements with the United Mine Workers of America ("UMWA") and certain Australian subsidiaries of the Company are party to a separate labor agreement with the United Mineworkers Federation of Australia. Sales of coal by these subsidiaries were 36 percent of the Company's tons sold for the year ended March 31, 1998, 37 percent for the six months ended March 31, 1997, 38 percent for the year ended September 30, 1996 and 41 percent for the year ended September 30, 1995. The Company's trading and price risk management activities give rise to market risk, which represents the potential loss caused by a change in the market value of a particular commitment. Market risks are actively monitored to ensure compliance with risk management policies of the Company. Policies are in place which limit the amount of total net exposure the Company may enter into at any point in time. Procedures exist which allow for monitoring of all commitments and positions with daily reporting to senior management. USE OF ESTIMATES IN THE PREPARATION OF THE FINANCIAL STATEMENTS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and F-12 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. IMPAIRMENT OF LONG-LIVED ASSETS During fiscal 1996, the Company elected early adoption of the provisions of Statement of Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS 121 requires impairment losses to be recognized on long- lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated under various assumptions by those assets are less than the assets' carrying amount. Impairment losses under SFAS 121 are measured by comparing the estimated fair value of the assets to their carrying amount. In fiscal year 1996, a noncash charge of $890.8 million ($525.7 million after income taxes) was recorded as a result of adopting the evaluation methodology of SFAS 121, principally related to the impairment of certain inactive and undeveloped coal reserves. Prior to the adoption of this pronouncement, asset impairment was evaluated at an operating company level based on the contribution of operating profits and undiscounted cash flows being generated from those operations. Under the Company's previous policy, assets used in operations, which consisted of multiple operating companies, were evaluated for impairment based on gross margins and cash flows generated by each separate operating company in a given business cycle. SFAS 121 requires the impairment review to be performed at the lowest level of asset grouping for which there are identifiable cash flows, a change from the higher level at which the Company's previous accounting policy measured impairment. The Company's economic grouping of assets was based on the markets in which the operations compete and consisted of both active and inactive mines, as well as undeveloped properties. Evaluation of assets at the lower grouping level indicated an impairment of certain of those assets. A significant factor contributing to the estimated impairment was a decline in certain coal markets caused by weak demand and lower prices. Coal market conditions have also been adversely impacted by the effects of the Clean Air Act Amendments of 1990. FOREIGN CURRENCY TRANSLATIONS Assets and liabilities of foreign affiliates are generally translated at current exchange rates, and related translation adjustments are reported as a component of invested capital. Income statement accounts are translated at the average rates during the period. RECLASSIFICATIONS Certain amounts for 1997, 1996 and 1995 have been reclassified to conform with 1998 report classifications with no effect on previously reported net income or invested capital. RECENT ACCOUNTING PRONOUNCEMENTS In June 1997, Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income" was issued which establishes new rules for the reporting and display of comprehensive income and its components. The Company intends to adopt this statement for its 1999 fiscal year. Also in June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" was issued which establishes standards for disclosure about operating segments in annual financial statements and selected information in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas and major customers. This statement supersedes SFAS No. 14, F-13 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) "Financial Reporting for Segments of a Business Enterprise." The new standard becomes effective for the Company's 1999 fiscal year and requires comparative information from earlier years be restated to conform to requirements of this standard. The Company is evaluating the requirements of SFAS No. 131 and the effects, if any, on the Company's current reporting and disclosures. In February 1998, SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" was issued which improves and standardizes disclosures by eliminating certain existing reporting requirements and adding new disclosures. The statement addresses disclosure issues only and does not change the measurement or recognition provisions specified in previous statements. The statement supercedes SFAS No. 87, "Employers' Accounting for Pensions," SFAS No. 88, "Accounting for Settlements and Curtailments of Defined Benefit Pensions Plans and for Termination Benefits" and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." The Company intends to adopt this statement for its 1999 fiscal year. (2) BUSINESS COMBINATIONS In May 1997, the Company acquired all of the ownership interests in Citizens Lehman Power L.L.C. ("Citizens Power") and its subsidiaries. Citizens Power, located in Boston, Massachusetts, markets and trades electric power and energy-related commodity risk management products. Citizens Power also provides services and price risk management capabilities to the electric power industry (see note 1). The purchase consideration is $20.0 million in cash, plus up to a maximum of $100.0 million of additional consideration based upon specific calculations related to increases in net asset value calculated at various dates over a five-year period ending March 31, 2002. The contingent payments are reflected in the financial statements as additional goodwill when the contingency is determined and the additional consideration becomes payable. Of the $100.0 million additional contingent consideration, $65.0 million has been determined owed as of March 31, 1998. Based upon Citizens Power's calculations as of June 1997, the Company issued a $30.0 million note to the sellers. The note is due March 31, 2000. Interest, which is payable quarterly, accrues at the London Interbank Offered Rate ("LIBOR") plus 18 basis points. In addition, the first amendment to the purchase agreement, dated July 1997, provided a total $35.0 million minimum on the total remaining net asset value contingency calculations, with a $70.0 million maximum. In the event of a change of ownership control, the agreement provides potential changes to the net asset value contingency calculations; however, the $120.0 million purchase price maximum remains. The acquisition was accounted for as a purchase and accordingly, the operating results of Citizens Power have been included in the Company's combined financial statements since the date of acquisition. The excess of the aggregate purchase price over the fair market value of net assets acquired (which will increase for any future contingent cash payments) of approximately $78.4 million as of March 31, 1998 is being amortized on a straight-line basis over 20 years. The following unaudited pro forma results of operations for the year ended March 31, 1998, the six months ended March 31, 1997 and the years ended September 30, 1996 and 1995, respectively, assumes the acquisition had occurred at the beginning of each fiscal year. The pro forma results of Citizens Power would be as follows (dollars in thousands):
YEAR ENDED SIX MONTHS YEAR ENDED YEAR ENDED MARCH 31, ENDED MARCH 31, SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1996 1995 ---------- --------------- ------------- ------------- Revenues............... $28,395 $18,174 $11,980 $ (147) Net income (loss)*..... 8,562 $15,772 938 (3,698)
- -------- * No taxes applicable to limited liability company F-14 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) The unaudited pro forma results of P & L Coal Group would be as follows (dollars in thousands):
SIX MONTHS YEAR ENDED ENDED YEAR ENDED YEAR ENDED MARCH 31, MARCH 31, SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1996 1995 ---------- ---------- ------------- ------------- Revenues................... $2,246,417 $1,082,267 $2,205,566 $2,175,689 Income (loss) before income taxes..................... 250,507 101,757 (701,529) 189,041 Net income (loss).......... 160,314 74,204 (445,344) 96,689
The pro forma results include amortization of the purchase goodwill since the acquisition date. The pro forma results are not necessarily indicative of what actually would have occurred if the acquisition had been completed as of the beginning of each of the fiscal periods presented, nor are they necessarily indicative of future combined results. Effective January 1, 1998, Thoroughbred L.L.C. ("Thoroughbred"), a subsidiary of Peabody Holding Company, purchased an additional 10 percent interest in Black Beauty Coal Company for $37.7 million in cash and as a result, increased its ownership in the partnership to 43.3 percent. Thoroughbred also obtained an option to purchase an additional 5 percent interest in the partnership on or before January 15, 1999. On July 17, 1995, Peabody Bengalla Investments Pty. Limited, a subsidiary of the Company, acquired an additional 10 percent in Bengalla's Joint Venture for $1.9 million. On November 1, 1994, Caballo Coal Company, a subsidiary of the Company, completed the purchase of Exxon Coal USA, Inc.'s Carter Mining Company for $356.2 million in cash. The purchase included Rawhide and Caballo coal mines, located in the Powder River Basin of Wyoming, and associated coal supply agreements. Caballo Coal Company's revenues and results of operations for the eleven month period that it was owned by Peabody Holding Company during fiscal 1995 of $129.0 million and $31.3 million, respectively, would not have been materially different if the acquisition had occurred at the beginning of the year. In 1995, the Company acquired controlling interest in an equity investment for $1.5 million in cash and a note payable valued at $1.6 million. (3) COAL INVENTORY Coal inventory consisted of the following (dollars in thousands):
MARCH 31, MARCH 31, SEPTEMBER 30, 1998 1997 1996 --------- --------- ------------- Saleable coal................................. $51,443 $ 52,821 $ 40,474 Raw coal...................................... 25,422 22,551 13,520 Work in process............................... 120,615 112,009 107,828 -------- -------- -------- $197,480 $187,381 $161,822 ======== ======== ========
Raw coal represents coal stockpiles that in some cases may be sold in current condition or may be further processed prior to shipment to a customer. Work in process consists of the average cost to remove overburden above an unmined coal seam as a part of the surface mining process. F-15 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) (4) INVESTMENTS AND OTHER ASSETS Investments and other assets consisted of the following (dollars in thousands):
MARCH 31 MARCH 31 SEPTEMBER 30 1998 1997 1996 -------- -------- ------------ Notes receivable................................ $173,639 $180,218 $188,414 Peabody Holding Company--intangible assets...... 97,783 106,193 110,296 Citizens Power--Goodwill........................ 76,198 -- -- Equity investments and other.................... 207,920 159,746 149,448 -------- -------- -------- $555,540 $446,157 $448,158 ======== ======== ========
Notes Receivable The rights of the lease between Hospah Coal Company, a wholly-owned subsidiary of Santa Fe Pacific Corporation ("SFPC") and Chaco Energy Company ("Chaco"), a subsidiary of Texas Utilities Company, were transferred to Hanson Natural Resources Company ("HNRC") with the acquisition of Lee Ranch in June 1993. On February 28, 1990, SFPC and Texas Utilities settled litigation related to the original lease which included an amended coal lease whereby Chaco agreed to make certain non-recoupable advance royalty payments to SFPC including annual payments of approximately $16.0 million for the period 1991 through 2017. At March 31, 1998, the present value of the non-recoupable advance royalty payments of $169.9 million is included in both "Other current assets" ($7.2 million) and "Investments and other assets" ($162.7 million) in the Combined Balance Sheets. At March 31, 1997, the present value of the non- recoupable advance royalty payments of $174.0 million is included in both "Other current assets" ($7.0 million) and "Investments and other assets" ($167.0 million) in the Combined Balance Sheets. At September 30, 1996, the present value of the non-recoupable advance royalty payments of $184.0 million is included in both "Other current assets" ($12.9 million) and "Investments and other assets" ($171.1 million) in the Combined Balance Sheets. As a result of amendments signed with American Electric Power Service Corporation ("AEP") and R&F Coal Company ("R&F") on December 21, 1990, the Simco AEP Conesville coal supply agreement was terminated effective April 20, 1991. As compensation, R&F agreed to pay a subsidiary of the Company $760,000 per month for 96 months with the first payment commencing in January 1991. The present value of $52.9 million was recorded as total consideration received on the Simco contract buyout. The March 31, 1997 and September 30, 1996 balances of $6.6 million and $10.8 million, respectively, represent the noncurrent portion of this note. At March 31, 1998 and 1997 and September 30, 1996 the current amounts of $6.6 million, $8.2 million and $7.8 million, respectively, are reflected in "Accounts receivable" in the Combined Balance Sheets. Peabody Holding Company--Intangible Assets Intangible assets, primarily purchased contract rights which are amortized essentially on a per ton shipped basis, were $138.9 million at March 31, 1998 and 1997 and $141.8 million at September 30, 1996. Accumulated amortization at March 31, 1998 and 1997 and September 30, 1996 was $41.1 million, $32.7 million and $31.5 million, respectively. The charge against earnings for amortization of intangible assets was $8.4 million for the year ended March 31, 1998, $4.1 million for the six months ended March 31, 1997 and $8.9 million and $9.5 million for the years ended September 30, 1996 and 1995, respectively. Citizens Power--Goodwill Goodwill in the amount of $78.4 million at March 31, 1998 is amortized on a straight-line basis over 20 years and is recorded net of accumulated amortization of $2.2 million for 1998. Goodwill represents the excess of the cost over the net tangible and identifiable intangible assets of the acquisition of Citizens Power (see note 2), and is stated at cost. The Company assesses the recoverability of goodwill based upon several factors, F-16 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) including management's intention with respect to the operations to which the goodwill relates and those operations' projected future income and undiscounted cash flows. Write-downs of goodwill are recognized when it is determined that the value of such asset has been impaired. Amortization expense for the year ended March 31, 1998 was $2.2 million. (5) LEASES The Company leases equipment and facilities under various noncancelable lease agreements. Certain lease agreements require the maintenance of specified ratios and contain restrictive covenants which limit indebtedness, subsidiary dividends, investments, sales of assets and other actions of the Company. Rental expense under operating leases was $40.6 million for the year ended March 31, 1998, $17.1 million for the six months ended March 31, 1997, $36.5 million for the year ended September 30, 1996 and $31.8 million for the years ended September 30, 1995. The cost of property, plant, equipment and mine development assets acquired under capital leases was $56.0 million and $54.7 million at March 31, 1998 and 1997, respectively, and $49.6 million at September 30, 1996. The related accumulated amortization was $27.1 million and $24.4 million at March 31, 1998 and 1997, respectively, and $22.6 million at September 30, 1996. Amortization of capital leases is included in "Depreciation, depletion and amortization" in the Statements of Combined Operations. The Company also leases coal reserves under agreements that require royalties to be paid as the coal is mined. Total royalty expense was $132.9 million for the year ended March 31, 1998, $64.2 million for the six months ended March 31, 1997 and $136.2 million and $127.9 million for the years ended September 30, 1996 and 1995, respectively. Certain agreements also require minimum annual royalties to be paid regardless of the amount of coal mined during the year. Future minimum lease and royalty payments as of March 31, 1998 are as follows (dollars in thousands):
CAPITAL OPERATING COAL YEAR LEASES LEASES RESERVES - ---- ------- --------- -------- 1999................................................ $ 2,841 $ 35,534 $ 13,433 2000................................................ 3,345 34,909 12,997 2001................................................ 2,630 28,594 10,987 2002................................................ 2,443 25,769 10,205 2003................................................ 2,841 21,820 9,114 2004 and thereafter................................. 12,945 65,904 45,695 ------- -------- -------- Total minimum lease payments........................ 27,045 $212,530 $102,431 ======== ======== Less interest....................................... 5,477 ------- Present value of minimum capital lease payments..... $21,568 =======
F-17 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) (6) ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of (dollars in thousands):
MARCH MARCH 31, 31, SEPTEMBER 30, 1998 1997 1996 --------- -------- ------------- Accounts payable.......... $234,277 $134,132 $123,721 Accrued payroll and related benefits......... 80,743 83,272 85,250 Accrued taxes other than income................... 75,791 77,501 85,173 Accrued health care....... 58,649 56,588 58,377 Workers' compensation obligations.............. 39,927 38,145 40,835 Accrued royalties......... 16,401 21,095 18,353 Accrued pensions.......... 12,953 4,231 3,883 Accrued lease payments.... 9,321 9,611 25,182 Accrued interest.......... 3,700 4,547 11,823 Customer contribution payable.................. -- 2,823 12,784 Other accrued expenses.... 55,912 54,223 46,811 -------- -------- -------- Total accounts payable and accrued expenses... $587,674 $486,168 $512,192 ======== ======== ========
(7) INCOME TAXES Pre-tax income (loss) is as follows (dollars in thousands):
YEAR ENDED SIX MONTHS YEAR ENDED YEAR ENDED MARCH 31, ENDED MARCH 31, SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1996 1995 ---------- --------------- ------------- ------------- Pretax income (loss): United States......... $207,884 $67,029 $(743,564) $156,875 Foreign............... 42,645 18,956 41,097 35,864 -------- ------- --------- -------- $250,529 $85,985 $(702,467) $192,739 ======== ======= ========= ========
Total income tax provision (benefit) consisted of (dollars in thousands):
YEAR ENDED SIX MONTHS YEAR ENDED YEAR ENDED MARCH 31, ENDED MARCH 31, SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1996 1995 ---------- --------------- ------------- ------------- Current: U.S. Federal.......... $ -- $ 2,216 $ 8,752 $10,940 Foreign............... 21,001 8,261 14,896 15,204 State................. 3,684 (453) 1,818 3,432 ------- ------- --------- ------- Total current....... 24,685 10,024 25,466 29,576 ------- ------- --------- ------- Deferred: U.S. Federal.......... 65,463 16,058 (239,014) 53,970 Foreign............... (5,457) (86) (2,786) (697) State................. 5,502 1,557 (39,851) 9,503 ------- ------- --------- ------- Total deferred...... 65,508 17,529 (281,651) 62,776 ------- ------- --------- ------- Total provision (benefit).......... $90,193 $27,553 $(256,185) $92,352 ======= ======= ========= =======
F-18 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) The income tax rate on income (loss) differed from the U.S. federal statutory rate as follows:
YEAR ENDED SIX MONTHS YEAR ENDED YEAR ENDED MARCH 31, ENDED MARCH 31, SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1996 1995 ---------- --------------- ------------- ------------- Federal statutory rate.. 35.0% 35.0% 35.0% 35.0% Changes in the asset valuation allowance.... 5.7 3.3 0.7 (1.1) Foreign earnings........ 0.4 1.8 0.3 1.0 State income taxes, net of U.S. federal tax benefit................ 2.8 0.7 5.5 6.7 Depletion............... (8.3) (8.8) 1.8 (13.8) Effect of tax sharing arrangement with Hanson................. -- -- (6.8) 19.9 Other, net.............. 0.4 -- -- 0.2 ---- ---- ---- ----- 36.0% 32.0% 36.5% 47.9% ==== ==== ==== =====
Beginning March 7, 1997, the Company filed a consolidated U.S. federal income tax return with its subsidiaries. At March 31, 1997, U.S. federal and state income taxes were determined on that basis. Prior to March 7, the Company consisted of two separate U.S. federal consolidated groups, Peabody Holding Company and Peabody Investments, Inc. ("PII"), parent of Gold Fields. For the years ended September 30, 1996 and 1995, Peabody Holding Company and its subsidiaries were included in a consolidated federal income tax return with other Hanson affiliates. Peabody Holding Company had a tax sharing arrangement with Hanson whereby federal income taxes were computed as part of a consolidated group of companies. For purposes of these financial statements, Peabody Holding Company determined its federal tax provision (benefit) based on its expected allocated share of the consolidated group tax position. State taxes were determined on a separate return basis. Under the tax sharing arrangement, Hanson allocated the consolidated federal income tax liability to the members of the consolidated group by applying a ratio of each member's separate taxable income to the sum of the separate taxable incomes of all members having taxable income for the years. If the consolidated group had taxable income, a member having a taxable loss did not receive a benefit for that loss. If the consolidated group had a taxable loss, only members having a taxable loss received a benefit for that loss. PII was the common parent of a separate consolidated tax group. The group included its interest in the operations of HNRC. HNRC was a partnership which historically included the operations of Lee Ranch, Cavenham Timber and Western Rock Quarries. For purposes of these statements, PII determined its federal and state tax provision as if Lee Ranch was the only operation included for the years ended September 30, 1996, 1995 and 1994. Pursuant to The Energy Group spin-off from Hanson in February 1997, The Energy Group entered into Tax Sharing Agreements (each, a "TSA") with both Hanson and Millennium Chemicals, Inc. ("Millennium"), a former Hanson company. Hanson has agreed to indemnify The Energy Group for all Peabody Investments' federal and state income tax liabilities arising prior to February 25, 1997, with the exception of those liabilities arising from the operations of Lee Ranch subsequent to its acquisition in June 1993. The Millennium TSA requires Millennium to indemnify The Energy Group and its subsidiaries for all federal income tax liabilities arising from tax years in which Peabody Holding Company and its subsidiaries were members of Hanson's Anglo-American affiliated group (July 3, 1990 through September 30, 1996). With respect to state income taxes, the Millennium TSA indemnifies The Energy Group for Arizona income taxes in the years in which Peabody Holding Company and subsidiaries filed a consolidated return with the Anglo-American group (fiscal years 1994 to 1996). F-19 NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below (dollars in thousands):
MARCH 31, MARCH 31, SEPTEMBER 30, 1998 1997 1996 ---------- ---------- ------------- Deferred tax assets: Accrued long-term reclamation and mine closing liabilities................... $ 57,773 $ 76,976 $ 79,543 Accrued long-term workers' compensation liabilities........................... 114,280 118,230 122,907 Postretirement benefit obligations..... 358,137 353,589 353,679 Tax credits and loss carryforwards..... 105,100 92,794 99,130 Obligation to industry fund............ 51,410 61,365 66,893 Others................................. 74,217 87,037 95,621 ---------- ---------- ---------- Total gross deferred tax assets...... $ 760,917 $ 789,991 $ 817,773 ---------- ---------- ---------- Deferred tax liabilities: Property, plant, equipment and mine development principally due to differences in depreciation, depletion and asset writedowns.................. 959,037 1,079,634 1,086,884 Long-term debt, principally due to amortization of debt discount......... 35,636 40,096 42,623 Others................................. 341,668 156,338 161,740 ---------- ---------- ---------- Total gross deferred tax liabilities......................... 1,336,341 1,276,068 1,291,247 ---------- ---------- ---------- Asset valuation allowance................ (92,184) (103,070) (110,343) ---------- ---------- ---------- Net deferred tax liability............... $ (667,608) $ (589,147) $ (583,817) ========== ========== ==========
Deferred taxes are included in the Combined Balance Sheets as follows (dollars in thousands):
MARCH 31, MARCH 31, SEPTEMBER 30, 1998 1997 1996 --------- --------- ------------- Current deferred income taxes............... $ (6,036) $ 133 $ 5,135 Noncurrent deferred income taxes............ (661,572) (589,280) (588,952) --------- --------- --------- Net deferred tax liability................ $(667,608) $(589,147) $(583,817) ========= ========= =========
The Company has alternative minimum tax ("AMT") credits of $59.6 million and net operating loss ("NOL") carryforwards of $45.5 million at March 31, 1998. The AMT credits have no expiration date and the NOL carryforwards expire in the year 2011. The AMT credits and NOL carryforwards are fully offset by a valuation allowance. The Company made U.S. federal tax payments of $0.1 million for the year ended March 31, 1998, $9.1 million for the six months ended March 31, 1997 and $10.4 million and $2.8 million for the years ended September 30, 1996 and 1995, respectively. The Company paid state and local income taxes totaling $0.8 million for the year ended March 31, 1998, $3.3 million for the six months ended March 31, 1997 and $2.7 million and $2.5 million for the years ended September 30, 1996 and 1995, respectively. Through September 30, 1996, all required federal income tax payments were made by Hanson for Peabody Holding Company. Foreign tax payments were $18.3 million for the year ended March 31, 1998, $13.4 million for the six months ended March 31, 1997 and $27.5 million for the year ended September 30, 1996. No material foreign tax payments were made for the year ended September 30, 1995. F-20 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) (8) SHORT-TERM BORROWINGS Short-term borrowings consist of the following (dollars in thousands):
MARCH 31, MARCH 31, SEPTEMBER 30, 1998 1997 1996 --------- --------- ------------- Commercial paper.............................. $10,080 $43,894 $225,653 The Energy Group credit facility.............. -- 50,000 -- Other......................................... 342 3,821 4,035 ------- ------- -------- Short-term borrowings....................... $10,422 $97,715 $229,688 ======= ======= ========
At March 31, 1998 and 1997, Peabody Resources maintained a revolving commercial paper facility denominated as $200.0 million Australian dollars available through multiple banks. The interest rate is determined at the time of borrowing based on the Bank Bill Swap Rate and at March 31, 1998, the effective annual interest rate was 5.3 percent. At September 30, 1996, a similar revolving commercial paper facility denominated as $400.0 million Australian dollars (U.S. $316.7 million) was available. Peabody Holding Company had borrowings against The Energy Group credit facility which had an effective interest rate of 6.0 percent at March 31, 1997. Peabody Holding Company maintained a line of credit amounting to $35.0 million with one bank at March 31, 1998 and Peabody Resources maintained lines of credit amounting to $20.0 million Australian dollars (U.S. $13.4 million) with several banks at March 31, 1998, to assure availability of funds at prevailing market interest rates. There were no borrowings against the Company's available lines of credit during fiscal year 1998. The amount of interest paid was $1.8 million for the year ended March 31, 1998, $6.6 million for the six months ended March 31, 1997 and $12.8 million and $4.3 million for the years ended September 30, 1996 and 1995, respectively. (9) LONG-TERM DEBT Long-term debt consisted of the following (dollars in thousands):
MARCH 31, MARCH 31, SEPTEMBER 30, 1998 1997 1996 --------- --------- ------------- 5% Subordinated Note: Principal................................... $280,000 $300,000 $ 310,000 Unamortized note discount................... (87,373) (98,368) (103,905) -------- -------- --------- 192,627 201,632 206,095 Non-recourse Citizens Power debt.............. 293,922 -- -- Citizens Power obligations.................... 65,000 -- -- Capital lease obligations..................... 21,568 17,422 16,345 Project finance facility...................... 14,632 -- -- Other......................................... 4,105 4,954 4,739 -------- -------- --------- Total long-term debt...................... 591,854 224,008 227,179 Less current maturities....................... (36,194) (23,817) (13,585) -------- -------- --------- Long-term debt, less current maturities... $555,660 $200,191 $213,594 ======== ======== =========
The 5 percent Subordinated Note, which had an original face value of $400.0 million is recorded net of discount at an effective annual interest rate of approximately 13 percent and provides that: (a) The stated interest is payable each March 1. F-21 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) (b) The regularly scheduled payments are $20.0 million in 1998 through 2006. Any unpaid amounts are due in 2007. Non-recourse Citizens Power debt is payable in installments through 2016. The weighted average interest rate is 9 percent. Citizens Power obligations' scheduled debt payments to the former owners of Citizens Lehman Power are $51.0 million in 2000 and $7.0 million in 2001 and 2002. Interest is due quarterly at LIBOR plus 18 basis points on $30.0 million of the debt. The remaining $35.0 million is non-interest bearing. Capital lease obligations are payable in installments through 2009 with a weighted average effective interest rate of 6 percent at March 31, 1998. Peabody Resources entered into a project finance facility to finance the construction of its interest in the Bengalla mine. The facility expires in 2010 and the maximum drawdown is $131.3 million Australian dollars (U.S. $88.2 million). In accordance with the facility agreement, the loan will be repaid from the proceeds of sales from Bengalla. During 1998, there were borrowings of $14.6 million against the facility with an effective annual interest rate of approximately 7 percent. Other, principally notes payable, is due in installments through 2018 with a weighted average effective interest rate of 7 percent. Peabody Resources has a medium term note facility denominated as $200.0 million Australian dollars (U.S. $134.4 million) with an effective interest rate of 6 percent. There were no borrowings against the facility during fiscal year 1998. Scheduled debt repayments for the next five fiscal years ending on March 31 are $36.6 million in 1999, $86.0 million in 2000, $44.1 million in 2001, $45.8 million in 2002 and $41.2 million in 2003. The amount of interest paid was $44.6 million for the year ended March 31, 1998, $18.0 million for the six months ended March 31, 1997 and $20.8 million and $21.0 million for the years ended September 30, 1996 and 1995, respectively. (10) WORKERS' COMPENSATION OBLIGATIONS The workers' compensation obligations consisted of the following (dollars in thousands):
MARCH 31 MARCH 31 SEPTEMBER 30 1998 1997 1996 -------- -------- ------------ Occupational disease costs..................... $214,091 $234,081 $243,438 Traumatic injury claims........................ 84,946 78,729 78,510 State assessment taxes......................... 1,785 9,336 10,506 -------- -------- -------- Total obligations............................ 300,822 322,146 332,454 Less current portion........................... (39,927) (38,145) (40,835) -------- -------- -------- Noncurrent obligations....................... $260,895 $284,001 $291,619 ======== ======== ========
Workers' compensation obligations consist of amounts accrued for loss sensitive insurance premiums, uninsured claims, and related taxes and assessments under traumatic injury and occupational disease workers' compensation programs. As of March 31, 1998, the Company had outstanding $57.5 million in letters of credit and $74.3 million in surety bonds to secure workers' compensation obligations. Certain subsidiaries of the Company are subject to the Federal Coal Mine Health & Safety Act of 1969, and the related workers' compensation laws in the states in which they operate. These laws require the subsidiaries to pay benefits for occupational disease resulting from coal workers' pneumoconiosis ("CWP"). The provision for CWP claims (including projected claims costs and interest discount accruals) was a benefit of $9.4 million F-22 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) for the year ended March 31, 1998, $3.8 million for the six months ended March 31, 1997 and $10.3 million and $24.9 million for the years ended September 30, 1996 and 1995, respectively. The benefit is primarily attributable to favorable loss experience factors and a change in certain actuarial assumptions. The liability for occupational disease claims represents the present value of known claims and an actuarially-determined estimate of future claims that will be awarded to current and former employees. The projections at March 31, 1998 and 1997 and September 30, 1996 were based on a 7.5 percent per annum interest discount rate and a 4 percent estimate for the annual rate of inflation. Traumatic injury workers' compensation obligations are estimated from both case reserves and actuarial determinations of historical trends, discounted at approximately 7.5 percent per annum at March 31, 1998 and 1997 and September 30, 1996. For Peabody Resources, workers' compensation funds are either separately administered industry funds or externally insured. Premiums are paid as a percentage of salary and labor costs. The administration of claims and the liability for payment of workers' compensation is the responsibility of the industry fund or the insurance company. (11) PENSION AND SAVINGS PLANS Peabody Holding Company sponsors a defined benefit pension plan covering substantially all salaried U.S. employees (the "Peabody Plan"). A Peabody Holding Company subsidiary also has a defined benefit pension plan covering eligible employees who are represented by the UMWA under the Western Surface Agreement of 1996 (the "Western Plan"). Powder River sponsors a defined benefit pension plan for its salaried employees (the "Powder River Plan"). Lee Ranch sponsors defined benefit pension plans, one which covers substantially all Lee Ranch hourly employees (the "Lee Ranch Hourly Plan") and one which covers substantially all Lee Ranch salaried employees (the "Lee Ranch Salaried Plan"). Peabody Resources participates in a number of superannuation funds and contributes on various percentages of employee compensation. Members of the funds may voluntarily contribute additional amounts to their accounts. Fund members are variously entitled to benefits on retirement, withdrawal, disability or death. Benefits under the Peabody Plan, the Powder River Plan and the Lee Ranch Salaried Plan are computed based on the number of years of service and compensation during certain years. Benefits under the Western Plan are computed based on the number of years of service with the subsidiary or other specified employers. Benefits under the Lee Ranch Hourly Plan are computed based on job classification and years of service. Annual contributions to the plans are made as determined by consulting actuaries based upon the Employment Retirement Income Security Act of 1974 minimum funding standard. Assets of the plans are primarily invested in various marketable securities, including U.S. Government bonds, corporate obligations and listed stocks. The funds are part of a master trust arrangement managed by the Company. Net periodic pension costs recognized as expense for the Peabody Plan, the Powder River Plan, the Western Plan and the Lee Ranch Salaried and Hourly Plans was $7.7 million for the year ended March 31, 1998, $4.4 million for the six months ended March 31, 1997 and $8.6 million and $9.2 million for the years ended September 30, 1996 and 1995, respectively. Net periodic pension costs included the following components (dollars in thousands):
YEAR ENDED SIX MONTHS YEAR ENDED YEAR ENDED MARCH 31 ENDED MARCH 31 SEPTEMBER 30 SEPTEMBER 30 1998 1997 1996 1995 ---------- -------------- ------------ ------------ Service cost for benefits earned................... $ 10,077 $ 5,163 $ 9,978 $ 9,533 Interest cost on projected benefit obligation....... 32,417 16,190 29,908 28,707 Actual return on plan assets................... (51,350) (7,969) (29,335) (43,862) Other amortizations and deferrals................ 16,589 (8,948) (1,950) 14,796 -------- ------- -------- -------- Net periodic pension costs.................. $ 7,733 $ 4,436 $ 8,601 $ 9,174 ======== ======= ======== ========
F-23 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) During 1998 and 1996, an early retirement and reduction in force program was offered to certain employees as part of a company-wide restructuring and cost reduction effort. As a result of the special termination benefits offered, a charge of $0.6 million and $15.3 million, respectively, was recognized in accordance with Statement of Financial Accounting Standards No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits." The following table sets forth the actuarial present value of benefit obligations and the funded status of the Peabody Plan, the Powder River Plan, the Western Plan and the Lee Ranch Salaried and Hourly Plans and amounts recognized in the Combined Balance Sheets (dollars in thousands):
MARCH 31, 1998 MARCH 31, 1997 SEPTEMBER 30, 1996 ------------------- ------------------- ------------------- ASSETS ABO ASSETS ABO ASSETS ABO EXCEED EXCEED EXCEED EXCEED EXCEED EXCEED ABO ASSETS ABO ASSETS ABO ASSETS --------- -------- --------- -------- --------- -------- Vested benefits......... $ 345,976 $ 55,623 $ 341,067 $ 47,795 $ 335,313 $ 44,757 Nonvested benefits...... 4,846 11,827 14,264 11,019 14,177 10,177 --------- -------- --------- -------- --------- -------- $ 350,822 $ 67,450 $ 355,331 $ 58,814 $ 349,490 $ 54,934 ========= ======== ========= ======== ========= ======== Projected benefit obligation for service rendered to date....... $ 372,255 $ 78,205 $ 379,168 $ 69,317 $ 376,766 $ 66,391 Plan assets at fair value.................. (408,027) (60,642) (366,837) (47,922) (358,812) (44,497) --------- -------- --------- -------- --------- -------- Plan assets (in excess of) less than projected benefit obligation..... (35,772) 17,563 12,331 21,395 17,954 21,894 Unrecognized net gain (loss)................. 13,891 (1,426) (22,454) (6,957) (29,131) (8,738) Unrecognized prior service cost........... 13,056 (6,654) 829 (7,243) 894 (7,537) Adjustment required to recognize additional minimum liability...... -- 5,812 -- 7,575 -- 8,629 --------- -------- --------- -------- --------- -------- Accrued (prepaid) pension liability (asset)................ $ (8,825) $ 15,295 $ (9,294) $ 14,770 $ (10,283) $ 14,248 ========= ======== ========= ======== ========= ========
The provisions of Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions," requires the recognition of an additional minimum liability and related intangible asset to the extent that accumulated benefits exceed plan assets. At March 31, 1998 and 1997 and September 30, 1996, the Company recorded adjustments of $5.8 million, $7.6 million and $8.6 million, respectively, which were required to reflect the Company's minimum liability. An intangible asset was recorded in the same amount. Peabody Holding Company and Gold Fields sponsor three separate unfunded supplemental retirement plans to provide senior management with benefits in excess of limits under the federal tax law and increased benefits to reflect a service adjustment factor. The following table sets forth the projected benefit obligation and the recorded liability (dollars in thousands):
MARCH 31 MARCH 31 SEPTEMBER 30 1998 1997 1996 -------- -------- ------------ Projected benefit obligation..................... $13,390 $13,162 $11,275 Recorded liability............................... 12,411 10,369 8,314
The recorded liability at March 31, 1998 and 1997 and September 30, 1996 includes the recognition of $3.4 million, $2.5 million and $0.7 million, respectively, in additional minimum liability. Pension expense for these plans was $1.4 million for the year ended March 31, 1998, $0.6 million for the six months ended March 31, 1997 and $1.5 million and $0.8 million for the years ended September 30, 1996 and 1995, respectively. F-24 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) The assumptions used to determine the above projected benefit obligation at the end of each fiscal period were as follows:
MARCH 31 MARCH 31 SEPTEMBER 30 1998 1997 1996 -------- -------- ------------ Discount rate.................................... 7.5% 7.5% 7.5% Rate of compensation increase.................... 3.75% 3.75% 4.25% Expected rate of return on plan assets........... 9.0% 9.0% 9.0%
Certain subsidiaries make contributions to multiemployer pension plans which provide defined benefits to substantially all hourly coal production workers represented by the UMWA other than those covered by the Western Plan. Benefits under the UMWA plans are computed based on service with the subsidiaries or other signatory employers. The amounts contributed to the plans and included in operating costs were $4.9 million for the year ended March 31, 1998, $2.4 million for the six months ended March 31, 1997 and $5.0 million and $5.5 million for the years ended September 30, 1996 and 1995, respectively. The Company sponsors savings and long-term investment plans for eligible salaried U.S. employees. The Company matches 50 percent of voluntary contributions up to a maximum matching contribution between 3 and 4 percent of a participant's salary. The expense of these plans was $4.2 million for the year ended March 31, 1998, $2.1 million for the six months ended March 31, 1997 and $4.7 million and $4.8 million for the years ended September 30, 1996 and 1995, respectively. The amount contributed and expensed by Peabody Resources to superannuation funds was $2.9 million for the year ended March 31, 1998, $1.5 million for the six months ended March 31, 1997 and $2.8 million and $1.8 million for the years ended September 30, 1996 and 1995, respectively. (12) POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS The Company currently provides health care and life insurance benefits to qualifying salaried and hourly retirees and their dependents from defined benefit plans established by the Company. Employees of Gold Fields are only eligible for life insurance benefits as provided by the Company. Plan coverage for the health and life insurance benefits is provided to future hourly retirees in accordance with the applicable labor agreement. The Company accounts for postretirement benefits using the accrual method. Retirees of Peabody Resources are provided similar benefits by plans sponsored by the Australian government. As a result, no liability is recorded for this plan. Net periodic postretirement benefits costs included the following components (dollars in thousands):
YEAR ENDED SIX MONTHS YEAR ENDED YEAR ENDED MARCH 31 ENDED MARCH 31 SEPTEMBER 30 SEPTEMBER 30 1998 1997 1996 1995 ---------- -------------- ------------ ------------ Service cost for benefits earned................... $ 6,569 $ 3,540 $ 12,094 $10,605 Interest cost on accumulated postretirement benefit obligation............... 69,614 34,068 63,806 63,847 Prior service cost amortization............. (10,071) (9,625) (20,855) (9,138) -------- ------- -------- ------- Net periodic postretirement benefit costs.................. $ 66,112 $27,983 $ 55,045 $65,314 ======== ======= ======== =======
F-25 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) The following table sets forth the plans' combined funded status reconciled with the amounts shown in the Combined Balance Sheets (dollars in thousands):
MARCH 31 MARCH 31 SEPTEMBER 30 1998 1997 1996 -------- -------- ------------ Accumulated postretirement benefit obligation ("APBO"): Retirees................................... $569,531 $563,528 $518,956 Fully eligible active plan participants.... 299,969 275,571 99,096 Other active plan participants............. 110,321 106,781 292,815 -------- -------- -------- 979,821 945,880 910,867 Unrecognized net loss...................... (70,704) (64,385) (47,659) Unrecognized prior service cost............ 16,057 26,132 39,117 -------- -------- -------- Liability included on the balance sheet.. 925,174 907,627 902,325 Less current portion....................... (48,930) (46,675) (48,700) -------- -------- -------- Noncurrent accrued postretirement benefit costs................................... $876,244 $860,952 $853,625 ======== ======== ========
The assumptions used to determine the APBO at the end of each fiscal period were as follows:
MARCH 31, 1998 MARCH 31, 1997 SEPTEMBER 30, 1996 ----------------- ----------------- ------------------ Discount rate........... 7.5% 7.5% 7.5% Salary increase rate for life insurance benefit................ 3.75% 3.75% 4.25% Health care trend rate: Pre-65................ 7.6% down to 8.0% down to 8.6% down to 5.0% over 5 years 5.0% over 6 years 5.0% over 7 years Post-65............... 6.5% down to 6.7% down to 7.0% down to 5.0% over 5 years 5.0% over 6 years 5.0% over 7 years Medicare.............. 5.9% down to 6.0% down to 6.25% down to 5.0% over 5 years 5.0% over 6 years 5.0% over 7 years
The health care cost trend rate assumption has a significant effect on the amounts reported. Increasing the assumed health care cost trend rates one percentage point in each year would increase the accumulated postretirement benefit obligation as of March 31, 1998 by $124.6 million. The effect of this change on the aggregate of the service cost and interest cost components of net periodic postretirement benefit costs for the year ended March 31, 1998 would be an increase of $11.6 million. Retirees formerly employed by certain subsidiaries and their predecessors, who were members of the UMWA, last worked before January 1, 1976 and were receiving health benefits on July 20, 1992 from a UMWA multiemployer plan, receive health benefits provided by the Combined Fund, a fund created by the "Coal Industry Retiree Health Benefit Act of 1992" (the "Coal Act"). The Coal Act requires former employers (including certain subsidiaries of the Company) and their affiliates to contribute to the Combined Fund according to a formula. In addition, certain surplus UMWA pension fund monies and Federal Abandoned Mine Lands program funds will be used to pay benefits to orphaned retirees. The Company has recorded an actuarially determined liability representing the amounts anticipated to be due for the UMWA Combined Fund. The "Obligation to Industry Fund" reflected in the Combined Balance Sheets at March 31, 1998 and 1997 and September 30, 1996 was $97.0 million, $123.8 million and $137.7 million, respectively. The current portion related to this obligation reflected in "Accounts payable and accrued expenses" in the Combined Balance Sheets at March 31, 1998 and 1997 and September 30, 1996 was $8.8 million, $9.7 million and $8.9 million, respectively F-26 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) A benefit of $15.9 million was recognized for the year ended March 31, 1998 which included amortization of an actuarial gain of $21.4 million, net of interest discount accrual of $5.5 million. A benefit of $8.7 million was recognized for the six months ended March 31, 1997 which included amortization of an actuarial gain of $11.7 million, net of interest discount accrual of $3.0 million. A benefit of $15.4 million was recognized for the year ended September 30, 1996 which included amortization of an actuarial gain of $23.3 million, net of interest discount accrual of $7.9 million. A charge of $14.0 million was recognized for the year ended September 30, 1995 for the interest discount accrual. The Coal Act also established a multiemployer benefit plan ("1992 Plan") which will provide medical and death benefits to persons who are not eligible for the Combined Fund, whose employer and any affiliates are no longer in business and who retired prior to October 1, 1994. A prior labor agreement established the 1993 UMWA Benefit Trust ("1993 Plan") to provide defined contribution health benefits for retired miners not covered by the Coal Act and whose employer is no longer in business. The 1992 Plan and the 1993 Plan qualify under Statement of Financial Accounting Standards No. 106 as multiemployer benefit plans which allows the Company to continue to recognize expense as the contributions are made. The amounts expensed related to these funds were $4.5 million for the year ended March 31, 1998, $3.7 million for the six months ended March 31, 1997 and $1.5 million and $2.2 million for the years ended September 30, 1996 and 1995, respectively. Pursuant to the provisions of the Coal Act and the 1992 Plan, the Company is required to provide security in an amount equal to three times the cost of providing health care benefits for one year for all individuals receiving benefits from the 1992 Plan who are attributable to the Company, plus all individuals receiving benefits from an individual employer plan maintained by the Company who are entitled to receive such benefits. In accordance with the Coal Act and the 1992 Plan, the Company has outstanding letters of credit at March 31, 1998 and 1997 and September 30, 1996 of $91.2 million, $94.1 million and $94.1 million, respectively. The letters of credit represent security for a portion of the postretirement liability included on the balance sheet. (13) RELATED PARTY TRANSACTIONS In August 1990, the Company borrowed $284.0 million from Hanson. The funds were used to prepay certain senior indebtedness. The note payable to Hanson carried interest at the rate of 10 percent per annum through September 1994 and 8.5 percent per annum through September 2000. This intercompany note was contributed by Hanson to capital during 1996. The amount of interest paid on the note was $18.1 million and $24.1 million for the years ended September 30, 1996 and 1995, respectively. The "Receivables from affiliates, net" reflected in the Combined Balance Sheets represents amounts due to/from The Energy Group and other affiliates. No interest is earned by the Company on the balance with The Energy Group. A subsidiary of the Company has purchased coal from Black Beauty Coal Company, a 43.3 percent owned partnership. The subsidiary purchased 126,601 tons of coal at a cost of $3.0 million for the year ended March 31, 1998, 37,645 tons of coal at a cost of $1.0 million for the six months ended March 31, 1997, 55,707 tons of coal at a cost of $1.5 million for the year ended September 30, 1996 and 238,000 tons of coal at a cost of $4.9 million for the year ended September 30, 1995. In 1998, the Company paid a $65.1 million dividend and provided a $141.0 million loan to Peabody Investments, Inc. with a five year term at a 5 percent interest rate. During the six months ended March 31, 1997, the Company received a capital contribution of $269.2 million from The Energy Group. In 1995, the Company received a capital contribution of $206.4 million from Hanson and paid a capital dividend of $274.6 million to Hanson. F-27 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) (14) CONTRACT RESTRUCTURINGS During 1998, a subsidiary of the Company agreed to terminate a long-term coal supply agreement ("CSA") in exchange for payments from a customer totaling $49.3 million, which resulted in a gain of $49.3 million. During 1997, a subsidiary of the Company sold a CSA to an unrelated third party in exchange for an initial $11.6 million payment, and nominal future consideration, which resulted in a gain of $11.6 million. During 1996, a subsidiary of the Company agreed to terminate a CSA in exchange for a $22.0 million payment from a customer which resulted in a gain of $22.0 million. During 1995, a subsidiary of the Company agreed to terminate a CSA in exchange for a $25.5 million payment from a customer. This transaction resulted in a gain of $23.9 million after deducting the cost of terminating a related coal purchase agreement as well as certain other costs related to the transaction. These gains are included in "Other revenue" in the Statements of Combined Operations. (15) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK The Company owns a 30 percent interest in a partnership that leases a coal export terminal from the Peninsula Ports Authority of Virginia under a 30-year lease that permits the partnership to purchase the terminal at the end of the lease term for a nominal amount. The partners have severally (but not jointly) agreed to make payments which in the aggregate provide the partnership with sufficient funds to pay rents and to cover the principal and interest payments on the floating-rate industrial revenue bonds issued by the Peninsula Ports Authority. The Company has provided letters of credit totaling $42.7 million as security that it will make such payments. The total face value of the bonds outstanding is $106.2 million. The Company guarantees 63.2 percent of the Series (A-D) bonds which have a total face value of $63.1 million. The effective interest rate was 2.4 percent as of March 31, 1998. The weighted average interest rate was 3.6 percent for the year ended March 31, 1998, 3.4 percent for the six months ended March 31, 1997 and 3.4 and 3.7 percent for the years ended September 30, 1996 and 1995, respectively. As of March 31, 1998, the Company was contingently liable in the form of a guarantee of indebtedness owed by partnership investments. The Company's portion of the liability, should the other parties fail to perform, is $105.6 million. The Company believes it is remote that it will be required to satisfy this guarantee. Peabody Resources uses forward currency contracts to manage its exposure against foreign currency fluctuations on sales denominated in U.S. dollars. Realized gains and losses on these contracts are recognized in the same period as the hedged transactions. The Company had unrealized gains and (losses) recorded of ($17.3 million) for the year ended March 31, 1998, $11.7 million for the six months ended March 31, 1997 and $14.2 million and $2.7 million for the years ended September 30, 1996 and 1995, respectively, related to the forward currency contracts. The Company had forward currency contracts outstanding at March 31, 1998, March 31, 1997, and September 30, 1996 of $244.0 million, $110.0 million and $123.0 million, respectively. In the normal course of business, the Company is a party to financial instruments with off-balance-sheet risk, such as bank letters of credit, performance bonds and other guarantees, which are not reflected in the accompanying balance sheets. Such financial instruments are to be valued based on the amount of exposure under the instrument and the likelihood of performance being required. In the Company's past experience, virtually no claims have been made against these financial instruments. Management does not expect any material losses to result from these off-balance-sheet instruments and, therefore, is of the opinion that the fair value of these instruments is zero. F-28 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) (16) FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107 "Disclosures About Fair Value of Financial Instruments", defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: Cash and cash equivalents, Accounts receivable, Receivables from affiliates, and Accounts payable and accrued expenses have a carrying value which approximate fair value due to the short maturity or the financial nature of these instruments. Notes payable fair value estimates are based on estimated borrowing rates to discount the cash flows to their present value. The 5 percent Subordinated Note carrying amount is net of unamortized note discount. Other noncurrent liabilities include a deferred purchase obligation related to the prior purchase of a mine facility. The fair value estimate is based on the same assumption as notes payable. Investments and other assets include certain notes receivable with customers at various interest rates. Notes receivable fair value estimates are based on estimated borrowing rates to discount the cash flows to their present values. The carrying amounts and estimated fair values of the Company's financial instruments are summarized as follows (dollars in thousands):
MARCH 31, 1998 MARCH 31, 1997 SEPTEMBER 30, 1996 ------------------- ------------------- ------------------- CARRYING ESTIMATED CARRYING ESTIMATED CARRYING ESTIMATED AMOUNT FAIR VALUE AMOUNT FAIR VALUE AMOUNT FAIR VALUE -------- ---------- -------- ---------- -------- ---------- Non-recourse Citizens Power debt............. $293,922 $293,922 $ -- $ -- $ -- $ -- 5% Subordinated Note.... 192,627 256,914 201,632 273,461 206,095 288,619 Notes receivable........ 182,671 200,923 195,414 198,245 209,212 214,914 Note receivable from af- filiate................ 141,000 137,161 -- -- -- -- Citizens Power obliga- tions.................. 65,000 53,937 -- -- -- -- Deferred purchase obli- gation................. 33,443 35,309 36,322 38,451 37,678 40,050 Project finance facili- ty..................... 14,632 11,615 -- -- -- -- Other notes payable..... 4,447 4,676 8,775 8,938 8,774 8,898 Commercial paper debt facility............... 10,080 10,080 43,894 43,894 225,653 225,653 Revolving line of cred- it..................... -- -- 50,000 50,000 -- -- Customer contribution payable................ -- -- 2,823 2,823 16,056 14,952
The fair value of the financial instruments related to trading and price risk management activities as of March 31, 1998, which include energy commodities and average fair value of those instruments held during the year are set forth below (dollars in thousands):
FAIR VALUE AS OF AVERAGE FAIR VALUE FOR THE MARCH 31, 1998 YEAR ENDED MARCH 31, 1998 ---------------------- ----------------------------- ASSETS LIABILITIES ASSETS LIABILITIES ---------- ----------- ------------- --------------- Forward contracts.......... $1,288,045 $942,455 $ 886,894 $ 593,030 Future contracts........... 761 102 553 162 Option contracts........... 3,043 2,120 2,429 3,128 Swap agreements............ 530 -- 592 -- ---------- -------- ------------- ------------- Total.................... $1,292,379 $944,677 $ 890,468 $ 596,320 ========== ======== ============= =============
F-29 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) The approximate gross contract or notional amounts of financial instruments as of March 31, 1998 are as follows (dollars in thousands):
ASSETS LIABILITIES ---------- ----------- Forward contracts........................................ $1,889,040 $1,265,840 Future contracts......................................... 6,541 1,056 Option contracts......................................... 3,607 3,448 Swap agreements.......................................... 5,330 --
The net gain arising from trading and price risk management activities for the period from May 19, 1997 to March 31, 1998 was $26.4 million. The change in unrealized gain from trading and price risk management activities for the period May 19, 1997 to March 31, 1998 was $12.4 million. (17) COMMITMENTS AND CONTINGENCIES Environmental claims have been asserted against the Company at 17 sites in the U.S. with one being settled in the current year. Some of these claims are based on the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, and under similar state statutes. The majority of these sites are related to activities of a former subsidiary of the Company. The Company's policy is to accrue environmental cleanup related costs of a noncapital nature when those costs are believed to be probable and can be reasonably estimated. The quantification of environmental exposures requires an assessment of many factors, including changing laws and regulations, advancements in environmental technologies, the quality of information available related to specific sites, the assessment stage of each site investigation, preliminary findings, and the length of time involved in remediation or settlement. For certain sites, the Company also assesses the financial capability of other potentially responsible parties and, where allegations are based on tentative findings, the reasonableness of the Company's apportionment. The Company has not anticipated any recoveries from insurance carriers or other potentially responsible third parties in its Combined Balance Sheets. The liabilities for environmental cleanup related costs recorded in the Combined Balance Sheets at March 31, 1998 and 1997 and September 30, 1996 were $68.6 million, $73.6 million and $74.9 million, respectively. These amounts represent those costs which the Company believes are probable and reasonably estimable. In the event that future remediation expenditures are in excess of amounts accrued, management does not anticipate that they will have a material adverse effect on the combined financial position of the Company. In addition, the Company at times becomes a party to claims, lawsuits, arbitration proceedings and administrative procedures in the ordinary course of business. Management believes that the ultimate resolution of pending or threatened proceedings will not have a material effect on the financial position of the Company. In December 1994, a subsidiary of the Company renegotiated a CSA and agreed to reimburse a customer for the construction of replacement equipment to allow the customer to efficiently burn coal. Payments will not exceed $27.5 million of which $2.8 million, $13.3 million, $9.8 million and $1.6 million was paid during the year ended March 31, 1998, the six months ended March 31, 1997, and during the years ended September 30, 1996 and 1995, respectively. At March 31, 1998, purchase commitments for capital expenditures were approximately $70.1 million. (18) IMPACT OF YEAR 2000--UNAUDITED Some of the Company's older computer programs were written using two digits rather than four to define the applicable year. In addition, the Company uses equipment purchased from third parties which utilizes computer technology to monitor or control certain operational procedures and other activities. As a result, those computer programs have time-sensitive software that recognize a date using "00" as the 1900 rather than the F-30 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) year 2000. This could cause a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. The Company has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter. The total Year 2000 project cost is estimated at approximately $6.5 million, which includes $1.4 million for the purchase of new software and hardware that will be capitalized and $5.1 million that will be expensed as incurred. To date, the Company has incurred and expensed approximately $0.4 million, primarily for assessment of the Year 2000 issue and the development of a modification plan. The project is estimated to be completed not later than June 30, 1999, which is prior to any anticipated impact on its operating systems. The Company believes that with modifications to existing software and conversions to new software, the Year 2000 Issue will not present significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Company. The cost of the project and the date on which the Company believes it will complete the Year 2000 modifications are based on management's best estimates, which were derived utilizing numerous assumptions of future events, however, there can be no guarantee that these estimates will be achieved. (19) SUBSEQUENT EVENTS--UNAUDITED Dividend Declared and Paid On April 27, 1998, Peabody Australia Ltd. and Darex Capital, Inc. declared and paid dividends totaling $50.0 million Australian dollars (U.S. $32.3 million) to Energy Holdings (No.1) Limited, a subsidiary of The Energy Group. On May 15, 1998, Peabody Holding Company declared a dividend totaling $141.0 million to Peabody Investments, Inc., liquidating a loan described in note 13. The Energy Group Purchase Effective May 19, 1998, the Company was acquired by P&L Coal Holdings Corporation, which at the time was wholly owned by Lehman Merchant Banking Partners II, an investment fund affiliated with Lehman Brothers Inc. The transaction was part of the sale of The Energy Group to Texas Utilities Company. The Company may conduct certain asset sales in order to generate cash to reduce debt associated with the purchase. In accordance with the purchase agreement, certain U.S. subsidiaries of the Company will become guarantors of debt associated with the purchase. F-31 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) The following historical financial information is provided for such guarantor/non-guarantor subsidiaries. P & L COAL GROUP SUPPLEMENTAL CONDENSED STATEMENTS OF COMBINED OPERATIONS FOR THE YEAR ENDED MARCH 31, 1998
GUARANTOR NON-GUARANTOR SUBSIDIARIES SUBSIDIARIES COMBINED ------------ ------------- ---------- (IN THOUSANDS) Total revenues.......................... $1,993,969 $250,493 $2,244,462 Costs and expenses: Operating costs and expenses.......... 1,552,176 158,625 1,710,801 Depreciation, depletion and amortization......................... 169,623 33,017 202,640 Selling and administrative expenses... 78,249 5,391 83,640 Net gain on property and equipment disposals............................ (22,079) 273 (21,806) Interest expense...................... (30,684) (2,951) (33,635) Interest income....................... 13,984 993 14,977 ---------- -------- ---------- Income before income taxes.............. 199,300 51,229 $ 250,529 Income tax provision.................. 74,649 15,544 90,193 ---------- -------- ---------- Net income.............................. $ 124,651 $ 35,685 $ 160,336 ========== ======== ==========
P & L COAL GROUP SUPPLEMENTAL CONDENSED STATEMENTS OF COMBINED OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1997
GUARANTOR NON-GUARANTOR SUBSIDIARIES SUBSIDIARIES COMBINED ------------ ------------- ---------- (IN THOUSANDS) Total revenues.......................... $943,554 $120,539 $1,064,093 Costs and expenses: Operating costs and expenses.......... 744,079 78,859 822,938 Depreciation, depletion and amortization......................... 84,094 17,636 101,730 Selling and administrative expenses... 39,623 1,798 41,421 Net gain on property and equipment disposals............................ (4,023) (68) (4,091) Interest expense...................... (17,699) (7,001) (24,700) Interest income....................... 4,947 3,643 8,590 -------- -------- ---------- Income before income taxes.............. 67,029 18,956 85,985 Income tax provision.................. 19,379 8,174 27,553 -------- -------- ---------- Net income.............................. $ 47,650 $ 10,782 $ 58,432 ======== ======== ==========
F-32 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) P & L COAL GROUP SUPPLEMENTAL CONDENSED STATEMENTS OF COMBINED OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1996
GUARANTOR NON-GUARANTOR SUBSIDIARIES SUBSIDIARIES COMBINED ------------ ------------- ---------- (IN THOUSANDS) Total revenues.......................... $1,966,171 $227,415 $2,193,586 Costs and expenses: Operating costs and expenses.......... 1,550,141 143,402 1,693,543 Depreciation, depletion and amortization......................... 165,256 32,597 197,853 Selling and administrative expenses... 71,722 3,977 75,699 Impairment of long-lived assets....... 890,829 -- 890,829 Net gain on property and equipment disposals............................ (11,942) (1,100) (13,042) Interest expense...................... (48,587) (13,939) (62,526) Interest income....................... 4,858 6,497 11,355 ---------- -------- ---------- Income (loss) before income taxes....... (743,564) 41,097 (702,467) Income tax provision (benefit)........ (268,295) 12,110 (256,185) ---------- -------- ---------- Net income (loss)....................... $ (475,269) $ 28,987 $ (446,282) ========== ======== ==========
P & L COAL GROUP SUPPLEMENTAL CONDENSED STATEMENTS OF COMBINED OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1995
GUARANTOR NON-GUARANTOR SUBSIDIARIES SUBSIDIARIES COMBINED ------------ ------------- ---------- (IN THOUSANDS) Total revenues.......................... $1,982,536 $193,300 $2,175,836 Costs and expenses: Operating costs and expenses.......... 1,547,709 123,724 1,671,433 Depreciation, depletion and amortization......................... 161,774 28,556 190,330 Selling and administrative expenses... 77,597 3,792 81,389 Net gain on property and equipment disposals............................ (12,226) (702) (12,928) Interest expense...................... (54,272) (4,083) (58,355) Interest income....................... 3,465 2,017 5,482 ---------- -------- ---------- Income before income taxes.............. 156,875 35,864 192,739 Income tax provision.................. 77,846 14,506 92,352 ---------- -------- ---------- Net income.............................. $ 79,029 $ 21,358 $ 100,387 ========== ======== ==========
F-33 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) P & L COAL GROUP SUPPLEMENTAL CONDENSED COMBINED BALANCE SHEETS MARCH 31, 1998
NON- GUARANTOR GUARANTOR SUBSIDIARIES SUBSIDIARIES COMBINED ------------ ------------ ----------- (IN THOUSANDS) ASSETS Current assets Cash and cash equivalents............. $ 83,812 $ 13,009 $ 96,821 Accounts receivable, net.............. 211,383 115,157 326,540 Receivables from affiliates, net...... 142,961 (30,198) 112,763 Inventories........................... 219,598 45,225 264,823 Assets from trading and price risk management activities................ -- 1,295,169 1,295,169 Prepaid expenses and deferred taxes... 21,483 8,553 30,036 ----------- ----------- ----------- 679,237 1,446,915 2,126,152 Property, plant, equipment and mine de- velopment--at cost..................... 4,649,463 589,476 5,238,939 Less accumulated depreciation, depletion and amortization....................... (1,359,442) (205,955) (1,565,397) ----------- ----------- ----------- 3,290,021 383,521 3,673,542 Investments and other assets............ 475,725 79,815 555,540 ----------- ----------- ----------- Total assets............................ $ 4,444,983 $ 1,910,251 $ 6,355,234 =========== =========== =========== LIABILITIES AND INVESTED CAPITAL Current liabilities Short-term borrowings and current maturities of long-term debt......... $ 21,844 $ 24,772 $ 46,616 Income taxes payable.................. (5,915) 8,303 2,388 Liabilities from trading and price risk management activities........... -- 947,467 947,467 Accounts payable and accrued ex- penses............................... 432,966 160,744 593,710 ----------- ----------- ----------- 448,895 1,141,286 1,590,181 Long-term debt, less current maturi- ties................................... 241,921 313,739 555,660 Deferred income taxes................... 591,114 70,458 661,572 Other noncurrent liabilities............ 1,839,416 20,563 1,859,979 Invested capital........................ 1,323,637 364,205 1,687,842 ----------- ----------- ----------- Total liabilities and invested capi- tal................................ $ 4,444,983 $ 1,910,251 $ 6,355,234 =========== =========== ===========
F-34 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) P&L COAL GROUP SUPPLEMENTAL CONDENSED COMBINED BALANCE SHEETS MARCH 31, 1997
GUARANTOR NON-GUARANTOR SUBSIDIARIES SUBSIDIARIES COMBINED ------------ ------------- ----------- (IN THOUSANDS) ASSETS Current assets Cash and cash equivalents............ $ 274,676 $ 6,433 $ 281,109 Accounts receivable, net............. 197,106 23,850 220,956 Receivables from affiliates, net..... 1,781 4,101 5,882 Inventories.......................... 210,062 45,049 255,111 Prepaid expenses and deferred taxes.. 21,809 5,997 27,806 ----------- --------- ----------- 705,434 85,430 790,864 Property, plant, equipment and mine development--at cost.................. 4,661,365 635,121 5,296,486 Less accumulated depreciation, depletion and amortization............ (1,293,549) (214,146) (1,507,695) ----------- --------- ----------- 3,367,816 420,975 3,788,791 Investments and other assets........... 446,130 27 446,157 ----------- --------- ----------- Total assets......................... $ 4,519,380 $ 506,432 $ 5,025,812 =========== ========= =========== LIABILITIES AND INVESTED CAPITAL Current liabilities Short-term borrowings and current maturities of long-term debt........ $ 72,387 $ 49,145 $ 121,532 Income taxes payable................. 7,946 8,142 16,088 Accounts payable and accrued expenses............................ 432,848 53,320 486,168 ----------- --------- ----------- 513,181 110,607 623,788 Long-term debt, less current maturities............................ 187,593 12,598 200,191 Deferred income taxes.................. 501,148 88,132 589,280 Other noncurrent liabilities........... 1,923,992 11,775 1,935,767 Invested capital....................... 1,393,466 283,320 1,676,786 ----------- --------- ----------- Total liabilities and invested capital............................. $ 4,519,380 $ 506,432 $ 5,025,812 =========== ========= ===========
F-35 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) P & L COAL GROUP SUPPLEMENTAL CONDENSED COMBINED BALANCE SHEETS SEPTEMBER 30, 1996
GUARANTOR NON-GUARANTOR SUBSIDIARIES SUBSIDIARIES COMBINED ------------ ------------- ----------- (IN THOUSANDS) ASSETS Current assets Cash and cash equivalents............ $ 2,338 $ 179,195 $ 181,533 Accounts receivable, net............. 177,425 26,068 203,493 Receivables from affiliates, net..... 762 853 1,615 Inventories.......................... 185,370 41,716 227,086 Prepaid expenses and deferred taxes.. 29,539 9,907 39,446 ----------- --------- ----------- 395,434 257,739 653,173 Property, plant, equipment and mine development--at cost.................. 4,655,672 627,547 5,283,219 Less accumulated depreciation, depletion and amortization............ (1,266,844) (201,013) (1,467,857) ----------- --------- ----------- 3,388,828 426,534 3,815,362 Investments and other assets........... 448,139 19 448,158 ----------- --------- ----------- Total assets......................... $ 4,232,401 $ 684,292 $ 4,916,693 =========== ========= =========== LIABILITIES AND INVESTED CAPITAL Current liabilities Short-term borrowings and current maturities of long-term debt........ $ 12,583 $ 230,690 $ 243,273 Income taxes payable................. 13,437 13,736 27,173 Accounts payable and accrued expenses............................ 459,887 52,305 512,192 ----------- --------- ----------- 485,907 296,731 782,638 Long-term debt, less current maturities............................ 202,351 11,243 213,594 Deferred income taxes.................. 499,840 89,112 588,952 Other noncurrent liabilities........... 1,935,985 11,869 1,947,854 Invested capital....................... 1,108,318 275,337 1,383,655 ----------- --------- ----------- Total liabilities and invested capital............................. $ 4,232,401 $ 684,292 $ 4,916,693 =========== ========= ===========
F-36 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) P&L COAL GROUP SUPPLEMENTAL CONDENSED STATEMENTS OF COMBINED CASH FLOWS FOR THE YEAR ENDED MARCH 31, 1998
GUARANTOR NON-GUARANTOR SUBSIDIARIES SUBSIDIARIES COMBINED ------------ ------------- --------- (IN THOUSANDS) Net cash provided by operating activities............................. $ 266,174 $ (84,496) $ 181,678 --------- --------- --------- Additions to property, plant, equipment and mine development................... (112,383) (53,953) (166,336) Acquisitions and equity investments..... (58,715) -- (58,715) Proceeds from contract renegotiations... 57,460 -- 57,460 Proceeds from property and equipment disposals.............................. 36,948 784 37,732 --------- --------- --------- Net cash used in investing activities........................... (76,690) (53,169) (129,859) Repayments of short-term borrowings and long-term debt......................... (162,420) (201,146) (363,566) Proceeds from short-term borrowings and long-term debt......................... 90,000 269,391 359,391 Capital contribution (distribution)..... (50,230) 50,230 -- Dividends paid.......................... (65,109) -- (65,109) Net transactions with affiliates........ (11,927) 1,362 (10,565) Net change in due to/from affiliates.... (172,602) 17,062 (155,540) --------- --------- --------- Net cash provided by (used in) financing activities................. (372,288) 136,899 (235,389) Effect of exchange rate changes on cash and equivalents........................ -- (718) (718) --------- --------- --------- Net increase (decrease) in cash and cash equivalents............................ (182,804) (1,484) (184,288) Cash and cash equivalents at beginning of period.............................. 266,616 14,493 281,109 --------- --------- --------- Cash and cash equivalents at end of period................................. $ 83,812 $ 13,009 $ 96,821 ========= ========= =========
P&L COAL GROUP SUPPLEMENTAL CONDENSED STATEMENTS OF COMBINED CASH FLOWS FOR THE SIX MONTHS ENDED MARCH 31, 1997
GUARANTOR NON-GUARANTOR SUBSIDIARIES SUBSIDIARIES COMBINED ------------ ------------- --------- (IN THOUSANDS) Net cash provided by operating activities............................. $ 36,460 $ 26,369 $ 62,829 -------- --------- --------- Additions to property, plant, equipment and mine development................... (59,531) (16,929) (76,460) Proceeds from contract renegotiations... 15,466 -- 15,466 Proceeds from property and equipment disposals.............................. 4,176 648 4,824 -------- --------- --------- Net cash used in investing activities........................... (39,889) (16,281) (56,170) Repayments of short-term borrowings and long-term debt......................... (15,741) (487,397) (503,138) Proceeds from short-term borrowings and long-term debt......................... 55,020 312,073 367,093 Capital contribution.................... 269,168 -- 269,168 Net transactions with affiliates........ (31,670) -- (31,670) Net change in due to/from affiliates.... (1,010) (6,265) (7,275) -------- --------- --------- Net cash provided by (used in) financing activities................. 275,767 (181,589) 94,178 Effect of exchange rate changes on cash and equivalents........................ -- (1,261) (1,261) -------- --------- --------- Net increase (decrease) in cash and cash equivalents............................ 272,338 (172,762) 99,576 Cash and cash equivalents at beginning of period.............................. 2,338 179,195 181,533 -------- --------- --------- Cash and cash equivalents at end of period................................. $274,676 $ 6,433 $ 281,109 ======== ========= =========
F-37 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) P & L COAL GROUP SUPPLEMENTAL CONDENSED STATEMENTS OF COMBINED CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 1996
GUARANTOR NON-GUARANTOR SUBSIDIARIES SUBSIDIARIES COMBINED ------------ ------------- ---------- (IN THOUSANDS) Net cash provided by operating activities............................ $ 169,736 $ 41,799 $ 211,535 --------- ---------- ---------- Additions to property, plant, equipment and mine development.................. (115,292) (36,814) (152,106) Proceeds from contract renegotiations.. 29,211 -- 29,211 Proceeds from property and equipment disposals............................. 15,258 1,997 17,255 --------- ---------- ---------- Net cash used in investing activities.......................... (70,823) (34,817) (105,640) Repayments of short-term borrowings and long-term debt........................ (11,354) (850,759) (862,113) Proceeds from short-term borrowings and long-term debt........................ 2,534 1,035,182 1,037,716 Capital contribution................... 284,000 156 284,156 Net transactions with affiliates....... (46,114) -- (46,114) Dividends paid......................... -- (72,830) (72,830) Net change in due to/from affiliates... (329,359) 4,531 (324,828) --------- ---------- ---------- Net cash provided by (used in) financing activities................ (100,293) 116,280 15,987 Effect of exchange rate changes on cash and equivalents....................... -- 5,886 5,886 --------- ---------- ---------- Net increase (decrease) in cash and cash equivalents...................... (1,380) 129,148 127,768 Cash and cash equivalents at beginning of period............................. 3,718 50,047 53,765 --------- ---------- ---------- Cash and cash equivalents at end of period................................ $ 2,338 $ 179,195 $ 181,533 ========= ========== ==========
P & L COAL GROUP SUPPLEMENTAL CONDENSED STATEMENTS OF COMBINED CASH FLOWS FOR THE YEAR ENDED SEPTEMBER, 1995
GUARANTOR NON-GUARANTOR SUBSIDIARIES SUBSIDIARIES COMBINED ------------ ------------- --------- (IN THOUSANDS) Net cash provided by operating activities............................. $ 212,405 $ 60,138 $ 272,543 --------- --------- --------- Additions to property, plant, equipment and mine development................... (163,306) (24,700) (188,006) Acquisitions and equity investments..... (357,657) (1,900) (359,557) Proceeds from sale of business unit..... 27,500 -- 27,500 Proceeds from contract renegotiations... 32,125 -- 32,125 Proceeds from property and equipment disposals.............................. 23,783 2,042 25,825 --------- --------- --------- Net cash used in investing activities........................... (437,555) (24,558) (462,113) Repayments of short-term borrowings and long-term debt......................... (15,823) (469,430) (485,253) Proceeds from short-term borrowings and long-term debt......................... -- 425,833 425,833 Capital contribution.................... 206,420 -- 206,420 Dividends paid.......................... (274,600) -- (274,600) Net transactions with affiliates........ (43,730) -- (43,730) Net change in due to/from affiliates.... 349,792 531 350,323 --------- --------- --------- Net cash provided by (used in) financing activities................. 222,059 (43,066) 178,993 Effect of exchange rate changes on cash and equivalents........................ -- 998 998 --------- --------- --------- Net decrease in cash and cash equivalents............................ (3,091) (6,488) (9,579) Cash and cash equivalents at beginning of period.............................. 6,809 56,535 63,344 --------- --------- --------- Cash and cash equivalents at end of period................................. $ 3,718 $ 50,047 $ 53,765 ========= ========= =========
F-38 NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED) (20) SEGMENT INFORMATION The Company operates primarily in the coal industry. The Company's industry and geographic data for continuing operations for the year ended March 31, 1998, the six months ended March 31, 1997 and the years ended September 30, 1996 and 1995 are as follows (dollars in thousands):
YEAR ENDED SIX MONTHS YEAR ENDED YEAR ENDED MARCH 31, ENDED MARCH 31, SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1996 1995 ----------- --------------- ------------- ------------- Revenues: Coal.................. $ 2,211,772 $ 1,064,093 $ 2,193,586 $ 2,175,836 Other................. 32,690 -- -- -- ----------- ----------- ----------- ----------- $ 2,244,462 $ 1,064,093 $ 2,193,586 $ 2,175,836 =========== =========== =========== =========== Operating income (loss): Coal.................. $ 256,779 $ 102,095 $ (651,296) $ 245,612 Other................. 12,408 -- -- -- ----------- ----------- ----------- ----------- $ 269,187 $ 102,095 $ (651,296) $ 245,612 =========== =========== =========== =========== Identifiable assets: Coal.................. $ 5,158,488 $ 5,025,812 $ 4,916,693 $ 5,676,923 Other................. 1,196,746 -- -- -- ----------- ----------- ----------- ----------- $ 6,355,234 $ 5,025,812 $ 4,916,693 $ 5,676,923 =========== =========== =========== =========== YEAR ENDED SIX MONTHS YEAR ENDED YEAR ENDED MARCH 31, ENDED MARCH 31, SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1996 1995 ----------- --------------- ------------- ------------- Revenues: United States......... $ 2,020,409 $ 943,554 $ 1,966,171 $ 1,982,536 Foreign............... 224,053 120,539 227,415 193,300 ----------- ----------- ----------- ----------- $ 2,244,462 $ 1,064,093 $ 2,193,586 $ 2,175,836 =========== =========== =========== =========== Operating income (loss): United States......... $ 224,375 $ 79,781 $ (699,835) $ 207,682 Foreign............... 44,812 22,314 48,539 37,930 ----------- ----------- ----------- ----------- $ 269,187 $ 102,095 $ (651,296) $ 245,612 =========== =========== =========== =========== Identifiable assets: United States......... $ 5,893,489 $ 4,519,380 $ 4,232,401 $ 5,145,918 Foreign............... 461,745 506,432 684,292 531,005 ----------- ----------- ----------- ----------- $ 6,355,234 $ 5,025,812 $ 4,916,693 $ 5,676,923 =========== =========== =========== ===========
F-39 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. ------------------ TABLE OF CONTENTS
PAGE ---- Prospectus Summary....................................................... 1 Risk Factors............................................................. 19 Use of Proceeds.......................................................... 33 Capitalization........................................................... 33 Unaudited Pro Forma Condensed Combined Financial Statements.............. 34 Selected Combined Financial Data......................................... 39 Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................... 40 Coal Industry Overview................................................... 52 Business................................................................. 63 Regulatory Matters....................................................... 87 Management............................................................... 93 Ownership of Capital Stock............................................... 100 The Acquisition.......................................................... 101 Related Party Transactions............................................... 103 Description of Certain Indebtedness...................................... 105 The Senior Exchange Offer................................................ 108 The Senior Subordinated Exchange Offer................................... 119 Description of the Senior Exchange Notes................................. 131 Description of Senior Subordinated Exchange Notes........................ 164 Certain United States Federal Tax Considerations......................... 199 Plan of Distribution..................................................... 200 Legal Matters............................................................ 200 Experts.................................................................. 201 Available Information.................................................... 201 Glossary of Selected Terms............................................... 202 Index to Combined Financial Statements................................... F-1
UNTIL , 1998 (90 DAYS AFTER COMMENCEMENT OF THIS OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- $900,000,000 PEABODY P&L COAL HOLDINGS CORPORATION OFFER TO EXCHANGE $400,000,000 OF ITS 8 7/8% SERIES B SENIOR NOTES DUE 2008, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, FOR $400,000,000 OF ITS OUTSTANDING 8 7/8% SENIOR NOTES DUE 2008 AND UP TO $500,000,000 OF ITS 9 5/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, FOR $500,000,000 OF ITS OUTSTANDING 9 5/8% SENIOR SUBORDINATED NOTES DUE 2008 --------------------------- PRELIMINARY PROSPECTUS --------------------------- , 1998 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law (the "DGCL") provides that, among other things, a corporation may indemnify directors and officers as well as other employees and agents of the corporation against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative, or investigative (other than action by or in the right of the corporation a "derivative action"), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys' fees) incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's by-laws, disinterested director vote, stockholder vote, agreement or otherwise. Article IV of the Registrant's By-laws requires indemnification to the fullest extent permitted by Delaware law. The Registrant has also obtained officers' and directors' liability insurance which insures against liabilities that officers and directors of the Registrant, in such capacities, may incur. The Registrant's Amended and Restated Certificate of incorporation (the "Certificate of Incorporation") requires the advancement of expenses incurred by officers or directors in relation to any action, suit or proceeding. Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duties as a director, except for liability (i) for any transaction from which the director derives an improper personal benefit, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL (certain illegal distributions) or (iv) for any breach of a director's duty of loyalty to the company or its stockholders. Article Seven of the Certificate of Incorporation includes such a provision. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- 1 Purchase Agreement dated as of May 13, 1998, between P&L Coal Holdings Corporation and Lehman Brothers Inc. *2.1 Participation Agreement dated March 1, 1998 between Texas Utilities Company and Lehman Brothers Merchant Banking Partners II L.P. *2.2 Purchase Agreement between The Energy Group PLC and P&L Coal Holdings Corporation as Purchaser. 3.1 Amended and Restated Certificate of Incorporation of P&L Coal Holdings Corporation. 3.2 By-Laws of P&L Coal Holdings Corporation. 3.3 Certificate of Incorporation of Affinity Mining Company. 3.4 By-Laws of Affinity Mining Company. 3.5 Certificate of Incorporation of Arid Operations Inc. 3.6 By-Laws of Arid Operations Inc. 3.7 Certificate of Incorporation of Big Sky Coal Company.
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EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- 3.8 By-Laws of Big Sky Coal Company. 3.9 Articles of Incorporation of Blackrock First Capital Corporation. 3.10 By-Laws of Blackrock First Capital Corporation. 3.11 Certificate of Incorporation of Bluegrass Coal Company. 3.12 By-Laws of Bluegrass Coal Company. 3.13 Certificate of Incorporation of Caballo Coal Company. 3.14 By-Laws of Caballo Coal Company. 3.15 Certificate of Incorporation of Charles Coal Company. 3.16 By-Laws of Charles Coal Company. 3.17 Certificate of Incorporation of Coal Properties Corp. 3.18 By-Laws of Coal Properties Corp. 3.19 Exhibit Intentionally Omitted 3.20 Amended and Restated Venture Agreement of Colony Bay Coal Company. 3.21 Certificate of Incorporation of Cook Mountain Coal Company. 3.22 By-Laws of Cook Mountain Coal Company. 3.23 Certificate of Incorporation of Cottonwood Land Company. 3.24 By-Laws of Cottonwood Land Company. 3.25 Certificate of Incorporation of Orion Mines, Inc. (now known as Darius Gold Mine Inc.) 3.26 By-Laws of Darius Gold Mine Inc. 3.27 Certificate of Incorporation of Koppers Recreation Camps (now known as EACC Camps, Inc.) 3.28 By-Laws of Koppers Recreation Camps, Inc. (now known as EACC Camps, Inc.) 3.29 Certificate of Incorporation of Eastern Associated Coal Corp. 3.30 By-Laws of Eastern Associated Coal Corp. 3.31 Certificate of Incorporation of Eastern Royalty Corp. 3.32 By-Laws of Eastern Royalty Corp. 3.33 Certificate of Incorporation of Exploraciones y Minerales Sierra Morena S.A. (now known as Gold Fields Chile, S.A.) 3.34 By-Laws of Exploraciones y Minerales Sierra Morena S.A. (now known as Gold Fields Chile, S.A.) 3.35 Restated Certificate of Incorporation of Gold Fields Mining Corporation. 3.36 By-Laws of Gold Fields Mining Corporation. 3.37 Certificate of Incorporation of East Tennessee Coal Company (now known as Gold Fields Operating Co.--Ortiz). 3.38 By-Laws of Gold Fields Operating Co.--Ortiz. 3.39 Articles of Incorporation of Grand Eagle Mining, Inc. 3.40 By-Laws of Grand Eagle Mining, Inc. 3.41 Certificate of Incorporation of Hayden Gulch Terminal, Inc. 3.42 By-Laws of Hayden Gulch Terminal, Inc. 3.43 Certificate of Incorporation of Independence Material Handling Company 3.44 By-Laws of Independence Material Handling Company
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EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- 3.45 Certificate of Incorporation of Interior Holdings Corp. 3.46 By-Laws of Interior Holdings Corp. 3.47 Certificate of Incorporation of A.T. Two, Inc. (now known as James River Coal Terminal Company). 3.48 Restated By-Laws of James River Coal Terminal Company. 3.49 Certificate of Incorporation of Juniper Coal Company. 3.50 By-Laws of Juniper Coal Company. 3.51 Certificate of Incorporation of Kayenta Mobile Home Park, Inc. 3.52 By-Laws of Kayenta Mobile Home Park, Inc. 3.53 Certificate of Incorporation of Martinka Coal Company. 3.54 By-Laws of Martinka Coal Company. 3.55 Articles of Incorporation of Midco Supply and Equipment Corporation. 3.56 By-Laws of Midco Supply and Equipment Corporation. 3.57 Certificate of Incorporation of Midwest Coal Resources, Inc. 3.58 By-Laws of Midwest Coal Resources, Inc. 3.59 Certificate of Incorporation of Nueast Mining Corp. (now known as Mountain View Coal Company). 3.60 By-Laws of Nueast Mining Corp. (now known as Mountain View Coal Company). 3.61 Articles of Incorporation of North Page Coal Corp. 3.62 By-Laws of North Page Coal Corp. 3.63 Articles of Incorporation of Ohio County Coal Company. 3.64 By-Laws of Ohio County Coal Company. 3.65 Certificate of Limited Partnership of Patriot Coal Company, L.P. 3.66 Limited Partnership Agreement of Patriot Coal Company, L.P. 3.67 Certificate of Incorporation of Peabody America, Inc. 3.68 By-Laws of Peabody America, Inc. 3.69 Certificate of Incorporation of Peabody Coal Company. 3.70 Restated By-Laws of Peabody Coal Company. 3.71 Certificate of Incorporation of Peabody COALSALES Company. 3.72 By-Laws of Peabody COALSALES Company. 3.73 Certificate of Incorporation of COALTRADE Inc. (now known as Peabody COALTRADE, Inc.). 3.74 By-Laws of COALTRADE Inc. (now known as Peabody COALTRADE, Inc.) 3.75 Certificate of Incorporation of Premier Coal Sales Company, (now known as Peabody Development Company). 3.76 Restated By-Laws of Peabody Development Company. 3.77 Certificate of Incorporation of Peabody Powertrade, Inc. (now known as Peabody Energy Solutions, Inc.). 3.78 By-Laws of Peabody Powertrade, Inc. (now known as Peabody Energy Solutions, Inc.).
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EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- 3.79 Restated Certificate of Incorporation of Peabody Holding Company, Inc. 3.80 Restated By-Laws of Peabody Holding Company, Inc. 3.81 Exhibit Intentionally Omitted 3.82 Second Amended and Restated Partnership Agreement re: Peabody Natural Resources Company. 3.83 Certificate of Incorporation of Armco Terminal Company (now known as Peabody Terminals, Inc.) 3.84 By-Laws of Peabody Terminals, Inc. 3.85 Certificate of Incorporation of Peabody Venezuela Coal Corp. 3.86 By-Laws of Peabody Venezuela Coal Corp. 3.87 Certificate of Incorporation of Peabody Western Coal Company. 3.88 By-Laws of Peabody Western Coal Company. 3.89 Certificate of Incorporation of Pine Ridge Coal Company. 3.90 By-Laws of Pine Ridge Coal Company. 3.91 Certificate of Incorporation of Powder River Coal Company. 3.92 Restated By-Laws of Powder River Coal Company. 3.93 Certificate of Incorporation of Rio Escondido Coal Corp. 3.94 By-Laws of Rio Escondido Coal Corp. 3.95 Certificate of Incorporation of Seneca Coal Company. 3.96 By-Laws of Seneca Coal Company. 3.97 Certificate of Incorporation of Sentry Mining Company. 3.98 By-Laws of Sentry Mining Company. 3.99 Certificate of Incorporation of Snowberry Land Company. 3.100 By-Laws of Snowberry Land Company. 3.101 Agreement of Incorporation of Low Volatile Coals, Inc. (now known as Sterling Smokeless Company). 3.102 By-Laws of Sterling Smokeless Company. 3.103 Certificate of Formation of Thoroughbred, L.L.C. 3.104 Operating Agreement of Thoroughbred, L.L.C. 4.1 Senior Note Indenture dated as of May 18, 1998 between P&L Coal Holdings Corporation and State Street Bank and Trust Company, as Senior Note Trustee. 4.2 Senior Subordinated Note Indenture dated as of May 18, 1998 between P&L Coal Holdings Corporation and State Street Bank and Trust Company, as Senior Subordinated Note Trustee. 4.3 First Supplemental Senior Note Indenture dated as of May 19, 1998 among the Guaranteeing Subsidiary (as defined therein), P&L Coal Holdings Corporation the other Senior Note Guarantors (as defined in the Senior Note Indenture) and State Street Bank and Trust Company, as Senior Note Trustee.
II-4
EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- 4.4 First Supplemental Senior Subordinated Note Indenture dated as of May 19, 1998 among the Guaranteeing Subsidiary (as defined therein), P&L Coal Holdings Corporation, the other Senior Subordinated Note Guarantors (as defined in the Senior Subordinated Note Indenture) and State Street Bank and Trust Company, as Senior Subordinated Note Trustee. 4.5 Notation of Senior Subsidiary Guarantee dated as of May 19, 1998 among the Senior Note Guarantors (as defined in the Senior Note Indenture). 4.6 Notation of Subordinated Subsidiary Guarantee dated as of May 19, 1998 among the Senior Subordinated Note Guarantors (as defined in the Senior Subordinated Note Indenture). 4.7 Senior Note Registration Rights Agreement dated as of May 18, 1998 between P&L Coal Holdings Corporation and Lehman Brothers Inc. 4.8 Senior Subordinated Note Registration Rights Agreement dated as of May 18, 1998 between P&L Coal Holdings Corporation and Lehman Brothers Inc. 5 Opinion of Simpson Thacher & Bartlett. 10.1 Amended and Restated Credit Agreement dated as of June 9, 1998 among P&L Coal Holdings Corporation, as Borrower, Lehman Brothers Inc., as Arranger, Lehman Commercial Paper Inc., as Syndication Agent, Documentation Agent, and Administrative Agent, and the lenders party thereto. 10.2 Guarantee and Collateral Agreement dated as of May 14, 1997 made by the Guarantors, in favor of Lehman Commercial Paper, Inc., as Administrative Agent for the banks and other financial institutions. 10.3 Federal Coal Lease WYW0321779: North Antelope/Rochelle Mine. 10.4 Federal Coal Lease WYW119554: North Antelope/Rochelle Mine. 10.5 Federal Coal Lease WYW5036: Rawhide Mine. 10.6 Federal Coal Lease WYW3397: Caballo Mine. 10.7 Federal Coal Lease WYW83394: Caballo Mine. 12 Computation of Ratio of Earnings to Fixed Charges. 21 List of Subsidiaries. 23.1 Consent of Simpson Thacher & Bartlett (included as part of its opinion filed as Exhibit 5 hereto). 23.2 Consent of Ernst & Young LLP, independent certified public accountants regarding P&L Coal Group. 23.3 Consent of Ernst & Young LLP, independent certified public accountants, regarding P&L Coal Holdings Corporation. 23.4 Consent of John T. Boyd Company. 24 Powers of Attorney (included on pages II-9 through II-60). 25.1 Form T-1 Statement of Eligibility under Trust Indenture Act of 1939 of State Street Bank and Trust Company, as Senior Notes Trustee. 25.2 Form T-1 Statement of Eligibility under Trust Indenture Act of 1939 of State Street Bank and Trust Company, as Senior Subordinated Notes Trustee. 27 Financial Data Schedule. *99.1 Form of Senior Letter of Transmittal. *99.2 Form of Senior Subordinated Letter of Transmittal. *99.3 Form of Senior Notice of Guaranteed Delivery. *99.4 Form of Senior Subordinated Notice of Guaranteed Delivery.
- -------- * To be filed by amendment. (b) Financial Statement Schedule II-5 REPORT OF INDEPENDENT AUDITORS The Board of Directors Peabody Holding Company, Inc. and Affiliates We have audited the combined financial statements of P&L Coal Group as of March 31, 1998 and 1997, and September 30, 1996, and for the year ended March 31, 1998, the six months ended March 31, 1997, and each of the two years ended September 30, 1996, and have issued our report thereon dated April 24, 1998 (included elsewhere in this Registration Statement). Our audits also included the financial statement schedule listed in Item 21(b) of this Registration Statement. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. St. Louis, Missouri /Ernst & Young LLP/ April 24, 1998 II-6 P & L COAL GROUP SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (IN THOUSANDS)
BALANCE AT CHARGED TO BALANCE AT BEGINNING COSTS AND END DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS(/1/) OTHER OF PERIOD ----------- ---------- ---------- --------------- ----- ---------- YEAR ENDED MARCH 31, 1998 Reserves deducted from asset accounts: Land and coal interests............ $61,276 $9,256 $(2,648) $67,884 Reserve for materials and supplies......... 9,433 35 (2,908) (244)(/2/) 6,316 Allowance for doubtful accounts............. 5,525 (378) 3,953 (/3/) 9,100 SIX MONTHS ENDED MARCH 31, 1997 Reserves deducted from asset accounts: Land and coal interests............ 52,825 3,323 (3,424) 8,552 (/3/) 61,276 Reserve for materials and supplies......... 10,383 (2,591) 1,641 (/3/) 9,433 Allowance for doubtful accounts............. 5,072 453 5,525 YEAR ENDED SEPTEMBER 30, 1998 Reserves deducted from asset accounts: Land and coal interests............ 64,815 4,600 (16,590) 52,825 Reserve for materials and supplies......... 6,010 2,528 (406) 2,251 (/3/) 10,383 Allowance for doubtful accounts............. 8,170 (3,098) 5,072 YEAR ENDED SEPTEMBER 30, 1995 Reserves deducted from asset accounts: Land and coal interests............ 79,407 3,448 (18,040) 64,815 Reserve for materials and supplies......... 5,206 1,092 (288) 6,010 Allowance for doubtful accounts............. 8,398 (228) 8,170
- -------- (1) Reserves utilized, unless otherwise indicated. (2) Balances disposed of in Western Associated sale. (3) Balances transferred from other accounts. ITEM 22. UNDERTAKINGS Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the DGCL, the Certificate of Incorporation and By-laws, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The Registrant hereby undertakes: (1) that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the II-7 information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) that every prospectus: (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 present change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (4) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (6) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (7) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-8 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. P&L COAL HOLDINGS CORPORATION By: /s/ Irl F. Engelhardt __________________________________ Chief Executive Officer and Director POWER OF ATTORNEY We, the undersigned directors and officers of P&L Coal Holdings Corporation, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on our behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ Irl F. Engelhardt Chief Executive Officer and Director ____________________________________ Irl F. Engelhardt /s/ Richard M. Whiting President, Chief Operating Officer ____________________________________ and Director Richard M. Whiting /s/ George J. Holway Chief Financial Officer ____________________________________ George J. Holway /s/ Alan H. Washkowitz Director ____________________________________ Alan H. Washkowitz /s/ Henry E. Lentz Director ____________________________________ Henry E. Lentz /s/ Roger H. Goodspeed Director ____________________________________ Roger H. Goodspeed II-9 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. ARID OPERATIONS, INC. /s/ G. J. Holway By: ---------------------------------- G. J. Holway President POWER OF ATTORNEY We, the undersigned directors and officers of ARID OPERATIONS, INC., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated:
SIGNATURE TITLE --------- ----- /s/ G. J. Holway President - ------------------------------------- G. J. Holway /s/ T. L. Bethel Vice President - ------------------------------------- T. L. Bethel
II-10 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. DARIUS GOLD MINE, INC. /s/ G. J. Holway By: ---------------------------------- G. J. Holway President POWER OF ATTORNEY We, the undersigned directors and officers of DARIUS GOLD MINE, INC., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated:
SIGNATURE TITLE --------- ----- /s/ G. J. Holway President - ------------------------------------- G. J. Holway /s/ T. L. Bethel Vice President - ------------------------------------- T. L. Bethel
II-11 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. GOLD FIELDS CHILE, S.A. /s/ G. J. Holway By: ---------------------------------- G. J. Holway President POWER OF ATTORNEY We, the undersigned directors and officers of GOLD FIELDS CHILE, S.A., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated:
SIGNATURE TITLE --------- ----- /s/ G. J. Holway President - ------------------------------------- G. J. Holway /s/ T. L. Bethel Vice President - ------------------------------------- T. L. Bethel
II-12 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. GOLD FIELDS MINING CORPORATION /s/ G. J. Holway By: ---------------------------------- G. J. Holway President POWER OF ATTORNEY We, the undersigned directors and officers of GOLD FIELDS MINING CORPORATION, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated:
SIGNATURE TITLE --------- ----- /s/ G. J. Holway President - ------------------------------------- G. J. Holway /s/ T. L. Bethel Vice President - ------------------------------------- T. L. Bethel
II-13 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. GOLD FIELDS OPERATING CO.--ORTIZ /s/ G. J. Holway By: ___________________________________ G. J. Holway President POWER OF ATTORNEY We, the undersigned directors and officers of GOLD FIELDS OPERATING CO.-- ORTIZ, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated:
SIGNATURE TITLE --------- ----- /s/ G. J. Holway President - ------------------------------------- G. J. Holway /s/ T. L. Bethel Vice President - ------------------------------------- T. L. Bethel
II-14 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PEABODY AMERICA, INC. /s/ G. J. Holway By: ---------------------------------- G. J. Holway President POWER OF ATTORNEY We, the undersigned directors and officers of PEABODY AMERICA, INC., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated:
SIGNATURE TITLE --------- ----- /s/ G. J. Holway President - ------------------------------------- G. J. Holway /s/ T. L. Bethel Vice President - ------------------------------------- T. L. Bethel
II-15 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PEABODY HOLDING COMPANY, INC. /s/ I. F. Engelhardt By: _____________________________________ I. F. Engelhardt Chairman & Chief Executive Officer POWER OF ATTORNEY We, the undersigned directors and officers of PEABODY HOLDING COMPANY, INC., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ I. F. Engelhardt Chairman, Chief Executive Officer & - ------------------------------------ Director I. F. Engelhardt /s/ G. J. Holway Vice President & Chief Financial - ------------------------------------ Officer & Director G. J. Holway /s/ J. L. Klinger Director - ------------------------------------ J. L. Klinger II-16 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. AFFINITY MINING COMPANY /s/ H. D. Dahl By: ___________________________________ H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of AFFINITY MINING COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer and T. L. Bethel Director II-17 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. BIG SKY COAL COMPANY /s/ W. H. Carson By: ___________________________________ W. H. Carson President POWER OF ATTORNEY We, the undersigned directors and officers of BIG SKY COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ W. H. Carson President & Director - ------------------------------------- W. H. Carson /s/ M. T. Lewis Treasurer - ------------------------------------- M. T. Lewis /s/ G. L. Melvin Director - ------------------------------------- G. L. Melvin II-18 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. BLACKROCK FIRST CAPITAL CORPORATION /s/ H. D. Dahl By: ___________________________________ H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of BLACKROCK FIRST CAPITAL CORPORATION, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer & T. L. Bethel Director II-19 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. BLUEGRASS COAL COMPANY /s/ John C. Hill By: ---------------------------------- John C. Hill Vice President POWER OF ATTORNEY We, the undersigned directors and officers of BLUEGRASS COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- /s/ John C. Hill Vice President and Director - ------------------------------------- John C. Hill /s/ G. J. Holway Vice President, Treasurer and - ------------------------------------- Director G. J. Holway II-20 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. CABALLO COAL COMPANY /s/ L. H. Fox By: ---------------------------------- L. H. Fox President POWER OF ATTORNEY We, the undersigned directors and officers of CABALLO COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- /s/ L. H. Fox President & Director - ------------------------------------- L. H. Fox /s/ L. J. Reynolds Vice President, Treasurer & Director - ------------------------------------- L. J. Reynolds II-21 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. CHARLES COAL COMPANY /s/ H. D. Dahl By: ---------------------------------- H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of CHARLES COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer & T. L. Bethel Director II-22 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. COAL PROPERTIES CORP. /s/ H. D. Dahl By: ---------------------------------- H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of COAL PROPERTIES CORP., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer & T. L. Bethel Director II-23 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. COOK MOUNTAIN COAL COMPANY /s/ H. D. Dahl By: ---------------------------------- H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of COOK MOUNTAIN COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer & T. L. Bethel Director II-24 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. COTTONWOOD LAND COMPANY /s/ J. L. Lautenschlager By: ---------------------------------- J. L. Lautenschlager President POWER OF ATTORNEY We, the undersigned directors and officers of COTTONWOOD LAND COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- /s/ J. L. Lautenschlager President & Director - ------------------------------------- J. L. Lautenschlager /s/ G. J. Holway Vice President, Treasurer & Director - ------------------------------------- G. J. Holway II-25 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. COLONY BAY COAL COMPANY By:Eastern Associated Coal Corp. Its General Partner /s/ H. D. Dahl By: ---------------------------------- H. D. Dahl President & Director POWER OF ATTORNEY We, the undersigned directors of the general partners of COLONY BAY COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- EASTERN ASSOCIATED COAL CORP. A General Partner By: /s/ H. D. Dahl President ---------------------------------- H. D. Dahl /s/ H. D. Dahl Director of Eastern Associated Coal ---------------------------------- Corp. H. D. Dahl /s/ T. L. Bethel Director of Eastern Associated Coal ---------------------------------- Corp. T. L. Bethel CHARLES COAL COMPANY A General Partner By: /s/ H. D. Dahl President ---------------------------------- H. D. Dahl /s/ H. D. Dahl Director of Charles Coal Company ---------------------------------- H. D. Dahl /s/ T. L. Bethel Director of Charles Coal Company ---------------------------------- T. L. Bethel II-26 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. EACC CAMPS, INC. /s/ H. D. Dahl By: __________________________________ H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of EACC CAMPS, INC., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer & T. L. Bethel Director II-27 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. EASTERN ASSOCIATED COAL CORP. /s/ H. D. Dahl By: ___________________________________ H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of EASTERN ASSOCIATED COAL CORP., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer & T. L. Bethel Director II-28 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. EASTERN ROYALTY CORP. /s/ H. D. Dahl By: ___________________________________ H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of EASTERN ROYALTY CORP., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer & Director T. L. Bethel II-29 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. GRAND EAGLE MINING, INC. /s/ John C. Hill By: ___________________________________ John C. Hill Vice President POWER OF ATTORNEY We, the undersigned directors and officers of GRAND EAGLE MINING, INC., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ John C. Hill Vice President, General Manager & - ------------------------------------- Director John C. Hill /s/ G. J. Holway Vice President, Treasurer & Director - ------------------------------------- G. J. Holway II-30 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. HAYDEN GULCH TERMINAL, INC. /s/ G. J. Holway By: ___________________________________ G. J. Holway President POWER OF ATTORNEY We, the undersigned directors and officers of HAYDEN GULCH TERMINAL, INC., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ G. J. Holway President and Director - ------------------------------------- G. J. Holway /s/ T. L. Bethel Vice President & Treasurer - ------------------------------------- T. L. Bethel /s/ C. G. Farrand Director - ------------------------------------- C. G. Farrand II-31 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. INDEPENDENCE MATERIAL HANDLING COMPANY /s/ J. L. Lautenschlager By: ___________________________________ J. L. Lautenschlager President POWER OF ATTORNEY We, the undersigned directors and officers of INDEPENDENCE MATERIAL HANDLING COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ J. L. Lautenschlager President & Director - ------------------------------------- J. L. Lautenschlager /s/ G. J. Holway Vice President - ------------------------------------- G. J. Holway /s/ C. G. Farrand Director - ------------------------------------- C. G. Farrand II-32 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. INTERIOR HOLDINGS CORP. /s/ I. F. Engelhardt By: ___________________________________ I. F. Engelhardt President POWER OF ATTORNEY We, the undersigned directors and officers of INTERIOR HOLDINGS CORP., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ I. F. Engelhardt President & Director - ------------------------------------- I. F. Engelhardt /s/ G. J. Holway Vice President, Treasurer & Director - ------------------------------------- G. J. Holway /s/ H. D. Dahl Director - ------------------------------------- H. D. Dahl II-33 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. JAMES RIVER COAL TERMINAL COMPANY /s/ R. M. Whiting By: ___________________________________ R. M. Whiting President POWER OF ATTORNEY We, the undersigned directors and officers of JAMES RIVER COAL TERMINAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ R. M. Whiting President & Director - ------------------------------------- R. M. Whiting /s/ G. J. Holway Vice President & Treasurer & - ------------------------------------- Director G. J. Holway II-34 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. JUNIPER COAL COMPANY /s/ G. J. Holway By: ___________________________________ G. J. Holway President POWER OF ATTORNEY We, the undersigned directors and officers of JUNIPER COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ G. J. Holway President & Director - ------------------------------------- G. J. Holway /s/ T. L. Bethel Vice President & Treasurer - ------------------------------------- T. L. Bethel /s/ C. G. Farrand Director - ------------------------------------- C. G. Farrand II-35 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. KAYENTA MOBILE HOME PARK, INC. /s/ W. H. Carson By: ___________________________________ W. H. Carson President POWER OF ATTORNEY We, the undersigned directors and officers of KAYENTA MOBILE HOME PARK, INC., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ W. H. Carson President & Director - ------------------------------------- W. H. Carson /s/ C. W. Tilly Treasurer - ------------------------------------- C. W. Tilly /s/ G. L. Melvin Director - ------------------------------------- G. L. Melvin II-36 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. MARTINKA COAL COMPANY /s/ H. D. Dahl By: ___________________________________ H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of MARTINKA COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer & T. L. Bethel Director II-37 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. MIDCO SUPPLY AND EQUIPMENT CORPORATION /s/ G. J. Holway By: ___________________________________ G. J. Holway President POWER OF ATTORNEY We, the undersigned directors and officers of MIDCO SUPPLY AND EQUIPMENT CORPORATION, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ G. J. Holway President & Director - ------------------------------------- G. J. Holway /s/ T. L. Bethel Vice President & Treasurer - ------------------------------------- T. L. Bethel /s/ G. P. Wickstra Director - ------------------------------------- G. P. Wickstra II-38 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. MIDWEST COAL RESOURCES, INC. /s/ H. D. Dahl By: ___________________________________ H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of MIDWEST COAL RESOURCES, INC., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President, Treasurer & Director - ------------------------------------- T. L. Bethel II-39 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. MOUNTAIN VIEW COAL COMPANY /s/ H. D. Dahl By: ---------------------------------- H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of MOUNTAIN VIEW COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer & T. L. Bethel Director II-40 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. NORTH PAGE COAL CORP. /s/ H. D. Dahl By: ---------------------------------- H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of NORTH PAGE COAL CORP., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer & T. L. Bethel Director II-41 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. OHIO COUNTY COAL COMPANY /s/ J. C. Hill By: ___________________________________ J. C. Hill Vice President POWER OF ATTORNEY We, the undersigned directors and officers of OHIO COUNTY COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ J. C. Hill Vice President - ------------------------------------- J. C. Hill /s/ G. J. Holway Vice President, Treasurer & Director - ------------------------------------- G. J. Holway II-42 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PATRIOT COAL COMPANY, L.P. By:Bluegrass Coal Company Its Managing Partner /s/ John C. Hill By: ---------------------------------- John C. Hill Its: Vice President POWER OF ATTORNEY We, the undersigned directors of the partners of PATRIOT COAL COMPANY, L.P., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- BLUEGRASS COAL COMPANYIts Managing Partner By: /s/ J. C. Hill Vice President ---------------------------------- J. C. Hill /s/ J. C. Hill Director of Bluegrass Coal Company ---------------------------------- J. C. Hill /s/ G. J. Holway Director of Bluegrass Coal Company ---------------------------------- G. J. Holway SENTRY MINING COMPANY A Partner By: /s/ G. J. Holway President ---------------------------------- G. J. Holway /s/ C. G. Farrand Director of Sentry Mining Company ---------------------------------- C. G. Farrand II-43 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PEABODY COALSALES COMPANY /s/ R. A. Navarre By: ___________________________________ R. A. Navarre President POWER OF ATTORNEY We, the undersigned directors and officers of PEABODY COALSALES COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- /s/ R. A. Navarre President & Director - ------------------------------------- R. A. Navarre /s/ G. J. Holway Vice President & Treasurer - ------------------------------------- G. J. Holway /s/ C. G. Farrand Director - ------------------------------------- C. G. Farrand /s/ R. M. Whiting Director - ------------------------------------- R. M. Whiting II-44 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PEABODY COALTRADE, INC. /s/ P. H. Vining By: ___________________________________ P. H. Vining President POWER OF ATTORNEY We, the undersigned directors and officers of PEABODY COALTRADE, INC., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ P. H. Vining President - ------------------------------------- P. H. Vining /s/ G. J. Holway Vice President & Treasurer - ------------------------------------- G. J. Holway /s/ C. G. Farrand Director - ------------------------------------- C. G. Farrand /s/ R. M. Whiting Director - ------------------------------------- R. M. Whiting II-45 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PEABODY COAL COMPANY /s/ H. D. Dahl By: ---------------------------------- H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of PEABODY COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer & T. L. Bethel Director II-46 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PEABODY DEVELOPMENT COMPANY /s/ J. L. Lautenschlager By: ___________________________________ J. L. Lautenschlager President POWER OF ATTORNEY We, the undersigned directors and officers of PEABODY DEVELOPMENT COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ J. L. Lautenschlager President & Director - ------------------------------------- J. L. Lautenschlager /s/ G. J. Holway Treasurer & Director - ------------------------------------- G. J. Holway /s/ W. H. Carson Director - ------------------------------------- W. H. Carson II-47 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PEABODY ENERGY SOLUTIONS, INC. /s/ R. A. Navarre By: ___________________________________ R. A. Navarre President POWER OF ATTORNEY We, the undersigned directors and officers of PEABODY ENERGY SOLUTIONS, INC., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ R. A. Navarre President & Director - ------------------------------------- R. A. Navarre /s/ G. J. Holway Vice President, Treasurer & Director - ------------------------------------- G. J. Holway II-48 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PEABODY NATURAL RESOURCES COMPANY By:Gold Fields Mining Corporation Its General Partner /s/ G. J. Holway By: ---------------------------------- G. J. Holway President & Director POWER OF ATTORNEY We, the undersigned directors of the general partners of PEABODY NATURAL RESOURCES COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- GOLD FIELDS MINING CORPORATION A General Partner By: /s/ G. J. Holway President ---------------------------------- G. J. Holway /s/ G. J. Holway Director of Gold Fields Mining ---------------------------------- Corporation G. J. Holway /s/ C. C. Kennedy Director of Gold Fields Mining ---------------------------------- Corporation C. C. Kennedy /s/ J. L. Klinger Director of Gold Fields Mining ---------------------------------- Corporation J. L. Klinger PEABODY AMERICA, INC. A General Partner By: /s/ G. J. Holway President ---------------------------------- G. J. Holway /s/ G. J. Holway Director of Peabody America, Inc. ---------------------------------- G. J. Holway /s/ C. C. Kennedy Director of Peabody America, Inc. ---------------------------------- C. C. Kennedy /s/ J. L. Klinger Director of Peabody America, Inc. ---------------------------------- J. L. Klinger II-49 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PEABODY TERMINALS, INC. /s/ R. M. Whiting By: ___________________________________ R.M. Whiting President POWER OF ATTORNEY We, the undersigned directors and officers of PEABODY TERMINALS, INC., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ R. M. Whiting President & Director - ------------------------------------- R. M. Whiting /s/ G. J. Holway Vice President, Treasurer & Director - ------------------------------------- G. J. Holway II-50 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PEABODY VENEZUELA COAL CORP. /s/ J. M. Wootten By: ___________________________________ J. M. Wootten President POWER OF ATTORNEY We, the undersigned directors and officers of PEABODY VENEZUELA COAL CORP., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ J. M. Wootten President & Director - ------------------------------------- J. M. Wootten /s/ G. J. Holway Vice President, Treasurer & Director - ------------------------------------- G. J. Holway II-51 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PEABODY WESTERN COAL COMPANY /s/ W. H. Carson By: ___________________________________ W. H. Carson President POWER OF ATTORNEY We, the undersigned directors and officers of PEABODY WESTERN COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ W. H. Carson President & Director - ------------------------------------- W. H. Carson /s/ C. W. Tilly Treasurer & Assistant Secretary - ------------------------------------- C. W. Tilly /s/ G. L. Melvin Director - ------------------------------------- G. L. Melvin II-52 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. PINE RIDGE COAL COMPANY /s/ H. D. Dahl By: ___________________________________ H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of PINE RIDGE COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ H. D. Dahl President & Director - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President, Treasurer & Director - ------------------------------------- T. L. Bethel II-53 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. POWDER RIVER COAL COMPANY /s/ L. H. Fox By: ___________________________________ L. H. Fox President POWER OF ATTORNEY We, the undersigned directors and officers of POWDER RIVER COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ L. H. Fox President & Director - ------------------------------------- L. H. Fox /s/ L. J. Reynolds Vice President Finance & Treasurer - ------------------------------------- L. J. Reynolds /s/ G. J. Holway Director - ------------------------------------- G. J. Holway II-54 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July14, 1998. RIO ESCONDIDO COAL CORP. /s/ G. J. Holway By: ___________________________________ G. J. Holway President POWER OF ATTORNEY We, the undersigned directors and officers of RIO ESCONDIDO COAL CORP., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ G. J. Holway President & Director - ------------------------------------- G. J. Holway /s/ T. L. Bethel Vice President & Treasurer - ------------------------------------- T. L. Bethel II-55 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. SENECA COAL COMPANY /s/ W. H. Carson By: ___________________________________ W. H. Carson President POWER OF ATTORNEY We, the undersigned directors and officers of SENECA COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ W. H. Carson President & Director - ------------------------------------- W. H. Carson /s/ M. T. Lewis Treasurer - ------------------------------------- M. T. Lewis /s/ G. L. Melvin Director - ------------------------------------- G. L. Melvin II-56 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. SENTRY MINING COMPANY /s/ G. J. Holway By: ___________________________________ G. J. Holway President POWER OF ATTORNEY We, the undersigned directors and officers of SENTRY MINING COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ G. J. Holway President - ------------------------------------- G. J. Holway /s/ T. L. Bethel Vice President & Treasurer - ------------------------------------- T. L. Bethel /s/ C. G. Farrand Director - ------------------------------------- C. G. Farrand II-57 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14th, 1998. SNOWBERRY LAND COMPANY /s/ J. L. Lautenschlager By: ___________________________________ J. L. Lautenschlager President POWER OF ATTORNEY We, the undersigned directors and officers of SNOWBERRY LAND COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ J. L. Lautenschlager President & Director - ------------------------------------- J. L. Lautenschlager /s/ G. J. Holway Vice President, Treasurer & Director - ------------------------------------- G. J. Holway II-58 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. STERLING SMOKELESS COAL COMPANY /s/ H. D. Dahl By: ___________________________________ H. D. Dahl President POWER OF ATTORNEY We, the undersigned directors and officers of STERLING SMOKELESS COAL COMPANY, do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ H. D. Dahl President - ------------------------------------- H. D. Dahl /s/ T. L. Bethel Vice President--Finance & - ------------------------------------- Administration, Treasurer & T. L. Bethel Director II-59 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on July 14, 1998. THOROUGHBRED, L.L.C. /s/ I. F. Engelhardt By: ___________________________________ I. F. Engelhardt Chairman POWER OF ATTORNEY We, the undersigned directors and officers of THOROUGHBRED, L.L.C., do hereby constitute and appoint Felix Herlihy, Christopher G. Farrand, Jeffery L. Klinger and George J. Holway, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said Corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 14th day of July, 1998 by the following persons in the capacities indicated: SIGNATURE TITLE /s/ I. F. Engelhardt Chairman - ------------------------------------- I. F. Engelhardt /s/ G. J. Holway Vice President & Treasurer - ------------------------------------- G. J. Holway II-60 [ALTERNATE COVER FOR MARKET-MAKER PROSPECTUS] PROSPECTUS [LOGO OMITTED] P&L COAL HOLDINGS CORPORATION 8 7/8% SERIES B SENIOR NOTES DUE 2008 AND 9 5/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008 ----------------- The 8 7/8% Series B Senior Notes due 2008 (the "Senior Exchange Notes") and the 9 5/8% Series B Senior Subordinated Notes due 2008 (the "Senior Subordinated Exchange Notes" and together with the Senior Exchange Notes, the "Exchange Notes") of P&L Coal Holdings Corporation (the "Company" or "P&L") were issued in exchange for the 8 7/8% Senior Notes due 2008 (the "Old Senior Notes") and for the 9 5/8% Senior Subordinated Notes ("Old Senior Subordinated Notes") respectively (the "Old Senior Notes" together with the "Old Senior Subordinated Notes", the "Old Notes", and together with the Exchange Notes, the "Notes") by the Company. Interest on the Exchange Notes is payable semi-annually on May 15 and November 15 of each year, commencing November 15, 1998. Prior to May 15, 2003, each series of the Exchange Notes is redeemable at a redemption price equal to 100% of the principal amount thereof plus either the Senior Notes Make Whole Premium (as defined) or the Senior Subordinated Notes Make Whole Premium (as defined), plus, to the extent not included in either the Senior Notes Make Whole Premium or the Senior Subordinated Notes Make Whole Premium, accrued and unpaid interest and Liquidated Damages (as defined), if any, to the date of redemption. On or after May 15, 2003, each series of Exchange Notes is subject to redemption at the option of the Company, in whole or in part, at the redemption prices set forth herein, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of redemption. In addition, at any time prior to May 15, 2001, the Company may, at its option, redeem up to 35% of the aggregate principal amount of each series of the Exchange Notes at a redemption price equal to (i) 108.875% of the principal amount of the Senior Exchange Notes and (ii) 109.675% of the principal amount of the Senior Subordinated Exchange Notes, in each case plus accrued and unpaid interest and Liquidated Damage, if any, thereon to the date of redemption, with the net proceeds of one or more Equity Offerings (as defined); provided that, in each case, at least 65% of the aggregate principal amount of Senior Exchange Notes and at least 65% of the aggregate principal amount of Senior Subordinated Exchange Notes remain outstanding immediately after the occurrence of each such redemption. See "Description of the Senior Exchange Notes--Optional Redemption and Description of the Senior Subordinated Exchange Notes--Optional Redemption." Upon the occurrence of a Change of Control (as defined), the holders of each series of the Exchange Notes (the "Holders") will have the right to require the Company to repurchase such series of Exchange Notes, in whole or in part, at a price equal to 101% of the respective principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase. See "Description of the Senior Exchange Notes--Repurchase at the Option of Holders--Change of Control" and "Description of the Senior Subordinated Exchange Notes--Repurchase at the Option of Holders--Change of Control." The Senior Exchange Notes are general unsecured obligations of the Company, rank senior in right of payment to all subordinated Indebtedness (as defined) of the Company and rank pari passu in right of payment with all current and future unsecured senior Indebtedness of the Company. All borrowings under the Senior Credit Facilities are secured by a first priority Lien (as defined) on certain of the assets of the Company and its Domestic Subsidiaries (as defined). Certain of the Company's current and future Restricted Subsidiaries (as defined) that are Domestic Subsidiaries (the "Guarantors") jointly and severally guarantee the Senior Exchange Notes on a senior basis (the "Senior Subsidiary Guarantees"). As of March 31, 1998, after giving pro forma effect to the Transactions (as defined), approximately $920.0 million would have been outstanding under the Senior Credit Facilities. See "Capitalization", "Description of the Senior Exchange Notes", "Description of the Senior Subordinated Exchange Notes" and "Description of Certain Indebtedness." The Senior Subordinated Exchange Notes are general unsecured obligations of the Company, subordinate in right of payment to all existing and future Senior Debt (as defined) of the Company, including all borrowings under the Senior Credit Facilities. The Guarantors jointly and severally guarantee the Senior Subordinated Exchange Notes on a senior subordinated basis (the "Subordinated Subsidiary Guarantees" and, together with the Senior Subsidiary Guarantees, the "Subsidiary Guarantees"). As of March 31, 1998, after giving pro forma effect to the Transactions, the Company would have had approximately $2,098.0 million of indebtedness outstanding (excluding $239.9 million of non-recourse indebtedness of Citizens Power (as defined), of which $1318.8 million would have been Senior Debt (excluding letters of credit). See "Capitalization" and "Description of the Senior Subordinated Exchange Notes--Subordination." FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE EXCHANGE NOTES, SEE "RISK FACTORS" BEGINNING ON PAGE [19]. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This Prospectus has been prepared for and is to be used by Lehman Brothers Inc. in connection with offers and sales in market-making transactions of the Exchange Notes. The Company will not receive any of the proceeds of such sales. Lehman Brothers Inc. may act as a principal or agent in such transactions. The Exchange Notes may be offered in negotiated transactions or otherwise. ----------------- LEHMAN BROTHERS INC. ----------------- The date of this Prospectus is , 1998 [ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS] TRADING MARKET FOR THE EXCHANGE NOTES There is no existing trading market for the Exchange Notes, and there can be no assurance regarding the future development of a market for the Exchange Notes or the ability of the Holders of the Exchange Notes to sell their Exchange Notes or the price at which such Holders may be able to sell their Exchange Notes. If such market were to develop, the Exchange Notes could trade at prices that may be higher or lower than their initial offering price depending on many factors, including prevailing interest rates, the Company's operating results and the market for similar securities. Although it is not obligated to do so, Lehman Brothers Inc. intends to make a market in the Exchange Notes. Any such market-making activity may be discontinued at any time, for any reason, without notice at the sole discretion of Lehman Brothers Inc. No assurance can be given as to the liquidity of or the trading market for the Exchange Notes. Lehman Brothers Inc. may be deemed to be an affiliate of the Company and, as such, may be required to deliver a prospectus in connection with its market- making activities in the Exchange Notes. Pursuant to the Registration Rights Agreements, the Company agreed to file and maintain a registration statement that would allow Lehman Brothers Inc. to engage in market-making transactions in the Exchange Notes. Subject to certain exceptions set forth in the Registration Rights Agreements, the registration statement will remain effective for as long as Lehman Brothers Inc. may be required to deliver a prospectus in connection with market-making transactions in the Exchange Notes. The Company has agreed to bear substantially all the costs and expenses related to such registration statement. 1 [ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS] USE OF PROCEEDS This Prospectus is delivered in connection with the sale of the Exchange Notes by Lehman Brothers Inc. in market-making transactions. The Company will not receive any of the proceeds from such transactions. 2 [ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS] PLAN OF DISTRIBUTION This Prospectus is to be used by Lehman Brothers Inc. in connection with offers and sales of the Exchange Notes in market-making transactions effected from time to time. Lehman Brothers Inc. may act as a principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties when it acts as agent for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. Affiliates of Lehman Brothers Inc. currently own 100% of the capital stock of the Company. See "Ownership of Capital Stock". Lehman Brothers Inc. has informed the Company that it does not intend to confirm sales of the Exchange Notes to any accounts over which it exercises discretionary authority without the prior specific written approval of such transactions by the customer. The Company has been advised by Lehman Brothers Inc. that, subject to applicable laws and regulations, Lehman Brothers Inc. currently intends to make a market in the Exchange Notes following completion of the Exchange Offer. However, Lehman Brothers Inc. is not obligated to do so and any such market-making may be interrupted or discontinued at any time without notice. In addition, such market-making activity will be subject to the limits imposed by the Securities Act and the Exchange Act. There can be no assurance that an active trading market will develop or be sustained. See "Risk Factors--Trading Market for the Exchange Notes." Lehman Brothers Inc. has provided investment banking services to the Company in the past and may provide such services and financial advisory services to the Company in the future. Lehman Brothers Inc. acted as purchaser in connection with the initial sale of the Notes and received an underwriting discount of $27.0 million in connection therewith. See "Related Party Transactions." Lehman Brothers Inc. and the Company have entered into a registration rights agreement with respect to the use by Lehman Brothers Inc. of this Prospectus. Pursuant to such agreement, the Company agreed to bear all registration expenses incurred under such agreement, and the Company agreed to indemnify Lehman Brothers Inc. against certain liabilities, including liabilities under the Securities Act. 3 [ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. ----------------- TABLE OF CONTENTS
PAGE ---- Prospectus Summary....................................................... 1 Risk Factors............................................................. 19 Use of Proceeds.......................................................... 33 Capitalization........................................................... 33 Unaudited Pro Forma Condensed Combined Financial Statements.............. 34 Selected Combined Financial Data......................................... 43 Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................... 44 Coal Industry Overview................................................... 56 Business................................................................. 67 Regulatory Matters....................................................... 91 Management............................................................... 97 Ownership of Capital Stock............................................... 104 The Acquisition.......................................................... 105 Related Party Transactions............................................... 107 Description of Certain Indebtedness...................................... 109 The Senior Exchange Offer................................................ 110 The Senior Subordinated Exchange Offer................................... 121 Description of the Senior Exchange Notes................................. 135 Description of the Senior Subordinated Exchange Notes.................... Description of the Senior Subordinated Exchange Notes.................... 204 Certain United States Federal Tax Considerations......................... 207 Plan of Distribution..................................................... 210 Legal Matters............................................................ 210 Experts.................................................................. 211 Available Information.................................................... Glossary of Selected Terms............................................... 211 Index to Financial Statements............................................ 212
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- P&L COAL HOLDINGS CORPORATION [LOGO OMITTED] 8 7/8% SERIES B SENIOR NOTES DUE 2008 AND 9 5/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008 ----------------- PROSPECTUS ----------------- LEHMAN BROTHERS INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EX-1.1 2 PURCHASE AGMT DTD 5/13/98 AMONG P&L COAL HOLDING EXHIBIT 1.1 $900,000,000 P&L COAL HOLDINGS CORPORATION $400,000,000 8-7/8% Senior Notes due 2008 $500,000,00 9-5/8% Senior Subordinated Notes due 2008 PURCHASE AGREEMENT ------------------ May 13, 1998 Lehman Brothers Inc. Three World Financial Center New York, New York 10285 Ladies and Gentlemen: P&L Coal Holdings Corporation, a Delaware corporation (the "COMPANY"), proposes to issue and sell to you (the "INITIAL PURCHASER"), $400.0 million in aggregate principal amount at maturity of its 8-7/8% Senior Notes due 2008 (the "SERIES A SENIOR NOTES") and $500.0 million in aggregate principal amount at maturity of its 9-5/8% Senior Subordinated Notes due 2008 (the "SERIES A SUBORDINATED NOTES" and together with the Series A Senior Notes, the "SERIES A NOTES"), the Series A Senior Notes to be issued pursuant to the terms of an Indenture (the "SENIOR NOTE INDENTURE") between the Company and State Street Bank and Trust Company, as trustee (the "SENIOR NOTE TRUSTEE"), the Series A Subordinated Notes to be issued pursuant to the terms of an Indenture (the "SUBORDINATED NOTE INDENTURE" and together with the Senior Note Indenture, the "INDENTURES") between the Company and State Street Bank and Trust Company, as trustee (the "SUBORDINATED NOTE TRUSTEE" and together with the Senior Note Trustee, the "TRUSTEES"), relating to the Series A Notes. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Indentures. Each tranche of the Series A Notes will be offered and sold to you pursuant to exemptions from the registration requirements under the Securities Act of 1933, as amended (the "SECURITIES ACT"). The Company has prepared a preliminary offering memorandum, dated May 4, 1998 (the "PRELIMINARY OFFERING MEMORANDUM"), and a final offering memorandum (the "OFFERING MEMORANDUM"), dated May 13, 1998, relating to the Company and each tranche of the Series A Notes. It is understood and acknowledged that upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Securities Act, each tranche of the Series A Notes (and all securities issued in exchange therefor or in substitution thereof) shall bear the following legend: "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS 2 AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE." You have represented and warranted to the Company that you will make offers (the "EXEMPT RESALES") of each tranche of the Series A Notes purchased by you hereunder on the terms set forth in the Offering Memorandum, as amended or supplemented, solely to (i) persons whom you reasonably believe to be "qualified institutional buyers," as defined in Rule 144A under the Securities Act ("QIBS"), and (ii) to persons other than U.S. persons in offshore transactions meeting the requirements of Rule 903 or 904 of Regulation S (such persons specified in clauses (i) and (ii) being referred to herein as the "ELIGIBLE PURCHASERS"). As used herein, the terms "OFFSHORE TRANSACTION" and "U.S. PERSON" have the respective meanings given to them in Regulation S. You will offer each tranche of the Series A Notes to Eligible Purchasers initially at a price equal to 100% of the principal amount thereof. Such price may be changed at any time without notice. Holders (including subsequent transferees) of the Series A Senior Notes will have the registration rights set forth in the registration rights agreement (the "SENIOR REGISTRATION RIGHTS AGREEMENT"), to be dated May 18, 1998 (the "CLOSING DATE"), for so long as such Series A Senior Notes constitute "TRANSFER RESTRICTED SECURITIES" (as defined in the Senior Registration Rights Agreement). Holders (including subsequent transferees) of the Series A Subordinated Notes will have the registration rights set forth in the registration rights agreement (the "SUBORDINATED REGISTRATION RIGHTS AGREEMENT" and, together with the Senior Registration Rights Agreement, the "REGISTRATION RIGHTS AGREEMENTS"), to be dated the Closing Date, for so long as such Series A Subordinated Notes constitute "TRANSFER RESTRICTED SECURITIES" (as defined in the Subordinated Registration Rights Agreement). Pursuant to the Registration Rights Agreements, the Company will agree to file with the Securities and Exchange Commission (the "COMMISSION") under the circumstances set forth therein, (i) a registration statement under the Securities Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating to the Company's 8-7/8% Series B Senior Notes due 2008 (the "SERIES B SENIOR NOTES"), its 9-5/8% Series B Senior Subordinated 3 Notes due 2008 (the "SERIES B SUBORDINATED NOTES" and together with the Series B Senior Notes, the "SERIES B NOTES;" the Series B Notes together with the Series A Notes, the "NOTES") to be offered in exchange for each tranche of the Series A Notes (such offer to exchange being referred to collectively as the "EXCHANGE OFFER") and (ii) a shelf registration statement pursuant to Rule 415 under the Securities Act (the "SHELF REGISTRATION STATEMENT," and together with the Exchange Offer Registration Statement, the "REGISTRATION STATEMENTS") relating to the resale of each tranche of the Series A Notes by certain holders of such Notes, and to use its best efforts to cause such Registration Statements to be declared effective. This Agreement, the Indentures and the Registration Rights Agreements are hereinafter referred to collectively as the "OPERATIVE DOCUMENTS." This is to confirm the agreement concerning the purchase of each tranche of the Series A Notes from the Company by the Initial Purchaser. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The Company (as of the date hereof and the Closing Date) represents, warrants and agrees as follows: The Preliminary Offering Memorandum and Offering Memorandum have been prepared by the Company for use by the Initial Purchaser in connection with the Exempt Resales. No order or decree preventing the use of the Preliminary Offering Memorandum or the Offering Memorandum, or any order asserting that the transactions contemplated by this Agreement are subject to the registration requirements of the Securities Act, has been issued and no proceeding for that purpose has commenced or is pending or, to the knowledge of the Company, is contemplated. The Preliminary Offering Memorandum and the Offering Memorandum as of their respective dates did not, and the Offering Memorandum as of the Closing Date will not, contain an untrue statement of a material fact or omit to state a material fact necessary, in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. The market-related and industry data included in the Preliminary Offering Memorandum and the Offering Memorandum are based upon estimates by the Company derived from sources which the Company believes to be reliable and accurate in all material respects. The Company is a corporation duly incorporated and validly existing and in good standing under the laws of Delaware with all requisite corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Preliminary Offering Memorandum and the Offering Memorandum, and is duly registered and qualified to conduct its business and is in good standing in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure to so register or qualify or to be in good standing would not reasonably be expected to have a material adverse effect on the financial condition, business, properties or results of operations of the Company (a "MATERIAL ADVERSE EFFECT"). The Company has all requisite power and authority to execute, deliver and perform its obligations under this Agreement, the Indentures and the Registration Rights Agreements. The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under each tranche of the Notes. This Agreement has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by the Initial Purchaser, constitutes the legally valid and binding agreement of the Company, enforceable against the Company in accordance with its terms subject to (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) general equitable 4 principles (whether considered in a proceeding in equity or at law), (iii) an implied covenant of good faith and fair dealing and (iv) except as rights to indemnity and contribution hereunder may be limited by Federal or state securities laws or principles of public policy. The Senior Registration Rights Agreement has been duly authorized by the Company and, upon its execution and delivery by the Company and, assuming due authorization, execution and delivery by the Initial Purchaser, will constitute the legally valid and binding agreement of the Company, enforceable against the Company in accordance with its terms subject to (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law), (iii) an implied covenant of good faith and fair dealing and (iv) except as rights to indemnity and contribution hereunder may be limited by Federal or state securities laws or principles of public policy. The Subordinated Registration Rights Agreement has been duly authorized by the Company and, upon its execution and delivery by the Company and, assuming due authorization, execution and delivery by the Initial Purchaser, will constitute the legally valid and binding agreement of the Company, enforceable against the Company in accordance with its terms subject to (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law), (iii) an implied covenant of good faith and fair dealing and (iv) except as rights to indemnity and contribution hereunder may be limited by Federal or state securities laws or principles of public policy. The Senior Note Indenture has been duly authorized by the Company, and upon its execution and delivery by the Company and, assuming due authorization, execution and delivery by the Senior Note Trustee, will constitute the legally valid and binding agreement of the Company, enforceable against the Company in accordance with its terms subject to (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) by general equitable principles (whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing; no qualification of the Senior Note Indenture under the Trust Indenture Act of 1939, as amended ("TIA") is required in connection with the offer and sale of the Series A Senior Notes contemplated hereby or in connection with the Exempt Resales other than in connection with the performance of the Company's obligations under the Senior Registration Rights Agreement. The Subordinated Note Indenture has been duly authorized by the Company, and upon its execution and delivery by the Company and, assuming due authorization, execution and delivery by the Subordinated Note Trustee, will constitute the legally valid and binding agreement of the Company, enforceable against the Company in accordance with its terms subject to (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) by general principles (whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing; no qualification of the Subordinated Note Indenture under the TIA is required in connection with the offer and sale of the Series A Subordinated Notes contemplated hereby or in connection with the Exempt Resales other than in connection with the performance of the Company's obligations under the Subordinated Registration Rights Agreement. The Series A Senior Notes have been duly authorized by the Company and when duly executed by the Company in accordance with the terms of the Senior Note Indenture and, assuming 5 due authentication of the Series A Senior Notes by the Senior Note Trustee, upon delivery to the Initial Purchaser against payment therefor in accordance with the terms hereof, will have been validly issued and delivered, and will constitute legally valid and binding obligations of the Company entitled to the benefits of the Senior Note Indenture, enforceable against the Company in accordance with their terms subject to (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) by general equitable principles (whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing. The Series A Subordinated Notes have been duly authorized by the Company and when duly executed by the Company in accordance with the terms of the Subordinated Note Indenture and, assuming due authentication of the Series A Subordinated Notes by the Subordinated Notes Trustee, upon delivery to the Initial Purchaser against payment therefor in accordance with the terms hereof, will have been validly issued and delivered, and will constitute legally valid and binding obligations of the Company entitled to the benefits of the Subordinated Note Indenture, enforceable against the Company in accordance with their terms subject to (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) by general equitable principles (whether enforcement is considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing. On or before the Closing Date the Series B Senior Notes will have been duly authorized by the Company and if and when duly issued and authenticated in accordance with the terms of the Senior Note Indenture and delivered in accordance with the Exchange Offer provided for in the Senior Registration Rights Agreement, will constitute legally valid and binding obligations of the Company entitled to the benefits of the Senior Note Indenture, enforceable against the Company in accordance with their terms subject to (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) by general equitable principles (whether enforcement is considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing. On or before the Closing Date, the Series B Subordinated Notes will have been duly authorized by the Company and if and when duly issued and authenticated in accordance with the terms of the Subordinated Note Indenture and delivered in accordance with the Exchange Offer provided for in the Subordinated Registration Rights Agreement, will constitute legally valid and binding obligations of the Company entitled to the benefits of the Subordinated Note Indenture enforceable against the Company in accordance with their terms subject to (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) by general equitable principles (whether enforcement is considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing. The senior credit facilities, dated as of May 18, 1998, by and among P&L Coal Holdings Corporation and Lehman Commercial Paper Inc., as Administrative Agent, Syndication Agent and Documentation Agent, and Lehman Brothers Inc., as Arranger, (the "CREDIT FACILITIES"), and any and all other agreements and instruments ancillary to or entered into in connection with the transaction contemplated by the credit agreement (the "CREDIT DOCUMENTS"), were duly and validly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by the other parties thereto, constitute the valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms subject to (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' 6 rights generally, (ii) by general equitable principles (whether enforcement is considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing. All the shares of capital stock, partnership, membership or other equity interest of the Company outstanding prior to the issuance of each tranche of the Series A Notes have been duly authorized and validly issued and are fully paid and nonassessable. The Company does not own capital stock or other equity interests of any corporation or entity other than as disclosed in the Offering Memorandum. There are no legal or governmental proceedings pending or, to the knowledge of the Company, contemplated by, or threatened, against the Company or to which any of its properties are subject, that are not disclosed in the Offering Memorandum and which, are reasonably likely to have a Material Adverse Effect or to materially and adversely affect the issuance of each tranche of the Notes or the consummation of the other transactions contemplated by the Operative Documents. The Company is not involved in any strike, job action or labor dispute with any group of employees, and, to the knowledge of the Company, no such action or dispute is threatened. No material relationship, direct or indirect, exists between or among the Company on the one hand, and the directors, officers, shareholders, members, partners, customers or suppliers of the Company on the other hand, that would be required to be described in the Offering Memorandum pursuant to Regulation S-K of the Securities Act if Regulation S-K were applicable to the Offering Memorandum, which is not so described in the Offering Memorandum. The execution, delivery and performance of this Agreement and the other Operative Documents and the issuance of each tranche of the Series A Notes and each tranche of the Series B Notes and the consummation of the transactions contemplated hereby and thereby will not conflict with, or result in a breach or violation of any of the terms or provisions of, or (including with the giving of notice or the lapse of time or both) constitute a default under (i) any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the properties or assets of the Company are subject, (ii) the provisions of the charter, by-laws or other organizational documents of the Company or (iii) any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its properties or assets, except in the cases of clause (i) or (iii), such breaches, violations or defaults that in the aggregate would not reasonably be expected to have a Material Adverse Effect; and no consent, approval, authorization or order of, or filing or registration with, any court or governmental agency or body is required for the execution, delivery and performance of this Agreement and the other Operative Documents and the issuance of each tranche of the Series A Notes and each tranche of the Series B Notes and the consummation of the transactions contemplated hereby and thereby except (A) as may be required by the securities or "blue sky" laws of any state of the United States in connection with the sale of each tranche of the Series A Notes and each tranche of the Series B Notes, and (B) as contemplated by the Registration Rights Agreements and (C) as required under the TIA for the issuance of each tranche of the Series B Notes, and (D) in connection with trading of the Notes on PORTAL. The accountants, Ernst & Young LLP, who have certified certain of the financial statements included as part of the Offering Memorandum, are independent public accountants as required by the Securities Act and its Rules and Regulations. 7 The John T. Boyd Company, whose report is referred to in the Offering Memorandum, as of the date of such report, and is, as of the date hereof, independent mining and geological consultants with respect to the Company. The combined historical financial statements, and pro forma financial information, together with the related notes thereto, set forth in the Offering Memorandum comply as to form in all material respects with the requirements of Regulation S-X under the Securities Act applicable to registration statements under the Securities Act. Such historical financial statements fairly present in all material respects the financial position of the Company at the respective dates indicated and the results of operations and cash flows for the respective periods indicated, subject in the case of unaudited combined financial statements to year-end audit adjustments, in each case in accordance with generally accepted accounting principles ("GAAP") consistently applied throughout such periods. Such pro forma financial information has been prepared on a basis consistent with such historical and proposed transactions contemplated by the Offering Memorandum and this Agreement. The other financial information and data included in the Offering Memorandum, historical and pro forma, are, in all material respects, accurately presented and prepared on a basis consistent with such financial statements and the books and records of the Company. Since the date of the latest audited combined financial statements of the Company included in the Offering Memorandum, the Company has not incurred any liability or obligation, direct or contingent, or entered into any transaction, in each case not in the ordinary course of business, that is material to the Company and there has been no Material Adverse Effect and, except as disclosed in or contemplated by the Offering Memorandum, since the date of the latest audited combined financial statements of the Company included in the Offering Memorandum, there has been no (i) dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock (other than the payment of regular quarterly cash dividends), (ii) issuance of securities (other than pursuant to the Company's employee benefit plans and agreement and the issuance of the Series A Notes offered hereby) or (iii) material increase in short-term or long-term debt of the Company. The Company has good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by it, in each case free and clear of all liens, claims, security interests or other encumbrances and defects except such as are described in the Offering Memorandum, other than to be granted pursuant to the Senior Credit Facilities, or such as do not materially affect the value of such property by the Company or would not reasonably be expected to have a Material Adverse Effect; and all material real property and buildings held under lease by the Company is held under valid, subsisting and enforceable leases, with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company. The Company has such permits, licenses, franchises, certificates, consents, orders and other approvals or authorizations of any governmental or regulatory authority ("PERMITS"), including, without limitation, any permits or approvals required by the United States Environmental Protection Agency, the United States Office of Surface Mining Reclamation and Enforcement and corresponding state agencies and any other entity or agency regulating the environment in countries other than the United States, as are necessary under applicable law to own its properties and to conduct its businesses in the manner described in the Offering Memorandum and, except to the extent that the failure to have such Permits would not reasonably be expected to have a Material Adverse Effect. The Company has fulfilled and performed in all material respects, all its material obligations with respect to the Permits, and, to the best knowledge of the Company, no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other material impairment of the rights of the holder of any such Permit, subject in each case to such qualification as may be set forth in the 8 Offering Memorandum and except to the extent that any such revocation or termination would not reasonably be expected to have a Material Adverse Effect. The Company is not currently and will not be, upon sale of each tranche of the Series A Notes in accordance herewith and the application of the net proceeds therefrom as described in the Offering Memorandum under the caption "Use of Proceeds," an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Neither the Company nor any affiliate (as defined in Rule 501(b) of Regulation D ("REGULATION D") under the Securities Act) of the Company, other than the Initial Purchaser, has directly, or through any agent (provided that no representation is made as to the Initial Purchaser or any person acting on their behalf), (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) which is or could be integrated with the offering and sale of each tranche of the Notes in a manner that would require the registration of each tranche of the Series A Notes under the Securities Act or (ii) engaged in any form of general solicitation or general advertising (within the meaning of Regulation D, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising) in connection with the offering of each tranche of the Series A Notes. No securities of the same class as each tranche of the Series A Notes have been issued and sold by the Company within the six-month period immediately prior to the date hereof. Except as permitted by the Securities Act, the Company has not distributed and, prior to the Closing Date will not distribute, any offering material in connection with the offering and sale of each tranche of the Series A Notes other than the Preliminary Offering Memorandum and Offering Memorandum. When each tranche of the Series A Notes is issued and delivered pursuant to this Agreement, neither tranche of such Series A Notes will be of the same class (within the meaning of Rule 144A under the Securities Act) as securities of the Company that are listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") or that are quoted in a United States automated inter- dealer quotation system. Assuming (i) that each tranche of the Series A Notes is issued, sold and delivered under the circumstances contemplated by the Offering Memorandum and this Agreement, (ii) that your representations and warranties in Section 2 are true, (iii) compliance by you with your covenants set forth in Section 2 and (iv) that each of the Eligible Purchasers is either (A) an entity that you reasonably believe to be a QIB or (B) a person who is not a "U.S. person" and who acquires the Series A Notes outside the United States in an "offshore transaction" (within the meaning of Regulation S), the purchase of each tranche of the Series A Notes by you pursuant hereto and the initial resale of each tranche of the Series A Notes pursuant to the Exempt Resales is exempt from the registration requirements of the Securities Act. Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect: the Company is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for which the Company would have any liability; the Company has not incurred and does not reasonably expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) 9 Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "CODE"). Each "pension plan" for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification, except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. The execution and delivery of this Agreement, the other Operative Documents and the sale of each tranche of the Series A Notes to be purchased by the Eligible Purchasers will not involve any prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code. The representation made by the Company in the preceding sentence is made in reliance upon and subject to the accuracy of, and compliance with, the representations and covenants made or deemed made by the Eligible Purchasers as set forth in the Offering Memorandum under the section entitled "Notice to Investors." Except as described in the Offering Memorandum, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statements or in any securities being registered pursuant to any other registration statement filed by the Company under the Securities Act. To the knowledge of the Company, the Company carries, or is covered by, insurance in such amounts and covering such risks as is adequate for the conduct of its businesses and the value of its properties and as is customary for companies engaged in similar businesses in similar industries. The Company has filed (or obtained extensions in filing) all Federal, state and local income and franchise tax returns required to be filed through the date hereof (other than those the nonfiling of which would not have a Material Adverse Effect) and have paid all taxes due thereon, other than those being contested in good faith and for which reserves have been provided in accordance with GAAP, those currently payable without penalty or interest, or the nonpayment of which would not have a Material Adverse Effect. No tax deficiency has been determined adversely to the Company nor does the Company have any knowledge of any tax deficiency which, if determined adversely to the Company, would have a Material Adverse Effect. Except as set forth in the Offering Memorandum, there has been no storage, disposal, generation, transportation, handling or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous substances by the Company (or, to the knowledge of the Company, any of their predecessors in interest) at, upon or from any of the property now or previously owned or leased by the Company in violation of any applicable law, ordinance, rule, regulation or order, or which would require remedial action under any applicable law, ordinance, rule, regulation or order, except for any violation or remedial action which would not be reasonably likely to have, singularly or in the aggregate, a Material Adverse Effect; except as set forth in, or specifically contemplated by, the Offering Memorandum there has been no material spill, discharge, leak, emission, injection, escape, dumping or release of any kind onto such property or into the environment surrounding such property of any toxic wastes, solid wastes, hazardous wastes or hazardous substances due to or caused by the Company or with respect to which the Company has knowledge, except for any such spill, discharge, leak, emission, injection, escape, dumping or release which would not be reasonably likely to have, singularly or in the aggregate, a Material Adverse Effect; and the terms "hazardous wastes," "medical wastes," "toxic wastes," and "hazardous substances" 10 shall have the meanings specified in any applicable local, state, federal and foreign laws or regulations with respect to environmental protection. None of the Company or any of its affiliates (other than the Initial Purchaser) or any person acting on its or their behalf has engaged or will engage during the applicable restricted period in any directed selling efforts within the meaning of Rule 902(b) of Regulation S with respect to each tranche of the Notes, and the Company and its affiliates and all persons acting on its or their behalf have complied with and will comply with the offering restrictions requirements of Regulation S in connection with the offering of each tranche of the Notes outside of the United States; provided, that, no representation or covenant is made as to the Initial Purchaser or any person acting on their behalf. The sale of each tranche of the Series A Notes pursuant to Regulation S are "offshore transactions" and are not part of a plan or scheme to evade the registration provisions of the Securities Act. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE INITIAL PURCHASER. The Initial Purchaser represents and warrants that: The Initial Purchaser is a QIB with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an investment in each tranche of the Series A Notes. The Initial Purchaser (i) is not acquiring each tranche of the Series A Notes with a view to any distribution thereof or with any present intention of offering or selling any of either tranche of the Series A Notes in a transaction that would violate the Securities Act or the securities laws of any State of the United States or any other applicable jurisdiction; (ii) in connection with the Exempt Resales, will solicit offers to buy the Notes only from, and will offer to sell either tranche of the Notes only to, the Eligible Purchasers in accordance with this Agreement and on the terms contemplated by the Offering Memorandum; and (iii) will not offer or sell either tranche of the Notes pursuant to, nor has it offered or sold either tranche of the Notes by, or otherwise engaged in, any form of general solicitation or general advertising (within the meaning of Regulation D; including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising) in connection with the offering of each tranche of the Series A Notes. It understands that neither tranche of the Notes has been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons pursuant to an exemption from the registration requirements of the Securities Act or outside the U.S. or to, or for the account or benefit of non-U.S. persons in accordance with Regulation S. The Initial Purchaser represents that it has not offered, sold or delivered either tranche of the Notes, and will not offer, sell or deliver either tranche of the Notes (i) as part of its distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the Closing Date or such longer period as may then be applicable under Regulation S (such period, the "RESTRICTED PERIOD"), within the United States or to, or for the account or benefit of U.S. persons, except in accordance with Rule 144A under the Securities Act or another applicable exemption. Accordingly, the Initial Purchaser represents and agrees that neither it, its affiliates nor any persons acting on its or their behalf has engaged or will engage in any directed selling efforts within the meaning of Rule 902(b) of Regulation S with respect to either tranche of the Notes, and it, its affiliates and all persons acting on its behalf have complied and will comply with the offering restriction requirements of Regulation S. 11 The Initial Purchaser agrees that at or prior to confirmation of all sales of each tranche of the Notes pursuant to Regulation S, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Notes from it during the Restricted Period a confirmation or notice substantially to the following effect: "The Notes covered hereby have not been registered under the U.S. Securities Act of 1933 (the "Securities Act") and may not be offered and 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 or the closing date, except in either case in accordance with Rule 144A if available under the Securities Act. Terms used above have the meanings assigned to them in Regulation S." The Initial Purchaser further agrees that it has not entered and will not enter into any contractual arrangement with respect to the distribution or delivery of either tranche of the Notes, except with its affiliates or with the prior written consent of the Company. The Initial Purchaser agrees not to cause any advertisement of either tranche of the Notes to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to each tranche of the Notes, except such advertisements as may be permitted by Regulation S. The sale of each tranche of the Series A Notes pursuant to Regulation S are "offshore transactions" and are not part of a plan or scheme to evade the registration provisions of the Securities Act. The Initial Purchaser understands that the Company and, for purposes of the opinions to be delivered to you pursuant to Section 7 hereof, counsel to the Company and counsel to the Initial Purchaser, will rely upon the accuracy and truth of the foregoing representations and you hereby consent to such reliance. The terms used in this Section 2 that have meanings assigned to them in Regulation S are used herein as so defined. PURCHASE OF THE NOTES BY THE INITIAL PURCHASER. On the basis of the representations and warranties contained in, and subject to the terms and conditions of, this Agreement, the Company agrees to sell $400.0 million in aggregate principal amount of Series A Senior Notes to the Initial Purchaser and the Initial Purchaser will purchase such aggregate principal amount of Series A Senior Notes at an aggregate purchase price equal to 97.0% of the principal amount thereof (the "SENIOR NOTES PURCHASE PRICE") and the Company agrees to sell $500.0 million in aggregate principal amount of Series A Subordinated Notes to the Initial Purchaser and the Initial Purchaser will purchase such aggregate principal amount of Series A Subordinated Notes at an aggregate purchase price equal to 97.0% of the principal amount thereof (the "SUBORDINATED NOTES PURCHASE PRICE"). The Company shall not be obligated to deliver any of the Series A Notes to be delivered, except upon payment for all of each tranche of the Series A Notes to be purchased on such Closing Date as provided herein. 12 DELIVERY OF AND PAYMENT. Delivery to the Initial Purchaser of and payment for each tranche of the Series A Notes shall be made at 10:00 a.m., New York City time, on the Closing Date at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017-3954, or such other place or time as you and the Company shall designate. One or more of each tranche of Series A Notes in definitive form, registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), or such other names as the Initial Purchaser may request upon at least one business days' notice to the Company, having an aggregate principal amount at maturity corresponding to the aggregate principal amount of each tranche of the Series A Notes sold pursuant to Exempt Resales (collectively, the "GLOBAL NOTES"), shall be delivered by the Company to the Initial Purchaser, against payment by the Initial Purchaser of the purchase price thereof by wire transfer of immediately available funds as the Company may direct by written notice delivered to you one business day prior to the Closing Date. The Global Notes in definitive form shall be made available to you for inspection not later than 10:00 a.m. on the day immediately preceding the Closing Date. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligation of the Initial Purchaser hereunder. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees: To advise you promptly and, if requested by you, to confirm such advice in writing, of (i) the issuance by any state securities commission of any stop order suspending the qualification or exemption from qualification of each tranche of any Series A Notes for offering or sale in any jurisdiction, or the initiation of any proceeding for such purpose by the Commission or any state securities commission or other regulatory authority, and (ii) the happening of any event that makes any statement of a material fact made in the Offering Memorandum untrue or that requires the making of any additions to or changes in the Offering Memorandum in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company shall use its reasonable efforts to prevent the issuance of any stop order or order suspending the qualification or exemption of each tranche of the Series A Notes under any state securities or Blue Sky laws and, if at any time any state securities commission shall issue any stop order suspending the qualification or exemption of each tranche of the Series A Notes under any state securities or Blue Sky laws, the Company shall use every reasonable effort to obtain the withdrawal or lifting of such order at the earliest possible time. To furnish to you, without charge, as many copies of the Preliminary Offering Memorandum and the Offering Memorandum, and any amendments or supplements thereto, as you may reasonably request. The Company consents to the use of the Preliminary Offering Memorandum and the Offering Memorandum, and any amendments and supplements thereto required pursuant to this Agreement, by you in connection with the Exempt Resales that are in compliance with this Agreement. Not to amend or supplement the Offering Memorandum prior to the Closing Date unless you shall previously have been advised of, and shall not have reasonably objected to, such amendment or supplement within a reasonable time, but in any event not longer than two Business Days after being furnished a copy of such amendment or supplement. If, in connection with any Exempt Resales or market-making transactions after the date of this Agreement and prior to the consummation of the Exchange Offer, any event shall occur that, in the judgment of the Company or in the judgment of counsel to you, makes any statement of a material fact in the Offering Memorandum untrue or that 13 requires the making of any additions to or changes in the Offering Memorandum in order to make the statements in the Offering Memorandum, in light of the circumstances at the time that the Offering Memorandum is delivered to prospective Eligible Purchasers, not misleading, or if it is necessary to amend or supplement the Offering Memorandum to comply with any applicable laws, the Company shall promptly notify you of such event and prepare an appropriate amendment or supplement to the Offering Memorandum so that (i) the statements in the Offering Memorandum as amended or supplemented will, in light of the circumstances at the time that the Offering Memorandum is delivered to prospective Eligible Purchasers, not be misleading and (ii) the Offering Memorandum will comply with applicable law. To cooperate with you and your counsel in connection with the qualification of each tranche of the Series A Notes for offer and sale by you and by dealers under the state securities or Blue Sky laws of such jurisdictions as you may request (provided, however, that the Company shall not be obligated to qualify as a foreign corporation in any jurisdiction in which it is not now so qualified or to take any action that would subject it to general consent to service of process in any jurisdiction in which it is not now so subject or subject itself to taxation in excess of a nominal amount in any such jurisdiction where it is not then so subject). Subject to the provisions in the first sentence of this Section 5(d), the Company shall continue such qualification in effect so long as required by law for distribution of each tranche of the Series A Notes. Not to voluntarily claim the benefit of any usury law against the holders of each tranche of the Series A Notes. Prior to the Closing Date, to furnish to you, any internal combined financial statements of the Company that have been prepared by the Company for any period subsequent to the period covered by the financial statements appearing in the Offering Memorandum. To use its reasonable best efforts to do and perform all things required to be done and performed under this Agreement by it prior to or after the Closing Date and to satisfy all conditions precedent on its part to the delivery of each tranche of the Series A Notes. Not to sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) that would be integrated with the sale of either tranche of the Series A Notes in a manner that would require the registration under the Securities Act of the sale to you or the Eligible Purchasers of either tranche of Series A Notes. For a period of 90 days from the date of the Offering Memorandum, not to, directly or indirectly, sell, contract to sell, grant any option to purchase, issue any instrument convertible into or exchangeable for, or otherwise transfer or dispose of, any debt securities of the Company in a public or private offering for cash having a maturity of more than one year from the date of issue of such securities, except (i) for each tranche of the Series B Notes in connection with the Exchange Offer or (ii) with the prior consent of the Initial Purchaser, which consent shall not be unreasonably withheld. For the period that is two years after the Closing Date or for so long as necessary to comply with Rule 144A in connection with resales by registered holders or beneficial owners of each tranche of Series A Notes, whichever is longer, to make available to such registered holder or beneficial owner of each tranche of Series A Notes in connection with any sale thereof and any prospective purchaser of each tranche of such Series A Notes from such registered holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act (or any successor provision thereto). 14 To comply with its agreements in the Registration Rights Agreements, and all agreements set forth in the representation letters of the Company to DTC relating to the approval of each tranche of the Notes by DTC for "book-entry" transfer. To use its reasonable best efforts to effect the inclusion of each tranche of the Notes in the National Association of Securities Dealers, Inc. Automated Quotation System - PORTAL ("PORTAL"). To apply the net proceeds from the sale of each tranche of the Series A Notes being sold by the Company as set forth in the Offering Memorandum under the caption "Use of Proceeds." During the period that is two years after the Closing Date, to take such steps as shall be necessary to ensure that the Company does not become an "investment company" within the meaning of such term under the Investment Company Act of 1940 and the rules and regulations of the Commission thereunder. EXPENSES. The Company agrees that, whether or not the transactions contemplated by this Agreement are consummated or this Agreement becomes effective or is terminated, to pay all costs, expenses, fees and taxes incident to and in connection with: (i) the preparation, printing, filing and distribution of the Preliminary Offering Memorandum and the Offering Memorandum (including, without limitation, financial statements) and all amendments and supplements thereto (but not, however, legal fees and expenses of your counsel incurred in connection therewith), (ii) the preparation, printing (including, without limitation, word processing and duplication costs) and delivery of this Agreement, the Indentures, any Blue Sky Memoranda and any other agreements, memoranda, correspondence and other documents printed and delivered in connection herewith and with the Exempt Resales (but not, however, legal fees and expenses of your counsel incurred in connection with any of the foregoing other than reasonable fees of such counsel plus reasonable disbursements incurred in connection with the preparation, printing and delivery of such Blue Sky Memoranda), (iii) the issuance and delivery by the Company of each tranche of the Notes, (iv) the qualification of each tranche of the Notes for offer and sale under the securities or Blue Sky laws of the several states (including, without limitation, the reasonable fees and disbursements of your counsel relating to such registration or qualification), (v) furnishing such copies of the Preliminary Offering Memorandum and the Offering Memorandum, and all amendments and supplements thereto, as may be reasonably requested by the Initial Purchaser for use in connection with the initial Exempt Resales, (vi) the preparation of certificates for each tranche of the Notes including, without limitation, printing and engraving, (vii) the fees, disbursements and expenses of the Company's counsel and accountants, (viii) all expenses and listing fees in connection with the application for quotation of each tranche of the Series A Notes in PORTAL, (ix) all fees and expenses (including fees and expenses of counsel) of the Company in connection with approval of each tranche of the Notes by DTC for "book-entry" transfer and (x) the performance by the Company of its other obligations under this Agreement to the extent not provided for above. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The obligations of the Initial Purchaser hereunder are subject to the accuracy, when made and again on the Closing Date (as if made again on and as of such date), of the representations and warranties of the Company contained herein, to the performance by the Company of its obligations hereunder, and to each of the following additional terms and conditions: 15 The Offering Memorandum shall have been printed and copies made available to you not later than 6:00 p.m., New York City time, on the Business Day following the date of this Agreement, or at such later date and time as you may approve in writing. The Initial Purchaser shall not have discovered and disclosed to the Company on or prior to such Closing Date that the Offering Memorandum or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of Latham & Watkins, counsel for the Initial Purchaser, is material or omits to state a fact which, in the opinion of such counsel, is material and is necessary to make the statements, in the light of the circumstances under which they were made, not misleading. All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the other Operative Documents, the Offering Memorandum and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Initial Purchaser, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. Simpson Thacher & Bartlett shall have furnished to the Initial Purchaser, its written opinion, as counsel to the Company, addressed to the Initial Purchaser and dated as of the Closing Date, substantially in the form of Exhibit A hereto: The Initial Purchaser shall have received from Latham & Watkins, counsel for the Initial Purchaser, such opinion or opinions, dated as of the Closing Date, with respect to the issuance and sale of each tranche of the Series A Notes, the Offering Memorandum and other related matters as the Initial Purchaser may reasonably require, and the Company shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters. The Company shall have entered into the Senior Credit Facilities and any Credit Documents and the Initial Purchaser shall have received counterparts, conformed as executed, thereof. The Company and the Senior Note Trustee shall have entered into the Senior Note Indenture and the Initial Purchaser shall have received counterparts, conformed as executed, thereof. The Company and the Subordinated Note Trustee shall have entered into the Subordinated Note Indenture and the Initial Purchaser shall have received counterparts, conformed as executed, thereof. The Company and the Initial Purchaser shall have entered into each of the Senior Registration Rights Agreement and the Subordinated Registration Rights Agreement and the Initial Purchaser shall have received counterparts, conformed as executed, thereof. The Initial Purchaser shall have received from Ernst & Young LLP, independent certified public accountants, letters addressed to the Initial Purchaser, substantially in the form heretofore approved by the Initial Purchaser, and dated the date hereof and the Closing Date, (i) confirming that they are independent auditors as required by the Securities Act and its Rules and Regulations, (ii) stating, as of the date of each letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Offering Memorandum, as of a date not more than two Business Days prior to the date of each letter), the conclusions and findings of such firm with respect to the financial information and other matters covered by the letter delivered concurrently with this Agreement and (iii) with respect to the letter delivered on the Closing Date, 16 confirming in all material respects the conclusions and findings set forth in the letter delivered concurrently with this Agreement. The Company shall have furnished to the Initial Purchaser a certificate, dated as of the Closing Date, of a Vice President and its Chief Financial Officer or Treasurer stating that: The representations, warranties and agreements of the Company (after giving effect to all materiality qualifiers therein) in Section 1 are true and correct as of such Closing Date and giving effect to the consummation of the transactions contemplated by this Agreement; the Company has complied in all material respects with all its agreements contained herein; and the conditions set forth in Sections 7(l) and 7(n) has been fulfilled; and They have examined the Preliminary Offering Memorandum and the Offering Memorandum and, in their opinion, the Preliminary Offering Memorandum as of its date and the Offering Memorandum as of its date and the Closing Date did not include any untrue statement of a material fact and did not omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (ii) since the date of the Offering Memorandum, no event has occurred which should have been set forth in a supplement or amendment to the Offering Memorandum. The Company shall not have sustained since the date of the latest audited financial statements included in the Offering Memorandum any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Offering Memorandum or (ii) since such date there shall not have been any change in the capital stock or long-term debt of the Company or any Material Adverse Effect otherwise than as set forth or contemplated in the Offering Memorandum, the effect of which, in any such case described in clause (i) or (ii), is, in the judgment of the Initial Purchaser, so material and adverse as to make it impracticable or inadvisable to proceed with the payment for and delivery of the Notes being delivered on such Closing Date on the terms and in the manner contemplated in the Offering Memorandum. Latham & Watkins shall have been furnished with such other documents and opinions, in addition to those set forth above, as they may reasonably require for the purpose of enabling them to review or pass upon the matters referred to in this Agreement and in order to evidence the accuracy, completeness or satisfaction in all material respects of any of the representations, warranties or conditions herein contained. Subsequent to the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Company's debt securities by any "nationally recognized statistical rating organization," as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities. Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall 17 have been declared by Federal or state authorities, (iii) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of the Initial Purchaser, impracticable or inadvisable to proceed with the public offering or delivery of each tranche of the Notes being delivered on such Closing Date on the terms and in the manner contemplated in the Offering Memorandum. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Initial Purchaser. INDEMNIFICATION AND CONTRIBUTION. The Company agrees to indemnify and hold harmless the Initial Purchaser, its officers and employees and each person, if any, who controls the Initial Purchaser within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of either tranche of Notes), to which the Initial Purchaser, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Memorandum or the Offering Memorandum (in each case as amended or supplemented), or (ii) the omission or alleged omission to state in any Preliminary Offering Memorandum or the Offering Memorandum (in each case as amended or supplemented) any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (iii) any act or failure to act or any alleged act or failure to act by the Initial Purchaser in connection with, or relating in any manner to, either tranche of the Notes or the offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon matters covered by clauses (i) or (ii) above (provided that the Company shall not be liable under this clause (iii) to the extent that it is determined in a final judgment by a court of competent jurisdiction that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by the Initial Purchaser through its gross negligence or willful misconduct); and shall reimburse the Initial Purchaser and each such officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by that Initial Purchaser, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Offering Memorandum or the Offering Memorandum (in each case as amended or supplemented) in reliance upon and in conformity with written information concerning the Initial Purchaser furnished to the Company by or on behalf of the Initial Purchaser specifically for inclusion therein; and provided further that with respect to any such untrue statement or omission made in the Preliminary Offering Memorandum, the foregoing indemnity shall not inure to the benefit of the Initial Purchaser (or any person who controls the Initial Purchaser or any officer or director thereof) from whom the person asserting such loss, claim, damage, liability or action purchased the Notes, to the extent that such sale was an initial resale by the Initial Purchaser and any such loss, claim, damage, liability or action of the Initial Purchaser is a result of the fact that both (i) to the extent required by applicable law, a copy of the Offering Memorandum was not sent or given to such person at or prior to the written confirmation of the 18 sale of such Securities to such person, and (ii) the untrue statement or omission in the Preliminary Offering Memorandum was corrected in the Offering Memorandum unless, in either case, such failure to deliver the Offering Memorandum was a result of noncompliance by the Company with section 5(c). The foregoing indemnity agreement is in addition to any liability which the Company may otherwise have to the Initial Purchaser or to any officer, employee or controlling person of the Initial Purchaser. The Initial Purchaser shall indemnify and hold harmless the Company, its officers and employees, each of its respective directors, and each person, if any, who controls the Company within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any such director, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Memorandum or the Offering Memorandum (in each case as amended or supplemented) or in any Blue Sky application or (ii) the omission or alleged omission to state in any Preliminary Offering Memorandum or the Offering Memorandum (in each case as amended or supplemented) or in any Blue Sky application any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning the Initial Purchaser furnished to the Company by or on behalf of the Initial Purchaser specifically for inclusion therein, and shall reimburse the Company and any such director, officer, employee or controlling person for any legal or other expenses reasonably incurred by the or any such director, officer or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which the Initial Purchaser may otherwise have to the Company or any such director, officer, employee or controlling person. Promptly after receipt by an indemnified party under this Section 8 of notice of any claim or the commencement of any action, the indemnified party shall, 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 claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent it has been materially prejudiced by such failure and, provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 8. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the Initial Purchaser shall have the right to employ one counsel to represent jointly the Initial Purchaser and its respective officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Initial Purchaser against the Company under this Section 8 if, in the reasonable judgment of outside counsel to the Initial Purchaser, it is advisable for the Initial Purchaser, officers, employees and controlling persons to be jointly represented by separate counsel, and in that event the reasonable fees and expenses of such separate counsel shall be paid by the Company. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any 19 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, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. If the indemnification provided for in this Section 8 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(b) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and the Initial Purchaser on the other from the offering of each tranche of the Series A Notes or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Initial Purchaser on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Initial Purchaser on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of each tranche of the Series A Notes purchased under this Agreement (before deducting expenses) received by the Company, on the one hand, and the total discounts and commissions received by the Initial Purchaser with respect to each tranche of the Series A Notes purchased under this Agreement, on the other hand, bear to the total gross proceeds from the offering of each tranche of the Series A Notes under this Agreement, in each case as set forth in the table on the cover page of the Offering Memorandum. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or the Initial Purchaser, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Initial Purchaser agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section shall be deemed to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), the Initial Purchaser shall not be required to contribute any amount in excess of the amount by which the total price at which each tranche of the Series A Notes purchased by it was resold to Eligible Purchasers exceeds the amount of any damages which the Initial Purchaser has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Initial Purchaser confirms and the Company acknowledges that the last paragraph on the cover page, the stabilization legend on page iii and the information contained in the second, fifth, sixth, seventh, ninth, tenth and thirteenth paragraphs of the section entitled "Plan of 20 Distribution" constitute the only information concerning the Initial Purchaser furnished in writing to the Company by or on behalf of the Initial Purchaser specifically for inclusion in the Preliminary Offering Memorandum or the Offering Memorandum. TERMINATION. The obligations of the Initial Purchaser hereunder may be terminated by Lehman Brothers Inc. by notice given to the Company prior to delivery of and payment for each tranche of the Series A Notes if, prior to that time, any of the events described in Sections 7(l), 7(n) or 7(o) shall have occurred or if the Initial Purchaser shall decline to purchase either tranche of the Series A Notes for any reason permitted under this Agreement. REIMBURSEMENT OF INITIAL PURCHASER'S EXPENSES. If the Company shall fail to tender either tranche of the Series A Notes for delivery to the Initial Purchaser by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or because any other condition of the Initial Purchaser's obligations hereunder required to be fulfilled by the Company is not fulfilled, the Company will reimburse the Initial Purchaser for all reasonable out-of-pocket expenses (including the reasonable fees and disbursements of its counsel) (accompanied by documentation) incurred by the Initial Purchaser in connection with this Agreement and the proposed purchase of each tranche of the Series A Notes, and upon demand the Company shall pay the full amount thereof to the Initial Purchaser. NOTICES, ETC. All statements, requests, notices and agreements hereunder shall be in writing, and: if to the Initial Purchaser, shall be delivered or sent by mail, telex or facsimile transmission to Lehman Brothers Inc., Three World Financial Center, New York, New York 10285, Attention: Syndicate Department (Fax: 212-526- 6588), with a copy to Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New York 10022, Attention: Raymond Y. Lin (Fax: 212-751-4864); and if to the Company, shall be delivered or sent by mail, telex or facsimile transmission to P&L Coal Holdings Corporation, 701 Market Street, St. Louis, Missouri, 63101, Attention: General Counsel (Fax: 314-342-3449), with a copy to Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, Attention Rise B. Norman (Fax: 212-455-2502). Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. The Company shall be entitled to act and rely upon any request, consent, notice or agreement given or made by the Initial Purchaser. Any notice of a change of address or facsimile transmission number must be given by the Company or by the Initial Purchaser, as the case may be, in writing, at least three days in advance of such change. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure to the benefit of and be binding upon the Initial Purchaser, the Company and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (i) the representations, warranties, indemnities and agreements of the Company contained in this Agreement shall also be deemed to be for the benefit of the person or persons, if any, who control the Initial Purchaser within the meaning of Section 15 of the Securities Act and (ii) the representations, warranties, indemnities and agreements of the Initial Purchaser contained in this Agreement shall be deemed to be for the benefit of directors, officers and employees of the Company and any person controlling the Company within the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this 21 Section 12, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. SURVIVAL. The respective indemnities, representations, warranties and agreements of the Initial Purchaser and the Company contained in this Agreement or made by or on behalf on them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Notes and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them. DEFINITION OF THE TERMS "BUSINESS DAY." For purposes of this Agreement, "BUSINESS DAY" means any day on which the New York Stock Exchange, Inc. is open for trading. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. COUNTERPARTS. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument. HEADINGS. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. [Signature page(s) follow] 1 If the foregoing correctly sets forth the agreement between the Initial Purchaser and the Company, please indicate your acceptance in the space provided for that purpose below. Very truly yours, P&L Coal Holdings Corporation By: _______________________________ Name: Title: Accepted: Lehman Brothers Inc. By: ____________________________ Name: Title: EXHIBIT A FORM OF OPINION OF SIMPSON THACHER & BARTLETT TO BE DELIVERED AS OF THE CLOSING DATE EX-3.1 3 AMENDED & RESTATED CERT OF INC. OF P&L COAL EXHIBIT 3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF P&L COAL HOLDINGS CORPORATION ----------------------------- P&L COAL HOLDINGS CORPORATION (the "Corporation"), a corporation organized and existing under the laws of the State of Delaware, DOES HEREBY CERTIFY: 1. The name of the corporation is P&L Coal Holdings Corporation. The date of the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was February 27, 1998 under the name of P&L Coal Holdings Corporation. 2. This Amended and Restated Certificate of Incorporation has been duly adopted in accordance with Sections 103, 242 and 245 of the General Corporation Law of the State of Delaware. The Corporation has received payment for its stock. 3. The Board of Directors of the Corporation, pursuant to a unanimous written action in lieu of a meeting pursuant to Section 141(f) of the General Corporation Law of the State of Delaware, adopted resolutions proposing and declaring advisable that the Corporation amend and restate its Certificate of Incorporation to read in its entirety as follows: FIRST: The name of the Corporation is P&L Coal Holdings Corporation. SECOND: The registered office and registered agent of the Corporation is The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The total number of shares of stock that the Corporation shall have the authority to issue is 35,000,000 shares, consisting of 25,000,000 shares of Common Stock, par value $0.01 per share (the "Common Stock") and 10,000,000 shares of Non-Convertible, Exchangeable Preferred Stock, par value of $0.01 per share (the "Preferred Stock"). Set forth below with respect to each type of stock of the Corporation is a statement of the voting powers and the designations, preferences, rights, qualifications, limitations and restrictions thereof: A. Common Stock. ------------ 1. Voting Rights. Except as may otherwise be required by law, each ------------- holder of Common Stock (together with the holders of any Preferred Stock) shall have one vote in respect of each share of Common Stock held on all matters voted upon by the stockholders of the Corporation. 2. Dividends. The holders of Common Stock (together with the holders --------- of any Preferred Stock) shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors of the Corporation ratably in proportion to the number of shares of Common Stock (and Preferred Stock) held by them. 3. Distributions. Subject to the limitations set forth in Section ------------- B.3 of this Article FOURTH, in the event of any Liquidation Event, following Payment in Full of the Preference Amount to the holders of Preferred Stock, the holders of Common Stock shall be entitled to receive all of the remaining Available Assets ratably in proportion to the number of shares of Common Stock held by them until they receive Payment in Full of the Preference Amount. If such remaining Available Assets shall be insufficient to distribute to the holders of shares of Common Stock the Payment in Full of the Preference Amount to which they are entitled (after Payment in Full of the Preference Amount to the holders of shares of Preferred Stock), the holders of shares of Common Stock shall share ratably in any distribution of Available Assets in proportion to the number of shares of Common Stock held by them. After Payment in Full of the Preference Amount to the holders of shares of Common Stock, the holders of Common Stock shall be entitled 2 (together with the holders of Preferred Stock) to receive any remaining Available Assets ratably in proportion to the number of shares of Common Stock (and Preferred Stock) held by them. B. Preferred Stock. Subject to the limitations and modifications set --------------- forth below, each share of Preferred Stock shall have the voting powers and the designations, preferences, rights, qualifications, limitations and restrictions of a share of Common Stock. 1. Voting Rights. Each holder of a share of Preferred Stock shall ------------- have the same voting rights as the holder of a share of Common Stock, and all holders of shares of Preferred Stock shall vote as a single class with all holders of shares of Common Stock, and not as a separate class, upon all matters in which the holders of the Common Stock are entitled to vote. 2. Dividends. The holders of the shares of Preferred Stock (together --------- with the holders of any Common Stock) shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors of the Corporation ratably in proportion to the number of shares of Preferred Stock (and Common Stock) held by them. 3. Distributions. In the event of any Liquidation Event, the holders ------------- of Preferred Stock shall be entitled to receive all of the Available Assets ratably in proportion to the number of shares of Preferred Stock held by them, in priority to any distribution to the holders of the Common Stock, until such holders of Preferred Stock receive Payment in Full of the Preference Amount. If the Available Assets shall be insufficient to distribute to the holders of shares of Preferred Stock the Payment in Full of the Preference Amount to which they are entitled, the holders of shares of Preferred Stock shall share ratably in any distribution of Available Assets in proportion to the number of shares of Preferred Stock held by them. After Payment in Full of the Preference Amount to the holders of shares of Preferred Stock pursuant to the foregoing provisions and to the holders of shares of Common Stock pursuant to Section A.3 of this Article FOURTH, the holders of Preferred Stock shall be entitled (together with the holders of Common Stock) to receive any remaining Available Assets ratably in proportion to the number of shares of Preferred Stock (and Common Stock) held by them. 4. Exchange. -------- a. At any time and from time to time, the Corporation may exchange, at the option of the Corporation in its sole discretion, in whole or in 3 part, the shares of Preferred Stock, share for share, into shares of Common Stock. b. The Corporation may exercise the right to exchange shares of Preferred Stock into shares of Common Stock by resolution of the Board of Directors to that effect (which may specify an event or events upon which such exercise and exchange will be effective). c. On the date for the exchange of the shares of Preferred Stock into shares of Common Stock (the "Exchange Date"), such shares of Preferred Stock (the "Exchanged Shares") shall be exchanged, share for share, for shares of Common Stock. As a condition of receipt of the certificate or certificates representing such Common Stock, each holder of Exchanged Shares must surrender the certificate or certificates representing the Exchanged Shares to the Corporation. Each surrendered certificate shall be canceled and retired promptly after receipt by the Corporation and the capital stock evidenced thereby may be reissued by the Corporation. d. From and after the Exchange Date, (i) the rights of the holders of Exchanged Shares in respect thereof will cease (other than the right to receive any dividend or other distribution that has been declared by the Board of Directors of the Corporation to be payable on or following the Exchange Date to holders of record of Preferred Stock on a date prior to the Exchange Date), (ii) the person or persons in whose name or names the certificate or certificates for the Exchanged Shares were issued shall be deemed to have become the holder or holders of record of an equivalent number of shares of Common Stock and (iii) any certificate or certificates representing Exchanged Shares shall thereafter, and without any action on the part of the holder thereof, be deemed to represent an equivalent number of shares of Common Stock. e. If the Corporation in any manner subdivides or combines the outstanding shares of Common Stock or Preferred Stock, the outstanding shares of the other class will be proportionately subdivided or combined. f. The Corporation shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the exchange of the Preferred Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect the exchange of all then outstanding shares of Preferred Stock. The Corporation shall from time to time, subject to and in accordance with the laws of Delaware, increase the authorized 4 amount of Common Stock if at any time the number of authorized shares of Common Stock remaining unissued shall not be sufficient to permit the exchange at such time of all then outstanding shares of Preferred Stock. 5. Redemption. ---------- a. At any time during the six-month period immediately following the issuance of shares of Preferred Stock by the Corporation and from time to time during such period, the Corporation may redeem, at the option of the Corporation in its sole discretion, in whole or in part, the shares of Preferred Stock for a price of $20 per share without interest thereon (the "Redemption Price"). b. The Corporation may exercise the right to redeem shares of Preferred Stock by resolution of the Board of Directors to that effect (which may specify an event or events upon which such exercise and redemption will be effective). c. On the date for the redemption of the shares of Preferred Stock (the "Redemption Date"), the full Redemption Price shall become payable in cash for the shares of Preferred Stock being redeemed on such Redemption Date (the "Redeemed Shares"). As a condition of payment of the Redemption Price, each holder of Redeemed Shares must surrender the certificate or certificates representing the Redeemed Shares to the Corporation. Each surrendered certificate shall be canceled and retired promptly after receipt by the Corporation and the capital stock evidenced thereby may be reissued by the Corporation. d. On the Redemption Date, unless the Corporation defaults in the payment in full of the Redemption Price, all rights of holders of the Redeemed Shares shall terminate (other than the right to receive any dividend or other distribution that has been declared by the Board of Directors of the Corporation to be payable on or following the Redemption Date to holders of record of Preferred Stock on a date prior to the Redemption Date and the right to receive the Redemption Price). e. If the Corporation in any manner subdivides or combines the outstanding shares of Preferred Stock, the Redemption Price will be adjusted proportionately. C. Certain Definitions. For purposes of this Article FOURTH, the ------------------- following terms shall have the following meanings: 5 "Available Assets" means (i) in the case of a Business Combination, ---------------- all cash, securities and other assets to be received by stockholders of the Corporation pursuant thereto and (ii) in the case of any other Liquidation Event, all assets of the Corporation, tangible and intangible, of whatever kind available for distribution to stockholders. "Liquidation Event" means any of the following: (i) any voluntary or ----------------- involuntary liquidation, dissolution or winding up of the Corporation, (ii) any acquisition of the Corporation by means of merger or other form of corporate reorganization in which outstanding shares of the Corporation are exchanged for cash, securities or other consideration issued or given, or caused to be issued or given, by the acquiring corporation or its subsidiary (other than a mere reincorporation transaction) (a "Business Combination"), or (iii) a sale or disposition by the Corporation or any subsidiary of the Corporation, if any, of all or substantially all of the assets of the Corporation or such subsidiary (if, with respect to such subsidiary, the assets so sold would have constituted all or substantially all of the assets of the Corporation if the assets were held directly by the Corporation). "Payment in Full of the Preference Amount" is deemed to have been made ---------------------------------------- at such time as the holders of the shares of Preferred Stock or Common Stock, as the case may be, shall have received in respect of each such share an aggregate amount of cash, or securities or other assets, or any combination thereof, with a fair market value equal to $20 in connection with a Liquidation Event (without giving effect to prior unrelated dividends or distributions), and in the event that the Corporation in any manner subdivides or combines the outstanding shares of Common Stock or Preferred Stock, such Payment in Full of the Preference Amount shall be adjusted accordingly. FIFTH: The Board of Directors of the Corporation, acting by the affirmative vote of a majority of the directors then in office, may alter, amend or repeal the Bylaws of the Corporation. SIXTH: The number of directors of the Corporation shall be determined in the manner provided in the Bylaws of the Corporation. SEVENTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law, as the same exists or hereafter 6 may be amended, or (iv) for any transaction from which the director derived an improper personal benefit. If the General Corporation Law hereafter is amended to authorize the further elimination or limitation of the liability of the directors, then the liability of a director shall be eliminated or limited to the fullest extent permitted by the amended General Corporation Law. In addition to the limitation on personal liability of directors provided herein, the Corporation shall, to the fullest extent permitted by the General Corporation Law: (x) indemnify its officers and directors and (y) advance expenses incurred by such officers or directors in relation to any action, suit or proceeding. Any repeal or modification of this paragraph by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability or right to indemnification or advancement of expenses hereunder existing at the time of such repeal or modification. EIGHTH: Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws of the Corporation may provide. The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated by the Board of Directors or in the Bylaws of the Corporation. NINTH: Unless and except to the extent that the Bylaws of the Corporation shall so require, the election of the directors of the Corporation need not be by written ballot. TENTH: Notwithstanding the provisions of Section 228 of the General Corporation Law of the State of Delaware, the stockholders of the Corporation may take action by written consent only if all of the stockholders entitled to vote on the matter sign such consent. This Article TENTH may not be amended without the unanimous consent of all stockholders entitled to vote on the matter. ELEVENTH: Each person who is or was or had agreed to become a director or officer of the Corporation, or each such person who is or was serving or who had agreed to serve at the request of the Board of Directors or an officer of the Corporation as an employee or agent of the Corporation or as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executors, administrators or estate of such person), shall be indemnified by the Corporation to the fullest extent permitted by the General Corporation Law of the State of Delaware or any other applicable law as presently or hereafter in effect. Without limiting the generality or the effect of the foregoing, the Corporation may enter into one or more agreements with any person which provide for indemnification greater or different than that provided in this Article ELEVENTH. Any repeal or modification of this Article ELEVENTH shall not adversely affect any right or protection existing hereunder immediately prior to such repeal or modification. 7 4. In Lieu of a meeting and vote of the stockholders, the stockholders have given written consent to such amendment and restatement of the Certificate of Incorporation of the Corporation in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of Incorporation this 14th day of May 1998. P&L COAL HOLDINGS CORPORATION By /s/ Henry E. Lentz -------------------------------- Name: Henry E. Lentz Title: Director and President 8 EX-3.2 4 BY-LAW OF P&L COAL HOLDING CORP. EXHIBIT 3.2 P&L COAL HOLDINGS CORPORATION BY-LAWS ARTICLE I MEETING OF STOCKHOLDERS ----------------------- Section 1. Place of Meeting and Notice. Meetings of the stockholders --------------------------- of the Corporation shall be held at such place either within or without the State of Delaware as the Board of Directors may determine. Section 2. Annual and Special Meetings. Annual meetings of --------------------------- stockholders shall be held, at a date, time and place fixed by the Board of Directors and stated in the notice of meeting, to elect a Board of Directors and to transact such other business as may properly come before the meeting. Special meetings of the stockholders may be called by the President or any Vice President for any purpose and shall be called by the President or Secretary if directed by the Board of Directors or requested in writing by the holders of not less than 25% of the capital stock of the Corporation. Each such stockholder request shall state the purpose of the proposed meeting. Section 3. Notice. Except as otherwise provided by law, at least ten ------ and not more than 60 days before each meeting of stockholders, written notice of the time, date and place of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given to each stockholder. Section 4. Quorum. At any meeting of stockholders, the holders of ------ record, present in person or by proxy, of a majority of the Corporation's issued and outstanding capital stock shall constitute a quorum for the transaction of business, except as otherwise provided by law. In the absence of a quorum, any officer entitled to preside at or to act as secretary of the meeting shall have power to adjourn the meeting from time to time until a quorum is present. Section 5. Voting. Except as otherwise provided by law, all matters ------ submitted to a meeting of stockholders shall be decided by vote of the holders of record of a majority of the Corporation's issued and outstanding capital stock present in person or by proxy. ARTICLE II DIRECTORS --------- Section 1. Number, Election and Removal of Directors. The number of ----------------------------------------- Directors that shall constitute the Board of Directors shall be not less than one nor more than 15. The first Board of Directors shall consist of one Director. Thereafter, within the limits specified above, the number of Directors shall be determined by the Board of Directors or by the stockholders. The Directors shall be elected by the stockholders at their annual meeting. Vacancies and newly created directorships resulting from any increase in the number of Directors may be filled by a majority of the Directors then in office, although less than a quorum, or by the sole remaining Director or by the stockholders. A Director may be removed with or without cause by the stockholders. Section 2. Meetings. Regular meetings of the Board of Directors -------- shall be held at such times and places as may from time to time be fixed by the Board of Directors or as may be specified in a notice of meeting. Special meetings of the Board of Directors may be held at any time upon the call of the President and shall be called by the President or Secretary if directed by a majority of the Directors. Telegraphic or written notice of each special meeting of the Board of Directors shall be sent to each Director not less than two days before such meeting. A meeting of the Board of Directors may be held without notice immediately after the annual meeting of the stockholders. Notice need not be given of regular meetings of the Board of Directors. Section 3. Quorum. One-third of the total number of Directors shall ------ constitute a quorum for the transaction of business. If a quorum is not present at any meeting of the Board of Directors, the Directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until such a quorum is present. Except as otherwise provided by law, the Certificate of Incorporation of the Corporation, these By-Laws or any contract or agreement to which the Corporation is a party, the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. Section 4. Committees of Directors. The Board of Directors may, by ----------------------- resolution adopted by a majority of the whole Board, designate one or more committees, including without limitation an Executive Committee, to have and exercise such power and authority as the Board of Directors shall specify. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another Director to act at the meeting in place of any such absent or disqualified member. 2 ARTICLE III OFFICERS -------- The officers of the Corporation shall consist of a President, one or more Vice Presidents, a Secretary, a Treasurer and such other additional officers with such titles as the Board of Directors shall determine, all of whom shall be chosen by and shall serve at the pleasure of the Board of Directors. Such officers shall have the usual powers and shall perform all the usual duties incident to their respective offices. All officers shall be subject to the supervision and direction of the Board of Directors. The authority, duties or responsibilities of any officer of the Corporation may be suspended by the President with or without cause. Any officer elected or appointed by the Board of Directors may be removed by the Board of Directors with or without cause. ARTICLE IV INDEMNIFICATION --------------- To the fullest extent permitted by the Delaware General Corporation Law, the Corporation shall indemnify any current or former Director or officer of the Corporation and may, at the discretion of the Board of Directors, indemnify any current or former employee or agent of the Corporation against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any threatened, pending or completed action, suit or proceeding brought by or in the right of the Corporation or otherwise, to which he was or is a party or is threatened to be made a party by reason of his current or former position with the Corporation or by reason of the fact that he is or was serving, at the request of the Corporation, as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. ARTICLE V GENERAL PROVISIONS ------------------ Section 1. Notices. Whenever any statute, the Certificate of ------- Incorporation or these By-Laws require notice to be given to any Director or stockholder, such notice may be given in writing by mail, addressed to such Director or stockholder at his address as it appears on the records of the Corporation, with postage thereon prepaid. Such notice shall be deemed to have been given when it is deposited in the United States mail. Notice to Directors may also be given by telegram. 3 Section 2. Fiscal Year. The fiscal year of the Corporation shall be ----------- fixed by the Board of Directors. 4 EX-3.3 5 CERT OF INCORPORATION OF AFFINITY MINING CO. EXHIBIT 3.3 I. The undersigned agree to become a corporation by the name of AFFINITY MINING COMPANY II. The principal place of business of the corporation shall be located at 1302 South Eisenhower Drive, in the City of Beckley, P.O. Box 1065, in the County of Raleigh, and State of West Virginia, (25801), and its chief works shall be located in said Raleigh County, State of West Virginia, and elsewhere in the State of West Virginia. The Corporation may transact business and have an office or offices at any other place or places as may be provided by its By-Laws. III. The objects and purposes for which the corporation is formed are as follows: To mine, sell, purchase, deal in, export, or import coal, coke and wood and other similar combustible material, and to purchase, lease and sell coal lands, coal rights, coal and timber lands and to manufacture, buy, sell and deal in or deal with coal and coke and all products and by-products of any such lands, rights and materials. To purchase or otherwise acquire, and to hold, own, maintain, work and develop, and to sell, lease, convey, mortgage or otherwise dispose of, within or without the State of West Virginia, and in any part of the world, lands and leaseholds and any interest, estate and rights in real property, and in personal or mixed property, or any franchises, rights, licenses of privileges necessary, convenient or appropriate for any of the purposes herein expressed. To acquire, own, lease, mortgage, occupy, sell, use or develop any lands containing coal, iron manganese, or other ores or oil and gas and any woodlands or other lands, for any purpose of the company, and to mine, or otherwise to extract or remove, coal, oil, gas, ores or other minerals, and to take or remove such minerals from any lands owned, acquired, leased or occupied by the corporation or from any other lands, and to buy and sell, import and export, or otherwise to deal or to traffic in or to use or consume coal, coke, oil, gas, wood, lumber and other materials or ores and any part of the products thereof, and any articles consisting, or partly consisting thereof. To manufacture or otherwise produce, import, export, buy, sell, and in every way deal with and in, either as principal or agent or otherwise, goods, wares and merchandise and personal property of every kind and description. To purchase, lease, erect, or otherwise acquire, exchange, sell, let or otherwise dispose of, own, maintain, develop and improve any and all property, real or personal, mines, coke ovens, plants, oil and gas wells, depots, factories, warehouses, stores, buildings or otherwise useful in connection with the business of the corporation. To apply for, obtain, purchase or otherwise acquire any and all patents, patent rights, copyrights, licenses and privileges, inventions, improvements and processes, trade-marks, trade names, labels, designs, and brands relating to or useful in 2 connection with any business of the corporation; and to use, exercise, develop, grant licenses in respect of, sell, traffic in and exchange the same. To subscribe to, purchase, acquire, hold, own, invest in, assign, pledge or otherwise dispose of or deal in the stocks, bonds and other securities and obligations of any other corporation, domestic or foreign, and issue in exchange therefor its stock, bonds, or other obligations, and while the owner of any such stock, bonds or other obligations, to possess and exercise in respect thereof all the rights, powers and privileges of individual owners thereof, including any and all voting powers. To acquire the good will, rights and property, and to undertake the whole or any part of the assets and liabilities, of any person, firm, association or corporation and to pay for the same in cash, stock or bonds of this corporation or otherwise, and to issue its stock or bonds in whole or fractional shares thereof in payment of real and personal property for its use and for its other corporate purposes and business upon such terms and conditions as may be agreed upon by the owners and the directors or stockholders of this corporation. To borrow money for the purposes of the corporation and to issue bonds, notes, debentures and other obligations and to secure the same by pledge or mortgage of the whole or any part of the property of the corporation, either real or personal, or to issue bonds, notes, debentures or other obligations without any such security, and to sell or pledge such bonds, notes or other 3 obligations; and to confer upon the holder of any bonds, notes, debentures and other obligations of the corporation, secured or unsecured, the right to convert the same into stock of the corporation. To conduct its business so far as permitted by law, in the State of West Virginia and in other states of the United States of America and in the territories and the District of Columbia, and in any and all dependencies or possessions of the United States and in foreign countries. The foregoing clauses in this Article shall be construed as stating both purposes and powers. It is the intention that the purposes and powers specified in said clauses shall be in no wise limited or restricted by reference to or inference from the terms of any other clause of this or any other Article in this certificate, but that the purposes and powers specified in each of the clauses of this Article shall be regarded as independent and cumulative purposes and powers. IV. The amount of the total authorized capital stock of said corporation shall be Five Thousand (5,000) shares of common stock of a par value of One Dollar ($1.00) per share. The amount of capital with which the corporation will commence business in One Thousand Dollars ($1,000.00). V. Ownership of any class of shares of stock of the corporation shall not entitle the holders thereof to any preemptive rights to subscribe for or purchase or to have offered to them for subscription or purchase any new or additional share or shares of stock of any class, or any options, bonds, 4 debentures, warrants, certificates of indebtedness or other securities convertible into or representing, the right to purchase shares of any class of stock, either of that authorized in the Certificate of Incorporation or thereafter authorized or any shares or securities convertible into shares however acquired, issued or sold by the corporation, it being the purpose and intent that the Board of Directors shall have full right, power and authority to offer for subscription or sale or to make any disposal of any or all unissued shares of any class of stock of the corporation or any or all shares issued and thereafter acquired by the corporation or any and all options, bonds, debentures, warrants, certificates of indebtedness or other securities of the corporation convertible into stock whether unissued or issued and reacquired by the corporation as the Board of Directors in its discretion may deem advisable. VI. At all elections of Directors each stockholder shall be entitled to as many votes as shall equal the number of votes which (except for the provisions of this Article VI) such stockholder would be entitled to cast for the election of Directors with respect to such shares multiplied by the number of Directors to be elected, and such stockholder may cast all of his votes for a single director or may distribute them upon the number to be voted for, or any two or more of them, as he may see fit. VII. This corporation shall have perpetual existence. VIII. The number of directors, who need not be stockholders or residents of the State of West Virginia, shall be 5 not less than three (3) nor more than twenty (20), as determined in the By-Laws of this corporation. IX. The names and post office addresses of the incorporators and the number of shares of stock subscribed for by each are as follows: Number of Names P. O. Addresses Shares ----- --------------- --------- R. H. Freeman Washington Plaza Apartments 1 1420 Centre Avenue Pittsburgh, Pennsylvania C. A. Stefl 4750 South Emblem Drive 1 Pittsburgh, Pennsylvania D. B. Shupe 2701 West Munroe Street 1 Bethel Park, Pennsylvania X. The following provisions are inserted for the regulation and conduct of the affairs of the corporation and it is expressly provided that they are intended to be in furtherance and not in limitation or exclusion of the powers conferred by statute: (a) Meetings of the stockholders and directors of the corporation for all purposes may be held at its office or elsewhere in the State of WestVirginia, and meetings of the directors and stockholders may be held outside of the State of West Virginia at such place or places as may from time to time be designated in the By-Laws, or by resolution of the Board of Directors. (b) All corporate powers except those which by law expressly require the consent of the stockholders shall be exercised by the Board of Directors. 6 (c) The Board of Directors shall have power from time to time to fix and determine and vary the amount of the corporation's funds to be reserved for any proper purpose and to direct and determine the use and disposition of any surplus over and above its capital. In its discretion the Board of Directors may use and apply any such surplus in purchasing or acquiring bonds or other obligations of the corporation or shares of its own capital stock to such extent and in such manner and upon such terms as the Board of Directors shall deem expedient. If any shares of stock of the corporation shall have been purchased or otherwise acquired by the corporation, the Board of Directors may, without action by the stockholders, at any time or from time to time, restore all or part of said shares to the status of authorized but unissued shares; provided that nothing herein contained shall be deemed to limit the right of the Board of Directors to cause the corporation to hold any such shares as treasury stock and to sell or otherwise deal with such treasury stock as the Board of Directors shall deem expedient. Any shares restored to the status of authorized but unissued shares as hereinabove provided may be issued to the same extent and subject to the same conditions as if such shares had not been previously issued. Whenever shares are restored as hereinabove provided, any resulting surplus may be used for such lawful purposes as shall be determined by the Board of Directors. (d) Subject always to By-Laws made by the stockholders, the Board of Directors may make By-Laws and from time to time may alter, amend or repeal any By-Laws, but any By- 7 Laws made by the Board of Directors may be altered or repealed by the stockholders. (e) The Board of Directors shall have power to the extent permitted by law to make distributions or pay dividends to its stockholders in cash or in property including, but not limited to, stocks, bonds or other securities of the corporation. (f) No contract or other transaction between the corporation and any other corporation shall be affected or invalidated by the fact that any one or more of the directors of this corporation is or are interested in, or is a director or officer, or are directors of officers of such other corporation, and any director or directors, individually or jointly, may be a party or parties to or may be interested in any contract or transaction of this corporation or in which this corporation is interested; and no contract, act or transaction of this corporation with any persons, firms or corporations, shall be affected or invalidated by the fact that any director or directors of this corporation is a party, or are parties to or interested in such contract, act or transaction, or in any way connected with such persons, firms or corporation, and each and every person who may become a director of this corporation is hereby relieved from any liability that might otherwise exist from contracting with the corporation for the benefit of himself or any firm or corporation in which he may be in any wise interested. (g) Any person made a party to any action, suit or proceeding by reason of the fact that he, his testator or 8 intestate, is or was a director, officer or employee of the corporation or of any corporation which he served as such at the request of this corporation, shall be indemnified by this corporation against the reasonable expenses, including attorney's fees actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties, provided, however, that if any such amount is paid otherwise than pursuant to court order or action by the stockholders, the corporation shall within eighteen (18) months from the date of such payment mail to its stockholders at the time entitled to vote for the election of directors a statement specifying the person paid, the amount of the payment and the final disposition of the litigation. Except as otherwise provided by law, and in addition to any other rights provided by law, any such person shall be entitled, without demand by him upon the corporation, or any action by the corporation, to enforce the right of indemnification or reimbursement hereinabove provided in an action at law against the corporation. The right of indemnification or reimbursement hereinabove provided or under any applicable statutes shall not be deemed exclusive of any other right to which any such person may now or hereafter be otherwise entitled. 9 XI. The following person prepared this agreement: DaCosta Smith, Jr., Esq. Weston, West Virginia WE, THE UNDERSIGNED, for the purposes of forming a Corporation under the laws of the State of West Virginia do make and file this Agreement; and we have accordingly hereunto set our respective hands this 10th day of July, 1970. /s/ R. H. Freeman ----------------------------- R. H. Freeman /s/ C. A. Stefl ----------------------------- C. A. Stefl /s/ D. B. Shupe ----------------------------- D. B. Shupe 10 COMMONWEALTH OF PENNSYLVANIA) ) SS: COUNTY OF ALLEGHENY ) I, Mary Sipula, a Notary Public in and for the County and State aforesaid, hereby certify that R. H. Freeman /s/ R. H. Freeman ----------------------------- C. A. Stefl /s/ C. A. Stefl ----------------------------- D. B. Shupe /s/ D. B. Shupe ----------------------------- whose names are signed to the foregoing agreement bearing date on the 10th day of July, 1970, this day personally appeared before me in my said county and severally acknowledged their signatures to the same. Given under my hand and official seal this 24th day of July, 1970. /s/ Mary Sipula ----------------------------- Notary Public My commission expires on the 4th day of March, 1972. 11 EX-3.4 6 BY-LAW OF AFFINITY MINING COMPANY EXHIBIT 3.4 BY-LAWS Of AFFINITY MINING COMPANY ---------------------- ARTICLE I MEETING OF STOCKHOLDERS SECTION 1. Annual Meeting. The annual meeting of stockholders shall -------------- be held on the second Wednesday of April in each year, beginning in the year 1971 (or, if that be a legal holiday, on the next succeeding business day) at three o'clock in the afternoon or at such other hour as may from time to time be designated by the Board of Directors and specified in the notice of the meeting. SECTION 2. Special Meetings. Special meetings of the stockholders ---------------- for any purpose or purposes may be called by the President or by order of the Board of Directors, and it shall be the duty of the Secretary to call such a meeting upon a request in writing therefor stating the purpose or purposes thereof, delivered to the Secretary, signed by the holders of record of not less than one-tenth of the outstanding capital stock of the corporation. SECTION 3. Place of Meeting. Meetings of the stockholders may be ---------------- held at its principal office in Beckley, West Virginia, or elsewhere within the State of West Virginia, or may be held outside the State of West Virginia at such place or places as the Board of Directors may from time to time determine. SECTION 4. Notice of Stockholders' Meeting. Notice of the annual and ------------------------------- of any special meeting of stockholders shall be given to each stockholder of record at least ten and not more than forty days before the meeting by personally delivering to such stockholder or by depositing in the United States mails, addressed to the address last left by such stockholder with the Transfer Agent, or in the absence of a Transfer Agent, the Registrar, or in the absence of a Transfer Agent and a Registrar, the Secretary of the corporation, a written or printed notice, signed by the President or a Vice President or the Secretary or an Assistant Secretary, stating the place, day and hour of the meeting and the purpose or purposes for which the meeting is called, and any such notice shall be deemed given when personally delivered or deposited postage prepaid in the United States mail. Any stockholder, or his attorney hereunto authorized, may waive notice of any meeting either before, at or after the meeting. SECTION 5. Quorum. At all meetings of stockholders the holders of ------ record of a majority of the issued and outstanding capital stock of the corporation, present in person or by proxy, shall constitute a quorum for the transaction of business. In the absence of a quorum, a majority in interest of those present or represented may adjourn the meeting by resolution to a date fixed therein, and no further notice thereof shall be required. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 6. Voting. At each meeting of the stockholders every ------ stockholder holding one or more shares of the capital stock of the corporation shall be entitled to one vote for each such share registered in his name on the books of the corporation at the time of the closing of the transfer books of the corporation for such meeting or on the record date therefor, as the case may be, except that, in the case of an election of directors, each stockholder shall be entitled to as many votes as shall equal the number of votes which (except for this cumulative voting provision) such stockholder would be entitled to cast for the election of directors with respect to his shares of stock, multiplied by the number of directors to be elected, and such stockholder may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them, as he may see fit. Except for the election of directors, all resolutions shall be adopted by a majority of votes properly cast at the meeting; at elections of directors, those nominees up to the number to be elected, receiving the largest number of votes shall be deemed elected. All elections for directors shall be by ballot, but this requirement shall be deemed to have been waived if at the meeting no stockholder shall demand a ballot vote. SECTION 7. Proxies. Every stockholder entitled to vote at any ------- meeting of stockholders may vote by proxy. Every proxy must be executed in writing by the stockholder or by his duly authorized attorney. No proxy shall be voted after the expiration of three years from the date of its execution unless the stockholder executing it shall have specified a longer duration, and then only within the period specified. Every proxy shall be revocable at the pleasure of the person executing it or of his personal representatives or assigns except as otherwise provided by law. SECTION 8. Inspectors of Election. Two inspectors of election, who ---------------------- shall act as such at elections of directors, shall be elected by and shall serve at the pleasure of the Board of Directors. If one or both of such inspectors fails to appear at any meeting for the election of directors, the Chairman of the meeting may appoint a substitute or substitutes to act at such meeting in place of such absent inspector or inspectors. Each inspector shall be entitled to a reasonable compensation for his services, to be paid by the corporation. The inspectors, before entering upon the discharge of their duties, shall be sworn faithfully to execute the duties of inspectors at such meeting with strict impartiality and according to the best of their ability, and the oath so taken shall be subscribed by them. 2 ARTICLE II BOARD OF DIRECTORS SECTION 1. General Powers. The property, affairs and business of the -------------- corporation shall be managed by the Board of Directors. SECTION 2. Number. The number of directors shall be not less than ------ three (3) nor more than twenty (20), as may be determined from time to time by the Board of Directors. SECTION 3. Term of Office and Qualification. Directors need not be -------------------------------- stockholders and shall be elected to serve until the next annual election of directors and until their successors are elected and shall have qualified. SECTION 4. Chairman of the Board. The Board of Directors may elect a --------------------- Chairman of the Board from among its members to serve at its pleasure, who shall preside at all meetings of the Board of Directors and shall have such other duties as from time to time may be assigned to him by the Board of Directors or by the Executive Committee. SECTION 5. Vacancies. Vacancies in the Board of Directors because of --------- death, resignation, disqualification, physical or mental incapacity to act, an increase in the number of members of the Board of Directors, or resulting from any other cause whatsoever, shall be filled for the unexpired portion of the term by a majority vote of the remaining directors, although less than a quorum, given at a regular meeting, or at a special meeting called for the purpose. SECTION 6. Place of Meeting. The Board of Directors shall hold its ---------------- meetings at such places within or without the State of West Virginia as it may decide. SECTION 7. Regular Meetings: Notice. The Board of Directors by ------------------------ resolution may establish regular periodic meetings and notice of such meetings need not be given. SECTION 8. Special Meetings. Special meetings of the Board of ---------------- Directors shall be called by the Secretary or an Assistant Secretary whenever ordered by the Board of Directors or requested in writing by the President or any two other directors. Such meetings shall be held at the principal office of the corporation unless the Board of Directors, by its order calling a special meeting, shall fix a different place for such meeting. Notice of each special meeting shall be mailed to each director, addressed to his residence or usual place of business, at least four days before the day on which the meeting is to be held, or shall be sent to such address by telegraph, or be given personally or by telephone, not later than two days before the day on which the meeting is to be held. Notice of any meeting may 3 be waived in writing by any director before, at or after the meeting. SECTION 9. Quorum and Manner of Acting. A majority of the members of --------------------------- the Board of Directors then in office shall constitute a quorum for the transaction of any business at any meeting of the Board of Directors and, except as herein otherwise provided, the act of a majority of those present at the meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum of the Board of Directors a majority of the members present may adjourn the meeting from time to time until a quorum be had, and no notice of any such adjournment need be given. SECTION 10. Fees. The Board of Directors may from time to time ---- prescribe reasonable fees for attendance by members of the Board of Directors and members of the Executive Committee and other committees, and for reimbursement for travel and other expenses incidental to such attendance. ARTICLE III EXECUTIVE AND OTHER COMMITTEES SECTION 1. How Constituted and the Powers Thereof. The Board of -------------------------------------- Directors by the vote of a majority of the entire Board, may designate three or more directors to constitute an Executive Committee, who shall serve during the pleasure of the Board of Directors. Except as otherwise provided by law, by these by-laws or by resolution adopted by a majority of the whole Board of Directors, the Executive Committee shall possess and may exercise during the intervals between the meetings of the directors, all of the powers of the Board of Directors in the management of the business, affairs and property of the corporation, including the power to cause the seal of the corporation to be affixed to all papers that may require it. SECTION 2. Organization, etc. The Executive Committee shall choose ------------------ its own Chairman and its Secretary and may adopt rules for its procedure. The Committee shall keep a record of its acts and proceedings and report the same from time to time to the Board of Directors. SECTION 3. Meetings. Meetings of the Executive Committee may be -------- called by the Chairman of the Committee, and shall be called by him at the request of any member of the Committee, or by any member if there shall be no Chairman. Notice of each meeting of the Committee shall be sent to each member of the Committee by mail at least two days before the meeting is to be held, or given personally or by telegraph or telephone at least one day before the day on which the meeting is to be held. Notice of any meeting may be waived before, at or after the meeting. 4 SECTION 4. Quorum and Manner of Acting. A majority of the Executive --------------------------- Committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at the meeting at which a quorum is present shall be the act of the Executive Committee. SECTION 5. Removal. Any member of the Executive Committee may be ------- removed, with or without cause, at any time, by the Board of Directors. SECTION 6. Vacancies. Any vacancy in the Executive Committee shall --------- be filled by the Board of Directors. SECTION 7. Other Committees. The Board of Directors or the Executive ---------------- Committee may by resolution provide for such other standing or special committees as it deems desirable, and discontinue the same at pleasure. Each committee shall have such powers and perform such duties, not inconsistent with law, as may be assigned to it by the Board of Directors or by the Executive Committee. ARTICLE IV OFFICES AND OFFICERS SECTION 1. Officers--Number. The officers of the corporation shall ---------------- be the Chairman, the President, one or more Vice Presidents as the Board of Directors or Executive Committee may determine, a Treasurer and a Secretary. The Board of Directors or Executive Committee may from time to time appoint one or more Assistant Secretaries and Assistant Treasurers. The same person may hold any two or more offices except those of President and Vice-President. No officer except the President need be a member of the Board of Directors. SECTION 2. Salaries. The Board of Directors or Executive Committee -------- may from time to time fix the salary of the President, as well as the salaries of other officers of the corporation. SECTION 3. Election, Term of Office and Qualification. All officers ------------------------------------------ of the corporation shall be elected annually (unless otherwise specified at the time of election) by the Board of Directors or Executive Committee and each officer shall hold office until his successor shall have been duly chosen and shall have qualified, or until he shall resign or shall have been re moved in the manner hereinafter provided. SECTION 4. Vacancies. If any vacancy shall occur in any office of --------- the corporation, such vacancy shall be filled by the Board of Directors or by the Executive Committee. SECTION 5. Other Officers, Agents and Employees. The Board of ------------------------------------ Directors or the Executive Committee may from time to 5 time appoint such other officers, agents and employees of the corporation as may be deemed proper, and may authorize any officer to appoint and remove agents and employees. The Board of Directors or the Executive Committee or the President may from time to time prescribe the powers and duties of such officers, agents and employees of the corporation in the management of its property, affairs and business. SECTION 6. Removal. Any officer of the corporation may be removed, ------- either with or without cause, by vote of a majority of the Board of Directors or of the Executive Committee, or, in the case of any officer, agent or employee not elected by the Board of Directors or the Executive Committee, by any committee or superior officer upon whom such power of removal may be conferred by the Board of Directors or by the Executive Committee. SECTION 7. Chairman. The Chairman shall preside at all meetings of -------- the stockholders and of the Board of Directors, and shall perform such other duties as shall be delegated to him at any time or from time to time by the Board of Directors. SECTION 8. President. The President shall be the chief executive --------- officer of the corporation and shall have general direction of its business, affairs and property and over its several officers. He shall see that all orders and resolutions of the Board of Directors and of the Executive Committee are carried into effect, and he shall have the power to execute in the name of the corporation all authorized deeds, mortgages, ship mortgages, bonds, contracts or other instruments, except in cases in which the signing and execution thereof shall have been expressly delegated to some other officer or agent of the corporation; and in general, he shall perform all duties, incident to the office of a president of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors or by the Executive Committee. He shall be ex officio a member of all committees. He shall from time to time report to the Board of Directors or to the Executive Committee all matters within his knowledge which the interest of the corporation may require to be brought to their notice. SECTION 9. Vice-Presidents. The Vice-President or Vice-Presidents of --------------- the corporation, under the direction of the President, shall have such powers and perform such duties as the Board of Directors or Executive Committee or President may from time to time prescribe, and shall perform such other duties as may be prescribed in these by-laws. In case of the absence or inability of the President to act, then the Vice-Presidents, in the order designated therefor by the Board of Directors or Executive Committee, shall have the powers and discharge the duties of the President. 6 SECTION 10. Treasurer. The Treasurer, under the direction of the --------- President, shall have charge of the funds, securities, receipts and disbursements of the corporation. He shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such banks or trust companies or with such other depositories as the Board of Directors or Executive Committee may from time to time designate. He shall supervise and have charge of keeping correct books of account of all the corporation's business and transactions. If required by the Board of Directors, he shall give a bond in such sum as the Board of Directors or Executive Committee may designate, conditioned upon the faithful performance of the duties of his office and the restoration to the corporation, at the expiration of his term of office, or in case of his death, resignation or removal from office, of all books, papers, vouchers, money or other property of whatever kind in his possession belonging to the corporation. He shall also have such other powers and perform such other duties as pertain to his office, or as the Board of Directors or the Executive Committee or the President may from time to time prescribe. SECTION 11. Assistant Treasurers. In the absence of or disability of -------------------- the Treasurer, the Assistant Treasurers, in the order designated by the Board of Directors or by the Executive Committee, shall perform the duties of the Treasurer, and, when so acting, shall have all the powers of, and be subject to all restrictions upon, the Treasurer. They shall also perform such other duties as from time to time may be assigned to them by the Board of Directors or by the Executive Committee or the President. SECTION 12. Secretary. The Secretary shall attend all meetings of --------- the stockholders of the corporation and of its Board of Directors and shall keep the minutes of all such meetings in a book or books kept by him for that purpose. He shall keep in safe custody the seal of the corporation, and, when authorized by the Board of Directors or the Executive Committee, he shall affix such seal to any instrument requiring it. In the absence of a Transfer Agent or a Registrar, the Secretary shall have charge of the stock certificate books, and the Secretary shall have charge of such other books and papers as the Board of Directors or Executive Committee may direct. He shall also have such other powers and perform such other duties as pertain to his office, or as the Board of Directors or the Executive Committee or the President may from time to time prescribe. SECTION 13. Assistant Secretaries. In the absence or disability of --------------------- the Secretary, the Assistant Secretaries, in the order designated by the Board of Directors or Executive Committee, shall perform the duties of the Secretary, and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Secretary. They shall also perform such other duties as from time to time may be assigned to them by the Board of Directors or Executive Committee or the President. 7 ARTICLE V CHECKS, DRAFTS, ETC. All checks, drafts or orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents, person or persons, to whom the Board of Directors or Executive Committee shall have delegated the power, but under such conditions and restrictions as in said resolutions may be imposed. The signature of any officer upon any of the foregoing instruments may be a facsimile whenever authorized by the Board of Directors or by the Executive Committee. ARTICLE VI SHARES AND THEIR TRANSFER SECTION 1. Issue of Certificates of Stock. The Board of Directors or ------------------------------ Executive Committee shall provide for the issue and transfer of the certificates of capital stock of the corporation, and prescribe the form of such certificates. Every owner of stock of the corporation shall be entitled to a certificate of stock, which shall be under the seal of the corporation (which seal may be a facsimile, engraved or printed), specifying the number of shares owned by him, and which certificate shall be signed by the President or Vice- President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the corporation. Said signatures may, wherever permitted by law, be facsimile, engraved or printed. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on any such certificate or certificates shall cease to be such officer or officers of the corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers of the corporation. SECTION 2. Transfer Agents and Registrars. The corporation may have ------------------------------ one or more Transfer Agents and one or more Registrars of its stock whose respective duties the Board of Directors may, from time to time, prescribe. If the corporation shall have a Transfer Agent, no certificate of stock shall be valid until countersigned by such Transfer Agent, and if the corporation shall have a Registrar, until registered by the Registrar. The duties of the Transfer Agent and Registrar may be combined. SECTION 3. Transfer of Shares. The shares of the corporation shall ------------------ be transferable only upon its books and by the 8 holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock transfer books and ledgers or to such other person as the Directors may designate for such purpose, and new certificates shall thereupon be issued. SECTION 4. Addresses of Stockholders. Every stockholder shall ------------------------- furnish the Transfer Agent, or in the absence of a Transfer Agent, the Registrar, or in the absence of a Transfer Agent and a Registrar, the Secretary, with an address at or to which notices of meetings and all other notices may be served upon or mailed to him, and in default thereof, notices may be addressed to him at the office of the corporation. SECTION 5. Closing of Transfer Books: Record Date. The Board of -------------------------------------- Directors shall have power to close the stock transfer books of the corporation for a period not exceeding forty (40) days and not less than ten (10) days prior to the date of any meeting of stockholders; provided, however, that in lieu of closing the stock transfer books as aforesaid the Board of Directors may fix a date not exceeding forty (40) days and not less than ten (10) days prior to the date of any such meeting as the time as of which stockholders entitled to notice of and to vote at such meeting shall be determined, and all persons who were holders of record of voting stock at such time and no others shall be entitled to notice of and to vote at such meeting. The Board of Directors shall also have power to close the stock transfer books of the corporation for a period not exceeding forty (40) days preceding the date fixed for the payment of any dividend or the making of any distribution or for the delivery of any evidence of right or evidence of interest; provided, however that in lieu of closing the stock transfer books as aforesaid the Board of Directors may fix a date not exceeding forty (40) days preceding the date fixed for the payment of any such dividend or the making of any such distribution or for the delivery of any such evidence of right or interest as a record time for the determination of the stockholders entitled to receive any such dividend, distribution, right or interest, and in such case only stockholders of record at the time so fixed shall be entitled to receive such dividend, distribution, right or interest. SECTION 6. Lost and Destroyed Certificates. The Board of Directors ------------------------------- or Executive Committee may direct a new certificate or certificates of stock to be issued in the place of any certificate or certificates theretofore issued and alleged to have been lost or destroyed; but the Board of Directors or Executive Committee when authorizing such issue of a new certificate or certificates, may in its discretion require the owner of the stock represented by the certificate so lost or destroyed or his legal representative to furnish proof by affidavit or otherwise to the satisfaction of the Board of Directors or Executive Committee of the ownership of the stock 9 represented by such certificate alleged to have been lost or destroyed and the facts which tend to prove its loss or destruction. The Board of Directors or Executive Committee may also require such person to execute and deliver to the corporation a bond, with or without sureties in such sum as the Board of Directors or Executive Committee may direct, indemnifying the corporation against any claim that may be made against it by reason of the issue of such new certificate. The Board of Directors or Executive Committee, however, may, in its discretion, refuse to issue any such new certificate, except pursuant to court order. ARTICLE VII SEAL The corporate seal of the corporation shall be circular in form, shall bear around the circumference the words "AFFINITY MINING COMPANY - WEST VIRGINIA" and in the center the words "INCORPORATED - 1970," or words of similar import. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced. ARTICLE VIII MISCELLANEOUS SECTION 1. Examination of Books and Records. The Board of Directors -------------------------------- or Executive Committee may determine from time to time whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the corporation, or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the corporation, except as provided by the statutes of the State of West Virginia, or authorized by the Board of Directors or Executive Committee. SECTION 2. Voting of Stock in Other Corporations. Any shares of ------------------------------------- stock in any other corporation, which may from time to time be held by the corporation, may be represented and voted at any of the stockholders' meetings thereof by the President or a Vice-President of the corporation or by proxy appointed by the President or one of the Vice-Presidents of the corporation. The Board of Directors or Executive Committee, however, may by resolution appoint any other person or persons to vote such shares, in which case such other person or persons shall be entitled to vote such shares upon the production of a certified copy of such resolution. SECTION 3. Fiscal Year. The fiscal year of the corporation shall ----------- begin on the first day of January in each year. 10 ARTICLE IX INDEMNIFICATION Any person made a party to any action, suit or proceeding by reason of the fact that he, his testator or intestate, is or was a director, officer or employee of the corporation or of any corporation which he served as such at the request of the corporation, shall be indemnified by the corporation against the reasonable expenses, including attorney's fees, actually and necessarily incurred by him in connection with the defense of such action, suit, proceeding, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties; provided, however, that if any such amount is paid otherwise than pursuant to court order or action by the stockholders, the corporation shall within eighteen (18) months from the date of such payment mail to its stockholders at the time entitled to vote for the election of directors a statement specifying the person paid, the amount of the payment and the final disposition of the litigation. Except as otherwise provided by law, and in addition to any other right provided by law, every such person shall be entitled, without demand by him upon the corporation, or any action by the corporation, to enforce the right of indemnification or reimbursement hereinabove provided in an action at law against the corporation. The right of indemnification or reimbursement hereinabove provided or under any applicable statutes shall not be deemed exclusive of any other right to which any such person may now or hereafter be otherwise entitled. ARTICLE X AMENDMENTS SECTION 1. By Stockholders. These by-laws may be made, amended, --------------- altered or repealed, by the affirmative vote of the holders of a majority of the stock of the corporation, or their proxies, who shall be present and entitled to vote at any annual or special meeting of stockholders, provided that notice of the proposed amendment, alteration or repeal shall have been included in the notice of the meeting. SECTION 2. By Directors. The Board of Directors shall have the ------------ power, by a vote of a majority of the Directors then in office, at a meeting upon waiver of notice or called pursuant to a notice in which any such proposed modification of the by-laws is set forth, to make, amend, alter or repeal these by-laws except that the Board of Directors shall have no power to alter, amend, or repeal a by-law adopted by the stockholders subsequent to any original adoption of these by-laws by the stockholders. 11 * * * * * * * * * * * * * * * * * * Thereupon, the Secretary reported that the Articles of Incorporation had been filed in the office of the Secretary of State of the State of West Virginia, and that a certificate had Been issued by that officer, which bears date on the 29th day of July, 1970, and which certificate has been duly recorded in the office of the Clerk of the County Court of Raleigh County, West Virginia, in Book No. 490, at page No. 242. Thereupon, the meeting proceeded to the election of ten (10) directors as prescribed by Article II of the by-laws. An election was held and each person entitled to vote announced his vote to the Secretary in accordance with the by- laws of the company, and after the same had been done, it was ascertained and reported by the Secretary that the following named persons had been elected and were thereupon duly declared to be the Directors of this company for the ensuing year and until their successors shall be duly elected and shall qualify, namely: R. S. Bailey H. H. Cobb R. H. Freeman Eli Goldston F. S. Holway William Laird J. N. Philips D. B. Shupe DaCosta Smith, Jr. C. A. Stefl Upon motion, the report was received and ordered spread upon the minutes. There being no further business to be transacted, upon motion the meeting adjourned. 12 [Executed] ---------------------------------------- - ---------------- Chairman [Executed] - ------------------------------------------- Secretary 13 Amendment of Bylaws - ------------------- RESOLVED, That Section 1 of Article I of the Bylaws of the Company is repealed in its entirety and the following provision substituted in lieu thereof. "Section 1. The annual meeting of the stockholders, commencing with the year 1988, shall be held in April, at such time as shall be determined by the Board of Directors, for the purpose of electing directors, and for the transaction of such other business as may be brought before the meeting." 14 EX-3.5 7 CERT OF INCORPORATION OF ARID OPERATION INC. EXHIBIT 3.5 CERTIFICATE OF INCORPORATION OF Arid Operations Inc. 1. The name of the corporation is: Arid Operations Inc. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is One Hundred (100) all of such shares shall be without par value. 5. The board of directors is authorized to make, alter or repeal the by-laws of the corporation. Election of directors need not be by written ballot. 6. The name and mailing address of the incorporator is: M. C. Kinnamon Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 7. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of Delaware, do make this certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 31st day of January, 1992. /s/ M. C. Kinnamon ------------------- M. C. Kinnamon 2 EX-3.6 8 BY-LAW OF ARID OPERATIONS INC. EXHIBIT 3.6 BY-LAWS OF ARID OPERATIONS INC. (A Delaware Corporation) ARTICLE I OFFICES SECTION 1. Registered Office. The registered office of the ----------------- Corporation within the State of Delaware shall be in the City of Wilmington, County of New Castle, or such other location of the Corporation's registered agent as the Corporation may from time to time determine by resolution of the Board of Directors. SECTION 2. Other Offices. The Corporation may also have an office or ------------- offices other than said registered office at such place or places, either within or without the State of Delaware, as the Board of Directors shall from time to time determine or the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. Place of Meetings. All meetings of the stockholders for ----------------- the election of directors or for any other purpose shall be held at any such place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of meeting or in a duly executed waiver thereof. SECTION 2. Annual Meeting. The annual meeting of stockholders, -------------- commencing with the year 1992, shall be held at 9:00 a.m. on the sixth day of October, if not a legal holiday, and if a legal holiday, then on the next succeeding day not a legal holiday, at 9:00 a.m., or at such other date and time as shall be designated from time to time by the Board of Directors and stated in the notice of meeting or in a duly executed waiver thereof. At such annual meeting, the stockholders shall elect, by a plurality vote, a Board of Directors and transact such other business as may properly be brought before the meeting. SECTION 3. Special Meetings. Special meetings of stockholders, ---------------- unless otherwise prescribed by statute, may be called at any time by the Board of Directors or the Chairman of the Board, if one shall have been elected, or the President and shall be called by the Secretary upon the request in writing of a stockholder or stockholders holding of record at least 51 percent of the voting power of the issued and outstanding shares of stock of the Corporation entitled to vote at such meeting. SECTION 4. Notice of Meetings. Except as otherwise expressly ------------------ required by statute, written notice of each annual and special meeting of stockholders stating the date, place and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given to each stockholder of record entitled to vote thereat not less than ten nor more than sixty days before the date of the meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Notice shall be given personally or by mail and, if by mail, shall be sent in a postage prepaid envelope, addressed to the stockholder at his address as it appears on the records of the Corporation. Notice by mail shall be deemed given at the time when the same shall be deposited in the United States mail, postage prepaid. Notice of any meeting shall not be required to be given to any person who attends such meeting, except when such person attends the meeting in person or by proxy for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, or who, either before or after the meeting, shall submit a signed written waiver of notice, in person or by proxy. Neither the business to be transacted at, nor the purpose of, an annual or special meeting of stockholders need be specified in any written waiver of notice. SECTION 5. List of Stockholders. The officer who has charge of the -------------------- stock ledger of the Corporation shall prepare and make, at least ten days before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city, town or village where the meeting is to be held, which place shall be specified in the notice of meeting, or, if not specified, at the place where the meeting is to be held. The list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. SECTION 6. Quorum, Adjournments. The holders of a majority of the -------------------- voting power of the issued and outstanding stock of the Corporation entitled to vote thereat, present in person or represented by proxy shall constitute a quorum for the transaction or business at all meetings of stockholders, except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented by proxy at any meeting of stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented by proxy. 2 At such adjourned meeting at which a quorum shall be present or represented by proxy, any business may be transacted which might have been transacted at the meeting as originally called. If the adjournment is for more than thirty days; or, if after adjournment a new record date is set, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. SECTION 7. Organization. At each meeting of stockholders, the ------------ Chairman of the Board, if one shall have been elected, or, in his absence or if one shall not have been elected, the President shall act as chairman of the meeting. The Secretary or, in his absence or inability to act, the person whom the chairman of the meeting shall appoint secretary of the meeting shall act as secretary of the meeting and keep the minutes thereof. SECTION 8. Order of Business. The order of business at all meetings ----------------- of the stockholders shall be as determined by the chairman of the meeting. SECTION 9. Voting. Except as otherwise provided by statute or the ------ Certificate of Incorporation, each stockholder of the Corporation shall be entitled at each meeting of stockholders to one vote for each share of capital stock of the Corporation standing in his name on the record of stockholders of the Corporation; (a) on the date fixed pursuant to the provisions of Section 7 of Article V of these By-Laws as the record date for the determination of the stockholders who shall be entitled to notice of and to vote at such meeting; or (b) if no such record date shall have been so fixed, then at the close of business on the day next preceding the day on which notice thereof shall be given, or, if notice is waived, at the close of business on the date next preceding the day on which the meeting is held. Each stockholder entitled to vote at any meeting of stockholders may authorize another person or persons to act for him by a proxy signed by such stockholder or his attorney-in-fact, but no proxy shall be voted after three years from its date, unless the proxy provides for a longer period. Any such proxy shall be delivered to the secretary of the meeting at or prior to the time designated in the order of business for so delivering such proxies. When a quorum is present at any meeting, the vote of the holders of a majority of the voting power of the issued and outstanding stock of the Corporation entitled to vote thereon, present in person or represented by proxy, shall decide any question brought before such meeting, unless the question is one upon which by express provision of statute or of the Certificate 3 of Incorporation or of these By-Laws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Unless required by statute, or determined by the chairman of the meeting to be advisable, the vote on any question need not be by ballot. On a vote by ballot, each ballot shall be signed by the stockholder voting, or by his proxy, if there by such proxy, and shall state the number of shares voted. SECTION 10. Inspectors. The Board of Directors may, in advance of ---------- any meeting of stockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof. If any of the inspectors so appointed shall fail to appear or act, the chairman of the meeting shall, or if inspectors shall not have been appointed, the chairman of the meeting may, appoint one or more inspectors. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares or capital stock of the Corporation outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the results, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the chairman of the meeting, the inspectors shall make a report in writing of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. No director or candidate for the office or director shall act as an inspector of an election of directors. Inspectors need not be stockholders. SECTION 11. Action by Consent. Whenever the vote of stockholders at ----------------- a meeting thereof is required or permitted to be taken for or in connection with any corporate action, by any provision of statute or of the Certificate of Incorporation of these By-Laws, the meeting and vote of stockholders may be dispensed with, and the action taken without such meeting and vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of stock of the Corporation entitled to vote thereon were present and voted. ARTICLE III BOARD OF DIRECTORS SECTION 1. General Powers. The business and affairs of the -------------- Corporation shall be managed by or under the direction of 4 the Board of Directors. The Board of Directors may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute or the Certificate of Incorporation directed or required to be exercised or done by the stockholders. SECTION 2. Number, Qualification, Election and Term of Office. The -------------------------------------------------- number of directors constituting the Board of Directors shall be not less than one nor more than 15. Thereafter, the number of directors may be fixed, from time to time, by the affirmative vote of a majority of the entire Board of Directors of by action of the stockholders of the Corporation. Any decrease in the number of directors shall be effective at the time of the next succeeding annual meeting of stockholders unless there shall be vacancies in the Board of Directors, in which case such decrease may become effective at any time prior to the next succeeding annual meeting to the extent of the number of such vacancies. Directors need not be stockholders. Except as otherwise provided by statute or these By-Laws, the directors (other than members of the initial Board of Directors) shall be elected at the annual meeting of stockholders. Each director shall hold office until his successor shall have been elected and qualified, or until his death, or until he shall have resigned, or have been removed, as hereinafter provided in these By-Laws. SECTION 3. Place of Meetings. Meetings of the Board of Directors ----------------- shall be held at such place or places, within or without the State of Delaware, as the Board of Directors may from time to time determine or as shall be specified in the notice of any such meeting. SECTION 4. Annual Meeting. The Board of Directors shall meet for the -------------- purpose of organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. In the event such annual meeting is not so held, the annual meeting of the Board of Directors may be held at such other time or place (within or without the State of Delaware) as shall be specified in a notice thereof given as hereinafter provided in Section 7 of this Article III. SECTION 5. Regular Meetings. Regular meetings of the Board of ---------------- Directors shall be held at such time and place as the Board of Directors may fix. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day. Notice of regular meetings of the Board of Directors need not be given except as otherwise required by statute or these By-Laws. 5 SECTION 6. Special Meetings. Special meetings of the Board of ---------------- Directors may be called by the Chairman of the Board, if one shall have been elected, or by two or more directors of the Corporation or by the President. SECTION 7. Notice of Meetings. Notice of each special meeting of the ------------------ Board of Directors (and of each regular meeting for which notice shall be required) shall be given by the Secretary as hereinafter provided in this Section 7, in which notice shall be stated the time and place of the meeting. Except as otherwise required by these By-Laws, such notice need not state the purpose of such meeting. Notice of each such meeting shall be mailed, postage prepaid, to each director, addressed to him at his residence or usual place of business, by first class mail, at least two days before the day on which such meeting is to be held, or shall be sent addressed to him at such place by telegraph, cable, telex, telecopier or other similar means, or be delivered to him personally or be given to him by telephone or other similar means, at least twenty-four hours before the time at which such meeting is to be held. Notice of any such meeting need not be given to any director who shall, either before or after the meeting, submit a signed waiver of notice or who shall attend such meeting, except when he shall attend for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. SECTION 8. Quorum and Manner of Acting. A majority of the entire --------------------------- Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and, except as otherwise expressly required by statute or the Certificate of Incorporation or these By-Laws, the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn such meeting to another time and place. Notice of the time and place of any such adjourned meeting shall be given to all of the directors unless such time and place were announced at the meeting at which the adjournment was taken, in which case such notice shall only be given to the directors who were not present thereat. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. The directors shall act only as a Board and the individual directors shall have no power as such. SECTION 9. Organization. At each meeting of the Board of Directors, ------------ the Chairman of the Board, if one shall have been elected, or, in the absence of the Chairman of the Board or if one shall not have been elected, the President (or, in his absence, another director chosen by a majority of the directors present) shall act as chairman of the meeting and preside thereat. The Secretary or, in his absence, any person appointed 6 by the chairman shall act as secretary of the meeting and keep the minutes thereof. SECTION 10. Resignations. Any director of the Corporation may resign ------------ at any time by giving written notice of his resignation to the Corporation. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 11. Vacancies. Any vacancy in the Board of Directors, --------- whether arising from death, resignation, removal (with or without cause), an increase in the number of directors or any other cause, may be filled by the vote of a majority of the directors then in office, though less than a quorum, or by the sole remaining director or by the stockholders at the next annual meeting thereof or at a special meeting thereof. Each director so elected shall hold office until his successor shall have been elected and qualified. SECTION 12. Removal of Directors. Any director may be removed, -------------------- either with or without cause, at any time, by the holders of a majority of the voting power of the issued and outstanding capital stock of the Corporation entitled to vote at an election of directors. SECTION 13. Compensation. The Board of Directors shall have ------------ authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity. SECTION 14. Committees. The Board of Directors may, by resolution ---------- passed by a majority of the entire Board of Directors, designate one or more committees, including an executive committee, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In addition, in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Except to the extent restricted by statute or the Certificate of Incorporation, each such committee, to the extent provided in the resolution creating it, shall have and may exercise all the powers and authority of the Board of Directors and may authorize the seal of the Corporation to be affixed to all papers which require it. Each such committee shall serve at the pleasure of 7 the Board of Directors and have such name as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors. SECTION 15. Action by Consent. Unless restricted by the Certificate ----------------- of Incorporation, any action required or permitted to be taken by the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of the Board of Directors or such committee, as the case may be. SECTION 16. Telephonic Meeting. Unless restricted by the Certificate ------------------ of Incorporation, any one or more members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means or which all persons participating in the meeting can hear each other. Participation by such means shall constitute presence in person at a meeting. ARTICLE IV OFFICERS SECTION 1. Number and Qualifications. The officers of the ------------------------- Corporation shall be elected by the Board of Directors or by the stockholders and shall include the President, one or more Vice-Presidents, the Secretary and, if appropriate, the General Manager and/or the Treasurer. If the Board of Directors or the stockholders wish, either may also elect as an officer of the Corporation a Chairman of the Board and may elect other officers (including one or more Assistant Treasurers and one or more Assistant Secretaries) as may be necessary or desirable for the business of the Corporation. Any two or more offices may be held by the same person, and no officer except the Chairman of the Board need be a director. Each officer shall hold office until his successor shall have been duly elected and shall have qualified, or until his death, or until he shall have resigned or have been removed, as hereinafter provided in these By-Laws. SECTION 2. Resignations. Any officer of the Corporation may resign ------------ at any time by giving written notice of his resignation to the Corporation. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon receipt. Unless otherwise specified therein, the acceptance of any such resignation shall not be necessary to make it effective. 8 SECTION 3. Removal. Any officer of the Corporation may be removed, ------- either with or without cause, at any time, by the Board of Directors at any meeting thereof. SECTION 4. Chairman of the Board. The Chairman of the Board, if one --------------------- shall have been elected, shall be a member of the Board, an officer of the Corporation and, if present, shall preside at each meeting of the Board of Directors or the stockholders. He shall advise and counsel with the President, and in his absence with other executives of the Corporation, and shall perform such other duties as may from time to time be assigned to him by the Board of Directors. SECTION 5. The President. The President shall be the chief executive ------------- officer of the Corporation. He shall, in the absence of the Chairman of the Board or if a Chairman of the Board shall not have been elected, preside at each meeting of the Board of Directors or the stockholders. He shall perform all duties incident to the office of President and chief executive officer and such other duties as may from time to time be assigned to him by the Board of Directors. SECTION 6. Vice-President. Each Vice-President shall perform all -------------- such duties as from time to time may be assigned to him by the Board of Directors or the President. At the request of the President or in his absence or in the event or his inability or refusal to act, the Vice-President, or if there shall be more than one, the Vice-Presidents in the order determined by the Board of Directors (or if there be no such determination, then the Vice- Presidents in the order of their election), shall perform the duties of the President, and, when so acting, shall have the powers of and be subject to the restrictions placed upon the President in respect of the performance of such duties. SECTION 7. Treasurer. The Treasurer shall --------- (a) have charge and custody of, and be responsible for, all the funds and securities of the Corporation; (b) keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation; (c) deposit all moneys and other valuables to the credit of the Corporation in such depositories as may be designated by the Board of Directors or pursuant to its direction; (d) receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever; 9 (e) disburse the funds of the Corporation and supervise the investment of its funds, taking proper vouchers therefor; (f) render to the Board of Directors, whenever the Board of Directors may require, an account of the financial condition of the Corporation; and (g) in general, perform all duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 8. Secretary. The Secretary shall --------- (a) keep or cause to be kept in one or more books provided for the purpose, the minutes of all meetings of the Board of Directors, the committees of the Board of Directors and the stockholders; (b) see that all notices are duly given in accordance with the provisions of these By-Laws and as required by law; (c) be custodian of the records and the seal of the Corporation and affix and attest the seal to all certificates for shares of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal; (d) see that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed; and (e) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 9. The Assistant Treasurer. The Assistant Treasurer, or if ----------------------- there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as from time to time may be assigned by the Board of Directors. SECTION 10. The Assistant Secretary. The Assistant Secretary, or if ----------------------- there be more than one, the Assistant 10 Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties as from time to time may be assigned by the Board of Directors. SECTION 11. Officers' Bonds or Other Security. If required by the --------------------------------- Board of Directors, any officer of the Corporation shall give a bond or other security for the faithful performance of his duties, in such amount and with such surety as the Board of Directors may require. SECTION 12. Compensation. The compensation of the officers of the ------------ Corporation for their services as such officers shall be fixed from time to time by the Board of Directors. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he is also a director of the Corporation. ARTICLE V STOCK CERTIFICATES AND THEIR TRANSFER SECTION 1. Stock Certificates. Every holder of stock in the ------------------ Corporation shall be entitled to have a certificate, signed by, or in the name of the Corporation by, the Chairman of the Board or the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restriction of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of the State of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who so requests the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. SECTION 2. Facsimile Signatures. Any or all of the signatures on a -------------------- certificate may be a facsimile. In case any 11 officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. SECTION 3. Lost Certificates. The Board of Directors may direct a ----------------- new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen, or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or his legal representative, to give the Corporation a bond in such sum as it may direct sufficient to indemnify it against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of any such certificate of the issuance of such new certificate. SECTION 4. Transfers of Stock. Upon surrender to the Corporation or ------------------ the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its records; provided, however, that the Corporation shall be entitled to recognize and enforce any lawful restriction on transfer. Whenever any transfer of stock shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of transfer if, when the certificates are presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so. SECTION 5. Transfer. The Board of Directors may appoint, or -------- authorize any officer or officers to appoint, one or more transfer agents and one or more registrars. SECTION 6. Regulations. The Board of Directors may make such ----------- additional rules and regulations, not inconsistent with these By-Laws, as it may deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. SECTION 7. Fixing the Record Date. In order that the Corporation may ---------------------- determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, 12 the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 8. Registered Stockholders. The Corporation shall be ----------------------- entitled to recognize the exclusive right of a person registered on its records as the owner of shares of stock to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments a person registered on its records as the owner of shares of stock, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares of stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VI INDEMNIFICATION OF DIRECTORS AND OFFICERS SECTION 1. General. The Corporation shall indemnify any person who ------- was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of ---- ---------- itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. SECTION 2. Derivative Actions. The Corporation shall indemnify any ------------------ person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, 13 officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorney's fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, provided that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. SECTION 3. Indemnification in Certain Cases. To the extent that a -------------------------------- director, officer, employee or agent of the Corporation (or anyone who is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise) has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article VI, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith. SECTION 4. Procedure. Any indemnification under Sections 1 and 2 of --------- this Article VI (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in such Sections 1 and 2. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (c) by the stockholders. SECTION 5. Advances for Expenses. Expenses (including reasonable --------------------- attorney's fees) incurred in defending a civil, administrative, investigative, or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall be ultimately determined that he is not entitled to be indemnified by the Corporation as authorized in this Article VI. 14 SECTION 6. Rights Not Exclusive. The indemnification and advancement -------------------- of expenses provided by, or granted pursuant to, the other subsections of this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any law, by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. SECTION 7. Insurance. The Corporation shall have power to purchase --------- and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article VI. SECTION 8. Definition of Corporation. For the purposes of this ------------------------- Article VI, references to "the Corporation" include all constituent corporations absorbed in a consolidation or merger as well as the resulting or surviving corporation so that any person who is or was a director, officer, employee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article VI with respect to the resulting or surviving corporation as he would if he had served the resulting or surviving corporation in the same capacity. SECTION 9. Survival of Rights. The indemnification and advancement ------------------ of expenses provided by, or granted pursuant to this Article VI shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. ARTICLE VII GENERAL PROVISIONS SECTION 1. Dividends. Subject to the provisions of statute and the --------- Certificate of Incorporation, dividends upon the shares of capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property or in shares of stock of the 15 Corporation, unless otherwise provided by statute or the Certificate of Incorporation. SECTION 2. Reserves. Before payment of any dividend, there may be -------- set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors may, from time to time, in its absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors may think conducive to the interests of the Corporation. The Board of Directors may modify or abolish any such reserves in the manner in which it was created. SECTION 3. Seal. The seal of the Corporation shall be in such form ---- as shall be approved by the Board of Directors. SECTION 4. Fiscal Year. The fiscal year of the Corporation shall be ----------- fixed, and once fixed, may thereafter be changed, by resolution of the Board of Directors. SECTION 5. Checks, Notes, Drafts, Etc. All checks, notes, drafts or --------------------------- other orders for the payment of money of the Corporation shall be signed, endorsed or accepted in the name of the Corporation by such officer, officers, person or persons as from time to time may be designated by the Board of Directors or by an officer or officers authorized by the Board of Directors to make such designation. SECTION 6. Execution of Contracts, Deeds, Etc. The Board of ----------------------------------- Directors may authorize any officer or officers, agent or agents, in the name and on behalf of the Corporation to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances. SECTION 7. Voting of Stock in Other Corporations. Unless otherwise ------------------------------------- provided by resolution of the Board of Directors, the Chairman of the Board or the President, from time to time, may (or may appoint one or more attorneys or agents to) cast the votes which the Corporation may be entitled to cast as a shareholder or otherwise in any other corporation, any of whose shares or securities may be held by the Corporation, at meetings of the holders of the shares or other securities of such other corporation. In the event one or more attorneys or agents are appointed, the Chairman of the Board or the President may instruct the attorneys or agents appointed to execute or cause to be executed in the name and on behalf of the Corporation and under its seal or otherwise such written proxies, consents, waivers or other instrument as may be necessary or proper in the circumstances. 16 ARTICLE VIII AMENDMENTS These By-Laws may be amended or repealed or new by-laws adopted (a) by action of the stockholders entitled to vote thereon at any annual or special meeting of stockholders or (b) if the Certificate of Incorporation so provides, by action of the Board of Directors at a regular or special meeting thereof. Any by-laws made by the Board of Directors may be amended or repealed by action of the stockholders at any annual or special meeting of stockholders. 17 EX-3.7 9 CERTIFICATE OF INCORPORATION OF BIG SKY COAL CO. EXHIBIT 3.7 CERTIFICATE OF INCORPORATION OF BIG SKY COAL COMPANY * * * * * 1. The name of the corporation is BIG SKY COAL COMPANY 2. The address of its registered office in the State of Delaware is Corporation Trust-Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). 5A. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 D. A. Hampton Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 M. A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- W. M. Landuyt 99 Wood Avenue, South Iselin, New Jersey 08330 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 9. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter 2 prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 10. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 4th day of October, 1991. /s/ K. A. Widdoes ----------------------------------- K. A. Widdoes /s/ D. A. Hampton ----------------------------------- D. A. Hampton /s/ M. A. Brzoska ----------------------------------- M. A. Brzoska 3 EX-3.8 10 BY-LAW OF BIG SKY COAL COMPANY EXHIBIT 3.8 BIG SKY COAL COMPANY * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Flagstaff, State of Arizona, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware r as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1992, shall be held on the first day of April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A. M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request tin writing of a majority of the board of directors, or at the request in writing of stockholder owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2 Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one nor more than ten. The first board shall consist of one director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution or the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in 3 office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of 4 business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by -the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of, directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which n:lay require it; but no such committee shall have the power or authority in reference -to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151 ta) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of 5 the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meetings of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed co mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and 6 such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice president (or in the event there be more than one vice president, the vice~presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 7 THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the boa:rd of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, tin case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or 8 other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificate or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to -the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon tits books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FILING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or 9 allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may file, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and 'co vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof' except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 10 EX-3.9 11 ARTICLES OF INCORP. OF BLACKROCK FIRST CAPITAL EXHIBIT 3.9 ARTICLES OF INCORPORATION OF BLACKROCK FIRST CAPITAL CORPORATION The undersigned, acting as incorporators of a corporation under Chapter 31, Article 1, Section 27 of the West Virginia Code, adopt the following Articles of Incorporation for such corporation: 1. The undersigned agree to become a West Virginia corporation by the name of BLACKROCK FIRST CAPITAL CORPORATION 2. The address at the physical location and the mailing address of the principal office of the corporation, which is also the principal place of business in West Virginia of the corporation, will be 800 Laidley Tower, in the city of Charleston, County of Kanawha, State of West Virginia, Zip Code 25301. 3. This corporation is organized as a stock corporation, for profit, and the aggregate value of the authorized capital stock of said profit corporation will be Twenty Thousand Dollars ($20,000.00), which shall be one class of two thousand (2,000) common shares of a par value of Ten Dollars ($10.00) each. 4. The period of duration of the corporation is perpetual. 5. The purpose for which this corporation is formed is to engage in the transaction of any or all lawful business for which corporations may be incorporated in West Virginia, including, without limiting in any way the scope of the foregoing purposes, for the purpose of making venture or risk capital available for qualified investments as contemplated by the West Virginia Capital Company Act, Article 1, Chapter 5E of the West Virginia Code, as amended. 6. The Corporation shall indemnify each member of the Board and each officer of the Corporation now or hereafter serving as such, who was, is or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (including an action by, or in the right of, the Corporation), by reason of the fact that he is or was a Board member, officer, or agent of the Corporation or is or was serving at the request of the Corporation as a Board member, officer or agent of another corporation, partnership, joint venture, trust or other enterprise. Said indemnification shall be against expenses (including attorney's fees), judgements, fines, and amounts paid in settlement actually and reasonably incurred by the aforementioned individuals in connection with such action, suit or proceeding, including any appeal thereof, if they acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interest of the Corporation. No indemnification shall be made in respect to any claim, issue, or matter as to which such person shall have been adjudged in such action, suit or proceeding to be liable for gross negligence or willful misconduct in the performance of his duties to the Corporation, except to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability and in view of all the 2 circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that such court shall deem proper. Indemnity with respect to any criminal action or proceeding will be provided only when the board member or officer had no reasonable cause to believe his act was unlawful. The amount paid to any board member, officer or agent of the corporation by way of indemnification shall not exceed the actual, reasonable and necessary expenses incurred in connection with the matter involved. The foregoing right of indemnification shall be in addition to but not exclusive of, any other right to which such board member, or officer of the corporation may other wise be entitled by law. 7. The full names and addresses of the incorporators including street and street numbers, if any, and the city, town or village, including tile zip code, are as follows: NAME ADDRESS Frank L. Ungerott 906 Olive Street St. Louis, Missouri 63101 Jonathan L. Miles 906 Olive Street St. Louis, Missouri 63101 Steven A. Gramlich 906 Olive Street St. Louis, Missouri 63101 8. The number of directors constituting the initial board of directors of the corporation is two (2) and the names and addresses of the persons who are to serve as directors until the first annual meeting of shareholders, or until their successors are elected and shall qualify, are as follows: 3 NAME ADDRESS Francis L. Barkofske 301 North Memorial Drive St. Louis, Missouri 63102 Michael M. Scharf 301 North Memorial Drive St. Louis, Missouri 63102 9. The name and address of the appointed person to whom notice or process may be sent is C T CORPORATION SYSTEM, 1200 Charleston National Plaza, Charleston, West Virginia 25301. ACKNOWLEDGEMENT We, the undersigned, for the purpose of forming a corporation under the laws of the State of West Virginia, do make and file this "Articles of Incorporation". In witness whereof, we have accordingly hereunto set our respective hands this 23rd day of February, 1990. /s/ Frank L. Ungerott ---------------------- Frank L. Ungerott /s/ Jonathan L. Miles ---------------------- Jonathan L. Miles /s/ Steven A. Gramlich ----------------------- Steven A. Gramlich 4 STATE OF MISSOURI CITY OF ST. LOUIS I, C. Patton McGee, a Notary Public in and for the city and state aforesaid, hereby certify that Frank L. Ungerott, Jonathan L. Miles and Steven A. Gramlich, whose names are signed to the foregoing Articles of Incorporation, this day personally appeared before me in my said city and acknowledged their signatures. /s/ C. Patton McGree ------------------------------- C. Patton McGree, Notary Public My commission expires November 1, 1993. ARTICLES OF INCORPORATION PREPARED BY Michael Hyer, Attorney, whose mailing address is Peabody Holding Company, Inc., Legal Department, 301 North Memorial Drive, St. Louis, Missouri 63102. 5 EX-3.10 12 BY-LAW OF BLACKROCK FIRST CAPITAL CORP. EXHIBIT 3.10 BLACKROCK FIRST CAPITAL CORPORATION * * * * * B Y L A W S * * * * * ARTICLE I OFFICES Section 1. The principal office of the corporation in the State of West Virginia shall be located in the City of Charleston, County of Kanawha. Section 2. The corporation may have such other offices, either within or without the State of West Virginia, as the board of directors may designate or as the business of the corporation may require. ARTICLE II ANNUAL MEETING OF SHAREHOLDERS Section 1. All meetings of shareholders for the election of directors shall be held in City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of West Virginia as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Section 2. Annual meetings of shareholders, commencing with the year 1991, shall be held on the second Tuesday of April at 10:00 A.M. if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., for the purpose of electing directors and for the transaction of such other business as may come before the meeting. Section 3. Written notice stating the place, day and hour of the meeting shall be delivered not less than ten nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of tile president, or the secretary, or the officer or other persons calling the meeting, to each shareholder of record entitled to vote at such meeting. ARTICLE III SPECIAL MEETINGS OF SHAREHOLDERS Section 1. Special meetings of shareholders for any purpose other than the election of directors may be held at such time and place within or without the State of West Virginia as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the president or by the board of directors, and shall be called by the president at the request of the holders of not less than one-tenth of all outstanding shares of the corporation entitled to vote at the meeting. Section 3. Written notice stating the place, day, hour and purpose or purposes for which the meeting is called shall be delivered not less than ten nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officer or 2 other persons calling the meeting, to each shareholder of record entitled to vote at such meeting. Section 4. The business transacted at any special meeting of shareholders shall be limited to the purposes stated in the notice. ARTICLE IV QUORUM AND VOTING OF STOCK Section 1. The holders of a majority of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders, but in no event shall a quorum consist of less than one-third of the shares entitled to vote. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders present in person or represented by proxy may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. Section 2. If a quorum is present, the affirmative vote of a majority of the shares of stock represented at the meeting shall be the act of the shareholders unless the vote of a greater number of shares of stock is required by law or the articles of incorporation. 3 Section 3. Each outstanding share of stock, having voting power, shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. A shareholder may vote either in person or by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. At each election for directors every shareholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be elected and for whose election he has a right to vote, or to cumulate his votes by giving one candidate as many votes as the number of such directors multiplied by the number of his shares shall equal, or by distributing such votes on the same principle among any number of such candidates. Section 4. Any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. ARTICLE V DIRECTORS Section 1. The Board of Directors of the Corporation shall consist of one or more members as fixed from time to time by resolution of the Board of Directors or the Shareholders. Directors need not be residents of the State of West Virginia nor shareholders of the corporation. The directors, other than the first board of directors, shall be elected at the annual meeting of the shareholders, and each director elected shall serve until the 4 next succeeding annual meeting and until his successor shall have been elected and qualified. The first board of directors shall hold office until the first meeting of shareholders. Section 2. Any vacancy occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the board of directors. A director elected to fill a vacancy shall be elected for the unexpired portion of the term of his predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by the affirmative vote of a majority of the directors present at a meeting at which a quorum is present. A director elected to fill a newly created directorship shall serve until the next succeeding annual meeting of shareholders. The board of directors shall fill vacancies occurring in the board by reason of the removal of directors without cause or for cause. Section 3. The business affairs of the corporation shall be managed by its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the articles of incorporation or by these bylaws directed or required to be exercised or done by the shareholders. Section 4. The directors may keep the books of the corporation, except such as are required by law to be kept within the state, outside of the State of West Virginia, at such place or places as they may from time to time determine. 5 Section 5. The board of directors, by the affirmative vote of a majority of the directors then in office, and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise. ARTICLE VI MEETINGS OF THE BOARD OF DIRECTORS Section 1. Meetings of the board of directors, regular or special, may be held either within or without the State of West Virginia. Section 2. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the shareholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present, or it may convene at such place and time as shall be fixed by the consent in writing of all the directors. Section 3. Regular meetings of the board of directors may be held upon such notice, or without notice, and at such time and at such place as shall from time to time be determined by the board. Section 4. Special meetings of the board of directors may be called by or at the request of the president or any two directors. Notice of any special meeting shall be given at least ten days, but not more than fifty days, previously thereto by written notice delivered personally or mailed to each director at 6 his business address, or by telegram. Any director may waive notice of any meeting. Section 5. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. With the exception of meetings for the purpose of amending the bylaws or authorizing the sales of all or substantially all of the assets of the corporation, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting. Section 6. A majority of the number of directors shall constitute a quorum for the transaction of business at any meeting of the board of directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. Section 7. Any action required or permitted to be taken at a meeting of the directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors entitled to vote with respect to the subject matter thereof. 7 ARTICLE VII EXECUTIVE COMMITTEES Section 1. The board of directors by resolution adopted by a majority of the full board, may designate two or more of its members to constitute an executive committee. The designation of such committee and the delegation thereto of authority shall not operate to relieve the board of directors, or any member thereof, of any responsibility imposed by law. The executive committee, when the board of directors is not in session shall have and may exercise all of the authority of the board of directors except to the extent, if any, that such authority shall be limited by the resolution appointing the executive committee and except also that the executive committee shall not have the authority of the board of directors in reference to amending the articles of incorporation, adopting a plan of merger or consolidation, recommending to the shareholders the sale, lease, exchange or other disposition of all or substantially all of the property and assets of the corporation otherwise than in the usual and regular course of its business, recommending to the shareholders a voluntary dissolution of the corporation or a revocation thereof, or amending the bylaws of the corporation. Any vacancy in the executive committee may be filled by a resolution adopted by a majority of the full board of directors. The executive committee shall keep regular minutes of its proceedings and report the same to the board of directors for its information at the meeting thereof held next after the proceedings shall have been taken. 8 ARTICLE VIII NOTICES Section 1. Whenever, under the provisions of the statutes or of the charter or of these bylaws, notice is required to be given to any director or shareholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or shareholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Section 2. Whenever any notice is required to be given to any shareholder or director of the corporation under the provisions of these bylaws or under the provisions of the Articles of Incorporation or under the provisions of the West Virginia Corporation Act, a waiver thereof in writing signed by the person or persons entitled to such notice, filed with the records of the meeting, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. ARTICLE IX OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of 9 directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Section 2. The board of directors at its first meeting after each annual meeting of shareholders shall choose a president, one or more vice- presidents, a secretary and a treasurer, none of whom need be a member of the board. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board of directors. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the shareholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. 10 Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his death, inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated at the time of their election, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. Any vice-president may sign, with the secretary or an assistant secretary, certificates for shares of the corporation; and shall perform such other duties as from time to time may be assigned to him by the president or by the board of directors. THE SECRETARY AND ASSISTANT SECRETARIES Section 9. The secretary shall: (a) keep the minutes of the proceedings of the shareholders and of the board of directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of 11 the corporation is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (d) keep a register of the post office address of each shareholder which shall be furnished to the secretary by such shareholder; (e) sign with the president, or a vice-president, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the board of directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him by the president or by the board of directors. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors, shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors or president may from time to time prescribe. The assistant secretaries, when authorized by the board of directors, may sign with the president or a vice-president certificates for shares of the corporation the issuance of which shall have been authorized by a resolution of the board of directors. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the 12 corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer or, if there shall be more than one, the assistant treasurers in the order determined by the board of directors, shall, in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 13 ARTICLE X CERTIFICATES FOR SHARES Section 1. The shares of a corporation shall be represented by certificates signed by the president or a vice-president and the secretary or an assistant secretary of the corporation, and may be sealed with the seal of the corporation or a facsimile thereof. Every certificate representing shares issued by a corporation which is authorized to issue shares of more than one class shall set forth upon the face or back of the certificate, or shall state that the corporation will furnish to any shareholder upon request and without charge, a full statement of the designations, preferences, limitations, and relative rights of the shares of each class authorized to be issued, and if the corporation is authorized to issue any preferred or special class in series, the variations in the relative rights and preferences between the shares of each such series so far as the same have been fixed and determined and the authority of the board of directors to fix and determine the relative rights and preferences of subsequent series. Each certificate representing shares shall state upon the face thereof: that the corporation is organized under the laws of this state; the name of the person to whom issued; the number and class of shares, and the designation of the series, if any, which such certificate represents; and the par value of each share represented by such certificate, or a statement that the shares are without par value. 14 Section 2. The signatures of the president or vice-president and the secretary or assistant secretary upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar, other than the corporation itself or an employee of the corporation. In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate to be issued in place of any certificate theretofore issued by the corporation alleged to have been lost or destroyed. When authorizing such issue of a new certificate, the board of directors, in its discretion and as a condition precedent to the issuance thereof, may prescribe such terms and conditions as it deems expedient, and may require such indemnities as it deems adequate, to protect the corporation from any claim that may be made against it with respect to any such certificate alleged to have been lost or destroyed. TRANSFER OF SHARES Section 4. Transfer of shares of the corporation shall be made only on the stock transfer books of the corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his 15 attorney thereunto authorized by power of attorney duly executed and filed with the secretary of the corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. CLOSING OF TRANSFER BOOKS Section 5. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors of the corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, fifty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books, the board of directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is 16 mailed or the date on which the resolution of the board of directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof. REGISTERED SHAREHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of West Virginia. LIST OF SHAREHOLDERS Section 7. The officer or agent having charge of the stock transfer books for shares of the corporation shall make a complete record of the shareholders entitled to vote at each meeting of shareholders or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each. Such record shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes thereof. 17 ARTICLE XI GENERAL PROVISIONS DIVIDENDS Section 1. The board of directors may, from time to time, declare and the corporation may pay dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its Articles of Incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. CHECKS Section 3. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 4. The fiscal year of the corporation shall be fixed by resolution of the board of directors. 18 SEAL Section 5. The board of directors may provide a corporate seal which shall have inscribed thereon the name of the corporation and the words "Corporate Seal, West Virginia". ARTICLE XII AMENDMENTS Section 1. These bylaws may be altered, amended or repealed and new bylaws may be adopted by the board of directors or by the shareholders at any regular or special meeting. 19 EX-3.11 13 CERT OF INCORP. OF BLUEGRASS COAL COMPANY EXHIBIT 3.11 CERTIFICATE OF INCORPORATION OF BLUEGRASS COAL COMPANY * * * * * 1. The name of the corporation is: BLUEGRASS COAL COMPANY 2. The address of its registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of common stock which the corporation shall have authority to issue is one hundred (100) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to One Thousand Dollars ($1,000.00). 5A. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- J. J. Masters 906 Olive Street St. Louis, Missouri 63101 M. S. Kinkead 906 Olive Street St. Louis, Missouri 63101 S. A. Gramlich 906 Olive Street St. Louis, Missouri 63101 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- Francis L. Barkofske 301 N. Memorial Drive St. Louis, Missouri 63102 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation. 8. No director shall be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director; provided, however, this provision shall not eliminate or limit the liability of a director: (i) for any breach of the director's duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the Delaware Corporation Law; or (iv) 2 for any transaction from which the director derived an improper personal benefit. 3 WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 26th day of April, 1989. /s/ J. J. Masters --------------------------------------- J. J. Masters, Incorporator /s/ M. S. Kinkead --------------------------------------- M. S. Kinkead, Incorporator /s/ S. A. Gramlich --------------------------------------- S. A. Gramlich, Incorporator 4 EX-3.12 14 BY-LAWS OF BLUEGRASS COAL COMPANY EXHIBIT 3.12 BLUEGRASS COAL COMPANY * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1990, shall be held on the second Tuesday in April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced 2 and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or 3 represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. 4 Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one (1) nor more than six (6). The first board shall consist of one (1) director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. 5 Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. 6 MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like 7 manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons 8 participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the 9 issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of 10 directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same 11 shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. 12 Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice- 13 presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. 14 Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall 15 be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the 16 information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or 17 destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other 18 distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 19 ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. 20 CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. (a) The Company shall, to the fullest extent permitted by applicable law, indemnify any person (and the heirs, executors and administrators thereof) who was or is made, or threatened to be made, a party to an action, suit or proceeding, whether civil, criminal, administrative or investigative, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or 21 administrative or legislative body or agency, including an action by or in the right of the Company to procure a judgment in its favor and an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Company is serving or served in any capacity at the request of the Company, by reason of the fact that he, his testator or intestate is or was a director or officer of the Company, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement, and costs, charges and expenses, including attorneys' fees, incurred therein or in any appeal thereof. (b) The Company shall indemnify other persons and reimburse the expenses thereof, to the extent required by applicable law, and may indemnify any other person to whom the Company is permitted to provide indemnification or the advancement of expenses, whether pursuant to rights granted pursuant to, or provided by, the Delaware General Corporation Law or otherwise. (c) The Company shall, from time to time, reimburse or advance to any person referred to in paragraph (a) the funds necessary for payment of expenses, including attorneys' fees, incurred in connection with any action, suit or proceeding referred to in paragraph (a) above, upon receipt of a written undertaking by or on behalf of such person to repay such 22 amount(s) if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled, or (iii) his conduct was otherwise of a character such that Delaware law would require that such amount(s) be repaid. (d) Any director or officer of the Company serving (i) another corporation, of which a majority of the shares entitled to vote in the election of its directors is held by the Company, or (ii) any employee benefit plan of the Company or any corporation referred in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (e) Any person entitled to be indemnified or to the reimbursement or advancement of expenses as a matter of right pursuant to this Article may elect to have the right to indemnification (or advancement of expenses) interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the action, suit or proceeding, to the extent permitted by applicable law, or on the basis of the applicable law in effect at the time indemnification is sought. (f) The right to be indemnified or to the reimbursement or advancement of expenses pursuant to this Article (i) is a contract right pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth 23 in a separate written contract between the Company and the director or officer, (ii) is intended to be retroactive and shall be available with respect to events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. (g) If a request to be indemnified or for the reimbursement or advancement of expenses pursuant hereto is not paid in full by the Company within thirty days after a written claim has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled also to be paid the expenses of prosecuting such claim. Neither the failure of the Company (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of or reimbursement or advancement of expenses to the claimant is proper in the circumstances, nor an actual determination by the company (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses, shall be a defense to the action or create a presumption that the claimant is not so entitled. 24 ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 25 EX-3.13 15 CERT OF INCORP. OF CABALLO COAL COMPANY EXHIBIT 3.13 CERTIFICATE OF INCORPORATION OF CABALLO COAL COMPANY * * * * 1. The name of the corporation is CABALLO COAL COMPANY 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is: To carry on and conduct the general business of mining; to conduct general mining operations for recovery of minerals, coal, products and substances; to mine, extract, remove and recover the same; to buy, sell, exchange, lease, acquire and generally deal in and with mines, mineral rights, mineral properties and mining claims and licenses; to construct, own and operate all necessary facilities; to do all things necessary or convenient therewith; To acquire, own, lease, mortgage, occupy, sell, let out or develop real estate, and any interest therein, particularly but not exclusively, mineral properties, and develop, use and turn the same to account; To buy, sell, exchange, manufacture, produce, process, convert, import, export and generally trade in and deal in and with goods, wares, merchandise, natural products, commodities, articles of commerce and personal property, of every kind and nature; and To engage in any lawful act or activity in connection with the foregoing, and for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is One Hundred Dollars ($100.00) amounting in the aggregate to One Hundred Thousand Dollars ($100,000.00). 5. The name and mailing address of each incorporator is as follows: 2 NAME MAILING ADDRESS - ---- --------------- M. A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 D. M. Dembkowski Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provisions contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. The corporation reserves the right to amend, alter, change or repeal any provisions contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 3 WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 12th day of September, 1994. /s/ M.A. Brzoska ---------------------------------- M. A. Brzoska, Incorporator /s/ K.A. Widdoes ---------------------------------- K. A. Widdoes, Incorporator /s/ D.M. Dembrowski ---------------------------------- D. M. Dembrowski, Incorporator EX-3.14 16 BY-LAWS OF CABALLO COAL COMPANY EXHIBIT 3.14 CABALLO COAL COMPANY * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1994, shall be held on the second Tuesday in April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by 2 the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as 3 originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would 4 be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one nor more than six. The first board shall consist of two directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly 5 created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of 6 directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. 7 Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a 8 quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and 9 merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. 10 ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. 11 Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof 12 shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same 13 to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. 14 Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. 15 Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its 16 discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to 17 receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 18 ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. 19 CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The Company shall, to the fullest extent permitted by applicable law, indemnify any person (and the heirs, executors and administrators thereof) who was or is made, or threatened to be made, a party to an action, suit or proceeding, whether civil, criminal, administrative or investigative, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or administrative or legislative body or 20 agency, including an action by or in the right of the Company to procure a judgment in its favor and an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Company is serving or served in any capacity at the request of the Company, by reason of the fact that he, his testator or intestate is or was a director or officer of the Company, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement, and costs, charges and expenses, including attorneys' fees, incurred therein or in any appeal thereof. (b) The Company shall indemnify other persons and reimburse the expenses thereof, to the extent required by applicable law, and may indemnify any other person to whom the Company is permitted to provide indemnification or the advancement of expenses, whether pursuant to rights granted pursuant to, or provided by, the Delaware General Corporation Law or otherwise. (c) The Company shall, from time to time, reimburse or advance to any person referred to in paragraph (a) the funds necessary for payment of expenses, including attorneys' fees, incurred in connection with any action, suit or proceeding referred to in paragraph (a) above, upon receipt of a written undertaking by or on behalf of such person to repay such amount(s) if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were 21 the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled, or (iii) his conduct was otherwise of a character such that Delaware law would require that such amount(s) be repaid. (d) Any director or officer of the Company serving (i) another corporation, of which a majority of the shares entitled to vote in the election of its directors is held by the Company, or (ii) any employee benefit plan of the Company or any corporation referred in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (e) Any person entitled to be indemnified or to the reimbursement or advancement of expenses as a matter of right pursuant to this Article may elect to have the right to indemnification (or advancement of expenses) interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the action, suit or proceeding, to the extent permitted by applicable law, or on the basis of the applicable law in effect at the time indemnification is sought. (f) The right to be indemnified or to the reimbursement or advancement of expenses pursuant to this Article (i) is a contract right pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth in a separate written contract between the Company and the director or officer, (ii) is intended to be retroactive and shall be available with respect to 22 events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. (g) If a request to be indemnified or for the reimbursement or advancement of expenses pursuant hereto is not paid in full by the Company within thirty days after a written claim has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled also to be paid the expenses of prosecuting such claim. Neither the failure of the Company (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of or reimbursement or advancement of expenses to the claimant is proper in the circumstances, nor an actual determination by the company (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses, shall be a defense to the action or create a presumption that the claimant is not so entitled. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by- laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular 23 meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 24 EX-3.15 17 CERT OF INCORP. OF CHARLES COAL COMPANY EXHIBIT 3.15 CERTIFICATE OF INCORPORATION OF CHARLES COAL COMPANY -----ooOoo----- 1. The name of the corporation is CHARLES COAL COMPANY 2. The address of its registered office in the State of Delaware is No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one hundred (100) and the par value of each of such shares is One Dollar ($1.00) amounting in the aggregate to One Hundred Dollars ($100.00). 5A. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- K. L. Husfelt 100 West Tenth Street Wilmington, Delaware 19801 M. A. Ferrucci 100 West Tenth Street Wilmington, Delaware 19801 E. L. Kinsler 100 West Tenth Street Wilmington, Delaware 19801 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- R. H. Freeman One Beacon Street Boston, Massachusetts 02108 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 2 9. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 7th day of April, 1980. /s/ K. L. Husfelt ------------------------- K. L. Husfelt /s/ M. A. Ferrucci ------------------------- M. A. Ferrucci /s/ E. L. Kinsler ------------------------- E. L. Kinsler 3 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION * * * * * CHARLES COAL COMPANY, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the board, adopted a resolution proposing and declaring advisable an amendment to the Certificate of Incorporation of said corporation as follows: RESOLVED, That this Board of Directors considers the amendment of the Company's Certificate of Incorporation by the addition thereto after paragraph "9" of a new paragraph numbered "10" and reading as set forth below to be advisable and in accordance with the desire of the Company's stockholders that the personal liability of the Company's directors be eliminated or limited except in certain specified instances: 10. A director of this corporation shall under no circumstance have any personal liability to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for those specific breaches and acts or omissions with respect to which the Delaware General Corporation Law expressly provides that this provision shall not eliminate or limit such personal liability of directors. SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of section 228 of the General Corporation Law of the State of Delaware. 4 THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said CHARLES COAL COMPANY has caused this certificate to be signed by H. W. Williams, its President, and attested by J. L. Klinger, its Secretary, this 29th day of September, 1987. (SEAL) By: /s/ H. W. Williams ----------------------------- H. W. Williams, President ATTEST: By: /s/ J.L. Klinger ------------------------ J. L. Klinger, Secretary 5 EX-3.16 18 BY-LAWS OF CHARLES COAL COMPANY EXHIBIT 3.16 CHARLES COAL COMPANY ------ooOoo------ B Y - L A W S ------ooOoo------ ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held at such place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1981, shall be held on the second Tuesday of April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in 2 writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for 3 the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt 4 notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one nor more than ten. The first board shall consist of one director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted 5 immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as 6 hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on twenty-four hours' notice to each director, either personally or by telephone, mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required 7 or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of 8 directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of 9 directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in 10 the United States mail. Notice to directors may also be given by telegram or telephone. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. 11 Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) 12 shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary 13 or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and 14 other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATE OF STOCK Section 1. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice- president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation, certifying the number of shares owned by him in the corporation. Section 2. Any of or all the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. 15 LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. 16 FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 17 ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. 18 CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board 19 of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 20 EX-3.17 19 CERT OF INCORP. OF COAL PROPERTIES CORP. EXHIBIT 3.17 CERTIFICATE OF INCORPORATION OF COAL PROPERTIES CORP. -----ooOoo----- 1. The name of the corporation is COAL PROPERTIES CORP. 2. The address of its registered office in the State of Delaware is No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one hundred (100) and the par value of each of such shares is One Dollar ($1.00) amounting in the aggregate to One Hundred Dollars ($100.00). 5A. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- K. L. Husfelt 100 West Tenth Street Wilmington, Delaware 19810 B. A. Schuman 100 West Tenth Street Wilmington, Delaware 19810 E. L. Kinsler 100 West Tenth Street Wilmington, Delaware 19810 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- R. H. Freeman One Beacon Street Boston, Massachusetts 02108 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the 2 corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 9. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. WE, THE UNDERSIGNED, being each of the incorporators herein before named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying, that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 13th day of May, 1980. /s/ K. L. Husfelt ------------------------- K. L. Husfelt /s/ B. A. Schuman ------------------------- B. A. Schuman /s/ E. L. Kinsler ------------------------- E. L. Kinsler 3 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION * * * * * COAL PROPERTIES CORP., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written amount of its members, filed with the minutes of the board, adopted a resolution proposing and declaring advisable an amendment to the Certificate of Incorporation of said corporation as follows: RESOLVED, That this Board of Directors considers the amendment of the Company's Certificate of Incorporation by the addition thereto after paragraph "9" of a new paragraph numbered "10" and reading as set forth below to be advisable and in accordance with the desire of the Company's sole stockholder that the personal liability of the Company's directors be eliminated or limited except in certain specified instances: 10. A director of this corporation shall under no circumstance have any personal liability to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for those specific breaches and acts or omissions with respect to which the Delaware General Corporation Law expressly provides that this provision shall not eliminate or limit such personal liability of directors. SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of sections 242 and 228 of the General Corporation Law of the State of Delaware. 4 IN WITNESS WHEREOF, said COAL PROPERTIES CORP. has caused this certificate to be signed by H. W. Williams, its President, and attested by J. L. Klinger, its Secretary, this 1st day of July, 1987. (SEAL) BY: /s/ H.W. Williams -------------------------- H. W. Williams , President ATTEST: By: /s/ J. L. Klinger ------------------------ J. L. Klinger, Secretary 5 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Coal Properties Corp., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Directors of Coal Properties Corp., a resolution was duly adopted setting forth a proposed amendment to the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and directing that said amendment be considered by the stockholder of said corporation. The resolution setting forth the proposed amendment is as follows: RESOLVED: That it is advisable to amend and restate Article 4 of the Corporation's Certificate of Incorporation as follows: "4. The total number of shares of all classes of capital stock which the corporation has the authority to issue is 59,952 which shall be divided into two classes as follows: 59,852 shares of Preferred Stock, par value TEN DOLLARS ($10) per share, and 100 shares of Common Stock, par value ONE DOLLAR ($1) per share. The voting powers, preferences and other special rights and qualifications, limitations or restrictions of the above classes of stock are as follows: PREFERRED STOCK The holders of the Preferred Stock shall be entitled to receive out of the surplus or net profits of the corporation, dividends, when and as declared by the directors, payable at such periods as shall be fixed by them, at the rate of 8% per annum on the par value of 6 such stock, and no more, before any dividend shall be paid or set apart for payment upon the Common Stock. The dividends on the Preferred Stock shall be noncumulative. In the event of any liquidation, dissolution or winding up, whether voluntary or involuntary, of the corporation, the holders of the Preferred Stock shall be entitled to be paid the sum of TEN DOLLARS ($10) per share and an amount equal to any declared and unpaid dividends thereon, before any amount shall be paid to the holders of the Common Stock, and after the payment to the holders of the Preferred Stock of such amounts, the remaining assets shall be distributed to the holders of the Common Stock. Except as required by law, the holders of the Preferred Stock shall not be entitled to a vote at any meeting of the shareholders or in respect of any written vote taken in lieu thereof. The Preferred Stock shall not be convertible into the Common Stock or any other class of stock of the corporation. COMMON STOCK Subject to the requirements of law and this Certificate of Incorporation, as amended from time to time, the holders of Common Stock shall (i) in the event of any liquidation, dissolution or other winding up of the corporation, whether voluntary or involuntary, and after all holders of the Preferred Stock shall have been paid in full the amount to which they shall be entitled, be entitled to receive all the remaining assets of the corporation, such assets to be distributed pro rata to holders of the Common Stock; and (ii) after payment in full of all dividends to which holders of the Preferred Stock shall be entitled, be entitled to receive such dividends as and when the same shall be declared from time to time by the Board of Directors of the corporation out of funds legally available therefor. Except as otherwise required by law and the provisions of this Certificate of Incorporation, the holders of the Common Stock of the corporation possess full voting power for the election of directors and for all other purposes and each holder thereof shall be entitled to one vote for each share held by such holder." SECOND: That thereafter, pursuant to the resolution of its Board of Directors, the sole stockholder of said corporation did, 7 by action by written consent of said sole stockholder in lieu of a special meeting of stockholders in accordance with Section 228 of the General Corporation Law of the State of Delaware, approve and adopt said amendment, notice of such action by consent not being required under said Section 228 because said action was unanimous. THIRD: That said amendment was duly adopted in accordance with the provision of Section 242 of the General Corporation Law of the State of Delaware and, in accordance with the provisions of Section 103 thereof, shall become effective when filed with the Secretary of the State of Delaware. 8 IN WITNESS WHEREOF, said Coal Properties Corp. has caused this certificate to be signed by Fred C. Raskin, its Senior Vice-President & Treasurer, and attested by Larry E. Scholl, its Vice-President, General Counsel and Secretary, this 30th, day of March, 1987 ---- ----- COAL PROPERTIES CORP. By /s/ Fred L. Ruskin ------------------ Senior Vice-President and Treasurer ATTEST: By /s/ Larry E. Scholl ----------------------- Vice President, General Counsel and Secretary 9 EX-3.18 20 BY-LAWS OF COAL PROPERTIES CORP. EXHIBIT 3.18 COAL PROPERTIES CORP. -----ooOoo----- B Y - L A W S -----ooOoo----- ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held at such place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1981, shall be held on the second Tuesday of April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 2 Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a 3 quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior 4 notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one nor more than ten. The first board shall consist of one director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold of(Pounds)ice until the next annual election and until their successors are duly elected and shall 5 qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected 6 directors in order legally to constitute the meeting, provided a quorum shall be present, In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on twenty-four hours notice to each director, either personally or by telephone, mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a 7 quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace 8 any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. 9 Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. 10 ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram or telephone. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. 11 ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. 12 THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice- presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 13 THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 14 THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of 15 the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATE OF STOCK Section 1. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice- president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation, certifying the number of shares owned by him in the corporation. Section 2. Any of or all the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation 16 alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to 17 receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 18 ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. 19 CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of 20 directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 21 EX-3.20 21 AMEND & RESTATED VENTURE AGMT COLONY BAY COAL CO EXHIBIT 3.20 AMENDED AND RESTATED VENTURE AGREEMENT OF COLONY BAY COAL COMPANY Amended and Restated Venture Agreement (the "Agreement"), dated and effective as of the 1st day of January, 1983, by and between WALNUT COAL COMPANY, a West Virginia corporation ("Walnut"), and CHARLES COAL COMPANY, a Delaware corporation ("Charles"), (Walnut and Charles being hereinafter sometimes collectively called "Partners" and individually called a "Partner"), W I T N E S S E T H : WHEREAS, Walnut and Charles have heretofore entered into a certain Venture Agreement dated as of November 20, 1980 (the "Original Agreement"), pursuant to which Walnut and Charles have formed a partnership (the "Partnership") under the West Virginia Uniform Partnership Act and have adopted the Original Agreement as the Articles of Partnership of the Partnership; and WHEREAS, the Partnership has and is engaged in the coal mining business in West Virginia as further described below; and WHEREAS, the Partners desire to provide that Walnut shall furnish to the Partnership certain services in connection with the continued operation of the Colony Bay Reserve (as defined below), for the compensation and on the other terms set forth herein; NOW, THEREFORE, to effect the foregoing and in consideration of the mutual covenants and benefits herein set forth and contemplated the Partners (i) agree that the Original Agreement is hereby amended and restated in its entirety by this Agreement, and (ii) further agree as follows: SECTION 1. ORGANIZATION OF THE PARTNERSHIP ------------------------------- 1.1 Organization. ------------ (a) The Partners hereby adopt this Agreement as the Amended and Restated Articles of Partnership of the Partnership in the place and stead of the Original Agreement and hereby agree that the Partnership shall be continued for the limited purposes and scope set forth herein. (b) Except to the extent otherwise provided herein, the rights and liabilities of the Partners and the conduct and termination of the Partnership shall continue to be governed by the West Virginia Uniform Partnership Act. (c) The Partners will promptly execute all certificates and other documents, and make all such filings and recordings and perform such other acts as may now or hereafter be necessary or desirable, to comply with the requirements of West Virginia law for the carrying on of the business of the Partnership. (d) Each Partner shall continue to be a general partner and each Partner's interest in the Partnership 2 shall continue to be fifty percent (hereinafter called its "Partnership Interest"). (e) All real and other property including permits and licenses owned by or granted to or held by the Partnership shall continue to be deemed to be owned by or granted to or held by the Partnership as an entity, and no Partner, individually, shall have any ownership of, or right to use, any such property, except as provided in this Agreement. 1.2 Name. The name of the Partnership shall continue to be "COLONY ---- BAY COAL COMPANY", and the Partnership's business and affairs shall continue to be conducted only under that name. 1.3 Effective Date and Term. This Agreement shall be effective as ----------------------- of the date hereof (hereinafter called the "Effective Date") and the Partnership shall continue in effect until terminated as provided in Section 8 hereof. 1.4 Principal Office. The principal office and place of business ---------------- of the Partnership shall be Bluestone Coal Building, 818 North Eisenhower Drive, Beckley, West Virginia 25801 or such other location as the Partners may designate. 1.5 Purposes and Scope. The sole purpose of the Partnership shall ------------------ be to engage in the business of mining coal in the seams and veins of coal in the areas covered 3 by the SubSublease and Consent dated November 20, 1980 between Eastern Royalty Corp. ("Royalty") and the Partnership (said subleased premises being hereinafter called the "Colony Bay Reserve") and in other activities incidental to such business, which activities may from time to time include: (a) developing strip, deep or auger mines and conducting mining operations in and on the Colony Bay Reserve; (b) acquiring by purchase, lease, sublease or otherwise rights to mine and extract coal in the Colony Bay Reserve; (c) acquiring by purchase, lease, sublease or otherwise surface land or rights to the use of surface land; (d) acquiring by purchase, lease or otherwise such machinery, equipment and other facilities as may be necessary or advisable for such operations; (e) entering into such engineering, operating or mining agreements with third parties as may be necessary or advisable to accomplish the foregoing; (f) transporting coal produced from such operations by such means as may be necessary or advisable (but not acting as a common carrier in connection therewith); (g) selling such coal and engaging in marketing activities incidental thereto; and (h) performing all other activities, including the borrowing of money and the mortgaging of real estate or personal property of the Partnership in connection therewith, as are necessary or incidental to conducting such business. 4 The Partnership shall have the power to do any act and thing and to enter into any contract incidental to, or necessary, proper or advisable for, the accomplishment or attainment of the purpose of the Partnership specified in this Agreement. 1.6 Partner's Authority. Except as otherwise provided in this ------------------- Agreement, neither Partner alone shall have any authority to act for, or to assume any obligations or responsibilities on behalf of, the other Partner or the Partnership. Each Partner will indemnify the Partnership and the other Partner against any claim, loss or damage to the Partnership or other Partner which may result from the Partner's breach of this Subsection 1.6. SECTION 2. OTHER AND COMPETING BUSINESS Except as otherwise provided herein, nothing contained in this Agreement shall be deemed to restrict in any way the freedom of either Partner, or any Affiliate of either Partner, to conduct, independently of the Partnership, and whether or not in competition with the Partnership, any business or activity outside the Colony Bay Reserve (other than the business contemplated to be performed by the Partnership under and in accordance with this Agreement) without any accountability to the Partnership or to the other Partner. No provision of this Agreement shall be interpreted in such a manner as to impose limitations 5 upon the activities of either Partner which will have the effect of limiting competition. For the purposes of this Agreement, "Affiliate" means, as to any entity, a person, corporation, company, trust, firm or other entity which directly or indirectly controls, or is controlled by, or is under common control with, such entity. SECTION 3. CONTRIBUTIONS TO THE PARTNERSHIP As and when the Partnership determines from time to time that it requires cash, each Partner hereby agrees that it shall make cash contributions to the Partnership in an amount equal to fifty percent of each such cash requirement. SECTION 4. MANAGEMENT OF THE PARTNERSHIP 4.1 Management of the Colony Bay Reserve. ------------------------------------ (a) Walnut, as managing general partner, shall supervise, manage and direct the operation of all of the mines and mining activities of the Partnership, upon the terms and conditions set forth below: (i) Walnut shall at its expense perform or cause to be performed or furnished, all of the work and services described in Appendix A attached hereto and with the authority and in accordance with the terms and conditions set forth in said Appendix A. (ii) The Partnership shall pay to Walnut, as a guaranteed payment (as such term is defined in Section 707(c) of the Internal Revenue Code of 6 1954, as amended), a management fee based upon the number of tons of raw coal mined by the Partnership in each calendar year, as follows, subject to adjustment as hereinafter provided: (1) $1.43 per ton for all coal mined up to but not in excess of 700,000 tons in any year; (2) $1.37 per ton for all coal mined in excess of 700,000 tons up to but not in excess of 1,200,000 tons in any year; and (3) $1.12 per ton for all coal mined in excess of 1,200,000 in any year. (iii) The management fee set forth in subsection (ii) above shall be adjusted from time to time for all costs incurred by Walnut in the performance of its services hereunder that are directly applicable to such services and that result from complying or preparing to comply with any federal, state or local law, regulation or order enacted or adopted after the date hereof or from any amendment or change in any existing federal, state or local law, regulation or order changed or amended after the date hereof. In the event of such an enactment, adoption, change or amendment, Walnut shall determine the cost of complying or preparing to comply, Charles shall have the right to examine and question any such 7 determination and, if the Partners shall agree on the amount of the adjustment, the amount so determined shall be added to the management fee (as then adjusted) to be effective as incurred by Walnut. If the Partners shall not agree, the amount of such adjustment shall be determined by arbitration under Section 9 hereof. (iv) The management fee (as adjusted pursuant to subsection (iii) above) shall be further adjusted annually as of May 1 (but not below (x) $1.43 per ton for all coal mined up to but not in excess of 700,000 tons in any year, (y) $1.21 per ton for all coal mined in excess of 700,000 tons up to but not in excess of 1,200,000 tons in any year and (z) $.99 per ton for all coal mined in excess of 1,200,000 tons in any year, in each case subject to adjustment pursuant to subsection (iii) above) by a percentage amount equal to the percentage increase or decrease in the average gross selling price of all of the coal produced by the Partnership during the preceding calendar year as compared to a base gross selling price of $32.00 per ton. The average gross selling price for any calendar year shall be the gross f.o.b. mine sale price, including any premium-penalty adjustments for coal quality, for such coal sold during such calendar year, whether or not actually paid by 8 vendees and without deduction for taxes, commissions, royalties or any other matter or thing, divided by the total number of net tons of such coal sold during such year. An example of such adjustment is as follows: MF = Management Fee = $1.43 BP = Base Gross Selling Price = $32.00 AP = Average Gross Selling Price = $40.00 AF = Adjusted Management Fee AF = (MF) AP -- BP AF = ($1.43) $40 = $1.43 (1.25) = $1.79 ---- $32 (v) In all adjustments of the management fee, any fraction of one cent shall be rounded to the nearest whole cent by dropping the last significant integer if five or less or by rounding up if six or more. (vi) As used herein, the term "ton" shall mean a net ton of 2,000 pounds. (vii) All sums due hereunder shall be payable monthly by the 15th day of each month for the preceding calendar month. (viii) The Partnership shall, at its expense, employ all labor necessary to carry on the operation of its mines and mining activities, including all mine superintendents, both deep and surface, mine engineering and mine office staffs, 9 and all other employees below the level of mine superintendent, all of whom shall be employees of and shall be under the direction and control of the Partnership, but who shall be subject to supervision by Walnut. (ix) Walnut shall, at its expense, (1) employ all supervisory and management personnel above the level of mine superintendent necessary for the efficient and economic operation of the mines and mining activities of the Partnership, and furnish to them such employee benefits, including pension, profit-sharing, insurance and bonus plans, as it may deem advisable; (2) supply appropriate transportation facilities for such supervisory personnel, in its discretion; (3) oversee all services and work performed at the mine; (4) perform overhead engineering and other work not appropriate for performance at the mining site; and (5) be responsible for all planning and forecasting. The cost of all necessary legal, accounting and other professional services not rendered by officers or employees of Walnut shall be borne by the Partnership (x) Term. The provisions of this Section 4.1 shall take effect ---- as of the Effective Date and shall continue in effect until November 20, 1986, and shall continue automatically thereafter from 10 year to year, subject, however, to the right of Walnut or the Partnership to terminate the provisions of this Section 4.1 on November 20, 1986, or thereafter, by giving six months' written notice to the other party of such election to terminate said provisions in the manner and form provided for giving of notice herein. (b) Nothing contained in this Section 4.1 shall be deemed or construed to create any rights of ownership in Walnut (beyond or in addition to its rights as Partner in the Partnership pursuant to the terms of this Agreement) of any documents, records, reports, plans or any other instruments created, written or copied by Walnut pursuant to the performance of its management responsibilities under this Section 4.1. All such records and documents shall be available to Charles for inspection and copying during normal business hours and shall be delivered to Charles upon the termination of this Agreement or the termination of Walnut's management responsibilities under the provisions of this Section 4.1. (c) No termination (for whatever reason) of Walnut's management responsibilities under the provisions of this Section 4.1 or default in the performance by Walnut or the Partnership of any obligations hereunder, shall be deemed or construed to constitute a default under the remaining provisions of 11 this Agreement or to create any right of termination of this Agreement or to constitute, require or permit any dissolution of or withdrawal of Walnut from the Partnership. (d) Any termination of this Agreement or dissolution of or withdrawal of Walnut from the Partnership (for whatever reason) shall terminate Walnut's management responsibilities under the provisions of this Section 4.1. (e) The amounts received by Walnut pursuant to the terms of subsection (a)(ii) (as adjusted pursuant to subsections (a)(iii) and (iv)) of this Section 4.1 shall constitute a guaranteed payment (as such term is defined in Section 707 of the Internal Revenue Code of 1954, as amended (the "Code")) to Walnut for its services as managing general partner and no such payment shall, for purposes of any other provision of this Agreement, be deemed or construed to constitute (i) net income of the Partnership allocable to Walnut, or (ii) a distribution of income by the Partnership to Walnut, nor shall any adjustment be made of Walnut's Partnership Interest or any other percentage, contribution or account by reason of receipt of any such amounts by Walnut. (f) The Partnership will appoint officers or employees of Walnut as its authorized representatives, from time to time, to do and perform such specific acts as may be designated by the Partnership and which are 12 deemed convenient or necessary for the day-to-day operation of the business of the Partnership. (g) The Partnership shall at its expense provide appropriate insurance coverage against liabilities arising from its operations and activities, including property damage, in such amounts and with such insurers as shall be determined by the Partnership. Such policies shall name Charles and Walnut as co-insureds where appropriate. (h) Walnut shall perform its services under this Section 4.1 and Appendix A in such manner as to provide efficient and economical planning, construction, development and mining operations for the Partnership. Walnut agrees that it will exercise its best efforts in carrying out its obligations under this Section 4.1 and Appendix A. 4.2 General Management of the Partnership. ------------------------------------- (a) The ultimate responsibility for the affairs of the Partnership shall be in the Partners, and each Partner shall have the right to participate fully and actively in the management of the business of the Partnership as herein provided. Subject to the provisions of this Agreement and except to the extent otherwise provided in Section 4.1 and Appendix A, all action and decisions in the management of the business of the Partnership shall be taken jointly by agreement between both Partners. 13 (b) Each Partner has, by notice to the other Partner, appointed a "Managing Agent" and one or more "Executive Agents" (herein collectively called "Agents"). At any time and from time to time, either Partner may remove and appoint a replacement for any of its Agents by notice to the other Partner, and shall do so immediately in the event of the death, resignation or substantial inability or incapacity of any of its Agents. In the absence or incapacity of a Partner's Managing Agent, one of such Partner's Executive Agents (in the order designated by such Partner) shall have the responsibility of and shall act for such Managing Agent. Each Partner represents and warrants that each Agent so appointed by it by such notice has and shall have all authority requisite to the duties of such Agent hereunder. (c) Agreement on behalf of either Partner pursuant to this Agreement (except as contemplated in Subsection 4.2(f) hereof) shall be communicated through its Managing Agent. Except to the extent otherwise provided in Section 4.1, the Managing Agents shall be responsible for the day-to-day management of the business of the Partnership. Meetings of the Managing Agents (and any other Agents) shall be held at such intervals and at such places as the Managing Agents shall determine. Action may be taken and decisions made (subject to the limitations set forth in Subsections 4.2(e) and 4.2(f) 14 hereof) by either written or oral agreement of the Managing Agents for each Partner. Actions taken and decisions made by a Managing Agent (or an Executive Agent acting for a Managing Agent) shall be binding upon the Partner by whom he was appointed. (d) The Managing Agents may from time to time adopt detailed rules and procedures not inconsistent with this Agreement (including Appendix A) for the management of the business of the Partnership, including rules and procedures for the establishment of one or more managing committees, the membership of such managing committees and the delegation of responsibilities of the Managing Agents to such managing committees. (e) The following actions shall require in every event the written consent of each Partner signed either by its Managing Agent or by another officer thereof duly authorized "thereunto: (i) The entering into of any contract or agreement (including without limitation any contract or agreement for engineering, architectural, construction, environmental, financial or other consulting services, or any lease or other acquisition of equipment or facilities or extension of credit on behalf of a supplier) calling for, or reasonably expected to 15 call for, the payment over its term by the Partnership of more than $100,000. (ii) The entering into of any contract or agreement for the sale or marketing of coal, the term of which exceeds one year; and the establishment of general policies, terms and conditions under which any other sale of coal will be made. (iii) Incurring, guaranteeing or otherwise becoming liable for indebtedness for borrowed money in an amount in excess of $100,000 in the aggregate. (iv) The acquisition of any land or other interests in real estate reasonably estimated to have a price in excess of $100,000. (v) The sale or transfer of any property or asset of the Partnership, other than obsolete or worn out assets and property or assets reasonably estimated to be worth in each case less than $l00,000, except in the ordinary course of business. (vi) The employment or discharge of employees of the Partnership at the level of the Mine Superintendent. (vii) The adoption of pension and other employee benefit and the awarding of bonuses to employees. 16 (viii) The waiver by the Partnership of any default by Walnut under Section 4.1 hereof or the assignment, termination, extension or amendment of any of the obligations of Walnut under Section 4.1 hereof. (ix) The waiver by the Partnership of any default by Eastern Associated Coal Corp. ("EACC") under the Coal Cleaning Contract (the "Cleaning Contract") or by Associated Coal Sales Corp. ("ACSC") or Castner, Curran & Bullitt, Inc. ("CCB") under the Coal Sales Agreement (the "Sales Agreement"), each dated as of November 20, 1980, entered into with the Partnership or the termination, extension, amendment or assignment of either agreement or the consent to the assignment of either agreement by EACC, ACSC or CCB. (f) The following actions shall require in every event the written consent of each Partner, executed by an officer thereof duly authorized "thereunto (with evidence of specific authority from the board of directors of the appropriate Partner): (i) Any amendment, modification, change or variation in or to this Agreement. (ii) Any discontinuance or substantial reduction of the business of the Partnership contemplated by this Agreement. 17 (iii) The liquidation or dissolution of the Partnership, except pursuant to Section 8 hereof. (iv) Any merger or consolidation of the Partnership into or with any other entity, or any transfer, assignment or encumbrance of a Partner's Partnership Interest except pursuant to Section 7 hereof. (g) Notwithstanding the limitations, obligations and liabilities established between the Partners hereunder, any person transacting business with the Partnership may rely upon the fact that each Partner and each Managing Agent is an agent of the Partnership for the purposes of its business, and the act of any Partner or Managing Agent, including the execution in the Partnership's name of any instrument for apparently carrying on in the usual way the business of the Partnership (as interpreted under the West Virginia Uniform Partnership Act), will bind the Partnership unless the person with whom he is dealing has knowledge of the fact that he has no such authority. (h) Either Partner alone shall have the right at any time to assert and enforce at law, in equity or otherwise, in the name and on behalf of the Partnership any claim which the Partnership may have against Walnut in connection with its performance under Section 4.1 hereof (subject to the provisions of Section 9 hereof), or against EACC in connection with its performance under 18 the Cleaning Contract or against ACSC or COB in connection with their performance under the Sales Agreement. The Partnership shall pay the costs and expenses (including reasonable legal fees) of enforcing any such claim provided that the recovery to the Partnership with respect to such claim exceeds such costs and expenses. SECTION 5. ACCOUNTING MATTERS; BOOKS AND RECORDS; TAX RETURNS 5.1 Fiscal Year. The fiscal year of the Partnership shall continue ----------- to be the calendar year. 5.2 Books and Reports. The Partnership shall cause to be prepared ----------------- and maintained complete books and records, on an accrual basis, regarding all phases of its business, including without limitation, construction, marketing activities, procurement and purchasing, contract administration, financial planning, administration, accounting, reporting, legal, capital expenditures, and taxes, royalties and other operation expenses, capital and operation budgets and other reporting procedures. The Partnership shall keep its books of accounts in accordance with generally accepted accounting principles consistently followed, except as otherwise agreed in writing by the Partners. Each Partner shall have the right (at its own expense) to inspect, audit and copy any and all such books and records at all reasonable times, which right may be exercised through 19 one or more Agents or employees of such Partner designated by such Partner and by one or more attorneys, independent engineers or independent certified public accountants designated by such Partner. 5.3 Financial Records; Independent Audits. Promptly after the end of ------------------------------------- each month, the Partnership will cause to be prepared and deliver to each Partner financial statements and related reports reflecting the financial position of the Partnership at the close of the month and the results of operations of the Partnership for the month. The Partnership shall have an audit of its books made as soon as practicable after the close of each fiscal year by Arthur Andersen & Co. or such other nationally recognized firm of public accountants as the Partners shall designate, and shall furnish each Partner copies of such financial statements and related reports reflecting the financial position of the Partnership at the close of the fiscal year and the results of operation of the Partnership for the fiscal year, together with the certificate of the public accountants covering the results of such audit. 5.4 Taxes and Tax Returns. The Partnership shall prepare and file ---------------------- all tax returns required to be filed by the Partnership pursuant to the Code or any successor statutes, and all state and local tax returns required to be filed by the Partnership. The Partnership shall not make an election to defer development 20 expenditures under Section 616(b) of the Code, entitled "Development Expenditures". In the preparation of the Partnership tax returns, depreciation methods will be adopted and other elections will be made to maximize percentage depletion over the life of the project. When percentage depletion is unaffected the most rapid available method of depreciation will be elected. No changes in the accounting methods for the purpose of preparation of tax returns of the Partnership shall be made without the consent of each Partner. SECTION 6. PROFITS, LOSSES AND DISTRIBUTIONS 6.1 Profits and Losses. All profits and losses of the Partnership ------------------ shall be shared equally by the Partners except as set forth below: (a) For book and tax purposes, all expenses of the Partnership with respect to royalty obligations payable to Royalty relating to the Colony Bay Reserve in excess of the royalty obligations payable by EACC to The Charleston National Bank, as Trustee and successor in interest of Donald D. Shepard et ux., pursuant to the Agreement of Lease dated January 29, 1946, -- -- as amended, and relating to the Colony Bay Reserve (the "Excess Royalty Payments") shall be allocated only to Charles. The Partnership shall distribute to Walnut cash equal to the Excess Royalty Payments, such distributions to be made contemporaneously with the payment of royalty obligations giving rise to such Excess Royalty Payments. 21 (b) The allocation between the Partners of percentage depletion for tax purposes shall be made so that Walnut is allocated the amount it would have been entitled to receive if the Partnership's royalty obligation referred to in clause (a) above were no greater than the royalty obligation of EACC referred to in said clause. In the event there is an insufficient amount of percentage depletion to allocate to Walnut pursuant to the preceding sentence, Charles shall pay to Walnut cash equal to the pretax value to Walnut of such deficiency. (c) The Partners may from time to time enter into additional agreements allocating for tax or book purposes certain items of income and expense. 6.2 Distributions. Except as otherwise specifically provided in this ------------- Agreement, all distributions of any Partnership assets shall be made only as and when determined by the prior written agreement of both Partners and all distributions of any Partnership assets, including those on termination and dissolution of the Partnership, shall be shared equally by the Partners. SECTION 7. RESTRICTIONS ON TRANSFER OF PARTNERSHIP INTERESTS Neither Partner may transfer, sell, alienate, assign or otherwise dispose of all or any part of its interest in the Partnership, whether voluntarily, involuntarily or by operation of law, or at a judicial 22 sale or otherwise; provided, however, that nothing herein contained shall be construed to prohibit either (a) the transfer of Walnut's entire interest in the Partnership to Bluestone Coal Corporation ("Bluestone") or to any entity 100% of the equity of which is owned directly or indirectly by Bluestone, or (b) the transfer of Charles' entire interest in the Partnership to Eastern Gas and Fuel Associates, a Massachusetts voluntary association ("Eastern"), or to any entity 100% of the equity of which is owned directly or indirectly by Eastern, so long as such transferee shall, immediately upon such transfer, become a Partner and expressly assume in writing the due and punctual performance of all the obligations of the transferring Partner under this Agreement and consent and undertake in writing to assume and perform all the obligations hereunder not theretofore performed and discharged by such Partner and to execute this Agreement and be bound by all the terms and provisions hereof; provided, however, that no such transfer shall be permitted without the express written consent of the nontransferring Partner if such transfer would, in the reasonable opinion of the nontransferring Partner, result in adverse tax consequences to the nontransferring Partner under the Code. Whenever pursuant to this Section 7 any transferee is entitled to become a Partner, the other Partner agrees 23 to execute an appropriate instrument admitting such transferee as a Partner. SECTION 8. TERM; DISSOLUTION; TERMINATION 8.1 Effective Date and Term. The Partnership shall be subject to the ----------------------- terms and provisions of this Agreement as of the Effective Date and shall continue until terminated in accordance with the provisions of this Section 8. No Partner shall have the right to and each Partner agrees not to dissolve, terminate or liquidate, or to petition a court for the dissolution, termination or liquidation of the Partnership, except as provided in this Agreement. 8.2 Events of Dissolution. --------------------- (a) The Partnership shall dissolve: (i) upon the unanimous written agreement of the Partners to dissolve the Partnership; (ii) on November 20, 2079; (iii) upon written notice given by Walnut at any time after the sixth anniversary of the Effective Date; (iv) upon the dissolution of a Partner; or (v) if (A) a Partner shall (1) apply for or consent to the appointment of a receiver, trustee, assignee for creditors or liquidator of such Partner, or of all or a substantial part of such Partner's assets, (2) be subject to an order for relief or be adjudicated a bankrupt or insolvent 24 under any bankruptcy or insolvency statute, or file a voluntary petition in bankruptcy, or be unable to pay its debts generally as they come due, (3) make a general assignment for the benefit of creditors, (4) file a petition or an answer seeking reorganization or arrangement with creditors or to utilize any insolvency law, or (5) file an answer admitting the material allegations, or consent to, or default in answering a petition filed against such Partner in any bankruptcy, reorganization or insolvency proceeding; or (B) a voluntary petition seeking reorganization of a Partner or an arrangement with creditors (or any call of creditors) of a Partner or appointing a receiver, trustee or liquidator of a Partner or of all or a substantial part of the assets of a Partner, shall be filed and such petition shall not be dismissed for any period of sixty consecutive days. (b) Upon the dissolution of the Partnership pursuant to either Subsection 8.2(a)(i) or 8.2(a)(ii), the Partnership and its business shall promptly be wound-up and terminated. Upon the dissolution of the Partnership caused by any event set forth in Subsection 8.2(a)(iii) through 8.2(a)(v), inclusive, (A) the Partner giving the written notice contemplated by Subsection 8.2(a)(iii) or as to whom the event described in Subsections 8.2(a)(iv) or 8.2(a)(v) has occurred (the 25 "Withdrawing Partner") shall immediately cease to be a Partner, and (B) the business of the Partnership shall not be wound-up and terminated unless the remaining Partner shall so elect. (c) Subject to the provisions of Section 8.2(b) above, in the event of the occurrence of an event set forth in Subsections 8.2(a)(iii) through 8.2(a)(v), inclusive: (i) the remaining Partner may send such notices of the dissolution to such persons and entities as the remaining Partner may deem appropriate and necessary under the circumstances; (ii) the remaining Partner shall either continue or promptly settle the business of the Partnership and, in either case, account for the interest of the Partners, and such procedure may include without limitation at the option of the remaining Partner either (A) a purchase by the remaining Partner of the interest in the Partnership of the Withdrawing Partner at a price equal to an amount determined in accordance with an appraisal of the interest of the Withdrawing Partner (net of all liabilities and obligations to be assumed by the remaining Partner in accordance with Subsection 8.4(d) hereof) made by three generally recognized competent coal mining appraisers one of whom shall be selected by the 26 Withdrawing Partner, another by the remaining Partner and the third by the other two appraisers so selected; provided, however, that such appraisal shall assign no value to the goodwill of the Partnership, and provided further that such appraisal shall value the assets of the Partnership as located and erected at the Colony Bay Reserve and as if such assets were to be used at that location but without regard to the potential earning power of such assets, or (B) a sale of all or any part of the assets of the Partnership; (iii) the goodwill of the Partnership (including the name, records and files) shall belong to and remain solely vested in the remaining Partner; and the remaining Partner shall have the right at all times to continue the business and affairs of the Partnership; and (iv) the prior written consent of the remaining Partner shall be required prior to either (A) any disposition of the Partnership interest of the Withdrawing Partner, or (B) any act by any judge, trustee or court of bankruptcy which may adversely affect the property or the business of the Partnership. 8.3 Voluntary Termination and Purchase by Charles. --------------------------------------------- (a) Charles shall have the right on and after the sixth anniversary of the Effective Date to terminate the 27 Partnership at any time by giving to Walnut a notice of termination (the "Termination Notice") which shall state that Charles will purchase Walnut's interest in the Partnership at a price determined as hereinafter provided. Upon giving the Termination Notice, Charles will have the rights of the remaining Partner as contemplated by Subsections 8.2(b) and 8.2(c) hereof and shall have the obligation to purchase Walnut's interest in the Partnership. The purchase price for such purchase shall be the sum of (i) the price contemplated by Subsection 8.2(c)(ii)(A) and (ii) one-half of the aggregate income of the Partnership for any period of 36 consecutive calendar months beginning not more than 36 months prior to the date of the Termination Notice and ending not more than 36 months after the date of the Termination Notice, said period to be designated by Walnut within thirty days after receipt of the Termination Notice. The income of the Partnership shall be determined by generally accepted accounting principles applied on a consistent basis except as otherwise agreed in writing by the Partners. The income of the Partnership for any period subsequent to the date of the Termination Notice shall be the pretax income of Charles (without deduction for the Excess Royalty Payments) derived from the business of the Partnership continued by Charles as the remaining Partner after termination of the Partnership. If Walnut designates 28 any period which ends after the Closing (hereinafter defined in Subsection 8.4(a)), the purchase price payable at the Closing shall be the amount contemplated by Subsection 8.2(c)(ii)(A) and the balance of the purchase price, if any, shall be payable as soon as practicable after the end of such period and the determination of such balance. (b) Charles shall have the option of making payment of the purchase price contemplated by Subsection 8.3(a) hereof in shares of common stock of Eastern. In the event Charles elects to make payment in such stock, Charles shall deliver at the Closing, in lieu of the check contemplated by Subsection 8.4(c) hereof, certificates representing the number of shares (rounded to the nearest full share) of such stock obtained by dividing the amount of the payment by the average of the daily closing sales prices for such stock on the New York Stock Exchange for the last five trading days immediately preceding the date of the Termination Notice and, as soon as the balance of the purchase price, if any, has been determined, shall deliver certificates representing the number of shares (rounded as aforesaid) of such stock obtained by dividing the amount of such balance by the average of said daily closing prices for the last five trading days immediately preceding such date of delivery. Walnut agrees that any shares of common stock of Eastern delivered to Walnut pursuant to 29 the foregoing will be acquired for its own account and for investment and not with a view to or in connection with any distribution thereof. Walnut agrees to confirm this understanding upon each delivery of such shares and to acknowledge that such shares will not be registered under the Securities Act of 1933 based upon such representation. Walnut shall also agree that such shares shall not be sold or transferred unless either (i) such shares shall first have been registered under said Act or (ii) Eastern first shall have been furnished with an opinion of its legal counsel stating that such sale or transfer is an exempted transaction under said Act. If the sale or transfer is pursuant to the foregoing clause (ii), Eastern shall also be furnished with a written agreement by the transferee of such shares not to sell or transfer such shares again without complying with the requirements provided for in this Subsection 8.3(b); provided, however, that no such agreement shall be required if the opinion referred to in clause (ii) states that such shares may be transferred by the transferee immediately after acquisition without registration under said Act. Until such shares have been registered under said Act or until Eastern shall have received an opinion of counsel pursuant to the next preceding sentence stating that such shares may be transferred by the transferee thereof immediately after the acquisition without registration 30 of such shares under said Act, each certificate representing shares delivered pursuant to this Subsection 8.3(b) shall bear the following legend: "The shares represented by this certificate are subject to certain restrictions on sale or transfer as set forth in an agreement dated as of ___________, 1983 between the issuer hereof and the initial holder of the shares delivered pursuant to such agreement. The issuer hereof will furnish a copy of such agreement to any registered holder hereof upon written request and without charge." 8.4 Purchase by Remaining Partner. If the remaining Partner elects ----------------------------- to purchase the interest in the Partnership of the Withdrawing Partner pursuant to Subsection 8.2(c)(ii)(A) hereof or if Charles purchases the interest in the Partnership of Walnut pursuant to Subsection 8.3 hereof, the following provisions shall govern the purchase by the remaining Partner or Charles (the "purchasing party") of the interest in the Partnership of the Withdrawing Partner or Walnut (the "selling party"): (a) The closing ("Closing") of any such purchase and sale shall be held at the principal office of the Partnership, or another mutually acceptable place. 31 (b) At the Closing, the selling party shall execute and deliver to the purchasing party all bills of sale and other instruments of transfer and conveyance, in form and substance satisfactory to the purchasing party, as may be necessary to convey, transfer, assign and deliver to the purchasing party ownership of all of the selling party's interest in the Partnership, free and clear of all liens and encumbrances. The selling party agrees, from time to time at the request of the purchasing party, at or after the date of Closing to execute and deliver such instruments of conveyance, assignment, transfer and consent as may be required or advisable for the effective conveyance and transfer of the business, properties, assets, name, goodwill and rights included in the selling party's interest in the Partnership or otherwise to vest ownership of all of the assets of the Partnership in the purchasing party. (c) At the Closing, the purchasing party shall pay to the selling party the purchase price determined as of the date of the Closing pursuant to Subsection 8.2(c)(ii)(A) or Subsection 8.3(a), as the case may be, which purchase price shall be adjusted downward by the amount of any contribution to the capital of the Partnership which both the purchasing party and the selling party agreed to make prior to the Closing if the purchasing party made such contribution but the selling party did not make such contribution prior to the 32 Closing. Subject to the provisions of Subsection 8.3(b), said purchase price shall be paid by a cashier's or certified check from a bank acceptable to the selling party. (d) At the Closing, the purchasing party shall by a legally enforceable agreement, effective upon the effectiveness of the sale of the selling party's interest in the Partnership: (i) assume and become obligated to pay, or discharge any indebtedness, lien, mortgage or encumbrance on the assets of the Partnership incurred in accordance with this Agreement to the extent that the selling party has personal liability with respect thereto; (ii) assume and become obligated to pay, or perform or discharge the obligations and liabilities that the selling party may have incurred in accordance with this Agreement to third parties as a Partner in the Partnership (other than liabilities for which the purchasing party may have a claim against the selling party due to the selling party's breach of, or default under, the terms of this Agreement); (iii) assume and become obligated to pay, or perform or discharge the obligations and liabilities that any Affiliate of the selling party may have incurred to third parties as a guarantor 33 of obligations of the Partnership or to support financing arrangements of the Partnership in some other manner such as an agreement to maintain the working capital of the Partnership; (iv) release and discharge the selling party of all obligations and liabilities (except those on account of or arising out of any breach of or default under the terms of this Agreement) to the purchasing party or the Partnership incurred hereunder or otherwise in connection with the operation of the business of the Partnership in accordance with this Agreement; and (v) save, defend and indemnify the selling party and its Affiliates against and hold them harmless from any and all liabilities specified in clauses (i) through (iv) of this Subsection 8.4(d). 8.5 Continuing Conduct of the Partnership. During the pendency of ------------------------------------- any claim against a Partner for a breach of or for default under the terms of this Agreement or during pendency of the procedures provided for in Subsections 8.2, 8.3 and 8.4 hereof, the business and affairs of the Partnership shall be conducted so as to maintain and preserve the value of the Partnership as a going concern. During any period of winding up, the business and affairs of the Partnership shall be conducted so as to maintain and preserve the assets of the Partnership in a manner consistent with the 34 winding-up of the affairs thereof. Each Partner will indemnify the Partnership and the other Partner against any claim, loss or damage to the Partnership or such other Partner which may result from the Partner's breach of this Subsection 8.5. 8.6 Liquidation and Distribution Procedure. In the event of any -------------------------------------- liquidation and distribution as a result of the termination of the Partnership, the assets of the Partnership after payment of or provision for all just debts of the Partnership shall be distributed in accordance with the provisions of the West Virginia Uniform Partnership Act except as otherwise provided herein. SECTION 9. ARBITRATION Either Partner may cause to be submitted to arbitration all disputes, controversies or questions of interpretation arising out of this Agreement or any breach or default hereunder by giving to the other Partner notice to that effect. The arbitration shall be held in Charleston, West Virginia and shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association as in effect at the time of such arbitration except as follows. The Partner desiring arbitration shall include in its notice to the other Partner the name of the arbitrator chosen by it. Within twenty days after receipt of such notice, the Partner receiving notice shall, by written notice to the 35 Partner desiring arbitration, name the arbitrator chosen by it and within twenty days after the appointment of the second arbitrator an additional arbitrator shall be selected by the two arbitrators theretofore appointed; provided, however, if one of the Partners shall have failed to appoint an arbitrator as hereinabove provided, the sole arbitrator appointed by the other Partner shall arbitrate the matter alone. If the two arbitrators shall have failed to select an additional arbitrator within the above-stated time, the additional arbitrator shall be appointed by the Chief Judge of the United States Court of Appeals for the Fourth Circuit, acting in his individual capacity, or in the event of his failure to appoint the additional arbitrator, by the Regional Director of the American Arbitration Association for Charleston, West Virginia. No arbitrator shall be an employee or former employee of the Partnership, either Partner, or an Affiliate of either Partner. After their selection, the arbitrators (or sole arbitrator as the case may be) shall proceed promptly with the arbitration proceedings and shall come to a decision and shall deliver a written report thereof to both Partners no later than ninety days after the selection of the last of their number (or in the case of a sole arbitrator, 110 days after his selection). Each Partner shall pay the costs and expenses of the arbitrator appointed by it and shall share equally the other costs and expenses of the 36 arbitration, including the costs and expenses of the additional arbitrator. The right of either Partner to seek or obtain any remedy pursuant to this Section 9 shall be in addition to the remedies provided for in Section 8 hereof and shall survive the dissolution of the Partnership or the sale and purchase of a Partner's interest in the Partnership pursuant to Subsections 8.2 and 8.3 hereof. SECTION 10. FORCE MAJEURE If either Partner fails to perform or commits a breach of any provision or covenant of this Agreement, other than the obligation to make contributions as provided herein, and the cause of such breach or failure is Force Mature, it shall be excused to the extent and for the period required ------------ by such cause. Force Majeure shall mean a strike, flood, fire, or other ------------- casualty, act of God, act of government or other occurrence or circumstance not due to the defaulting Partner's fault or negligence and not within such Partner's reasonable control. SECTION 11. GENERAL 11.1 Notices. All notices, demands or requests required or permitted ------- to be given pursuant to this Agreement shall be in writing and shall be deemed to have been given when delivered personally or when deposited in the United States mail, postage prepaid, by registered or 37 certified mail, with return receipt requested, addressed as follows: (a) If to Walnut to: Walnut Coal Corporation c/o Bluestone Coal Corporation P. O. Box 1085 Beckley, West Virginia 25801 Attention: James C. Justice or at such other address as Walnut may have furnished Charles by notice. (b) If to Charles to: Charles Coal Company c/o Eastern Associated Coal Corp. Koppers Building Pittsburgh, Pennsylvania 15219 Attention: President with a copy to: Eastern Gas and Fuel Associates One Beacon Street Boston, Massachusetts 02108 Attention: Robert H. Freeman or at such other address as Charles may have furnished Walnut by notice. 11.2 Amendment. This Agreement may not be amended except by a --------- written instrument executed by both Partners. 11.3 Applicable Law. This Agreement and the performance of the -------------- Partners hereunder shall be interpreted, construed and enforced in accordance with the laws of the State of West Virginia and no presumption shall be deemed to exist in favor of or against either Partner as a result of the preparation or negotiation of the same. 38 11.4 Entire Agreement. This Agreement constitutes the entire ----------------- agreement between the parties hereto relative to the organization and operation of the Partnership for the purposes herein contemplated and there are no other expressed or implied understandings, representations or warranties, oral or written, relating to the Colony Bay Reserve or the subject matter of this Agreement, which shall be deemed to exist or to bind any of the Parties hereto, their respective successors or assigns except as referred to herein. 11.5 Further Assurances. Each of the Parties hereto shall from time ------------------ to time and at all times do all such other further acts as may reasonably be necessary in order fully to perform and carry out the terms and intent hereof. 11.6 Admission of Additional Partners. Except as provided in -------------------------------- Section 7 hereof, no additional Partners may be admitted to the Partnership except upon the unanimous consent of the Partners and upon such terms and conditions as they may agree upon. 11.7 Severability. If any provisions of this Agreement or the ------------ application thereof to any person or circumstances shall be invalid or unenforceable to any extent, the remainder of the Agreement and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. 39 11.8 Binding Agreement. Subject to the restrictions on transfers ----------------- and other dispositions set forth herein, this Agreement shall inure to the benefit of and be binding upon the undersigned Partners and their respective successors and assigns. 11.9 Headings. The headings of sections in this Agreement are for -------- convenience only and are not a part of this Agreement. 40 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement by their duly authorized officers as of the day and year first above written. WALNUT COAL CORPORATION By: [Executed] ------------------------------- CHARLES COAL COMPANY By: [Executed] ------------------------------- 41 APPENDIX A Procedures for Conduct of Management of --------------------------------------- Colony Bay Reserve by Managing General Partner ---------------------------------------------- Terms used herein and not otherwise defined herein are used herein as defined in the Amended and Restated Venture Agreement of Colony Bay Coal Company (the "Agreement"). 1. Services Included. Walnut shall at its expense provide or ----------------- make provision for all of the managerial, administrative and technical services reasonably required to enable the Partnership to conduct its operations in a proper and businesslike manner. The services of Walnut hereunder shall include, without implied limitation, (i) all upper management services in connection with operations, purchasing, labor relations, insurance, supervisory engineering, and, to the extent set out in Section 2 of these Procedures, accounting; (ii) all negotiations with and proceedings before federal and state agencies having jurisdiction over the Partnership's operations; (iii) the supervision of~the preparation of all mine permit applications, reclamation plans, and mining plans and projections; and (iv) the approval of and preparation of contracts with all miners and truckers engaged by contract. 2. Accounting. ---------- (a) Walnut shall (i) keep and maintain complete books and records, on the accrual basis of 42 accounting and in accordance with generally accepted accounting principles, with respect to all phases of the business of the Partnership; (ii) maintain all other records necessary or appropriate to recording and managing the business and tax affairs of the Partnership, including the preparation and filing of all federal, state and local tax returns, and including all books and records provided for in (S) 5.2 of the Agreement; (iii) provide the Partnership with appropriate financial statements on a monthly basis and at such other times and for such other periods as may be reasonably required by the Partnership. (b) All books and records maintained for the Partnership by Walnut hereunder shall be open to inspection by the Partnership or any of the Partners at all reasonable times, and shall be the property of the Partnership. 3. Bank Accounts. All receipts and income of the Partnership shall ------------- be deposited in accounts in such bank or banks as may from time to time be designated by the Partnership. Withdrawals from such accounts shall be made upon the signature or signatures of such person or persons as may be authorized by the Partnership from time to time. 4. Fund Deposits and Reports. Walnut shall be responsible for ------------------------- maintaining all records, and for making all deposits and paying all premiums (with funds of the 43 Partnership), on behalf of the Partnership and its employees, with respect to the West Virginia Workmen's Compensation Fund, The West Virginia Coal Workers Pneumoconiosis Fund, The West Virginia Unemployment Compensation Fund, and any other such funds, as may be required by law, regulation or labor contract, and for processing all claims by employees of the Partnership. All legal expenses with respect to the processing or contest of such claims shall be borne by the Partnership. 5. Materials and Supplies. Walnut shall oversee the ordering, for ---------------------- the Partnership's account, of all materials and supplies necessary for the operation of the mines and mining activities of the Partnership, subject to consultation between the Partners from time to time with respect to suppliers, prices, etc. 6. Purchases, Leases and Equipment. Walnut shall be responsible for ------------------------------- making recommendations to the Partnership with respect to the leasing or purchase of equipment, coal deposits and surface lands. No equipment, coal lands, or other property shall be leased or purchased by Walnut for the Partnership's account without the express consent or approval of the Partnership. 7. Relationship to the Agreement. In the event of any conflict or ----------------------------- inconsistency between the Agreement and these Procedures, the terms of the Agreement shall prevail and control. 44 THIS AGREEMENT, made as of the 11th day of August, 1987, by and between CHARLES COAL COMPANY, a Delaware corporation ("Charles"), and EASTERN ASSOCIATED COAL CORP., a West Virginia corporation ("EACC"); WHEREAS, the parties hereto are the owners of all interests in Colony Bay Coal Company, a general partnership formed under the Uniform Partnership Act as adopted in West Virginia; and WHEREAS, said partnership was continued and restated in an Amended and Restated Venture Agreement of Colony Bay Coal Company dated January 1, 1983; and WHEREAS, the partnership was originally formed between Walnut Coal Corporation and Charles Coal Company; however, by Venture Interest Purchase Agreement dated August 11, 1987, EACC purchased all of the partnership interest of Walnut Coal Corporation; NOW, THEREFORE, for valuable consideration Charles does hereby agree that EACC shall be admitted as a partner to the general partnership and that EACC shall have all of the rights and interests in said partnership as were previously held and owned by Walnut Coal Corporation. EACC does hereby agree to perform all of the covenants and obligations of Walnut as set forth in said Amended and Restated Venture Agreement. In all other respects the parties do hereby ratify and affirm the said Amended and Restated Venture Agreement. 45 IN WITNESS WHEREOF, the parties have caused this agreement to be executed by officers thereunto duly authorized. CHARLES COAL COMPANY By [Executed] --------------------------- Its ________________________ EASTERN ASSOCIATED COAL CORP. By [Executed] --------------------------- Its ________________________ 46 EX-3.21 22 CERT OF INCORP OF COOK MOUNTAIN COAL CO. EXHIBIT 3.21 CERTIFICATE OF INCORPORATION OF COOK MOUNTAIN COAL COMPANY * * * * * 1. The name of the corporation is COOK MOUNTAIN COAL COMPANY 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). 5A. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- M. A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19810 K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19810 L. J. Vitalo Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19810 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- P. B. Lilly 800 Laidley Tower Charleston, WV 25301 D. B. Scherder 800 Laidley Tower Charleston, WV 25301 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 2 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 11. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, 3 do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 3rd day of March, 1994. /s/ M. A. Brzoska ------------------------- M. A. Brzoska Incorporator /s/ K. A. Widdoes ------------------------- K. A. Widdoes Incorporator /s/ K. A. Widdoes ------------------------- K. A. Widdoes Incorporator 4 EX-3.22 23 BY-LAWS OF COOK MOUNTAIN COAL COMPANY EXHIBIT 3.22 COOK MOUNTAIN COAL COMPANY * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Charleston, State of West Virginia, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1995, shall be held on the first day of April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 2 Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a 3 quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting 4 of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one nor more than three. The first board shall consist of two directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual 5 election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly 6 elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of 7 directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace 8 any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the 9 stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. 10 REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. 11 ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. 12 THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 13 THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 14 THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such 15 determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been 16 placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, 17 assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. 18 REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the 19 interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. 20 INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 21 EX-3.23 24 CERT OF INCORP OF COTTONWOOD LAND CO. EXHIBIT 3.23 CERTIFICATE OF INCORPORATION OF COTTONWOOD LAND COMPANY * * * * * 1. The name of the corporation is Cottonwood Land Company 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is Ten (10) and the par value of each of such shares is One Hundred Dollars and No Cents ($100.00) amounting in the aggregate to One Thousand Dollars and No Cents ($1,000.00). 5. The board of directors is authorized to make, alter or repeal the by-laws of the corporation. Election of directors need not be by written ballot. 6. The name and mailing address of the sole incorporator is: M. A. Brzoska Corporation Trust Company 1209 Orange Street Wilmington, Delaware 19801 7. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. 8. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is my act 2 and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 17th day of August, 1995. /s/ M. A. Brzoska ----------------------------- M. A. Brzoska Sole Incorporator EX-3.24 25 BY-LAWS OF COTTONWOOD LAND COMPANY EXHIBIT 3.24 COTTONWOOD LAND COMPANY * * * * * BY-LAWS * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1996, shall be held on the of May if 2 not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 3 Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a 4 quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. At all elections of directors of the corporation each stockholder having voting power shall be entitled to exercise the right of cumulative voting as provided in the certificate of incorporation. 5 Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one (1) nor more than three (3). The first board shall consist of two (2) directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized 6 number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall 7 be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on zero (0) days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board two directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically 8 provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may 9 replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of 10 a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or bylaw, any director or the entire board of directors may be removed, with or without cause, by the 11 holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number 12 of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the 13 corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it 14 and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. 15 Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Upon the face or back of each stock certificate issued to represent any partly paid shares, or upon the books and 16 records of the corporation in the case of uncertificated partly paid shares, shall be set forth the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each 17 stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made 18 against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or 19 to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, thinly proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or 20 for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. 21 ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.25 26 CERT OF INCORPORATION OF ORION MINES, INC. EXHIBIT 3.25 CERTIFICATE OF INCORPORATION OF ORION MINES, INC. * * * * * 1. The name of the corporation is ORION MINES, INC. 2. The address of the registered office in the State of Delaware is No. 100 West Tenth Street, in the City of Wilmington, county of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000); and the par value of each of such shares is One Dollar ($1.00), amounting in the aggregate to One Thousand Dollars ($1,000.00). 5. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS - ---- --------------- S. S. Simpson 100 West Tenth Street Wilmington, Delaware 19801 K. L. Husfelt 100 West Tenth Street Wilmington, Delaware 19801 C. J. Coyle 100 West Tenth Street Wilmington, Delaware 19801 2 A. The corporation is to have perpetual existence. 1. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the 3 business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an Agreement of Merger or Consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or by- laws, expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. When and as authorized by the stockholders in accordance with statute, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property, including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 2. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the 4 board of directors or in the by-laws of the corporation. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 3. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 11th day of April, 1977. /s/ S. S. Simpson ------------------------- S. S. Simpson /s/ K. L. Husfelt ------------------------- K. L. Husfelt /s/ G. J. Coyle ------------------------- G. J. Coyle CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION BEFORE PAYMENT OF CAPITAL OF ORION MINES, INC. * * * * * ORION MINES, INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That Articles "1. and 4." the Certificate of Incorporation be and they hereby are amended to read as follows: "1. The name of the corporation is DARIUS GOLD MINE INC." 4. The total number of shares of stock which the corporation shall have authority to issue is fifty thousand (50,000) and the par value of each of such shares is Ten Cents ($.10) amounting in the aggregate to Five Thousand Dollars ($5,000.00). SECOND: That the corporation has not received any payment for any of its stock. THIRD: That the amendment was duly adopted in accordance with the provisions of Section 241 of the General Corporation Law of the State of Delaware. 2 IN WITNESS WHEREOF, said ORION MINES, INC. has caused this Certificate to be signed by RUSSELL L. WOOD, its President and attested by V.A. FILIPPONE, its Secretary, this 13th day of May, 1977. ORION MINES, INC. by /s/ Russell L. Wood -------------------------------- Russell L. Wood, President ATTEST: by /s/ V.A. Filippone ---------------------------- V.A. Filippone, Secretary EX-3.26 27 BY-LAWS OF DARIUS GOLD MINE INC. EXHIBIT 3.26 BY-LAWS OF DARIUS GOLD MINE INC. ARTICLE 1 DEFINITIONS As used in these By-laws, unless the context otherwise requires, the term: 1.1 "Assistant Secretary" means an Assistant Secretary of the Corporation. 1.2 "Assistant Treasurer" means an Assistant Treasurer of the Corporation. 1.3 "Board" means the Board of Directors of the Corporation. 1.4 "By-laws" means the initial by-laws of the Corporation, as amended from time to time. 1.5 "Certificate of Incorporation" means the initial certificate of incorporation of the Corporation, as amended, supplemented or restated from time to time. 1.6 "Corporation" means Darius Gold Mine Inc. 1.7 "Directors" means directors of the Corporation. 2 1.8 "General Corporation Law" means the General Corporation Law of the State of Delaware, as amended from time to time. 1.9 "Office of the Corporation" means the executive office of the Corporation, anything in Section 131 of the General Corporation Law to the contrary notwithstanding. 1.10 "President" means the President of the Corporation. 1.11 "Secretary" means the Secretary of the Corporation. 1.12 "Stockholders" means stockholders of the Corporation. 1.13 "Total number of directors" means the total number of directors determined in accordance with Section 141(b) of the General Corporation Law and Section 2 of Article 3 of the Bylaws. 1.14 "Treasurer" means the Treasurer of the Corporation. 1.15 "Vice-President" means a Vice President of the Corporation. 1.16 "Whole Board" means the total number of directors of the Corporation. ARTICLE 2 MEETINGS OF STOCKHOLDERS Section 1. Annual Meeting. The annual meeting of the stockholders of -------------- DARIUS GOLD MINE INC. (hereinafter to be called the "Corporation") shall be held at 11:00 a.m. on the first Tuesday in October. At the annual meeting, the stockholders shall elect by a plurality vote a board of directors (hereinafter 3 referred to as the "Board"), and transact such other business as may properly be brought before the meeting. If the annual meeting shall not be held on the day hereinabove provided for, the Board shall cause the meeting to be held as soon thereafter as convenient. Section 2. Special Meetings. Special meetings of the stockholders ---------------- (other than a special meeting for the election of directors), unless otherwise prescribed by statute, may be called for any purpose or purposes at any time by the Board or by the President, or by the Secretary. At any special meeting of stockholders only such business may be transacted as is related to the purpose or purposes of such meeting set forth in the notice thereof given pursuant to Section 4 of this Article or in any waiver of notice thereof given pursuant to Section 4 of this Article. Section 3. Fixing Record Date. For the purpose of determining the ------------------ stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or for the purpose of determining stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix, in advance, a date as the record date for any such determination of stockholders. Such date shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any action. If no such record date is fixed: 4 3.1 The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; 3.2 The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting shall be the day on which the first written consent is expressed; 3.3 The record date for determining stockholders for any purpose other than those specified in Sections 3.1 and 3.2 shall be at the close of business on the day on which the Board adopts the resolution relating thereto. When a determination of stockholders entitled to notice of or to vote at any meeting of stockholders has been made as provided in this Section 3 such determination shall apply to any adjournment thereof, unless the Board fixes a new record date for the adjourned meeting. Section 4. Notice of Meetings. Written notice of the place, date and ------------------ time of the holding of each annual and special meeting of the stockholders and, in the case of a special meeting, the purpose or purposes thereof, shall be given personally or by mail in a postage pre-paid envelope to each stockholder entitled to vote at such meeting, not less than ten nor more than sixty days before the date of such meeting, and, if mailed, it shall be directed to such stockholder at his address as it appears on the records of the Corporation, unless he shall 5 have filed with the Secretary of the Corporation a written request that notices to him be mailed to some other address, in which case it shall be directed to him at such other address. If mailed, such notice shall be deemed to be given when deposited in the United States mail. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the Corporation that the notice required by this Section has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy and shall not, at the beginning of such meeting, object to the transaction of any business because the meeting is not lawfully called or convened, or who shall, either before or after the meeting, submit a signed waiver of notice, in person or by proxy. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. Unless the Board shall fix after the adjournment a new record date for an adjourned meeting, notice of such adjourned meeting need not be given if the time and place to which the meeting shall be adjourned were announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 6 Section 5. Place of Meetings. Every meeting of the stockholders ----------------- shall be held at the office of the Corporation or at such other place, within or without the State of Delaware, as the Board or the officer calling the same shall specify in the notice of such meeting, or in a duly executed waiver of notice thereof. Section 6. Quorum. At all meetings of the stockholders the holders ------ of one third of the shares of stock of the Corporation issued and outstanding and entitled to vote shall be present in person or by proxy to constitute a quorum for the transaction of any business. When a quorum is once present to organize a meeting of stockholders, it is not broken by the subsequent withdrawal of any stockholders. In the absence of a quorum, the holders of a majority of the shares of stock present in person or by proxy and entitled to vote, or if no stockholder entitled to vote is present, then any officer of the Corporation may adjourn the meeting from time to time. At any such adjourned meeting at which a quorum may be present any business may be transacted which might have been transacted at the meeting as originally called. Section 7. Organization. At each meeting of the stockholders, the ------------ Chairman of the Board, or in his absence or inability to act, the President, or in the absence or inability to act of the Chairman of the Board and the President, a Vice-President, and in case more than one Vice-President shall be present, that Vice-President designated by the Board (or in the absence of any such designation, the most senior Vice-President, based on age, present), or in the absence of all of the foregoing, any person chosen by a majority of those stockholders 7 present, shall act as chairman of the meeting. The Secretary, or, in his absence or inability to act, the Assistant Secretary or any person appointed by the chairman of the meeting, shall act as secretary of the meeting and keep the minutes thereof. Section 8. Order of Business. The order of business at all meetings ----------------- of the stockholders shall be as determined by the chairman of the meeting, but the order of business to be followed at any meeting at which a quorum is present may be changed by a majority of votes cast at such meeting by the holders of shares of capital stock present in person or represented by proxy and entitled to vote at the meeting. Section 9. Voting. Except as otherwise provided by statute or by the ------ Certificate of Incorporation, each holder of record of shares of stock of the Corporation having voting power shall be entitled at each meeting of the stockholders to one vote for every share of such stock standing in his name on the record of stockholders of the Corporation determined in accordance with Section 3 of this Article. If the Certificate of Incorporation provides for more or less than one vote for any share, on any matter, every reference in the By- laws or the General Corporation Law to a majority or other proportion of stock shall refer to such majority or other proportion of the votes of such stock. The provisions of Sections 212 and 217 of the General Corporation Law shall apply in determining whether any shares of capital stock may be voted, and the persons, if any, entitled to vote such shares; but the Corporation shall be protected in treating the persons in whose names shares of capital stock stand on the 8 record of stockholders as owners thereof for all purposes. Each stockholder entitled to vote at any meeting of stockholders may authorize another person or persons to act for him by a proxy signed by such stockholder or his attorney-in- fact. Any such proxy shall be delivered to the secretary of such meeting at or prior to the time designated in the order of business for so delivering such proxies. No proxy shall be valid after the expiration of three years from the date thereof, unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the stockholder executing it, except in those cases where an irrevocable proxy is permitted by law. Except as otherwise provided by statute, these By-laws, or the Certificate of Incorporation, any corporate action to be taken by vote of the stockholders shall be authorized by a majority of the total votes, cast at a meeting of stockholders by the holders of shares present in person or represented by proxy and entitled to vote on such action. All elections of directors shall be by written ballot unless otherwise provided in the Certificate of Incorporation. In voting on any other question on which a vote by ballot is required by law or is demanded by any stockholder entitled to vote, the voting shall be by ballot. On a vote by written ballot, each ballot shall be signed by the stockholder voting, or by his proxy, if there be such proxy, and shall state the number of shares voted. On all other questions, the voting may be viva voce. Every stockholder entitled to vote at a meeting of ---- ---- stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy. The validity and 9 enforceability of any proxy shall be determined in accordance with Section 212 of the General Corporation Law. Section 10. List of Stockholders. The Secretary shall prepare and -------------------- make, or cause to be prepared and made, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meetings, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 11. Inspectors. The Board may, in advance of any meeting of ---------- stockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof. If the inspectors shall not be so appointed, the chairman of the meeting may and on the request of any stockholder entitled to vote thereat shall, appoint one or more inspectors. In case any person appointed fails to appear or act, the vacancy may be filled by appointment made by the Board in advance of the meeting or at the meeting by the chairman of the meeting. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath 10 faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct, the election or votes with fairness to all stockholders. On request of the chairman of the meeting or any stockholder entitled to vote thereat, the inspectors shall make a report in writing of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. Any report or certificate made by the inspector or inspectors shall be prima facie evidence of the facts stated and of the vote as certified by him or them. No director or candidate for the office of director shall act as inspector of an election of directors. Inspectors need not be stockholders. Section 12. Consent of Stockholders in Lieu of Meeting. Whenever the ------------------------------------------ vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, the meeting and vote of stockholders can be dispensed with without prior notice and without a vote (a) if all of the stockholders who would have been entitled to vote upon the action if such meeting were held shall consent in writing to such corporate action being taken, setting forth the action so taken; 11 or (b) unless the Certificate of Incorporation provides otherwise, with the written consent of the holders of not less than the minimum percentage of the total Vote required by statute for the proposed corporate action, and provided that prompt notice must be given to all stockholders who have not so consented in writing of the taking of such corporate action without a meeting and by less than unanimous written consent of stockholders. ARTICLE 3 BOARD OF DIRECTORS Section 1. General Powers. The business and affairs of the -------------- Corporation shall be managed by or under the direction of the Board. The Board may adopt such rules and regulations, not inconsistent with the Certificate of Incorporation or the By-laws or applicable laws, as it may deem proper for the conduct of its meetings and the management of the Corporation. The Board may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute or the Certificate of Incorporation directed or required to be exercised or done by the stockholders. Section 2. Number, Qualifications, Election and Term of Office. The --------------------------------------------------- Board shall consist of three to fifteen members. The total number of directors shall be fixed initially by the incorporator and may thereafter be changed from time to time by action of the stockholders or by action of the Board. All the directors shall be of full age. Directors need not be stockholders. Except as otherwise provided by statute or the Certificate of Incorporation or these By- laws, the directors 12 shall be elected by plurality vote at the annual meeting of the stockholders. Each director shall hold office until the next annual meeting of the stockholders and until his successor shall have been duly elected and qualified, or until his death, or until he shall have resigned, or have been removed, as hereinafter provided in these By-laws, or as otherwise provided by statute or the Certificate of Incorporation. Section 3. Place of Meetings. Meetings of the Board, regular or ----------------- special, may be held at such place and at such time, within or without the State of Delaware, as the Board may from time to time determine or as shall be specified in the notice or waiver of notice of such meeting. Section 4. Annual Meeting. The Board shall meet for the purpose of -------------- organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of the stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. Such meeting may be held at any other time or place (within or without the State of Delaware) which shall be specified in a notice thereof given as hereinafter provided in Section 7 of this Article II. Section 5. Regular Meetings. Regular meetings of the Board shall be ---------------- held at such time and place as the Board from time to time determines. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business 13 day. Notice of regular meetings of the Board need not be given except as otherwise required by statute or these By-laws. Section 6. Special Meetings. Special meetings of the Board shall be ---------------- held whenever called by two or more directors of the Corporation or by the Chairman of the Board or the President or the Secretary. Section 7. Notice of Meetings. Notice of each special meeting of the ------------------ Board (and of each regular meeting for which notice shall be required) shall be given by the Secretary as hereinafter provided in this Section 7, in which notice shall be stated the time and place (within or without the State of Delaware) of the meeting. Notice of each such meeting shall be delivered to each director, either personally or by telephone, telegraph, cable or wireless, at least twenty-four hours before the time at which such meeting is to be held or by first-class mail, postage prepaid, addressed to him at his residence, or usual place of business, at least two days before the day on which such meeting is to be held. If mailed, each notice shall be deemed given when deposited, with postage thereon prepaid, in a post office or official depository under the exclusive care and custody of the United States post office department. Notice of any such meeting need not be given to any director who shall, either before or after the meeting, submit a signed waiver of notice or who shall attend such meeting without protesting, prior to or at its commencement, the lack of notice to him. Except as otherwise specifically required by these By-laws, a notice or waiver of notice of any regular or special meeting need not state the purposes of such meeting. 14 Section 8. Quorum and Manner of Acting. One-third of the directors --------------------------- shall be present in person or by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, at any meeting of the Board in order to constitute a quorum for the transaction of business at such meeting, and, except as otherwise expressly required by statute or the Certificate of Incorporation, the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board. In the absence of a quorum at any meeting of the Board, a majority of the directors present thereat, or if no director be present, the Secretary, may adjourn such meeting to another time and place. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. Except as provided in Article 3 of these By-laws, the directors shall act only as a Board and the individual directors shall have no power as such. Section 9. Organization. At each meeting of the Board, the Chairman ------------ of the Board (or, in his absence or inability to act, the President, or, in his absence or inability to act another director chosen by a majority of the directors present) shall act as Chairman of the meeting and preside thereat. The Secretary (or, in his absence or inability to act, the Assistant Secretary, or in his absence or inability to act any person appointed by the Chairman) shall act as secretary of the meeting and keep the minutes thereof. 15 Section 10. Resignations. Any director of the Corporation may resign ------------ at any time by giving written notice of his resignation to the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 11. Vacancies. Vacancies and newly created directorships --------- resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, or may be elected by a plurality of the votes cast by the holders of shares of capital stock entitled to vote in the election at a special meeting of stockholders called for that purpose and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace 16 the directors chosen by the directors then in office. When one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this Section in the filling of other vacancies. Section 12. Removal of Directors. Except as otherwise provided in -------------------- the Certificate of Incorporation or in these By-laws, any director may be removed, either with or without cause, at any time, by the affirmative vote of the holders of record of a majority of the issued and outstanding stock entitled to vote for the election of directors of the Corporation given at a special meeting of the stockholders called and held for that purpose; and the vacancy in the board caused by such removal may be filled by such stockholders at such meeting, or, if the stockholders shall fail to fill such vacancy, as in these By-laws provided. Section 13. Compensation. The Board shall have authority to fix the ------------ compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity, provided, no such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Section 14. Action Without Meeting. Any action required or permitted ---------------------- to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if all 17 members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 15. Telephonic Participation. One or more members of the ------------------------ Board may participate in a meeting by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at the meeting. ARTICLE 4 EXECUTIVE AND OTHER COMMITTEES Section 1. Executive and Other Committees. The Board may, by ------------------------------ resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution, and except as otherwise provided by statute, shall have and may exercise the powers of the Board in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the 18 Corporation or a revocation of a dissolution, or amending the By-laws of the Corporation; and, unless the resolution designating it expressly so provides, no committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Each committee shall keep written minutes of its proceedings and shall report such minutes to the Board when required. All such proceedings shall be subject to revision or alteration by the Board: provided, however, that third parties shall not be prejudiced by such revision or alteration. Section 2. General. A majority of any committee may determine its ------- action and fix the time and place of its meeting, unless the Board shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Article 3, Section 7. The Board shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. ARTICLE 5 OFFICERS Section 1. Number and Qualifications. The officers of the ------------------------- Corporation shall include a President, a Secretary, a Treasurer, and/or Controller, and, if deemed necessary, expedient, or desirable by the Board of Directors, a Chairman of 19 the Board, a Vice-Chairman of the Board, one or more Vice-Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers with such titles as the resolution of the Board of Directors choosing them shall designate. Any two or more offices may be held by the same person. Such officers shall be elected from time to time by the Board, each to hold office until the meeting of the Board following the next annual meeting of the stockholders, or until his successor shall have been duly elected and shall have qualified, or until his death, or until he shall have resigned, or have been removed, as hereinafter provided in these By-laws. Section 2. Resignations. Any officer of the Corporation may resign ------------ at any time by giving written notice of his resignation to the Board, the President or the Secretary. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt: and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. The resignation of an officer shall be without prejudice to the contract rights of the Corporation, if any. Section 3. Removal. Any officer of the Corporation may be removed, ------- either with or without cause at any time, by the vote of the majority of the entire Board at any meeting of the Board. Such removal shall be without prejudice to the contractual rights, if any, of the person so removed. Section 4. Vacancies. A vacancy in any office, whether arising from --------- death, resignation, removal, 20 disqualification or any other cause, shall be filled for the unexpired portion of the term of the office which shall be vacant, in the manner prescribed in these By-laws for the regular election or appointment to such office. Section 5. The Chairman of the Board. The Chairman of the Board ------------------------- shall, if present, preside at each meeting of the stockholders and of the Board. He shall perform all duties incident to the office of the Chairman of the Board and such other duties as may from time to time be assigned to him by the Board. In the absence or in the case of the death or disability of the President, the Chairman of the Board shall have and exercise all the powers of the President. Section 6. The President. The President shall be the chief executive ------------- officer of the Corporation and shall have general and active supervision and direction over the business and affairs of the corporation and over its several officers subject, however to the control of the Board and of any duly authorized committee of directors. At the request of the Chairman of the Board, or in the case of his absence or inability to act, the President shall perform the duties of the Chairman of the Board and when so acting shall have all the powers of, and be subject to all the restrictions upon, the Chairman of the Board. The President shall, if present, preside at all meetings of the stockholders and at all meetings of the Board. He may, with the Secretary or the Treasurer, sign certificates for shares of capital stock of the Corporation. He may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts and other instruments, except in case where the signing and execution 21 thereof shall be expressly delegated by the Board or by the By-laws to some other officer or agent of the Corporation, or shall be required by law otherwise to be signed or executed. He shall perform all duties incident to the office of President and such other duties as from time to time may be assigned to him by the Board or these By-laws. Section 7. Vice-Presidents. At the request of the President, or, in --------------- his absence and in the absence of the Chairman of the Board, at the request of the Board, the Vice-Presidents shall (in such order as may be designated by the Board or, in the absence of any such designation, in order of seniority based on age) perform all of the duties of the President and so acting shall have all the powers of and be subject to all restrictions upon the President. Any Vice- President may also, with the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer, sign certificates for shares of capital stock of the Corporation; may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by the By-laws to some other officer or agent of the Corporation, or shall be required by law otherwise to be signed or executed; and shall perform such other duties as from time to time may be assigned to him by the Board or by the President. Section 8. The Treasurer. The Treasurer shall ------------- (a) have charge and custody of, and be responsible for, all the funds, securities, and notes of the Corporation; 22 (b) keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and have control of all books of account of the Corporation; (c) cause all moneys and other valuables to be deposited to the credit of the Corporation in such depositaries as may be designated by the Board; (d) receive, and give receipts for, moneys due and payable to the corporation from any source whatsoever; (e) disburse the funds of the Corporation and supervise the investment of its funds as ordered or authorized by the Board, taking proper vouchers therefor; (f) render to the President or the Board, whenever the President or the Board may require, an account of the financial condition of the Corporation and of all his transactions as Treasurer: (g) sign with the President or a Vice-President certificates for shares of capital stock of the Corporation; and (h) in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board, the Chairman of the Board, or the President. 23 A Controller and Assistant Controller may perform the function of Treasurer and Assistant Treasurer. Section 9. The Secretary. The Secretary shall ------------- (a) act as Secretary of all meetings of the stockholders and of the Board; (b) keep or cause to be kept in one or more books provided for the purpose, the minutes of all meetings of the Board, the committees of the Board and the stockholders; (c) see that all notices are duly given in accordance with the provisions of these By-laws and as required by law; (d) with the President or a Vice President, sign certificates for shares of capital stock of the Corporation; (e) be custodian of the records and the seal of the Corporation and affix and attest the seal to all stock certificates of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal: (f) see that the books, reports, statements, certificates, stock ledgers and other documents and records required by law to be 24 kept and filed are properly kept and filed; and (g) in general, perform all the duties incident to the office of Secretary and such duties as from time to time may be assigned to him by the Board, the Chairman of the Board or the President. Section 10. Assistant Secretaries and Assistant Treasurers. Assistant ---------------------------------------------- Secretaries and Assistant Treasurers shall perform such duties as shall be assigned to them by the Secretary or by the Treasurer, respectively, or by the Board or by the President. Assistant Secretaries and Assistant Treasurers may, with the President or a Vice-President, sign certificates for shares of capital stock of the Corporation. Section 11. Officers' Bonds or other Security. If required by the --------------------------------- Board, any officer of the Corporation shall give a bond or other security for the faithful performance of his duties, in such amount and with such surety or sureties as the Board may require. Section 12. Compensation. The compensation of the officers of the ------------ Corporation for their services as such officers shall be fixed from time to time by the Board. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he is also a director of the Corporation, but any such officer who shall also be a director shall not have any vote in the determination of the amount of compensation paid to him. 25 ARTICLE 6 INDEMNIFICATION Section 1. Agreement to Indemnify. The Corporation shall indemnify ---------------------- any person (including his heirs, executors and administrators) who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. 26 Section 2. Agreement in Derivative Action. The Corporation shall ------------------------------ indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Section 3. Successful Defense. To the extent that a director, ------------------ officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article 6, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including 27 attorneys' fees) actually and reasonably incurred by him in connection therewith. Section 4. Determination. Any indemnification under Sections 1 and 2 ------------- of this Article 6 unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 1 and 2 of this Article 6. Such determination shall be made (a) by the Board by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable such a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (c) by the stockholders. Section 5. Advances. Expenses incurred in defending a civil or -------- criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation. Section 6. Non-Exclusivity. The indemnification provided by this --------------- Article 6 shall not be deemed exclusive of any other rights to which those may be entitled under any By-law, agreement, vote of stockholders or disinterested directors or otherwise both as to action in his official capacity and as to action in another capacity while holding such office and shall 28 continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 7. Insurance. The Corporation shall have the power to --------- purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article 6. Section 8. Reference. For purposes of this Article 6 references to --------- the "Corporation" include all constituent corporations absorbed in a consolidation or merger as well as the resulting or surviving corporation so that any person who is or was a director, officer, employee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article 6 with respect to the resulting or surviving corporation as he would if he had served the resulting or surviving corporation in the same capacity. 29 ARTICLE 7 CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. Section 1. Execution of Contracts. Except as otherwise required by ---------------------- statute, the Certificate of Incorporation or these By-laws, any contracts or other instrument may be executed and delivered in the name and on behalf of the Corporation by such officer or officers (including any assistant officer) of the Corporation as the Board may from time to time direct. Such authority may be general or confined to specific instances as the Board may determine. Unless authorized by the Board or expressly permitted by these By-laws, an officer or agent or employee shall not have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it pecuniarily liable for any purpose or to any amount. Section 2. Loans. The President or any other officer, employee or ----- agent authorized by these By-laws or by the Board may effect loans and advances at any time for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds or other certificates or evidences of indebtedness of the Corporation, but no officer or officers shall mortgage, pledge, hypothecate or transfer any securities or other property of the Corporation, except when authorized by the Board. Such authority conferred by the Board may be general or confined to specific instances or otherwise limited. 30 Section 3. Checks, Drafts, etc. All checks, drafts, bills of ------------------- exchange or other orders for the payment of money out of the funds of the Corporation, and all notes or other evidences of indebtedness of the Corporation, shall be signed in the name and on behalf of the Corporation by such persons and in such manner as shall from time to time be authorized by the Board. Section 4. Deposits. All funds of the Corporation not otherwise -------- employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may from time to time designate or as may be designated by any officer or officers of the Corporation to whom such power of designation may from time to time be delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Corporation, checks, drafts and other orders for the payment of money which are payable to the order of the Corporation may be endorsed, assigned and delivered by any officer or agent of the Corporation, or in such other manner as the Board may determine by resolution. Section 5. General and Special Bank Accounts. The Board may from --------------------------------- time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may designate or as may be designated by any officer or officers of the Corporation to whom such power of designation may from time to time be delegated by the Board. The Board may make such special rules and 31 regulations with respect to such bank accounts, not inconsistent with the provisions of these By-laws, as it may deem expedient. Section 6. Proxies in Respect of Securities of Other Corporations. ------------------------------------------------------ Unless otherwise provided by resolution adopted by the Board of Directors, the President or a Vice-President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises. ARTICLE 8 SHARES, ETC. Section 1. Stock Certificates. Each holder of stock of the ------------------ Corporation shall be entitled to have a certificate, in such form as shall be approved by the Board, certifying the number of shares of stock of the Corporation owned by him. The certificates representing shares of stock shall be signed in the name of the Corporation by the President or a Vice-President and 32 by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with the seal of the Corporation (which seal may be a facsimile, engraved or printed); provided, however, that where any such certificate is countersigned by a transfer agent other than the Corporation or one of its employees, or is registered by a registrar other than the Corporation or one of its employees, the signature of the officers of the Corporation upon such certificates may be a facsimile, engraved or printed. In case any officer who shall have signed or whose facsimile signature has been placed upon such certificates shall have ceased to be such officer before such certificates shall be issued, they may nevertheless be issued by the Corporation with the same effect as if such officer were still in office at the date of their issue. Section 2. Books of Account and Record of Stockholders. The books ------------------------------------------- and records of the Corporation may be kept at such places within or without the State of Delaware, as the Board of Directors may from time to time determine. The stock record books and the blank stock certificate books shall be kept by the Secretary or by any other officer or agent designated by the Board of Directors. Section 3. Transfer of Shares. Transfers of shares of stock of the ------------------ Corporation shall be made on the stock records of the Corporation only upon authorization by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or with a transfer agent or transfer clerk, and on surrender of the certificate or certificates for such shares properly endorsed or 33 accompanied by a duly executed stock transfer power and the payment of all taxes thereon. Every certificate exchanged, returned or surrendered to the Corporation shall be marked "Cancelled," with the date of cancellation, by the Secretary or an Assistant Secretary or the transfer agent of the Corporation. Except as otherwise provided by law, the Corporation shall be entitled to recognize the exclusive right of a person in whose name any share or shares stand on the record of stockholders as the owner of such share or shares for all purposes, including without limitation, the right to receive dividends or other distributions and to vote as such owner, and the Corporation may hold any such stockholder of record liable for calls and assessments and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in any such share or shares on the part of any other person whether or not it shall have express or other notice thereof. Whenever any transfers of shares shall be made for collateral security and not absolutely, and both the transferor and transferee request the Corporation to do so, such fact shall be stated in the entry of the transfer. Section 4. Regulations. The Board may make such additional rules and ----------- regulations, not inconsistent with these By-laws, as it may deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer agents or one or more transfer clerks and one or more registrars and may require all certificates for shares of stock to bear the signature or signatures of any of them. 34 Section 5. Lost, Destroyed, Stolen or Mutilated Certificates. The ------------------------------------------------- holder of any certificate representing shares of stock of the Corporation shall immediately notify the Corporation of any loss, destruction, theft or mutilation of such certificate, and the Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it which the owner thereof shall allege to have been lost, stolen, or destroyed or which shall have been mutilated, and the Board may, in its discretion, require such owner or his legal representative to make proof satisfactory to the Board of such loss, destruction, theft or mutilation and to advertise such fact in such manner as the Board may require, and to give to the Corporation a bond in such sum, limited or unlimited, and in such form and with such surety or sureties as the Board in its absolute discretion shall determine, to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate, or the issuance of a new certificate. Anything herein to the contrary notwithstanding, the Board, in its absolute discretion, may refuse to issue any such new certificate, except pursuant to legal proceedings under the laws of the State of Delaware. Section 6. Restriction on Transfer of Stock. A written restriction -------------------------------- on the transfer or registration of transfer of capital stock of the Corporation, if permitted by Section 202 of the General Corporation Law and noted conspicuously on the certificate representing such capital stock, may be enforced against the holder of the restricted capital stock or any successor or transferee of the holder including an executor, 35 administrator, trustee, guardian or other fiduciary entrusted with like responsibility for the person or estate of the holder. Unless noted conspicuously on the certificate representing such capital stock, a restriction, even though permitted by Section 202 of the General Corporation Law, shall be ineffective except against a person with actual knowledge of the restriction. A restriction on the transfer or registration or transfer of capital stock of the Corporation may be imposed either by the Certificate of Incorporation or by an agreement among any number of stockholders or among such stockholders and the Corporation. No restriction so imposed shall be binding with respect to capital stock issued prior to the adoption of the restriction unless the holders of such capital stock are parties to an agreement or voted in favor of the restriction. Section 7. Dividends, Surplus, Etc. Subject to the provisions of the ----------------------- Certificate of Incorporation and of law, the Board: 7.1 May declare and pay dividends or make other distributions on the outstanding shares of capital stock in such amounts and at such time or times as, in its discretion, the condition of the affairs of the Corporation shall render advisable. 7.2 May use and apply, in its discretion, any of the surplus of the Corporation in purchasing or acquiring any shares of capital stock of the Corporation, or purchase warrants thereof, in accordance with law, or any of its bonds, debentures, notes, scrip or other securities or evidences of indebtedness; 36 7.3 May set aside from time to time out of such surplus or net profits such sum or sums as, in its discretion, it may think proper, as a reserve fund to meet contingencies, or for equalizing dividends or for the purpose of maintaining or increasing the property or business of the Corporation, or for any purpose it may think conducive to the best interests of the Corporation. ARTICLE 9 BOOKS AND RECORDS Section 1. Books and Records. The Corporation shall keep correct and ----------------- complete books and records of account and shall keep minutes of the proceedings of the stockholders, the Board and any committee of the Board. The Corporation shall keep at the office designated in the Certificate or Incorporation or at the office of the transfer agent or registrar of the Corporation, a record containing the names and addresses of all stockholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof. Section 2. Form of Records. Any records maintained by the --------------- Corporation in the regular course of its business, including its stock ledger, books of accounts, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs, or any other information storage device, provided that the records so kept can be converted into clearly legible written form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same. 37 Section 3. Inspection of Books and Records. Except as otherwise ------------------------------- provided by law, the Board shall determine from time to time whether, and, if allowed, when and under what conditions and regulations, the accounts, books, minutes and other records of the Corporation, or any of them, shall be open to the inspection of the stockholders. ARTICLE 10 FISCAL YEAR The fiscal year of the Corporation shall be determined by the Board of Directors. ARTICLE 11 FISCAL YEAR The Board shall provide a corporate seal of which shall be in the form of a circle and bear the name of the Corporation and the words and figures "Corporate Seal-Delaware" and the year of incorporation. ARTICLE 12 AMENDMENTS These By-laws may be altered, amended or repealed or new By-laws may be adopted by the stockholders or by the Board of Directors, when such power is conferred upon the Board of Directors by the Certificate of Incorporation at any regular meeting of the stockholders or of the Board of Directors or any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-laws be contained on the notice of such special meeting. EX-3.27 28 CERT OF INCORP OF KOPPERS RECREATION CAMPS EXHIBIT 3.27 STATE OF WEST VIRGINIA CERTIFICATE OF INCORPORATION I, Wm. S. O'Brien, Secretary of State of the State of West Virginia, hereby certify that an Agreement, duly acknowledged, has been this day filed in my office, which agreement is in words and figures following: I. The undersigned agree to become a corporation by the name of KOPPERS RECREATION CAMPS, INC. II. The principal office or place of business of said Corporation will be located at No. 1050 Koppers Building, in the city of Pittsburgh, in county of Allegheny and State of Pennsylvania. Its chief works will be located in Summers County, West Virginia. III. The objects for which this Corporation is formed are as follows: To build, conduct and maintain camps, playgrounds, swimming pools, schools and places of amusement to be used for the promotion of the education, health, recreation and general welfare of the employees of The Koppers Coal Company and their families and for the purpose of training the children of said employees to the end that they may become more useful citizens; to buy, sell and exchange real estate necessary to carry out such proposes; to construct, equip and maintain camp buildings, amusement halls, school buildings, dwelling houses and all other buildings necessary or convenient to carry out such purposes; to employ doctors, nurses, teachers and counsellors to care for and 2 promote the education, health, recreation and general welfare of the employees of The Koppers Coal Company and their families; to acquire farm lands and to cultivate such lands; to raise livestock and poultry; to produce crops, vegetables and fruits; to buy and sell farm products, poultry, cattle and all other commodities and merchandise necessary for the conduct and maintenance of the said camps, the profit, if any, derived from any and all activities to be conducted by this company to be used by the company for the purposes herein specified and not for the profit of any person or corporation. IV. This corporation is not being organized for profit and will not be authorized to issue capital stock. V. The names and post office address of the incorporators are as follows: Name P. O. Address P. C. Thomas, 1050 Koppers Building, Pittsburgh, Pennsylvania L. C. Campbell, 1050 Koppers Building, Pittsburgh, Pennsylvania J. W. Tyson, II, 1050 Koppers Building, Pittsburgh, Pennsylvania Thomas E. Lightfoot, 1050 Koppers Building, Pittsburgh, Pennsylvania C. R. Stahl, Powellton, West Virginia. VI. The existence of this corporation is to be perpetual. WE, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws of the State of West Virginia do make and file this Agreement; and we have accordingly hereunto set our respective hands this 5th day of July, 1940. 3 P. C. Thomas L. C. Campbell J. W. Tyson, II Thomas E. Lightfoot C. R. Stahl. WHEREFORE, The corporator named in the said Agreement, and who have signed the same, and their successors and assigns, are hereby declared to be from this date a Corporation by the name and for the purposes set forth in the said agreement, with the right of perpetual succession. Given under my hand and the Great Seal of the said State, at the City of Charleston, this Twentieth day of July, Nineteen Hundred and Forty. (SEAL) (SIGNED) WM. S. O'BRIEN --------------------------------------- Secretary of State State of West Virginia Office of the Clerk of the County Court of Summers County July 22, 1940 The foregoing instrument of Writing, with Certificate of acknowledgement thereon, was this day presented in said office and admitted to Record. (SIGNED) HAROLD E. PRICE - ----------------------------------------- Clerk STATE OF WEST VIRGINIA CERTIFICATE I, Wm. S. O'Brien, Secretary of State of the State of West Virginia, hereby certify that Thomas E. Lightfoot, Vice President of KOPPERS RECREATION CAMPS, INC., a corporation created and organized under the laws of the State of West Virginia, has certified to me under his signature and the corporate seal of said corporation, that, at a meeting of the voting members of said corporation, regularly held in accordance with the requirements of the law of said State, at the office of said corporation in the City of Pittsburgh, County of Allegheny and Commonwealth of Pennsylvania, on the third day of November, 1947, at which meeting a majority of the members entitled to vote were represented and voted in favor or the same, the following resolution was duly and regularly adopted and passed, to wit: "RESOLVED, That the name of this corporation be and the same is hereby changed from Koppers Recreation Camps, Inc. to Eastern Gas and Fuel Recreations Camps, Inc., and that any Vice-President of this corporation is hereby authorized to certify this resolution to the Secretary of State of the State of West Virginia, as required by the laws of the State of West Virginia. WHEREFORE, I do declare said change of name to be authorized by law, and that said corporation shall hereafter by known by the name of EASTER GAS AND FUEL RECREATION CAMPS, INC. Given under my hand and Great Seal of the said State, at the City of Charleston, this twenty fourth day of November 1947. /s/ Robert D. Bailey ------------------------------ Secretary of State [SEAL] STATE OF WEST VIRGINIA CERTIFICATE I, Robert D. Bailey, Secretary of State of the State of West Virginia, hereby certify that the following and hereto attached is a true and correct copy of the Certificate issued by the Secretary of State on the 2nd day of May, 1966, changing the name of EASTERN GAS AND FUEL RECREATION CAMPS, INC., to EACC CAMPS, INC.; as it appears from the records of my said office. Given under my hand and the Great Seal of the said State at the City of Charleston, this second day of May, 1966. /s/ Robert D. Bailey ------------------------------ Secretary of State [SEAL] STATE OF WEST VIRGINIA CERTIFICATE I, Robert D. Bailey, Secretary of State of the State of West Virginia, hereby certify that A. P. BOXLEY, Vice President of EASTERN GAS AND FUEL RECREATION CAMPS, INC., a corporation created and organized under the laws of the State of West Virginia, has certified to me under his signature and the corporate seal of said corporation, that, at a meeting of the members of said corporation, regularly held in accordance with the requirements of the law of State, at the office of said corporation, in the Koppers Building, Pittsburgh, Pennsylvania, on the 13th day of April, 1966, at which meeting more than a majority of the voting members of such corporation being represented, in person, and voting for the following resolutions, the same were duly and regularly adopted and passed, to-wit: "WHEREAS on March 24, 1966, a written notice was mailed to the members, who are also the directors, of Eastern Gas and Fuel Recreation Camps, Inc., advising all of them that the annual meeting of Eastern Gas and Fuel Recreation Camps, Inc., would be held on Wednesday, April 13, 1966, at the corporation's office in the Koppers Building, Pittsburgh, Pennsylvania; and WHEREAS said written notice, which was mailed more than ten days prior to said annual meeting, also advised that the members and directors would vote upon the matter of amending Articles I, II and III of the corporation's Certificate of Incorporation, as fully set forth in said notice of meeting; NOW, THEREFORE, BE IT RESOLVED: 1. That Article I of this corporation's Certificate of Incorporation be and the same hereby is amended to read as follows: `I. The name of the corporation shall be EACC CAMPS, INC." 2 2. That Article II of this corporation's Certificate of Incorporation be and the same hereby is amended to read as follows: `II. The principal office or place of business of said Corporation will be located in the Koppers Building,in the City of Pittsburgh, County of Allegheny and State of Pennsylvania. Its chief works will be located in Summers County, West Virginia.' 3. That Article III of this corporation's Certificate of Incorporation be and the same hereby is amended to read as follows: `III. The objects for which this Corporation is formed are as follows: To build, conduct and maintain camps, playgrounds, swimming pools, schools and place of amusement to be used for the promotion of the education, health, recreation and general welfare of the employees of Eastern Associated Coal Corp. and their families and for the purpose of training the children of said employees to the end that they may become more useful citizens; to buy, sell and exchange real estate necessary to carry out such purposes; to construct, equip and maintain camp buildings, amusement halls, school buildings, dwelling houses and all other buildings necessary or convenient to carry out such purposes; to employ doctors, nurses, teachers and counselors to care for and promote the education, health, recreation and general welfare of the employees of Eastern Associated Coal Corp. and their families; to acquire farm lands and to cultivate such lands; to raise livestock ad poultry; to produce crops, vegetables and fruits; to buy and sell farm products, poultry, cattle and all other commodities and merchandise necessary for the conduct and maintenance of the said camps, the profit, if any, derived from any and all activities to be conducted by this company to be used by the company for the purposes herein specified and not for the profit of any person or corporation.' and be it FURTHER RESOLVED that the President or Vice President of this corporation be and he hereby is authorized and directed to certify these resolutions to the Secretary of State of the State of West Virginia, as required by the laws of said State." WHEREFORE, I do declare said amendment of the Certificate of Incorporation and change of name as set forth in the foregoing resolutions authorized by law, and that said 3 corporation shall hereafter be known by the name of EACC CAMPS, INC. Given under my hand and the Great Seal of the said State, at the City of Charleston, this second day of May, 1966. ROBERT D. BAILEY, Secretary of State [SEAL] STATE OF WEST VIRGINIA CERTIFICATE I, Robert D. Bailey, Secretary of State of the State of West Virginia, hereby certify that the following and hereto attached is a true and correct copy of the Certificate issued by the Secretary of State on the 2nd day of May, 1966, changing the name of EASTERN GAS AND FUEL RECREATION CAMPS, INC., to EACC CAMPS, INC.; as it appears from the records of my said office. Given under my hand and the Great Seal of the said State at the City of Charleston, this second day of May, 1966. /s/ Robert D. Bailey ------------------------------ Secretary of State [SEAL] STATE OF WEST VIRGINIA CERTIFICATE I, Robert D. Bailey, Secretary of State of the State of West Virginia, hereby certify that A. P. BOXLEY, Vice President of EASTERN GAS AND FUEL RECREATION CAMPS, INC., a corporation created and organized under the laws of the State of West Virginia, has certified to me under his signature and the corporate seal of said corporation, that, at a meeting of the members of said corporation, regularly held in accordance with the requirements of the law of State, at the office of said corporation, in the Koppers Building, Pittsburgh, Pennsylvania, on the 13th day of April, 1966, at which meeting more than a majority of the voting members of such corporation being represented, in person, and voting for the following resolutions, the same were duly and regularly adopted and passed, to-wit: "WHEREAS on March 24, 1966, a written notice was mailed to the members, who are also the directors, of Eastern Gas and Fuel Recreation Camps, Inc., advising all of them that the annual meeting of Eastern Gas and Fuel Recreation Camps, Inc., would be held on Wednesday, April 13, 1966, at the corporation's office in the Koppers Building, Pittsburgh, Pennsylvania; and WHEREAS said written notice, which was mailed more than ten days prior to said annual meeting, also advised that the members and directors would vote upon the matter of amending Articles I, II and III of the corporation's Certificate of Incorporation, as fully set forth in said notice of meeting; NOW, THEREFORE, BE IT RESOLVED: 1. That Article I of this corporation's Certificate of Incorporation be and the same hereby is amended to read as follows: `I. The name of the corporation shall be EACC CAMPS, INC." 2 2. That Article II of this corporation's Certificate of Incorporation be and the same hereby is amended to read as follows: `II. The principal office or place of business of said Corporation will be located in the Koppers Building,in the City of Pittsburgh, County of Allegheny and State of Pennsylvania. Its chief works will be located in Summers County, West Virginia.' 3. That Article III of this corporation's Certificate of Incorporation be and the same hereby is amended to read as follows: `III. The objects for which this Corporation is formed are as follows: To build, conduct and maintain camps, playgrounds, swimming pools, schools and place of amusement to be used for the promotion of the education, health, recreation and general welfare of the employees of Eastern Associated Coal Corp. and their families and for the purpose of training the children of said employees to the end that they may become more useful citizens; to buy, sell and exchange real estate necessary to carry out such purposes; to construct, equip and maintain camp buildings, amusement halls, school buildings, dwelling houses and all other buildings necessary or convenient to carry out such purposes; to employ doctors, nurses, teachers and counselors to care for and promote the education, health, recreation and general welfare of the employees of Eastern Associated Coal Corp. and their families; to acquire farm lands and to cultivate such lands; to raise livestock ad poultry; to produce crops, vegetables and fruits; to buy and sell farm products, poultry, cattle and all other commodities and merchandise necessary for the conduct and maintenance of the said camps, the profit, if any, derived from any and all activities to be conducted by this company to be used by the company for the purposes herein specified and not for the profit of any person or corporation.' and be it FURTHER RESOLVED that the President or Vice President of this corporation be and he hereby is authorized and directed to certify these resolutions to the Secretary of State of the State of West Virginia, as required by the laws of said State." WHEREFORE, I do declare said amendment of the Certificate of Incorporation and change of name as set forth in the foregoing resolutions authorized by law, and that said 3 corporation shall hereafter be known by the name of EACC CAMPS, INC. Given under my hand and the Great Seal of the said State, at the City of Charleston, this second day of May, 1966. ROBERT D. BAILEY, Secretary of State [SEAL] EX-3.28 29 BY-LAWS OF KOPPERS RECREATION CAMPS, INC EXHIBIT 3.28 BY-LAWS ------- OF -- KOPPERS RECREATION CAMPS. INC. ------------------------------ ARTICLE I --------- Offices ------- The principal office of the corporation shall be in the City of Pittsburgh, County of Allegheny and Commonwealth of Pennsylvania, and the corporation may have also offices at such other places as the Board of Directors may from time to time designate, or the business of the corporation may require. ARTICLE II ---------- Seal ---- The corporate seal shall have inscribed thereon the name of the corporation and the words "Seal, West Virginia." ARTICLE III ----------- Directors --------- Section 1. The Board of Directors of the Corporation shall consist of one or more members as fixed from time to time by resolution of the Board of Directors or the Shareholders. They shall be elected at the first meeting of the corporators. Section 2. The Board of Directors may hold its meetings and keep the books of the corporation outside of West Virginia at the office of the corporation in the City of Pittsburgh, Pennsylvania, or at such other places as the said Board of Directors may from time to time determine. The Board of 2 Directors may designate an office as the general office of the corporation. Section 3. The Board of Directors shall hold an annual meeting of which no notice shall be required to be given to any director, and, if a quorum be present (or, if a quorum be not then present, then at an adjournment of said meeting at which a quorum shall be present, of which no notice other than announcement at the time of adjournment shall be required to be given, or at a special meeting held as soon as practicable thereafter on notice as prescribed by these By-Laws, or at the next regular meeting;) shall elect a President, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors may at said meeting or any other, elect a Chairman of the Board of Directors, one or more additional Vice Presidents one or more Assistant Treasurers and one or more Assistant Secretaries Officers may but need not be directors. The Board of Directors may also appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. If the election of officers be not held at the time prescribed by these By-Laws, it may be held at any subsequent meeting of the Board of Directors. The Secretary and Treasurer may or may not be the same person, and any Vice President may hold at the same time the office of Treasurer or Secretary, but not both. The Treasurer 3 shall be ex officio Assistant Secretary and the Secretary shall be ex officio Assistant Treasurer. Section 4. Regular meetings of the Board of Directors may be held, without notice, at such time and place as shall, from time to time, be determined by the Board of Directors. Section 5. Special meetings of the Board of Directors shall be held at any time at the direction of the President, any Vice President, or any four directors. Section 6. Except as otherwise provided by law or these By-Laws, notice of the time and place of any special meeting of the Board of Directors shall be given by the Secretary, as provided in Section 2 of Article VII, to each director at least twenty-four (24) hours prior to the time appointed for such meetings. Unless otherwise indicated in the notice thereof, any business may be transacted at a special meeting. Section 7. A majority of the Directors in office (amended 8/16/90) shall constitute a quorum at all meetings of the Board of Directors. If, however, such majority shall not be present at any meetings, the Directors present shall have power to adjourn the meeting from time to time, without notice other than announcement at the time of adjournment, until the requisite number be present. The act of a majority of the directors present at any meeting at which there is a quorum, shall be the act of the Board of Directors, except as may be otherwise specifically provided by law. Section 8. The Board of Directors may from time to time, by resolution or resolutions passed by a majority of the whole 4 Board, designate from their own number one or more committees of not less than two (2) members each, which shall have such powers as the Board of Directors may prescribe. One of such committees may be designated as the Executive Committee, which, unless the Board of Directors shall otherwise provide, shall have and may exercise, when the Board of Directors is not in session all the powers of the Board of Directors in the management of the business and affairs of the corporation, and shall have power to authorize the seal of the corporation to be affixed to all papers which may require it. Each member of the Executive Committee shall continue as a member thereof during the pleasure of the Board of Directors. The Board of Directors may at any time dispense with the Executive Committee entirely. Vacancies in the membership of the Executive Committee shall be filled by the Board of Directors. The Executive Committee may establish a fixed time and place for regular meetings, and no call or notice of any such meeting shall be required. Special meetings of the Executive Committee may be held at any time or any place when called by the President or by any member of the Executive Committee. Notice of such meetings may be given in the manner provided for giving notice of special meetings of the Board of Directors. A majority of the members of the Executive Committee shall constitute a quorum, but less than a quorum may adjourn a meeting from time to time. The Executive Committee shall keep minutes of its proceedings and report the same to the Board of Directors at the next regular meeting thereof. 5 ARTICLE IV ---------- Duties of Officers ------------------ The Chairman ------------ Section 1. If there be a Chairman of the Board of Directors, he shall, if present, preside at all meetings of the Board of Directors, and he shall have such other duties and powers as may be prescribed by the Board of Directors. The President ------------- Section 2. The President shall be the principal executive officer of the corporation; he shall, if present and in the absence of the Chairman of the Board of Directors, if any, preside at all meetings of the Board of Directors. He shall have general and active management of the business of the corporation, and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have power to appoint and remove such subordinate officers and agents, other than those appointed or elected by the Board of Directors, as the business of the corporation may require and to fix their compensation. He shall perform such other duties as may be prescribed for him elsewhere in these By-Laws or by the Board of Directors. The Vice President ------------------ Section 3. The Vice President, or any Vice President, if there be more than one, shall in the absence or disability of the President, perform the duties and exercise the powers of the President and shall perform such other duties as may be prescribed by the Board of Directors or the President; and the performance of any of the duties and/or the exercise of any of 6 the powers of the President by any Vice President shall as to third parties be conclusive proof of his authority so to do. The Secretary ------------- Section 4. The Secretary shall keep and transcribe minutes of all meetings of the stockholders, of the Board of Directors and of the Executive Committee, if any. He shall have the custody of the seal of the corporation and shall affix the same to such documents as may require it, and shall have charge of the records of the corporation, except when otherwise directed by the Board of Directors. He shall give all such notices as are required by law or these By-Laws, and shall perform such other duties as may be prescribed by the Board of Directors or the President. The Treasurer ------------- Section 5. The Treasurer shall have the care and custody of the funds, securities and other intangible assets of the corporation, and shall deposit the same in the name of the corporation in such depositaries as the Board of Directors or the President shall designate. He shall make disbursements for liabilities of the corporation, and shall keep books of account showing in detail all moneys received and paid out by him, which books shall at all times be open to the inspection of the officers and directors of the corporation. He shall have the custody of the stock books and stock ledgers and shall perform such other duties as may be prescribed by the Board of Directors or the President. 7 Assistant Secretaries and Assistant Treasurers ---------------------------------------------- Section 6. Assistant Secretaries and Assistant Treasurers shall, in the absence or disability of the Secretary or the Treasurer, perform the duties and exercise the posers of their respective superiors in office and shall also perform such other duties as may be assigned to them by such superiors; and the performance of any of the duties and/or the exercise of any of the powers of the Secretary or the Treasurer by any Assistant Secretary or Assistant Treasurer, respectively, shall as to third parties be conclusive proof of his authority so to do. ARTICLE V --------- Resignations, Removals and Vacancies ------------------------------------ Section 1. Any Director, member of a committee or officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, or if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective, unless such resignation is by its terms to be effective only upon acceptance. Section 2. All officers, agents and employees of the corporation shall be subject to removal or discharge at any time by the affirmative vote of a majority of the Whole Board of Directors. All agents and employees, other than those elected or appointed by the Board of Directors, shall also be subject to removal or discharge at any time by the officer appointing or employing them. Section 3. If the office of any Director becomes vacant for any cause, the remaining Directors in office, though less than a 8 quorum, by a majority vote may elect a person to fill such vacancy, who shall hold office for the unexpired portion of the term and until his successor shall be duly chosen and qualified, unless sooner displaced. Section 4. If the position of any officer, agent or employee elected or appointed by the Board of Directors becomes vacant for any cause, such vacancy may be filled by the Board of Directors. If the position of any other agent or employee becomes vacant for any cause, such vacancy may be filled by the Board of Directors or by the officer who originally appointed or employed such agent or employee. ARTICLE VI ---------- Execution of Contracts, Checks and Other Instruments ---------------------------------------------------- Contracts --------- Section 1. Except as herein otherwise provided, contracts and other instruments may be executed and delivered in the name of and on behalf of the corporation by the President or any Vice President, or by any other officer, agent or employee of the corporation thereunto authorized by the Board of Directors, and such authority may be general or confined to specific instances; the seal of the corporation may be affixed to any such contract or other instrument by any officer of the corporation. Checks and Other Instruments ---------------------------- Section 2. General Accounts: All checks drawn upon the General ---------------- Accounts of this corporation and all drafts, bills of exchange and notes or other instruments or orders for the payment of money shall be signed by the Treasurer or an Assistant Treasurer of the corporation or by such other officer, employee 9 or agent of the corporation as may be designated by the Board of Directors or the Treasurer, and shall be countersigned by the President or a Vice President or such other officer, employee or agent as may be designated by the Board of Directors or the President; provided that all such instruments shall be signed and countersigned by separate persons; and provided that the Board of Directors may designate and appoint a corporation as the agent of this corporation to sign such instruments, in which event such instruments shall be signed by the officers, employees or agents of such corporation who are generally authorized or designated by or pursuant to the By-Laws or resolutions of the Board of Directors of such corporation. ARTICLE VII ----------- Notice ------ Section 1. Notice of the time, place or purpose of any meeting whether required by the provisions of Article 1 of Chapter 31 of the Code of West Virginia or by these By-Laws may be dispensed with if every director shall attend in person, or if every absent director shall, in writing, filed with the records of the meeting, either before or after the holding thereof, waive such notice. Section 2. Whenever any notice is required to be given under the provisions of law or of these By-Laws, unless such provisions otherwise direct, such provisions shall not be construed to mean personal notice, but such notice may be given (1) personally, (2) in writing (a) by depositing the same in the United States mails, postage prepaid, addressed to the person entitled to such notice at such address as appears on the books 10 of the corporation, or at the usual business address of such person, or in default of either such address, to the general post office in the City of Pittsburgh, State of Pennsylvania, or (b) by delivering or causing such notice to be delivered at either of such addresses, or (3) by sending a prepaid straight telegram addressed to the person entitled to such notice at either of such addresses; and such notice shall be deemed to be given at the time when the same shall be thus delivered or given to the telegraph company, if so given, and twenty-four hours after the same shall be thus mailed, if so given; and any notice may be given to one person entitled thereto by any of the foregoing methods and to another or other persons entitled thereto by another or other of such methods. ARTICLE VIII ------------ Amendments ---------- These By-Laws may be amended, altered or repealed at any meeting of the Board of Directors by a majority vote of those present, or represented at the meeting either in person or by proxy. EX-3.29 30 CERT OF INCORP OF EASTERN ASSOCIATED COAL EXHIBIT 3.29 CERTIFICATE OF INCORPORATION OF EASTERN ASSOCIATED COAL CORP. 1. The undersigned agree to become a corporation by the name of EASTERN ASSOCIATED COAL CORP. 2. The principal place of business of the corporation shall be located in the City of Weston, in the County of Lewis, and State of West Virginia, and its chief works shall be located in said Lewis County, State of West Virginia, and elsewhere in the State of West Virginia. The corporation may transact business and have an office or offices at any other place or places as may be provided by its By-Laws. 3. The objects and purposes for which the corporation is formed are as follows: To mine, sell, purchase, deal in, export or import coal, coke and wood and other similar combustible material, and to purchase, lease and sell coal lands, coal rights, coal rights, coal and timber lands and to manufacture, buy sell and deal in or deal with coal and coke and all products and by-products of any such lands, rights and materials. To purchase or otherwise acquire, and to hold, own, maintain, work and develop, and to sell, lease, convey, mortgage or otherwise dispose of, within or without the State of West Virginia, and in any part of the world, lands leaseholds and any interest, estate and rights in real property, and in personal or 2 mixed property, or any franchises, rights, licenses of privileges necessary, convenient or appropriate for any of the purposes herein expressed. To acquire, own, lease, mortgage, occupy, sell, use of develop any lands containing coal, iron manganese, or other ores or oil and gas and any woodlands or other lands, for any purpose of the company, and to mine, or otherwise extract or remove, coal, oil, gas, ores or other minerals, and to take or remove such minerals from any lands owned, acquired, leased or occupied by the corporation or from any other lands, and to buy and sell, import and export, or otherwise to deal or to traffic in or to use or consume coal, coke, oil, gas, wood, lumber and other materials or ores and any part of the products thereof, and any articles consisting, or partly consisting thereof. To manufacture or otherwise produce, import, export, buy, sell, and in every way deal with and in, either as principal or agent or otherwise, goods, wares and merchandise and personal property of every kind and description. To purchase, lease, erect, or otherwise acquire, exchange, sell, let or otherwise dispose of, own, maintain, develop and improve any and all property, real or personal, mines, coke ovens, plants, oil and gas wells, depots, factories, warehouses, stores, buildings or otherwise useful in connection with the business of the corporation. To apply for, obtain, purchase or otherwise acquire any and all patents, patent rights,copyrights, licenses and privileges, inventions, improvements and processes, trade-marks, trade names, labels, designs, and brands relating to or useful in 3 connection with any business of the corporation; and to use, exercise, develop, grant licenses in respect of, sell, traffic in and exchange the same. To subscribe to, purchase, acquire, hold, own, invest in, assign, pledge or otherwise dispose of or deal in the stocks, bonds and other securities and obligations of any other corporation, domestic or foreign, and issue in exchange therefor its stock, bonds, or other obligations and while the owner of any such stock, bonds or other obligations, to possess and exercise in respect thereof all the rights, powers and privileges of individual owners thereof, including any and all voting powers. To acquire the good will, rights and property, and to undertake the whole or any part of the assets and liabilities, of any person, firm, association or corporation and to pay for the same in cash, stock or bonds of this corporation or otherwise, and to issue its stock or bonds in whole or fractional shares thereof in payment of real and personal property for its use and for its other corporate purposes and businesses upon such terms and conditions as may be agreed upon by the owners and the directors or stockholders of this corporation. To borrow money for the purposes of the corporation and to issue bonds, notes, debentures and other obligations and to secure the same by pledge or mortgage of the whole or any part of the property of the corporation, either real or personal, or to issue bonds, notes, debentures or other obligations without any such security, and to sell or pledge such bonds, notes, debentures and other obligations of the corporation, secured or 4 unsecured, the right to convert the same into stock of the corporation. To conduct its business and all or any of its branches so far as permitted by law, in the State of West Virginia and in other states of the United States of America and in the territories and the District of Columbia, and in any and all dependencies, colonies, or possessions of the United States and in foreign countries. The foregoing clauses in this Article shall be construed as stating both purposes and powers. It is the intention that the purposes and powers specified in said clauses shall be in no wise limited or restricted by reference to or inference from the terms of any other clause of this or any other Article in this certificate, but that the purposes and powers specified in each of the clauses of this Article shall be regarded as independent and cumulative purposes and powers. 4. The amount of the total authorized capital stock of said corporation shall be One Thousand (1,000) shares of common stock of a par value of One Dollar ($1.00) per share. The amount of capital with which the corporation will commence business is One Thousand Dollars ($1,000.00). 5. Ownership of any class of share of stock of the corporation shall not entitle the holders thereof to any pre-emptive rights to subscribe for or purchase or to have offered to them for subscription or purchase any new or additional share or shares of stock of any class, or any options, bonds, debentures, warrants, certificates of indebtedness or other securities convertible into or representing, the right to purchase shares of 5 any class of stock, either of that authorized in the Certificate of Incorporation or thereafter authorized or any shares or securities convertible into shares however acquired, issued or sold by the corporation it being the purpose and intent that the Board of Directors shall have full right, power and authority to offer for subscription or sale or to make any disposal of any or all unissued shares of any class of stock of the corporation or any or all shares issued and thereafter acquired by the corporation of any and all options, bonds, debentures, warrants, certificates of indebtedness or other securities of the corporation convertible into stock whether unissued or issued and reacquired by the corporation as the Board of Directors in this Ownership of any class of shares of stock of the discretion may deem advisable. 6. At all elections of Directors each stockholder shall be entitled to as many votes as shall equal the number of votes which (except for the provisions of this Article VI) such stockholder would be entitled to cast for the election of Directors with respect to such shares multiplied by the number of Directors to be elected, and such stockholder may cast all of his votes for a single director or may distribute them upon the number to be voted for, or any two or more of them, as he may see fit. 7. This corporation shall have perpetual existence. 8. The number of directors, who need not be stockholders or residents of the State of West Virginia, shall be not less than three (3) nor more than twenty (2), as determined The number of directors, who need not be in the By-Laws of this corporation. 6 9. The names and post office addresses of the incorporators and the number of shares of stock subscribed for by each are as follows: Names P.O. Addresses Number of Shares ----- -------------- ---------------- W.B. Ross 2165 Country Club Drive 1 Huntingdon Valley, Pennsylvania DaCosta Smith Jr. 440 Center Avenue 1 Weston, West Virginia J. N. Philips Indian Trail 1 North Scituate, Massachusetts 10. The following provisions are inserted for the regulation and conduct of the affairs of the corporation and it is expressly provided that they are intended to be in furtherance and not in limitation or exclusion of the powers conferred by statute: (a) Meetings of the stockholders and directors of the corporation for all purposes may be held at its office or elsewhere in the State of West Virginia, and meetings of the directors and stockholders may be held outside of the State of West Virginia at such place or places as may from time to time be designated in the By-laws, or by resolution of the Board of Directories. (b) All corporate powers except those which by law expressly require the consent of the stockholders shall be exercised by the Board of Directors. (c) The Board of Directors shall have power from time to time to fix and determine and vary the amount of the corporation's funds to be reserved for any proper purpose and to direct and determine the use and disposition of any surplus over 7 and above its capital. In its discretion the Board of Directors may use and apply any such surplus in purchasing or acquiring bonds or other obligations of the corporation or shares of its own capital stock to such extent and in such manner and upon such terms as the Board of Directors shall deem expedient. If any shares of stock of the corporation shall have been purchased or otherwise acquired by the corporation, the Board of Directors may, without action by the stockholders, at any time or from time to time, restore all or part of said shares to the status of authorized but unissued shares; provided that nothing herein contained shall be deemed to limit the right of the Board of Directors to cause the corporation to hold any such shares as treasury stock and to sell or otherwise deal with such treasury stock as the Board of Directors shall deem expedient. Any shares restored to the status of authorized but unissued shares as hereinabove provided may be issued to the same extent and subject to the same conditions as if such shares had not been previously issued. Whenever shares are restored as hereinabove provided, any resulting surplus may be used for such lawful purposes as shall be determined by the Board of Directors. (d) Subject always to By-Laws made by the stockholders, the Board of Directors may make By-Laws and from time to time may alter, amend or repeal any By-Laws, but any By-Laws made by the Board of Directors may be altered or repealed by the stockholders. (e) The Board of Directors shall have power to the extent permitted by law to make distributions or pay dividends to 8 its stockholders in cash or in property including, but not limited to, stocks, bonds or other securities of the corporation. (f) No contract or other transaction between the corporation and any other corporation shall be affected or invalidated by the fact that any one or more of the directors of this corporation is or are interested in, or is a director or officer, or are directors of officers of such other corporation, and any director or directors, individually or jointly, may be a party or parties to or may be interested in any contract or transaction of this corporation or in which this corporation is interested; and no contract, act or transaction of this corporation with any persons, firms or corporations, shall be affected or invalidated by the fact that any direct or directors of this corporation is a party, or are parties to or interest in such contract, act or transaction, or in any way connected with such persons, firms or corporations, and each and every person who may become a director of this corporation is hereby relieved from any liability that might otherwise exist from contracting with the corporation for the benefit of himself or any firm or corporation in which he may be in any wise interested. (g) Any person made a party to any action, suit or proceeding by reason of the fact that he, his testator or interstate, is or was a director, officer or employee of the corporation or of any corporation which he served as such at the request of this corporation, shall be indemnified by this corporation against the reasonable expenses, including attorney's fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding, or in connection 9 with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties, provided, however, that if any such amount is paid otherwise than pursuant to court order or action by the stockholders, the corporation shall within eighteen (18) months from the date of such payment mail to its stockholders at the time entitled to vote for the election of directors a statement specifying the person paid, the amount of the payment and the final disposition of the litigation. Except as otherwise provided by law, and in addition to any other rights provided by law, any such person shall be entitled, without demand by him upon the corporation, or any action by the corporation, to enforce the right of indemnification or reimbursement hereinabove provided in an action at law against the corporation. The right of indemnification or reimbursement hereinabove provided or under any applicable statutes shall not be deemed exclusive of any other right to which any such person may now or hereafter be otherwise entitled. 10 WE, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws of the State of West Virginia do make and file this Agreement; and we have accordingly hereunto set our respective hands this 27th day of March, 1963 /s/ W. B. Ross ------------------------------- W. B. Ross /s/ DeCosta Smith Jr. ------------------------------- DeCosta Smith Jr. /s/ J. N. Philips ------------------------------- J. N. Philips STATE OF WEST VIRGINIA CERTIFICATE I, Robert D. Bailey, Secretary of State of the State of West Virginia, hereby certify that DaCOSTA SMITH JR., Vice President of EASTERN ASSOCIATED COAL CORP., a corporation created and organized under the laws of the State of West Virginia, has certified to me under his signature and the corporate seal of said corporation, that, at a special meeting of the stockholders of said corporation, regularly held in accordance with the requirements of the law of said State, in Room 1724, Koppers Building, Pittsburgh, Pennsylvania, on the 18th day of November, 1965, at which meeting all of the issued and outstanding voting stock of such corporation being represented by the holders thereof, in person, by bodies corporate or by proxy, and voting for the following resolution, the same was duly and regularly adopted and passed, to-wit: WHEREAS the notice of this special meeting of the stockholders of Eastern Associated Coal Corp. held on Thursday, November 18, 1965, at 1:00 o'clock p.m. EST at its office in Room 1724 Koppers Building, Pittsburgh, pennsylvania, specified that the stockholders would vote upon the matter of amending Article IV of its Certificate of Incorporation thereby to increase its authorized capital stock of 1,000 shares; whereby the stockholders were duly inform of such proposed amendment; and WHEREAS Article IV of this corporation's Certificate of Incorporation dated March 27, 1963, fixed the authorized capital stock of the corporation to consist of 1,000 shares all common stock of the par value of $1.00 per share, and it is desired that the authorized capital stock of the corporation be increase by an additional 4,000 shares of like stock so that the authorized capital stock of the corporation shall be 5,000 shares of like capital stock; THEREFORE, BE IT RESOLVED, that the first paragraph of Article IV of this corporation's Certificate of Incorporation be and the same is amended to read as follows: 2 "IV. The amount of the total authorized capital stock of said corporation shall be 5,000 shares of common stock of a par value of One Dollar ($1.00) per share." WHEREFORE, I do declare said increase of the authorized capital stock as set forth in the foregoing resolution is authorized by law. Given under my hand and the Great Seal of the said State, at the City of Charleston, this tenth day of December, 1965. /s/ Robert D. Bailey --------------------------- Secretary of State [SEAL] STATE OF WEST VIRGINIA CERTIFICATE I, James R. McCartney, Secretary of State of the State of West Virginia, hereby certify that R. H. FREEMAN, President of EASTERN ASSOCIATED COAL CORP., a corporation created and organized under the laws of the State of West Virginia, has certified to me under his signature and the corporate seal of said corporation, that, at a meeting of the stockholders of said corporation, regularly held in accordance with the requirements of the law of said State, in Pittsburgh, Pennsylvania, on the 9th day of April, 1975, at which meeting more than two-thirds of the issued and outstanding voting stock of such corporation being represented by the holders thereof, in person, by bodies corporate or by proxy, and voting for the following resolution, the same was duly and regularly adopted and passed, to-wit: "THEREFORE, BE IT RESOLVED, That Article II of this Corporation's Certificate of Incorporation be and the same hereby is amended to read as follows: "II. The principal place of business of the Corporation shall be located at 1302 South Eisenhower Drive, in the City of Beckley, in the County of Raliegh and the State of West Virginia, and its chief works shall be located in said Raleigh County, State of West Virginia and elsewhere in the State of West Virginia. The Corporation may transact business and have an office or offices at any other place or places as may be provided by its by-laws." WHEREFORE, I do declare said Change of Principal Office as set forth in the foregoing resolution is authorized by law and that hereafter said corporation shall be located at 1302 South Eisenhower Drive, in the City of Beckley, County of Raliegh, State of West Virginia. 2 Given under my hand and the Great Seal oft he said State, at the City of Charles, this seventh day of May 1975. /s/ Robert D. Bailey --------------------------------- Secretary of State [SEAL] EX-3.30 31 BY-LAWS ON EASTERN ASSOCIATED COAL CORP. EXHIBIT 3.30 BY-LAWS of EASTERN ASSOCIATED COAL CORP. (Amended as of July 31 1992) ---------------------------- ARTICLE I MEETING OF STOCKHOLDERS SECTION 1. Annual Meeting. The annual meeting of the stockholders, -------------- commencing with the year 1988, shall be held in April, at such time as shall be determined by the Board of Directors, for the purpose of electing directors, and for the transaction of such other business as may be brought before the meeting. (Amended April 21, 1987.) SECTION 2. Special Meetings. Special meetings of the stockholders for any ---------------- purpose or purposes may be called by the President or by order of the Board of Directors, and it shall be the duty of the Secretary to call such a meeting upon a request in writing therefor stating the purpose or purposes thereof, delivered to the Secretary, signed by the holders of record of not less than one-tenth of the outstanding capital stock of the corporation. SECTION 3. Place of Meeting. Meetings of the stockholders may be held at ---------------- its principal office in Weston, West Virginia, or elsewhere within the State of West Virginia, or may be held outside the State of West Virginia at such place or places as the Board of Directors may from time to time determine. SECTION 3A. Transaction of Business and Maintenance of Offices. Business -------------------------------------------------- may be transacted and offices may be maintained in such places within and without the State of West Virginia as the President, any Senior Vice President or any Vice President may from time to time determine. (Added February 7, 1979.) SECTION 4. Notice of Stockholders' Meeting. Notice of the annual and of ------------------------------- any special meeting of stockholders shall be given to each stockholder of record at least ten and not more than forty days before the meeting by personally delivering to such stockholder or by depositing in the United States mails, addressed to the address last left by such stockholder with the Transfer Agent, or in the absence of a Transfer Agent, the Registrar, or in the absence of a Transfer Agent and a Registrar, the Secretary of the corporation, a written or printed notice, signed by the President or a Vice President or the Secretary or an Assistant Secretary, stating the place, day and hour of the meeting and the purpose or purposes for which the meeting is called, and any such notice shall be deemed given when personally delivered or deposited postage prepaid in the United States mail. 2 Any stockholder, or his attorney thereunto authorized, may waive notice of any meeting either before, at or after the meeting. SECTION 5. Quorum. At all meetings of stockholders the holders of record ------ of a majority of the issued and outstanding capital stock of the corporation, present in person or by proxy, shall constitute a quorum for the transaction of business. In the absence of a quorum, a majority in interest of those present or represented may adjourn the meeting by resolution to a date fixed therein, and no further notice thereof shall be required. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 6. Voting. At each meeting of the stockholders every stockholder ------ holding one or more shares of the capital stock of the corporation shall be entitled to one vote for each such share registered in his name on the books of the corporation at the time of the closing of the transfer books of the corporation for such meeting or on the record date therefor, as the case may be, except that, in the case of an election of directors, each stockholder shall be entitled to as many votes as shall equal the number of votes which (except for this cumulative voting provision) such stockholder would be entitled to cast for the election of directors with respect to his shares of stock, multiplied by the number of directors to be elected, and such stockholder may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them, as he may see fit. Except for the election of directors, all resolutions shall be adopted by a majority of votes properly cast at the meeting; at elections of directors, those nominees up to the number to be elected, receiving the largest number of votes shall be deemed elected. All elections for directors shall be by ballot, but this requirement shall be deemed to have been waived if at the meeting no stockholder shall demand a ballot vote. SECTION 7. Proxies. Every stockholder entitled to vote at any meeting of ------- stockholders may vote by proxy. Every proxy must be executed in writing by the stockholder or by his duly authorized attorney. No proxy shall be voted after the expiration of three years from the date of its execution unless the stockholder executing it shall have specified a longer duration, and then only within the period specified. Every proxy shall be revocable at the pleasure of the person executing it or of his personal representatives or assigns except as otherwise provided by law. SECTION 8. Inspectors of Election. Two inspectors of election, who shall ---------------------- act as such at elections of directors, shall be elected by and shall serve at the pleasure of the Board of Directors. If one or both of such inspectors fails to appear at any meeting for the election of directors, the Chairman of the meeting may appoint a substitute or substitutes to act at such 3 meeting in place of such absent inspector or inspectors. Each inspector shall be entitled to a reasonable compensation for his services, to be paid by the corporation. The inspectors, before entering upon the discharge of their duties, shall be sworn faithfully to execute the duties of inspectors at such meeting with strict impartiality and according to the best of their ability, and the oath so taken shall be subscribed by them. ARTICLE II BOARD OF DIRECTORS SECTION 1. General Powers. The property, affairs and business of the -------------- corporation shall be managed by the Board of Directors. SECTION 2. Number. The Board of Directors of the Corporation shall ------ consist of one or more members as fixed from time to time by resolution of the Board of Directors or the Shareholders. (Amended August 16, 1990.) SECTION 3. Term of Office and Qualification. Directors need not be -------------------------------- stockbrokers and shall be elected to serve until the next annual election of directors and until their successors are elected and shall have qualified. SECTION 4. Chairman of the Board. The Board of Directors may elect a --------------------- Chairman of the Board from among its members to serve at its pleasure, who shall preside at all meetings of the Board of Directors and shall have such other duties as from time to time may be assigned to him by the Board of Directors or by the Executive Committee. SECTION 5. Vacancies. Vacancies in the Board of Directors because of --------- death, resignation, disqualification, physical or mental incapacity to act, an increase in the number of members of the Board of Directors, or resulting from any other cause whatsoever, shall be filled for the unexpired portion of the term by a majority vote of the remaining directors, although less than a quorum, given at a regular meeting, or at a special meeting called for the purpose. SECTION 6. Place of Meeting. The Board of Directors shall hold its ---------------- meetings at such places within or without the State of West Virginia as it may decide. One or more directors may participate in a meeting by means of conference telephone or similar electronic communications equipment by means of which all persons participating in the meeting can hear each other. (Amended July 31, 1992.) SECTION 7. Regular Meetings: Notice. The Board of Directors by resolution ------------------------ may establish regular periodic meetings and notice of such meetings need not be given. 4 SECTION 8. Special Meetings. Special meetings of the Board of Directors ---------------- shall be called by the Secretary or an Assistant Secretary whenever ordered by the Board of Directors or requested in writing by the President or any two other directors. Such meetings shall be held at the principal office of the corporation unless the Board of Directors, by its order calling a special meeting, shall fix a different place for such meeting. Notice of each special meeting shall be mailed to each director, addressed to his residence or usual place of business, at least four days before the day on which the meeting is to be held, or shall be sent to such address by telegraph, or be given personally or by telephone, not later than two days before the day on which the meeting is to be held. Notice of any meeting may be waived in writing by any director before, at or after the meeting. SECTION 9. Quorum and Manner of Acting. A majority of the members of the --------------------------- Board of Directors then in office shall constitute a quorum for the transaction of any business at any meeting of the Board of Directors and, except as herein otherwise provided, the act of a majority of those present at the meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum of the Board of Directors a majority of the members present may adjourn the meeting from time to time until a quorum be had, and no notice of any such adjournment need be given. SECTION 10. Fees. The Board of Directors may from time to time prescribe ---- reasonable fees for attendance by members of the Board of Directors and members of the Executive Committee and other committees, and for reimbursement for travel and other expenses incidental to such attendance. ARTICLE III EXECUTIVE AND OTHER COMMITTEES SECTION 1. How Constituted and the Powers Thereof. The Board of Directors -------------------------------------- by the vote of a majority of the entire Board, may designate three or more directors to constitute an Executive Committee, who shall serve during the pleasure of the Board of Directors. Except as otherwise provided by law, by these by-laws or by resolution adopted by a majority of the whole Board of Directors, the Executive Committee shall possess and may exercise during the intervals between the meetings of the directors, all of the powers of the Board of Directors in the management of the business, affairs and property of the corporation, including the power to cause the seal of the corporation to be affixed to all papers that may require it. SECTION 2. Organization, etc. The Executive Committee shall choose its ----------------- own Chairman and its Secretary and may adopt rules for its procedure. The Committee shall keep a record of its acts and proceedings and report the same from time to time to the Board of Directors. 5 SECTION 3. Meetings. Meetings of the Executive Committee may be called by -------- the Chairman of the Committee, and shall be called by him at the request of any member of the Committee, or by any member if there shall be no Chairman. Notice of each meeting of the Committee shall be sent to each member of the Committee by mail at least two days before the meeting is to be held, or given personally or by telegraph or telephone at least one day before the day on which the meeting is to be held. Notice of any meeting may be waived before, at or after the meeting. SECTION 4. Quorum and Manner of Acting. A majority of the Executive --------------------------- Committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at the meeting at which a quorum is present shall be the act of the Executive Committee. SECTION 5. Removal. Any member of the Executive Committee may be removed, ------- with or without cause, at any time, by the Board of Directors. SECTION 6. Vacancies. Any vacancy in the Executive Committee shall be --------- filled by the Board of Directors. SECTION 7. Other Committees. The Board of Directors or the Executive ---------------- Committee may by resolution provide for such other standing or special committees as it deems desirable, and discontinue the same at pleasure. Each Committee shall have such powers and perform such duties, not inconsistent with law, as may be assigned to it by the Board of Directors or by the Executive Committee. ARTICLE IV OFFICES AND OFFICERS SECTION 1. Officers--Number. The officers of the Corporation shall be the ---------------- Chairman, the President, one or more Vice-Presidents as the Board of Directors or Executive Committee may determine, a Treasurer and a Secretary. The Board of Directors or Executive Committee may from time to time appoint one or more Assistant Secretaries and Assistant Treasurers. The same person may hold any two or more offices except those of President and Vice-President. No officer except the President need be a member of the Board of Directors. SECTION 2. Salaries. The Board of Directors or Executive Committee may -------- from time to time fix the salary of the President, as well as the salaries of other officers Of the corporation. SECTION 3. Election, Term of Office and Qualification. All officers of ------------------------------------------ the corporation shall be elected annually (unless otherwise specified at the time of election) by the Board of Directors or Executive Committee and each officer shall hold office until his successor shall have been duly chosen and shall 6 have qualified, or until he shall resign or shall have been removed in the manner hereinafter provided. SECTION 4. Vacancies. If any vacancy shall occur in any office of the --------- corporation, such vacancy shall be filled by the Board of Directors or by the Executive Committee. SECTION 5. Other Officers, Agents and Employees. The Board of Directors ------------------------------------ or the Executive Committee may from time to time appoint such other officers, agents and employees of the corporation as may be deemed proper, and may authorize any officer to appoint and remove agents and employees. The Board of Directors or the Executive Committee or the President may from time to time prescribe the powers and duties of such officers, agents and employees of the corporation in the management of its property, affairs and business. SECTION 6. Removal. Any officer of the corporation may be removed, either ------- with or without cause, by vote of a majority of the Board of Directors or of the Executive Committee, or, in the case of any officer, agent or employee not elected by the Board of Directors or the Executive Committee, by any committee or superior officer upon whom such power of removal may be conferred by the Board of Directors or by the Executive Committee. SECTION 7. Chairman. The Chairman shall preside at all meetings of the -------- stockholders and of the Board of Directors, and shall perform such other duties as shall be delegated to him at any time or from time to time by the Board of Directors. SECTION 8. President. The President shall be the chief executive officer --------- of the corporation and shall have general direction of its business, affairs and property and over its several officers. He shall see that all orders and resolutions of the Board of Directors and of the Executive Committee are carried into effect, and he shall have the power to execute in the name of the corporation all authorized deeds, mortgages, ship mortgages, bonds, contracts or other instruments, except in cases in which the signing and execution thereof shall have been expressly delegated to some other officer or agent of the corporation; and in general, he shall perform all duties incident to the office of a president of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors or by the Executive Committee. He shall be ex officio a member of all committees. He shall from time to time report to the Board of Directors or to the Executive Committee all matters within his knowledge which the interest of the corporation may require to be brought to their notice. SECTION 9. Vice-Presidents. The Vice-President or Vice-Presidents of the --------------- corporation, under the direction of the President, shall have such powers and perform such duties as the Board of Directors or Executive Committee or President may from time to time prescribe, and shall perform such other duties as 7 may be prescribed in these by-laws. In case of the absence or inability of the President to act, then the Vice-Presidents, in the order designated therefor by the Board of Directors or Executive Committee, shall have the powers and discharge the duties of the President. SECTION 10. Treasurer. The Treasurer, under the direction of the --------- President, shall have charge of the funds, securities, receipts and disbursements of the corporation. He shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such banks or trust companies or with such other depositories as the Board of Directors or Executive Committee, with the approval of the Board of Directors of that direct subsidiary of Eastern Gas and Fuel Associates which is the corporation's direct or indirect parent company or entity, may from time to time designate. He shall supervise and have charge of keeping correct books of account of all the corporation's business and transactions. If required by the Board of Directors, he shall give a bond in such sum as the Board of Directors or Executive Committee may designate, conditioned upon the faithful performance of the duties of his office and the restoration to the corporation, at the expiration of his term of office, or in case of his death, resignation or removal from office, of all books, papers, vouchers, money or other property of whatever kind in his possession belonging to the corporation. He shall also have such other powers and perform such other duties as pertain to his office, or as the Board of Directors or the Executive Committee or the President may from time to time prescribe. (Amended August 20, 1980.) SECTION 11. Assistant Treasurers. In the absence of or disability of the -------------------- Treasurer, the Assistant Treasurers, in the order designated by the Board of Directors or by the Executive Committee, shall perform the duties of the Treasurer, and, when so acting, shall have all the powers of, and be subject to all restrictions upon, the Treasurer. They shall also perform such other duties as from time to time may be assigned to them by the Board of Directors or by the Executive Committee or the President. SECTION 12. Secretary. The Secretary shall attend all meetings of the --------- stockholders of the corporation and of its Board of Directors and shall keep the minutes of all such meetings in a book or books kept by him for that purpose. He shall keep in safe custody the seal of the corporation, and, when authorized by the Board of Directors or the Executive Committee, he shall affix such seal to any instrument requiring it. In the absence of a Transfer Agent or a Registrar, the Secretary shall have charge of the stock certificate books, and the Secretary shall have charge of such other books and papers as the Board of Directors or Executive Committee may direct. He shall also have such other powers and perform such other duties as pertain to his office, or as the Board of Directors or the Executive Committee or the President may from time to time prescribe. 8 SECTION 13. Assistant Secretaries. In the absence or disability of the --------------------- Secretary, the Assistant Secretaries, in the order designated by the Board of Directors or Executive Committee, shall perform the duties of the Secretary, and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Secretary. They shall also perform such other duties as from time to time may be assigned to them by the Board of Directors or Executive Committee or the President. ARTICLE V CHECKS, DRAFTS, ETC. All checks, drafts or orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents, person or persons, to whom the Board of Directors or Executive Committee shall have delegated the power, but under such conditions and restrictions as in said resolutions may be imposed. The signature of any officer upon any of the foregoing instruments may be a facsimile whenever authorized by the Board of Directors or by the Executive Committee. ARTICLE VI SHARES AND THEIR TRANSFER SECTION 1. Issue of Certificates of Stock. The Board of Directors or ------------------------------ Executive Committee shall provide for the issue and transfer of the certificates of capital stock of the corporation, and prescribe the form of such certificates. Every owner of stock of the corporation shall be entitled to a certificate of stock, which shall be under the seal of the corporation (which seal may be a facsimile, engraved or printed), specifying the number of shares owned by him, and which certificate shall be signed by the President or Vice- President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the corporation. Said signatures may, wherever permitted by law, be facsimile, engraved or printed. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on any such certificate or certificates shall cease to be such officer or officers of the corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers of the corporation. SECTION 2. Transfer Agents and Registrars. The corporation may have one ------------------------------ or more Transfer Agents and one or more Registrars of its stock, whose respective duties the Board of Directors may, from time to time, prescribe. If the corporation shall have a Transfer Agent, no certificate of stock shall be valid until countersigned by such Transfer Agent, and if the corporation 9 shall have a Registrar, until registered by the Registrar. The duties of the Transfer Agent and Registrar may be combined. SECTION 3. Transfer of Shares. The shares of the corporation shall be ------------------ transferable only upon its books and by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock transfer books and ledgers or to such other person as the Directors may designate for such purpose, and new certificates shall thereupon be issued. SECTION 4. Addresses of Stockholders. Every stockholder shall furnish the ------------------------- Transfer Agent, or in the absence of a Transfer Agent, the Registrar, or in the absence of a Transfer Agent and a Registrar, the Secretary, with an address at or to which notices of meetings and all other notices may be served upon or mailed to him, and in default thereof, notices may be addressed to him at the office of the corporation. SECTION 5. Closing of Transfer Books: Record Date. The Board of Directors -------------------------------------- shall have power to close the stock transfer books of the corporation for a period not exceeding forty (40) days and not less than ten (10) days prior to the date of any meeting of stockholders; provided, however, that in lieu of closing the stock transfer books as aforesaid the Board of Directors may fix a date not exceeding forty (40) days and not less than ten (10) days prior to the date of any such meeting as the time as of which stockholders entitled to notice of and to vote at such meeting shall be determined, and all persons who were holders of record of voting stock at such time and no others shall be entitled to notice of and to vote at such meeting. The Board of Directors shall also have power to close the stock transfer books of the corporation for a period not exceeding forty (40) days preceding the date fixed for the payment of any dividend or the making of any distribution or for the delivery of any evidence of right or evidence of interest; provided, however, that in lieu of closing the stock transfer books as aforesaid the Board of Directors may fix a date not exceeding forty (40) days preceding the date fixed for the payment of any such dividend or the making of any such distribution or for the delivery of any such evidence of right or interest as a record time for the determination of the stockholders entitled to receive any such dividend, distribution, right or interest, and in such case only stockholders of record at the time so fixed shall be entitled to receive such dividend, distribution, right or interest. SECTION 6. Lost and Destroyed Certificates. The Board of Directors or ------------------------------- Executive Committee may direct a new certificate or certificates of stock to be issued in the place of any certificate or certificates theretofore issued and alleged to 10 have been lost or destroyed; but the Board of Directors or Executive Committee when authorizing such issue of a new certificate or certificates, may in its discretion require the owner of the stock represented by the certificate so lost or destroyed or his legal representative to furnish proof by affidavit or otherwise to the satisfaction of the Board of Directors or Executive Committee of the ownership of the stock represented by such certificate alleged to have been lost or destroyed and the facts which tend to prove its loss or destruction. The Board of Directors or Executive Committee may also require such person to execute and deliver to the corporation a bond, with or without sureties, in such sum as the Board of Directors or Executive Committee may direct, indemnifying the corporation against any claim that may be made against it by reason of the issue of such new certificate. The Board of Directors or Executive Committee, however, may, in its discretion, refuse to issue any such new certificate, except pursuant to court order. ARTICLE VII SEAL The corporate seal of the corporation shall be circular in form, shall bear around the circumference the words "EASTERN ASSOCIATED COAL CORP." and in the center the words "INCORPORATED, 1963, WEST VIRGINIA," or words of similar import. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced. ARTICLE VIII MISCELLANEOUS SECTION 1. Examination of Books and Records. The Board of Directors or -------------------------------- Executive Committee may determine from time to time whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the corporation, or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the corporation, except as provided by the statutes of the State of West Virginia, or authorized by the Board of Directors or Executive Committee. SECTION 2. Voting of Stock in Other Corporations. Any shares of stock in ------------------------------------- any other corporation, which may from time to time be held by the corporation, may be represented and voted at any of the stockholders' meetings thereof by the President or a Vice-President of the corporation or by proxy appointed by the President or one of the Vice-Presidents of the corporation. The Board of Directors or Executive Committee, however, may by resolution appoint any other person or persons to vote such shares, in which case such other person or persons shall be entitled to vote such shares upon the production of a certified copy of such resolution. 11 SECTION 3. Fiscal Year. The fiscal year of the corporation shall be fixed ----------- by resolution of the Board of Directors or the Shareholders. (Amended August 16, 1990.) ARTICLE IX INDEMNIFICATION Any person made a party to any action, suit or proceeding by reason of the fact that he, his testator or intestate, is or was a director, officer or employee of the corporation or of any corporation which he served as such at the request of the corporation, shall be indemnified by the corporation against the reasonable expenses, including attorney's fees, actually and necessarily incurred by him in connection with the defense of such action, suit, proceeding, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties; provided, however, that if any such amount is paid otherwise than pursuant to court order or action by the stockholders, the corporation shall within eighteen (18) months from the date of such payment mail to its stockholders at the time entitled to vote for the election of directors a statement specifying the person paid, the amount of the payment and the final disposition of the litigation. Except as otherwise provided by law, and in addition to any other right provided by law, every such person shall be entitled, without demand by him upon the corporation, or any action by the corporation, to enforce the right of indemnification or reimbursement hereinabove provided in an action at law against the corporation. The right of indemnification or reimbursement hereinabove provided or under any applicable statutes shall not be deemed exclusive of any other right to which any such person may now or hereafter be otherwise entitled. ARTICLE X AMENDMENTS SECTION 1. By Stockholders. These by-laws may be made, amended, altered --------------- or repealed, by the affirmative vote of the holders of a majority of the stock of the corporation, or their proxies, who shall be present and entitled to vote at any annual or special meeting of stockholders, provided that notice of the proposed amendment, alteration or repeal shall have been included in the notice of the meeting. SECTION 2. By Directors. The Board of Directors shall have the power, by ------------ a vote of a majority of the Directors then in office, at a meeting upon waiver of notice or called pursuant to a notice in which any such proposed-modification of the by-laws is set forth, to make, amend, alter or repeal these by-laws except that the Board of Directors shall have no power to alter, amend, or repeal a by-law adopted by the stockholders subsequent to any original adoption of these by-laws by the stockholders. EX-3.31 32 CERT OF INCORP OF EASTERN ROYALTY CORP EXHIBIT 3.31 CERTIFICATE OF INCORPORATION OF EASTERN ROYALTY CORP. -----ooOoo----- 1. The name of the corporation is EASTERN ROYALTY CORP. 2. The address of its registered office in the State of Delaware is No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one hundred (100) and the par value of each of such shares is One Dollars ($1.00) amounting in the aggregate to One Hundred Dollars ($100.00). 5A. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS ---- --------------- K. L. Husfelt 100 West Tenth Street Wilmington, Delaware 19801 B.A. Schuman 100 West Tenth Street Wilmington, Delaware 19801 E. L. Kinsler 100 West Tenth Street Wilmington, Delaware 19801
5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the 2 stockholders or until a successor is elected and qualified, is as follows:
NAME MAILING ADDRESS ---- --------------- R. H. Freeman One Beacon Street Boston, Massachusetts 02108
6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 9. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, 3 and accordingly have hereunto set our hands this 16th day of April, 1980. /s/ K. L. Husfelt ------------------------- K. L. Husfelt /s/ B. A. Schuman ------------------------- B. A. Schuman /s/ E. L. Kinsler ------------------------- E. L. Kinsler EX-3.32 33 BY-LAWS OF EASTERN ROYALTY CORP. EXHIBIT 3.32 EASTERN ROYALTY CORP. ---ooOoo--- B Y - L A W S ---ooOoo--- ARTICLE I OFFICES Section 1. The registered office shall be in the city of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held at such place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1981, shall be held on the second Tuesday of April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of 2 directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the 3 president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting 4 as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of 5 outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one nor more than ten. The first board shall consist of one director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner 6 provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first 7 meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on twenty-four hours' notice to each director, either personally or by telephone, mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting 8 from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. 9 In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation' and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. 10 Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, 11 but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram or telephone. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall 12 hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or 13 in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined 14 by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement 15 or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATE OF STOCK Section 1. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation, certifying the number of shares owned by him in the corporation. Section 2. Any of or all the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he 16 were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. 17 FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 18 ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or 19 such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. IDENTIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of 20 incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 21 Amendment of Bylaws ------------------- RESOLVED, That Section 2 of Article II of the Bylaws of the Company is repealed in its entirety and the following provision substituted in lieu thereof. "Section 2. The annual meeting of the stockholders, commencing with the year 1988, shall be held in April at the Principal office of the Corporation, or at such other place, within or without the State of Delaware and at such time, as shall be determine by the Board of Directors, for the purpose of electing directors, and for the transaction of such other business as may be brought before the meeting." EX-3.33 34 CERT OF INCORP OF EXPLORACIONES Y MINERALES EXHIBIT 3.33 CERTIFICATE OF INCORPORATION -of- EXPLORACIONES Y MINERALES SIERRA MORENA S.A. FIRST: The name of the corporation is exploraciones y Minerales ----- Sierra Morena S.A. SECOND: The corporation's registered office in the State of delaware ------ is at 306 South State Street, in the City of Dover, County of Kent. The name of its registered agent at that address is United States Corporation Company. THIRD: The purpose of the corporation is to engage in any lawful act ----- or activity for which corporations may be organized under the general Corporations Law of the State of Delaware. FOURTH: The total number of shares of stock which the Corporation ------ shall have authority to issue is one thousand (1,000) shares, all of which shall be Common Stock without par value. FIFTH: The name and mailing address of the corporator is as follows: ----- William D. Stempel 299 Park Avenue New York, New York 10017 SIXTH: The following provisions are inserted for the management of ----- the business and for the conduct of the affairs of the corporation and for further definition, limitation and regulation of the powers of the corporation and of its directors and stockholders: (1) The number of directors of the corporation shall be such as from time to time shall be fixed by, or in the manner provided in, the by-laws, election of directors need not be by ballot unless the by-laws so provide. 2 (2) The Board of Directors shall have power without the assent or vote of the stockholders to make, alter, amend, change, add to or repeal the by-laws of the corporation; to fix and vary the amount to be reserved for any proper purpose; to authorize and cause to be executed mortgages and liens upon all or any part of the property of the corporation; to determine the use and disposition of any surplus or net profits; and to fix the times for the declaration and payment of dividends. (3) In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this Certificate of Incorporation, and to any by-laws from time to time made by the stockholders; provided, however, that no by-law so made shall invalidate any prior act of the directors which would have been valid if such by-law had not been made. SEVENTH: The corporation reserves the right to amend, alter, change ------- or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by law and all rights herein conferred on stockholders, directors and officers are granted subject to this reserved power. IN WITNESS WHEREOF, I the undersigned, being the incorporator hereinabove name, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make and file this Certificate, hereby declaring and certifying that the facts herein stated are true, and accordingly have hereunto set my hand and seal, this 31st day of October, 1979. /s/ William D. Stempel ------------------------------ William D. Stempel 3 STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on this 31th day of October, 1979, personally came before me, D. Judith Penci, a Notary Public in ad for the County and State aforesaid, WILLIAM D. STEMPEL, the party to the foregoing Certificate of Incorporation, known to me personally to be such, and acknowledged the said Certificate to be his act and deed, and that the facts therein stated are true. GIVES under my hand and seal of office the day and year aforesaid. /s/ D. Judith Penci --------------------------------- D. Judith Penci, Notary Public CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Exploraciones y Minerales Sierra Morena S.A., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation and said corporation: RESOLVED, that the Certificate of Incorporation of Exploraciones y Minerales sierra Morena S.A., be amended by changing the Article First thereof so that, as amended, said Article shall be and read as follows: "The name of the corporation is Gold Fields Chile, S.A." SECOND: That is lieu of a meeting and a vote of stockholders, the stockholders have give unanimous written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said Exploraciones y Minerales Sierra Morena S.A., has caused this certificate to be signed by 2 William C. Bleimeister, its President, and attested by Stephen E. Flechner, its Secretary, this 23rd day of March, 1990. EXPLORACIONES Y MINERALES SIERRA MORENA S.A. By /s/ William L. Bleimeister ---------------------------------- President ATTEST: By /s/ Stephen E. Flechner --------------------------- Secretary EX-3.34 35 BY-LAWS OF EXPLORACIONES Y MINERALES SIERRA EXHIBIT 3.34 BY-LAWS OF EXPLORACIONES Y MINERALES SIERRA MORENA S.A. (A Delaware Corporation) 1 ARTICLE 1 DEFINITIONS ----------- As used in these By-laws, unless the context otherwise requires, the term: 1.1 "Assistant Secretary" means an Assistant Secretary of the Corporation. 1.2 "Assistant Treasurer" means an Assistant Treasurer of the Corporation. 1.3 "Board" means the Board of Directors of the Corporation. 1.4 "By-laws" means the initial by-laws of the Corporation, as amended from time to time. 1.5 "Certificate of Incorporation" means the initial certificate of incorporation of the Corporation, as amended, supplemented or restated from time to time. 1.6 "Corporation" means Exploraciones y Minerales Sierra Morena S.A. 1.7 "Directors" means directors of the Corporation. 1.8 "General Corporation Law" means the General Corporation Law of the State of Delaware, as amended from time to time. 1.9 "Office of the Corporation" means the executive office of the Corporation, anything in Section 131 of the General Corporation Law to the contrary notwithstanding. 1.10 "President" means the President of the Corporation. 1.11 "Secretary" means the Secretary of the Corporation. 1.12 "Stockholders" means stockholders of the Corporation. 1.13 "Total number of directors" means the total number of directors determined in accordance with Section 141(b) of the General Corporation Law and Section 3.2 of the By-laws. 1.14 "Treasurer" means the Treasurer of the Corporation. 1.15 "Vice President" means a Vice President of the Corporation. 2 1.16 "Whole Board" means the total number of directors of the Corporation. ARTICLE 2 STOCKHOLDERS ------------ 2.1 Place of Meetings. Every meeting of stockholders shall be held ----------------- at the office of the Corporation or at such other place within or without the State of Delaware as shall be specified or fixed in the notice of such meeting or in the waiver of notice thereof. 2.2 Annual Meeting. A meeting of stockholders shall be held annually -------------- for the election of directors and the transaction of other business at 10:00 a.m. on the first Tuesday in October. 2.3 Deferred Meeting for Election of Directors, Etc. If the annual ------------------------------------------------ meeting of stockholders for the election of directors and the transaction of other business is not held within the months specified in Section 2.2, the Board shall call a meeting of stockholders for the election of directors and the transaction of ocher business as soon thereafter as convenient. 2.4 Other Special Meetings. A special meeting of stockholders (other ---------------------- than a special meeting for the election of directors), unless otherwise prescribed by statute, may be called at any time by the Board or by the President or by the Secretary. At any special meeting of stockholders only such business may be transacted as is related to the purpose or purposes of such meeting set forth in the notice thereof given pursuant to Section 2.6 of the By- laws or in any waiver of notice thereof given pursuant to Section 2.7 of the By- laws. 2.5 Fixing Record Date. For the purpose of determining the ------------------ stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or for the purpose of determining stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix, in advance, a date as the record date for any such determination of stockholders. Such date shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no such record date is fixed: 2.5.1 The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; 3 2.5.2 The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is expressed; 2.5.3 The record date for determining stockholders for any purpose other than those specified in Sections 2.5.1 and 2.5.2 shall be at the close of business on the day on which the Board adopts the resolution relating thereto. When a determination of stockholders entitled to notice of or to vote at any meeting of stockholders has been made as provided in this Section 2.5 such determination shall apply to any adjournment thereof, unless the Board fixes a new record date for the adjourned meeting. 2.6 Notice of Meetings of Stockholders. Except as otherwise provided ---------------------------------- in Sections 2.5 and 2.7 of the By-laws, whenever under the General Corporation Law or the Certificate of Incorporation or the By-laws, stockholders are required or permitted to take any action at a meeting, written notice shall be given stating the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. A copy of the notice of any meeting shall be given, personally or by mail, not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to notice of or to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, with postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the Corporation that the notice required by this section has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken, and at the adjourned meeting any business may be transacted that might have been transacted at the meeting as originally called. If, however, the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.7 Waivers of Notice. Whenever notice is required to be given to ----------------- any stockholder under any provision of the General Corporation Law or the Certificate of Incorporation or the By-laws, a written waiver thereof, signed by the stockholder entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a stockholder at a meeting shall constitute a waiver of notice of 4 such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. 2.8 List of Stockholders. The Secretary shall prepare and make, or -------------------- cause to be prepared and made, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 2.9 Quorum of Stockholders; Adjournment. The holders of one-third of ----------------------------------- the shares of stock entitled to vote at any meeting of stockholders, present in person or represented by proxy, shall constitute a quorum for the transaction of any business at such meeting. When a quorum is once present to organize a meeting of stockholders, it is not broken by the subsequent withdrawal of any stockholders. The holders of a majority of the shares of stock present in person or represented by proxy at any meeting of stockholders, including an adjourned meeting, whether or not a quorum is present, may adjourn such meeting to another time and place. 2.10 Voting; Proxies. Unless otherwise provided in the Certificate --------------- of Incorporation every stockholder of record shall be entitled at every meeting of stockholders to one vote for each share of capital stock standing in his name on the record of stockholders determined in accordance with Section 2.5 of the By-laws. If the Certificate of Incorporation provides for more or less than one vote for any share, on any matter, every reference in the By-laws or the General Corporation Law to a majority or other proportion of stock shall refer to such majority or other proportion of the votes of such stock. The provisions of Sections 212 and 217 of the General Corporation Law shall apply in determining whether any shares of capital stock may be voted and the persons, if any, entitled to vote such shares; but the Corporation shall be protected in treating the persons in whose names shares of capital stock stand on the record of stockholders as owners thereof for all purposes. At any meeting of stockholders (at which a quorum was present to 5 organize the meeting), all matters, except as otherwise provided by law or by the Certificate of Incorporation or by the By-laws, shall be decided by a majority of the votes cast at such meeting by the holders of shares present in person or represented by proxy and entitled to vote thereon, whether or not a quorum is present when the vote is taken. All elections of directors shall be by written ballot unless otherwise provided in the Certificate of Incorporation. In voting on any other question on which a vote by ballot is required by law or is demanded by any stockholder entitled to vote, the voting shall be by ballot. Each ballot shall be signed by the stockholder voting or by his proxy, and shall state the number of shares voted. On all other questions, the voting may by viva voce. Every stockholder entitled to vote at a meeting of stockholders or - --------- to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy. The validity and enforceability of any proxy shall be determined in accordance with Section 212 of the General Corporation Law. 2.11 Selection and Duties of Inspectors at Meetings of Stockholders. -------------------------------------------------------------- The Board, in advance of any meeting of stockholders, may appoint one or more inspectors to act at the meeting or any adjournment thereof. If inspectors are not so appointed, the person presiding at such meeting may, and on the request of any stockholder entitled to vote thereat shall, appoint one or more inspectors. In case any person appointed fails to appear or act, the vacancy may be filled by appointment made by the Board in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspector or inspectors shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting or any stockholder entitled to vote thereat, the inspector or inspectors shall make a report in writing of any challenge, question or matter determined by him or them and execute a certificate of any fact found by him or them. Any report or certificate made by the inspector or inspectors shall be prima facie evidence of the facts stated and of the vote as certified by him or them. 2.12 Organization. At every meeting of stockholders, the Chairman of ------------ the Board, or in the absence of the Chairman, the President, or in the absence of the President a Vice President, and in case more than one Vice President shall be present, that 6 Vice President designated by the Board (or in the absence of any such designation, the most senior Vice President, based on age, present), shall act as chairman of the meeting. The Secretary, or in his absence one of the Assistant Secretaries, shall act as secretary of the meeting. In case none of the officers above designated to act as chairman or secretary of the meeting, respectively, shall be present, a chairman or a secretary of the meeting, as the case may be, shall be chosen by a majority of the votes cast at such meeting by the holders of shares of capital stock present in person or represented by proxy and entitled to vote at the meeting. 2.13 Order of Business. The order of business at all meetings of ----------------- stockholders shall be as determined by the chairman of the meeting, but the order of business to be followed at any meeting at which a quorum is present may be changed by a majority of the votes cast at such meeting by the holders of shares of capital stock present in person or represented by proxy and entitled to vote at the meeting. 2.14 Written Consent of Stockholders Without a Meeting. Unless ------------------------------------------------- otherwise provided in the Certificate of Incorporation, any action required by the General Corporation Law to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE 3 DIRECTORS --------- 3.1 General Powers. Except as otherwise provided in the Certificate -------------- of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board. The Board may adopt such rules and regulations, not inconsistent with the Certificate of Incorporation or the By- laws or applicable laws, as it may deem proper for the conduct of its meetings and the management of the Corporation. In addition to the powers expressly conferred by the By-laws, the Board may exercise all powers and perform all acts which are not required, by the By-laws or the Certificate of Incorporation or by law, to be exercised and performed by the stockholders. 7 3.2 Number; Qualification; Term of Office. The Board shall consist ------------------------------------- of two to fifteen members. The total number of directors shall be fixed initially by the incorporator and may thereafter be changed from time to time by action of the stockholders or by action of the Board. Directors need not be stockholders. Each director shall hold office until his successor is elected and qualified or until his earlier death, resignation or removal. 3.3 Election. Directors shall, except as otherwise required by law -------- or by the Certificate of Incorporation, be elected by a plurality of the votes cast at a meeting of stockholders by the holders of shares entitled to vote in the election. 3.4 Newly Created Directorships and Vacancies. Unless otherwise ----------------------------------------- provided in the Certificate of Incorporation, newly created directorships resulting from an increase in the number of directors and vacancies occurring in the Board for any other reason, including the removal of directors without cause, may be filled by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director, or may be elected by a plurality of the votes cast by the holders of shares of capital stock entitled to vote in the election at a special meeting of stockholders called for that purpose. A director elected to fill a vacancy shall be elected to hold office until his successor is elected and qualified, or until his earlier death, resignation or removal. 3.5 Resignations. Any director may resign at any time by written ------------ notice to the Corporation. Such resignation shall take effect at the time therein specified, and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. 3.6 Removal of Directors. Subject to the provisions of Section -------------------- 141(k) of the General Corporation Law, any or all of the directors may be removed with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. 3.7 Compensation. Each director, in consideration of his service as ------------ such, shall be entitled to receive from the Corporation such amount per annum or such fees for attendance as directors' meetings, or both, as the Board may from time to time determine, together with reimbursement for the reasonable expenses incurred by him in connection with the performance of his duties. Each director who shall serve as a member of any committee of directors in consideration of his serving as such shall be entitled to such additional amount per annum or such fees for attendance at committee meetings, or both, as the Board may from time to time determine, together with reimbursement for the reasonable expenses incurred by him in the performance of his duties. Nothing contained in this section shall preclude any 8 director from serving the Corporation or its subsidiaries in any other capacity and receiving proper compensation therefor. 3.8 Place and Time of Meetings of the Board. Meetings of the Board, --------------------------------------- regular or special, may be held at any place within or without the State of Delaware. The times and places for holding meetings of the Board may be fixed from time to time by resolution of the Board or (unless contrary to resolution of the Board) in the notice of the meeting. 3.9 Annual Meetings. On the day when and at the place where the --------------- annual meeting of stockholders for the election of directors is held, and as soon as practicable thereafter, the Board may hold its annual meeting, without notice of such meeting, for the purposes of organization, the election of officers and the transaction of other business. The annual meeting of the Board may be held at any other time and place specified in a notice given as provided in Section 3.11 of the By-laws for special meetings of the Board or in a waiver of notice thereof. 3.10 Regular Meetings. Regular meetings of the Board may be held at ---------------- such times and places as may be fixed from time to time by the Board. Unless otherwise required by the Board, regular meetings of the Board may be held without notice. If any day fixed for a regular meeting of the Board shall be a Saturday or Sunday or a legal holiday at the place where such meeting is to be held, then such meeting shall be held at the same hour at the same place on the first business day thereafter which is not a Saturday, Sunday or legal holiday. 3.11 Special Meetings. Special meetings of the Board shall be held ---------------- whenever called by the President or the Secretary or by any two or more directors. Notice of each special meeting of the Board shall, if mailed, be addressed to each director at the address designated by him for that purpose or, if none is designated, at his last known address at least two days before the date on which the meeting is to be held; or such notice shall be sent to each director at such address by telegraph, cable or wireless, or be delivered to him personally, not later than the day before the date on which such meeting is to be held. Every such notice shall state the time and place of the meeting but need not state the purposes of the meeting, except to the extent required by law. If mailed, each notice shall be deemed given when deposited, with postage thereon prepaid, in a post office or official depository under the exclusive care and custody of the United States post office department. Such mailing shall be by first class mail . 3.12 Adjourned Meetings. A majority of the directors present at any ------------------ meeting of the Board, including an adjourned meeting, whether or not a quorum is present, may adjourn such meeting to another time and place. Notice of any adjourned meeting of the Board need not be given by any director whether or 9 not present at the time of the adjournment. Any business may be transacted at any adjourned meeting that might have been transacted at the meeting as originally called. 3.13 Waiver of Notice. Whenever notice is required to be given to ---------------- any director or member of a committee of directors under any provision of the General Corporation Law or of the Certificate of Incorporation or By-laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice. 3.14 Organization. At each meeting of the Board, the Chairman of the ------------ Board, or in the absence of the Chairman, the President of the Corporation, or in the absence of the President, a chairman chosen by a majority of the directors present, shall preside. The Secretary shall act as secretary at each meeting of the Board. In case the Secretary shall be absent from any meeting of the Board, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary and Assistant Secretaries, the person presiding at the meeting may appoint any person to act as secretary of the meeting. 3.15 Quorum of Directors. One-third of the total number of directors ------------------- shall constitute a quorum for the transaction of business or of any specified item of business at any meeting of the Board. 3.16 Action by the Board. All corporate action taken by the Board or ------------------- any committee thereof shall be taken at a meeting of the Board, or of such committee, as the case may be, except that any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or of such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.16 shall constitute presence in person at such meeting. Except as otherwise provided by the Certificate of Incorporation or by law, the vote of a majority of the directors present (including those who participate by means of conference telephone or similar 10 communications equipment) at the time of the vote, if a quorum is present at such time, shall be the act of the Board. ARTICLE 4 COMMITTEES OF THE BOARD ----------------------- The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporations's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the By-laws of the Corporation; and, unless the resolution designating it expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. ARTICLE 5 OFFICERS -------- 5.1 Officers. The Board shall elect a Chairman of the Board, a -------- President, a Secretary and a Treasurer, and may elect or appoint one or more Vice Presidents and such other officers as it may determine. The Board may designate one or more Vice Presidents as Executive Vice Presidents, and may use descriptive words or phrases to designate the standing, seniority or area of special competence of the Vice Presidents elected or appointed by it. Each officer shall hold his office until his successor is elected and qualified or until his earlier death, resignation or removal in the manner provided in Section 5.2 of the By-laws. Any two or more offices may be held by the same person. The Board may require any officer to give a bond or other security for the faithful performance of his duties, in such amount and with such sureties as the Board may determine. All officers as between themselves and the Corporation shall have such authority 11 and perform such duties in the management of the Corporation as may be provided in the By-laws or as the Board may from time to time determine. 5.2 Removal of Officers. Any officer elected or appointed by the ------------------- Board may be removed by the Board with or without cause. The removal of an officer without cause shall be without prejudice to his contract rights, if any. The election or appointment of an officer shall not of itself create contract rights. 5.3 Resignations. Any officer may resign at any time by so notifying ------------ the Board or the President or the Secretary in writing. Such resignation shall take effect at the date of receipt of such notice or at such later time as is therein specified, and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. The resignation of an officer shall be without prejudice to the contract rights of the Corporation, if any. 5.4 Vacancies. A vacancy in any office because of death, --------- resignation, removal, disqualification or any other cause shall be filled for the unexpired portion of the term in the manner prescribed in the By-laws for the regular election or appointment to such office. 5.5 Compensation. Salaries or other compensation of the officers may ------------ be fixed from time to time by the Board. No officer shall be prevented from receiving a salary or other compensation by reason of the fact that he is also a director. 5.6 Chairman of the Board. The Chairman of the Board shall preside --------------------- at all meetings of the stockholders and of the Board of Directors. He shall have such other powers and perform such other duties as are provided in these By-laws and as may be prescribed from time to time by the Board of Directors. In the absence or in the case of the death or disability of the President, the Chairman of the Board shall have and exercise all the powers of the President. 5.7 President. The President shall be the chief executive officer of --------- the Corporation and shall have general supervision over the business of the Corporation, subject, however, to the control of the Board and of any duly authorized committee of directors. The President shall, if present, preside at all meetings of the stockholders and at all meetings of the Board. He may, with the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer, sign certificates for shares of capital stock of the Corporation. He may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts and other instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by the By-laws to some other officer or agent of the Corporation, or shall be required by law otherwise to be signed 12 or executed; and, in general, he shall perform all duties incident to the office of President and such other duties as from time to time may be assigned to him by the Board. 5.8 Vice President. At the request of the President, or, in his -------------- absence and in the absence of the Chairman of the Board, at the request of the Board, the Vice Presidents shall (in such order as may be designated by the Board or, in the absence of any such designation, in order of seniority based on age) perform all of the duties of the President and so acting shall have all the powers of and be subject to all restrictions upon the President. Any Vice President may also, with the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer, sign certificates for shares of capital stock of the Corporation; may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by the By-laws to some other officer or agent of the Corporation, or shall be required by law otherwise to be signed or executed; and shall perform such other duties as from time to time may be assigned to him by the Board or by the President. 5.9 Secretary. The Secretary, if present, shall act as secretary of --------- all meetings of the stockholders and of the Board, and shall keep the minutes thereof in the proper book or books to be provided for that purpose; he shall see that all notices required to be given by the Corporation are duly given and served; he may, with the President or a Vice President, sign certificates for shares of capital stock of the Corporation; he shall be custodian of the seal of the Corporation and may seal with the seal of the Corporation, or a facsimile thereof, all certificates for shares of capital stock of the Corporation and all documents the execution of which on behalf of the Corporation under its corporate seal is authorized in accordance with the provisions of the By-laws; he shall have charge of the stock ledger and also of the other books, records and papers of the Corporation relating to its organization and management as a Corporation, and shall see that the reports, statements and other documents required by law are properly kept and filed; and shall, in general, perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board or by the President. 5.10 Treasurer. The Treasurer shall have charge and custody of, and --------- be responsible for, all funds, securities and notes of the Corporation; receive and give receipt for moneys due and payable to the Corporation from any sources whatsoever; deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositaries as shall be selected in accordance with these By-laws; against proper vouchers, cause such funds to be disbursed by checks or drafts on the authorized depositaries of the Corporation signed in such manner as shall be determined in accordance with any provisions of the By- laws, and 13 be responsible for the accuracy of the amounts of all moneys so disbursed; regularly enter or cause to be entered in books to be kept by him or under his direction full and adequate account of all moneys received or paid by him for the account of the Corporation; have the right to require, from time to time, reports or statements giving such information as he may desire with respect to any and all financial transactions of the Corporation from the officers or agents transacting the same; render to the President or the Board, whenever the President or the Board, respectively, shall require him so to do, an account of the financial condition of the Corporation and of all his transactions as Treasurer; exhibit at all reasonable times his books of account and other records to any of the directors upon application at the office of the Corporation where such books and records are kept; and, in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board or by the President; and he may sign with the President or a Vice President certificates for shares of capital stock of the Corporation. 5.11 Assistant Secretaries and Assistant Treasurers. Assistant ---------------------------------------------- Secretaries and Assistant Treasurers shall perform such duties as shall be assigned to them by the Secretary or by the Treasurer, respectively, or by the Board or by the President. Assistant Secretaries and Assistant Treasurers may, with the President or a Vice President, sign certificates for shares of capital stock of the Corporation. ARTICLE 6 CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. ---------------------------------------------- 6.1 Execution of Contracts. The Board may authorize any officer, ---------------------- employee or agent, in the name and on behalf of the Corporation, to enter into any contract or execute and satisfy any instrument, and any such authority may be general or confined to specific instances, or otherwise limited. 6.2 Loans. The President or any other officer, employee or agent ----- authorized by the By-laws or by the Board may effect loans and advances at any time for the Corporation from any bank, trust company or other institutions or from any firm, corporation or individual and for such loans and advances may make, execute and deliver promissory notes bonds or other certificates or evidences of indebtedness of the Corporation, and, when authorized by the Board so to do, may pledge and hypothecate or transfer any securities or other property of the Corporation as security for any such loans or advances. Such authority conferred by the Board may be general or confined to specific instances or otherwise limited. 6.3 Checks, Drafts, Etc. All checks, drafts and other orders for the -------------------- payment of money out of the funds of the Corporation and all notes or other evidences of indebtedness of 14 the Corporation shall be signed on behalf of the Corporation in such manner as shall from time to time be determined by resolution of the Board. 6.4 Deposits. The funds of the Corporation not otherwise employed -------- shall be deposited from time to time to the order of the Corporation in such banks, trust companies or other depositaries as the Board may select or as may be selected by an officer, employee or agent of the Corporation to whom such power may from time to time be delegated by the Board. ARTICLE 7 STOCK AND DIVIDENDS ------------------- 7.1 Certificates Representing Shares. The shares of capital stock of -------------------------------- the Corporation shall be represented by certificates in such form (consistent with the provisions of Section 158 of the General Corporation Law) as shall be approved by the Board. Such certificates shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and may be sealed with the seal of the Corporation or a facsimile thereof. The signatures of the officers upon a certificate may be facsimiles, if the certificate is countersigned by a transfer agent or registrar other than the Corporation itself or its employee. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon any certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may, unless otherwise ordered by the Board, be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. 7.2 Transfer of Shares. Transfer of shares of capital stock of the ------------------ Corporation shall be made only on the books of the Corporation by the holder thereof or by his duly authorized attorney appointed by a power of attorney duly executed and filed with the Secretary or a transfer agent of the Corporation, and on surrender of the certificate or certificates representing such shares of capital stock properly endorsed for transfer and upon payment of all necessary transfer taxes. Every certificate exchanged, returned or surrendered to the Corporation shall be marked "Cancelled," with the date of cancellation, by the Secretary or an Assistant Secretary or the transfer agent of the Corporation. A person in whose name shares of capital stock shall stand on the books of the Corporation shall be deemed the owner thereof to receive dividends, to vote as such owner and for all other purposes as respects the Corporation. No transfer of shares of capital stock shall be valid as against the Corporation, its stockholders and creditors for any purpose, except to render the transferee liable for the debts of the Corporation to the extent provided by law, until such transfer 15 shall have been entered on the books of the Corporation by an entry showing from and to whom transferred. 7.3 Transfer and Registry Agents. The Corporation may from time to ---------------------------- time maintain one or more transfer offices or agents and registry offices or agents at such place or places as may be determined from time to time by the Board. 7.4 Lost, Destroyed, Stolen and Mutilated Certificates. The holder -------------------------------------------------- of any shares of capital stock of the Corporation shall immediately notify the Corporation of any loss, destruction, theft or mutilation of the certificate representing such shares, and the Corporation may issue a new certificate to replace the certificate alleged to have been lost, destroyed, stolen or mutilated. The Board may, in its discretion, as a condition to the issue of any such new certificate, require the owner of the lost, destroyed, stolen or mutilated certificate, or his legal representatives, to make proof satisfactory to the Board of such loss, destruction, theft or mutilation and to advertise such fact in such manner as the Board may require, and to give the Corporation and its transfer agents and registrars, or such of them as the Board may require, a bond in such form, in such sums and with such surety or sureties as the Board may direct, to indemnify the Corporation and its transfer agents and registrars against any claim that may be made against any of them on account of the continued existence of any such certificate so alleged to have been lost, destroyed, stolen or mutilated and against any expense in connection with such claim. 7.5 Regulations. The Board may make such rules and regulations as it ----------- may deem expedient, not inconsistent with the By-laws or with the Certificate of Incorporation, concerning the issue, transfer and registration of certificates representing shares of its capital stock. 7.6 Restriction on Transfer of Stock. A written restriction on the -------------------------------- transfer or registration of transfer of capital stock of the Corporation, if permitted by Section 202 of the General Corporation Law and noted conspicuously on the certificate representing such capital stock, may be enforced against the holder of the restricted capital stock or any successor or transferee of the holder including an executor, administrator, trustee, guardian or other fiduciary entrusted with like responsibility for the person or estate of the holder. Unless noted conspicuously on the certificate representing such capital stock, a restriction, even though permitted by Section 202 of the General Corporation Law, shall be ineffective except against a person with actual knowledge of the restriction. A restriction on the transfer or registration of transfer of capital stock of the Corporation may be imposed either by the Certificate of Incorporation or by an agreement among any number of stockholders or among such stockholders and the Corporation. No restriction so imposed shall be binding with respect to capital stock issued prior to the adoption of the restriction 16 unless the holders of such capital stock are parties to an agreement or voted in favor of the restriction. 7.7 Dividends, Surplus, Etc. Subject to the provisions of the ------------------------ Certificate of Incorporation and of law, the Board: 7.7.1 May declare and pay dividends or make other distributions on the outstanding shares of capital stock in such amounts and at such time or times as, in its discretion, the condition of the affairs of the Corporation shall render advisable; 7.7.2 May use and apply, in its discretion, any of the surplus of the Corporation in purchasing or acquiring any shares of capital stock of the Corporation, or purchase warrants therefor, in accordance with law, or any of its bonds, debentures, notes, scrip or other securities or evidences of indebtedness; 7.7.3 May set aside from time to time out of such surplus or net profits such sum or sums as, in its discretion, it may think proper, as a reserve fund to meet contingencies, or for equalizing dividends or for the purpose of maintaining or increasing the property or business of the Corporation, or for any purpose it may think conducive to the best interests of the Corporation. ARTICLE 8 INDEMNIFICATION --------------- 8.1 Indemnification of Officers and Directors. The Corporation shall ----------------------------------------- indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or an officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another Corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding to the fullest extent and in the manner set forth in and permitted by the General Corporation Law, and any other applicable law, as from time to time in effect. Such right of indemnification shall not be deemed exclusive of any other rights to which such director or officer may be entitled apart from the foregoing provisions. The foregoing provisions of this Section 8.1 shall be deemed to be a contract between the Corporation and each director and officer who serves in such capacity at any time while this Article 8 and the relevant provisions of the General Corporation Law and other applicable law, if any, are in effect, and any repeal or modification 17 thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts. 8.2 Indemnification of Other Persons. The Corporation may indemnify -------------------------------- any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that he is or was an employee or agent of the Corporation, or is or was serving at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding to the extent and in the manner set forth in and permitted by the General Corporation Law, and any other applicable law, as from time to time in effect. Such right of indemnification shall not be deemed exclusive of any other rights to which any such person may be entitled apart from the foregoing provisions. 8.3 Insurance. The Corporation shall have power to purchase and --------- maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of Sections 8.1 and 8.2 of the By-laws or under Section 145 of the General Corporation Law or any other provision of law. ARTICLE 9 BOOKS AND RECORDS ----------------- 9.1 Books and Records. The Corporation shall keep correct and ----------------- complete books and records of account and shall keep minutes of the proceedings of the stockholders, the Board and any committee of the Board. The Corporation shall keep at the office designated in the Certificate of Incorporation or at the office of the transfer agent or registrar of the Corporation, a record containing the names and addresses of all stockholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof. 9.2 Form of Records. Any records maintained by the Corporation in --------------- the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, 18 or be in the form of, punch cards, magnetic tape, photographs, microphotographs, or any other information storage device, provided that the records so kept can be converted into clearly legible written form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same. 9.3 Inspection of Books and Records. Except as otherwise provided by ------------------------------- law, the Board shall determine from time to time whether, and, if allowed, when and under what conditions and regulations, the accounts, books, minutes and other records of the Corporation, or any of them, shall be open to the inspection of the stockholders. ARTICLE 10 SEAL ---- The Board may adopt a corporate seal which shall be in the form of a circle and shall bear the full name of the Corporation, the year of its incorporation and the word "Delaware." ARTICLE 11 FISCAL YEAR ----------- The fiscal year of the Corporation shall be determined, and may be changed, by resolution of the Board. ARTICLE 12 VOTING OF SHARES HELD --------------------- Unless otherwise provided by resolution of the Board, the President or any Vice President may, from time to time, appoint one or more attorneys or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as a stockholder or otherwise in any other corporation, any of whose shares or securities may be held by the Corporation, at meetings of the holders of stock or other securities of such other corporation, or to consent in writing to any action by any such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed on behalf of the Corporation and under its corporate seal, or otherwise, such written proxies, consents, waivers or other instruments as he may deem necessary or proper in the premises; or the President or any Vice President may attend any meeting of the holders of the stock or other securities of any such other corporation and thereat vote or exercise any or all other powers of the Corporation as the holder of such stock or other securities of such other corporation. 19 ARTICLE 13 AMENDMENTS ---------- The By-laws may be altered, amended, supplemented or repealed, or new By-laws may be adopted, by vote of the holders of the shares entitled to vote in the election of directors. The By-laws may be altered, amended, supplemented or repealed, or new By-laws may be adopted, by the Board. Any By-laws adopted, altered, amended, or supplemented by the Board may be altered, amended, or supplemented or repealed by the stockholders entitled to vote thereon. EX-3.35 36 RESTATED CERT OF INCORP GOLD FIELDS MINING CORP EXHIBIT 3.35 RESTATED CERTIFICATE OF INCORPORATION OF GOLD FIELDS MINING CORPORATION Pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware GOLD FIELDS MINING CORPORATION, a corporation duly organized and existing under the General Corporation Law of the State of Delaware (the "Corporation") and originally incorporated in the State of Delaware on August 26, 1926 under the name Tri-State Zinc, Inc., does hereby certify as follows: FIRST: That the Certificate of Incorporation of the Corporation was ----- filed in the office of the Secretary of State on the 26th day of August, 1926. SECOND: That the Certificate of Incorporation, as amended, is further ------ amended and restated to read in its entirety as follows: "ARTICLE I NAME The name of the Corporation is GOLD FIELDS MINING CORPORATION. ARTICLE II REGISTERED OFFICE AND REGISTERED AGENT The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. ARTICLE III CORPORATE PURPOSE The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the "GCL"). 2 ARTICLE IV CAPITAL STOCK The total number of shares which the Corporation shall have authority to issue is 100 shares of Common Stock, without nominal or par value. ARTICLE V BY-LAWS The Board of Directors is expressly authorized to adopt, amend, or repeal the by-laws of the Corporation. ARTICLE VI ELECTION OF DIRECTORS Elections of directors need not be by written ballot unless the by- laws of the Corporation shall otherwise provide. ARTICLE VII INDEMNIFICATION A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director; provided, however, that the foregoing shall not eliminate or -------- ------- limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve fraud or intentional misconduct or a knowing violation of law, (iii) under Section 174 of the GCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the GCL is hereafter amended to permit further elimination or limitation of the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the GCL as so amended. Any repeal or modification of this Article SEVENTH by the stockholders of the Corporation or otherwise shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. 3 ARTICLE VIII COMPROMISE WITH CREDITORS Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which said application has been made, be binding on all the creditors or class of creditors, and/or on all of the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. ARTICLE IX AMENDMENT OF CERTIFICATE OF INCORPORATION Subject to shareholder approval, the Corporation reserves the right to amend, alter, change, or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute." THIRD: This Restated Certificate of Incorporation has been duly ----- adopted by unanimous written consent of the stockholders in accordance with the applicable provisions of Section 228, 242 and 245 of the General Corporation Law of the State of Delaware and with the provisions of the Corporation's Certificate of Incorporation and By-laws. 4 IN WITNESS WHEREOF, GOLD FIELDS MINING CORPORATION has caused this certificate to be signed on its behalf by William C. Bleimeister, its President, and attested to by Stephen E. Flechner, its Secretary, this 22nd day of March, 1991. GOLD FIELDS MINING CORPORATION By: /s/ William C. Bleimeister ----------------------------- William C. Bleimeister, President ATTEST: /s/ Stephen E. Flechner - -------------------------------- Stephen E. Flechner, Secretary EX-3.36 37 BY-LAWS OF GOLD FIELDS MINING CORP. EXHIBIT 3.36 BY-LAWS OF GOLD FIELDS MINING CORPORATION (A Delaware Corporation) ________________________ ARTICLE 1 DEFINITIONS ----------- As used in these By-laws, unless the context otherwise requires, the term: 1.1 "Assistant Secretary" means an Assistant Secretary of the Corporation. 1.2 "Assistant Treasurer" means an Assistant Treasurer of the Corporation. 1.3 "Board" means the Board of Directors of the Corporation. 1.4 "By-laws" means the initial by-laws of the Corporation, as amended from time to time. 1.5 "Certificate of Incorporation" means the initial certificate of incorporation of the Corporation, as amended, supplemented or restated from time to time. 1.6 "Corporation" means Gold Fields Mining Corporation. 1.7 "Directors" means directors of the Corporation. 1.8 "General Corporation Law" means the General Corporation Law of the State of Delaware, as amended from time to time. 1.9 "Office of the Corporation" means the executive office of the Corporation, anything in Section 131 of the General Corporation Law to the contrary notwithstanding. 1.10 "President" means the President of the Corporation. 1.11 "Secretary" means the Secretary of the Corporation. 1.12 "Stockholders" means stockholders of the Corporation. 2 1.13 "Total number of directors" means the total number of directors determined in accordance with Section 141(b) of the General Corporation Law and Section 3.2 of the By-Laws. 1.14 "Treasurer" means the Treasurer of the Corporation. 1.15 "Vice President" means a Vice President of the Corporation. 1.16 "Whole Board" means the total number or directors of the Corporation. ARTICLE 2 STOCKHOLDERS ------------ 2.1 Place of Meetings. Every meeting of stockholders shall be held ----------------- at the office of the Corporation or at such other place within or without the State of Delaware as shall be specified or fixed in the notice of such meeting or in the waiver of notice thereof. 2.2 Annual Meeting. A meeting of stockholders shall be held annually -------------- for the election of directors and the transaction of other business at 10:00 a.m. on the first Tuesday in October. 2.3 Deferred Meeting for Election of Directors, Etc. If the annual ------------------------------------------------ meeting of stockholders for the election of directors and the transaction of other business is not held within the months specified in Section 2.2, the Board shall call a meeting of stockholders for the election of directors and the transaction of other business as soon thereafter as convenient. 2.4 Other Special Meetings. A special meeting of stockholders (other ---------------------- than a special meeting for the election of directors), unless otherwise prescribed by statute, may be called at any time by the Board or by the President or by the Secretary. At any special meeting of stockholders only such business may be transacted as is related to the purpose or purposes of such meeting set forth in the notice thereof given pursuant to Section of the By-laws or in any waiver of notice thereof given pursuant to Section 2.7 of the By-laws. 2.5 Fixing Record Date. For the purpose of determining the ------------------ stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or for the purpose of determining stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in 3 respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix, in advance, a date as the record date for any such determination of stockholders. Such date shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no such record date is fixed: 2.5.1 The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; 2.5.2 The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is expressed; 2.5.3 The record date for determining stockholders for any purpose other than those specified in Sections 2.5.1 and 2.5.2 shall be at the close of business on the day on which the Board adopts the resolution relating thereto. When a determination of stockholders entitled to notice of or to vote at any meeting of stockholders has been made as provided in this Section 2.5 such determination shall apply to any adjournment thereof, unless the Board fixes a new record date for the adjourned meeting. 2.6 Notice of Meetings of Stockholders. Except as otherwise provided ---------------------------------- in Sections 2.5 and 2.7 of the By-laws, whenever under the General Corporation Law or the Certificate of Incorporation or the By-laws, stockholders are required or permitted to take any action at a meeting, written notice shall be given stating the place, date and hour or the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. A copy of the notice of any meeting shall be given, personally or by mail, not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to notice of or to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, with postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the Corporation that the notice required by this section has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the 4 adjournment is taken, and at the adjourned meeting any business may be transacted that might have been transacted at the meeting as originally called. If, however, the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.7 Waivers of Notice. Whenever notice is required to be given to ----------------- any stockholder under any provision of the General Corporation Law or the Certificate of Incorporation or the By-laws, a written waiver thereof, signed by the stockholder entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a stockholder at a meeting shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. 2.8 List of Stockholders. The Secretary shall prepare and make, or -------------------- cause to be prepared and made, at least ten days before every meeting or stockholders, a complete list of he stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 2.9 Quorum of Stockholders; Adjournment. The holders of one-third of ----------------------------------- the shares of stock entitled to vote at any meeting of stockholders, present in person or represented by proxy, shall constitute a quorum for the transaction of any business at such meeting. When a quorum is once present to organize a meeting of stockholders, it is not broken by the subsequent withdrawal of any stockholders. The holders of a majority of the shares of stock present in person or represented by proxy at any meeting of stockholders, including an adjourned meeting, whether or not a quorum is present, may adjourn such meeting to another time and place. 2.10 Voting; Proxies. Unless otherwise provided in he Certificate of --------------- Incorporation every stockholder of record shall be 5 entitled at every meeting of stockholders to one vote for each share of capital stock standing in his name on the record of stockholders determined in accordance with Section 2.5 of the By-laws. If the Certificate of Incorporation provides for more or less than one vote for any share, on any matter, every reference in the By-laws or the General Corporation Law to a majority or other proportion of stock shall refer to such majority or other proportion of the votes of such stock. The provisions of Sections 212 and 217 of the General Corporation Law shall apply in determining whether any shares of capital stock may be voted and the persons, if any, entitled to vote such shares; but the Corporation shall be protected in treating the persons in whose names shares of capital stock stand on the record of stockholders as owners thereof for all purposes. At any meeting of stockholders (at which a quorum was present to organize the meeting), all matters, except as otherwise provided by law or by the Certificate of Incorporation or by the By-laws, shall be decided by a majority of the votes cast at such meeting by the holders of shares present in person or represented by proxy and entitled to vote thereon, whether or not a quorum is present when the vote is taken. All elections of directors shall be by written ballot unless otherwise provided in the Certificate of Incorporation. In voting on any other question on which a vote by ballot is required by law or is demanded by any stockholder entitled to vote, the voting shall be by ballot. Each ballot shall be signed by the stockholder voting or by his proxy, and shall state the number of shares voted. On all other questions, the voting may be viva voce. Every stockholder entitled to vote at a meeting of stockholders or - ---- ---- to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act far him by proxy. The validity and enforceability of any proxy shall be determined in accordance with Section 212 of the General Corporation Law. 2.11 Selection and Duties of Inspectors at Meetings of Stockholders. -------------------------------------------------------------- The Board, in advance of any meeting of stockholders, may appoint one or mare inspectors to act at the meeting or any adjournment thereof. If inspectors are not so appointed, the person presiding at such meeting may, and on the request of any stockholder entitled to vote thereat shall, appoint one or mare inspectors. In case any person appointed fails to appear or act, the vacancy may be filled by appointment made by the Board in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspector or inspectors shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate 6 all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting or any stockholder entitled to vote thereat, the inspector or inspectors shall make a report in writing of any challenge, question or matter determined by him or them and execute a certificate of any fact found by him or them. Any report or certificate made by the inspector or inspectors shall be prima facie evidence of the facts stated and of the vote as certified by him or them. 2.12 Organization. At every meeting of stockholders, the Chairman of ------------ the Board, or in the absence of the Chairman, the President, or in the absence of the President a Vice President, and in case more than one Vice President shall be present, that Vice President designated by the Board (or in the absence of any such designation, the most senior Vice President, based on age, present), shall act as chairman of the meeting. The Secretary, or in his absence one of the Assistant Secretaries, shall act as secretary of the meeting. In case none of the officers above designated to act as chairman or secretary of the meeting, respectively, shall be present, a chairman or a secretary of the meeting, as the case may be, shall be chosen by a majority of the votes cast at such meeting by the holders of shares of capital stock present in person or represented by proxy and entitled to vote at the meeting. 2.13 Order of Business. The order of business at all meetings of ----------------- stockholders shall be as determined by the chairman of the meeting, but the order of business to be followed at any meeting at which a quorum is present may be changed by a majority of the votes cast at such meeting by the holders of shares of capital stock present in person or represented by proxy and entitled to vote at the meeting. 2.14 Written Consent of Stockholders Without a Meeting. Unless ------------------------------------------------- otherwise provided in the Certificate of Incorporation, any action required by the General Corporation Law to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. 7 ARTICLE 3 DIRECTORS --------- 3.1 General Powers. Except as otherwise provided in the Certificate -------------- of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board. The Board may adopt such rules and regulations, not inconsistent with the Certificate of Incorporation or the Bylaws or applicable laws, as it may deem proper for the conduct of its meetings and the management of the Corporation. In addition to the powers expressly conferred by the By-laws, the Board may exercise all powers and perform all acts which are not required, by the By-laws or the Certificate of Incorporation or by law, to be exercised and performed by the stockholders. 3.2 Number; Qualification; Term of Office. The Board shall consist ------------------------------------- of three to fifteen members. The total number of directors shall be fixed initially by the incorporator and may thereafter be changed from time to time by action of the stockholders or by action of the Board. Directors need not be stockholders. Each director shall hold office until his successor is elected and qualified or until his earlier death, resignation or removal. 3.3 Election. Directors shall, except as otherwise required by law -------- or by the Certificate of Incorporation, be elected by a plurality of the votes cast at a meeting of stockholders by the holders of shares entitled to vote in the election. 3.4 Newly Created Directorships and Vacancies. Unless otherwise ----------------------------------------- provided in the Certificate of Incorporation, newly created directorships resulting from an increase in the number of directors and vacancies occurring in the Board for any other reason, including the removal of directors without cause, may be filled by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director, or may be elected by a plurality of the votes cast by the holders of shares of capital stock entitled to vote in the election at a special meeting of stockholders called for that purpose. A director elected to fill a vacancy shall be elected to hold office until his successor is elected and qualified, or until his earlier death, resignation or removal. 3.5 Resignations. Any director may resign at any ------------ time by written notice to the Corporation. Such resignation shall take effect at the time therein specified, and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. 3.6 Removal of Directors. Subject to the provisions of Section -------------------- 141(k) of the General Corporation Law, any or all of the directors may be removed with or without cause, by the 8 holders of a majority of the shares then entitled to vote at an election of directors. 3.7 Compensation. Each director, in consideration of his service as ------------ such, shall be entitled to receive from the Corporation such amount per annum or such fees for attendance at directors' meetings, or both, as the Board may from time to time determine, together with reimbursement for the reasonable expenses incurred by him in connection with the performance of his duties. Each director who shall serve as a member of any committee of directors in consideration of his serving as such shall be entitled to such additional amount per annum or such fees for attendance at committee meetings, or both, as the Board may from time to time determine, together with reimbursement for the reasonable expenses incurred by him in the performance of his duties. Nothing contained in this section shall preclude any director from serving the Corporation or its subsidiaries in any other capacity and receiving proper compensation therefor. 3.8 Place and Time of Meetings of the Board. Meetings of the Board, --------------------------------------- regular or special, may be held at any place within or without the State of Delaware. The times and places for holding meetings of the Board may be fixed from time to time by resolution of the Board or (unless contrary to resolution of the Board) in the notice of the meeting. 3.9 Annual Meetings. On the day when and at the place where the --------------- annual meeting of stockholders for the election of directors is held, and as soon as practicable thereafter, the Board may hold its annual meeting, without notice of such meeting, for the purposes of organization, the election of officers and the transaction of other business. The annual meeting of the Board may be held at any other time and place specified in a notice given as provided in Section 3.11 of the By-laws for special meetings of the Board or in a waiver of notice thereof. 3.10 Regular Meetings. Regular meetings of the Board may be held at ---------------- such times and places as may be fixed from time to time by the Board. Unless otherwise required by the Board, regular meetings of the Board may be held without notice. If any day fixed for a regular meeting of the Board shall be a Saturday or Sunday or a legal holiday at the place where such meeting is to be held, then such meeting shall be held at the same hour at the same place on the first business day thereafter which is not a Saturday, Sunday or legal holiday. 3.11 Special Meetings. Special meetings of the Board shall be held ---------------- whenever called by the President or the Secretary or by any two or more directors. Notice of each special meeting of the Board shall, if mailed, be addressed to each director at the address designated by him for that purpose or, if none is designated, at his last known address at least two days before the date on which the meeting is to be held; or such notice shall 9 be sent to each director at such address by telegraph, cable or wireless, or be delivered to him personally, not later than the day before the date on which such meeting is to be held. Every such notice shall state the time and place of the meeting but need not state the purposes of the meeting, except to the extent required by law. If mailed, each notice shall be deemed given when deposited, with postage thereon prepaid, in a post office or official depository under the exclusive care and custody of the United States post office department. Such mailing shall be by first class mail. 3.12 Adjourned Meetings. A majority of the directors present at any ------------------ meeting of the Board, including an adjourned meeting, whether or not a quorum is present, may adjourn such meeting to another time and place. Notice of any adjourned meeting of the Board need not be given to any director whether or not present at the time of the adjournment. Any business may be transacted at any adjourned meeting that might have been transacted at the meeting as originally called. 3.13 Waiver of Notice. Whenever notice is required to be given to ---------------- any director or member of a committee of directors under any provision of the General Corporation Law or of the Certificate of Incorporation or By-laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice. 3.14 Organization. At each meeting of the Board, the Chairman of the ------------ Board, or in the absence of the Chairman, the President of the Corporation, or in the absence of the President, a chairman chosen by a majority of the directors present, shall preside. The Secretary shall act as secretary at each meeting of the Board. In case the Secretary shall be absent from any meeting of the Board, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary and Assistant Secretaries, the person presiding at the meeting may appoint any person to act as secretary of the meeting. 3.15 Quorum of Directors. One-third of the total number of directors ------------------- shall constitute a quorum for the transaction of business or of any specified item of business at any meeting of the Board. 3.16 Action by the Board. All corporate action taken by the Board or ------------------- any committee thereof shall be taken at a meeting 10 of the Board, or of such committee, as the case may be, except that any action required or permitted to be taken at any meeting of the Board, or any committee thereof, may be taken without a meeting if all members of the Board or Committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Members of the Board, or ny committee designated by the Board, may participate in a meeting of the Board, or of such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.16 shall constitute presence in person at such meeting. Except as otherwise provided by the Certificate of Incorporation or by law, the vote of a majority of the directors present (including those who participate by means of conference telephone or similar communications equipment) at the time of the vote, if a quorum is present at such time, shall be the act of the Board. ARTICLE 4 COMMITTEES OF THE BOARD ----------------------- The Board may, by re solution passed by a majority of the whole Board, designate one or more committees, each Committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the real of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to tine stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the By-laws of the Corporation; and, unless the resolution designating it expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. 11 ARTICLE 5 OFFICERS -------- 5.1 Officers. The Board shall elect a Chairman of the Board, a -------- President, a Secretary and a Treasurer, and may elect or appoint one or more Vice Presidents and such other officers as it may determine. The Board may designate one or more Vice Presidents as Executive Vice Presidents, and may use descriptive words or phrases to designate the standing, seniority or area of special competence of the Vice Presidents elected or appointed by it. Each officer shall hold his office until his successor is elected and qualified or until his earlier death, resignation or removal in the manner provided in Section 5.2 of the By-laws. Any two or more offices may be held by the same person. The Board may require any officer to give a bond or other security for the faithful performance of his duties, in such amount and with such sureties as the Board may determine. All officers as between themselves and the Corporation shall have such authority and perform such duties in the management of the Corporation as may be provided in the By-laws or as the Board may from time to time determine. 5.2 Removal of Officers. Any officer elected or appointed by the ------------------- Board may be removed by the Board with or without cause. The removal of an officer without cause shall be without prejudice to his contract rights, if any. The election or appointment of an officer shall not of itself create contract rights. 5.3 Resignations. Any officer may resign at any time by so notifying ------------ the Board or the President or the Secretary in writing. Such resignation shall take effect at the date of receipt of such notice or at such later time as is therein specified, and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. The resignation of an officer shall be without prejudice to the contract rights of the Corporation, if any. 5.4 Vacancies. A vacancy in any office because of death, --------- resignation, removal, disqualification or any other cause shall be filled for the unexpired portion of the term in the manner prescribed in the By-laws for the regular election or appointment to such office. 5.5 Compensation. Salaries or other compensation of the officers may ------------ be fixed from time to timely the Board. No officer shall be prevented from receiving a salary or other compensation by reason of the fact that he is also a director. 5.6 Chairman of the Board. The Chairman of the Board shall preside --------------------- at all meetings of the stockholders and of the Board of Directors. He shall have such other powers and perform such other duties as are provided in these By-laws and as may be 12 prescribed from time to time by the Board of Directors. In the absence or in the case of the death or disability of the President, the Chairman of the Board shall have and exercise all the powers of the President. 5.7 President. The President shall be the chief executive officer of --------- the Corporation and shall have general supervision over the business of the Corporation, subject, however, to the control of the Board and of any duly authorized committee of directors. The President shall, if present, preside at all meetings of the stockholders and at all meetings of the Board. He may, with the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer, sign certificates for shares of capital stock of the Corporation. He may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts and other instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by the By-laws to some other officer or agent of the Corporation, or shall be required by law otherwise to be signed or executed; and, in general, he shall perform all duties incident to the office of President and such other duties as from time to time may be assigned to him by the Board. 5.8 Vice-Presidents. At the request of the President, or, in his --------------- absence and in the absence of the Chairman of the Board, at the request of the Board, the Vice Presidents shall (in such order as may be designated by the Board or, in the absence of any such designation, in order of seniority based on age) perform all of the duties of the President and so acting shall have all the powers of and be subject to all restrictions upon the President. Any Vice President may also, with the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer, sign certificates for shares of capital stock of the Corporation; may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by the By-laws to some other officer or agent of the Corporation, or shall be required by law otherwise to be signed or executed; and shall perform such other duties as from time to time may be assigned to him by the Board or by the President. 5.9 Secretary. The Secretary, if present, shall act as secretary of --------- all meetings of the stockholders and of the Board, and shall keep the minutes thereof in the proper book or books to be provided for that purpose; he shall see that all notices required to be given by the Corporation are duly given and served; he may, with the President or a Vice President, sign certificates for shares of capital stock of the Corporation; he shall be custodian of the seal of the Corporation and may seal with the seal of the Corporation, or a facsimile thereof, all certificates for shares of capital stock of the Corporation and all documents the execution of which on behalf of the Corporation under its corporate seal is authorized in accordance with the 13 provisions of the By-laws; he shall have charge of the stock ledger and also of the other book, records and papers of the Corporation relating to its organization and management as a Corporation, and shall see that the reports, statements and other documents required by law are properly kept and filed; and shall, in general, perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board or by the President. 5.10 Treasurer. The Treasurer shall have charge and custody of, and --------- be responsible for, all funds, securities and notes of the Corporation; receive and give receipts for moneys due and payable to the Corporation from any sources whatsoever; deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositaries as shall be selected in accordance with these By-laws; against proper vouchers, cause such funds to be disbursed by checks or drafts on the authorized depositaries of the Corporation signed in such manner as shall be determined in accordance with any provisions of the By- laws, and be responsible for the accuracy of the amounts of all moneys so disbursed; regularly enter or cause to be entered in books to be kept by him or under his direction full and adequate account of all moneys received or paid by him for the account of the Corporation; have the right to require, from time to time, reports or statements giving such information as he may desire with respect to any and all financial transactions of the Corporation from the officers or agents transacting the same; render to the President or the Board, whenever the President or the Board, respectively, shall require him so to do, an account of the financial condition of the Corporation and of all his transactions as Treasurer; exhibit at all reasonable times his books of account and other records to any of the directors upon application at the office of the Corporation where such books and records are kept; and, in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board or by the President; and he may sign with the President or a Vice President certificates for shares of capital stock of the Corporation. 5.11 Assistant Secretaries and Assistant Treasurers. Assistant ---------------------------------------------- Secretaries and Assistant Treasurers shall perform such duties as shall be assigned to them by the Secretary or by the Treasurer, respectively, or by the Board or by the President. Assistant Secretaries and Assistant Treasurers may, with the President or a Vice President, sign certificates for shares of capital stock of the Corporation. ARTICLE 6 CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. ---------------------------------------------- 6.1 Execution of Contracts. The Board may authorize any officer, ---------------------- employee or agent, in the name and on behalf of the 14 Corporation, to enter into any contract or execute and satisfy any instrument, and any such authority may be general or confined to specific instances, or otherwise limited. 6.2 Loans. The President or any other officer, employee or agent ----- authorized by the By-Laws or by the Board may effect loans and advances at any time for the Corporation from any bank, trust company or other institutions or from any firm, corporation or individual and for such loans and advances may make, execute and deliver promissory notes bonds or other certificates or evidences of indebtedness of the Corporation, and, when authorized by the Board so to do, may pledge and hypothecate or transfer any securities or other property of the Corporation as security for any such loans or advances. Such authority conferred by the Board may be general or confined to specific instances or otherwise limited. 6.3 Checks, Drafts, Etc. All checks, drafts and other orders for the -------------------- payment of money out of the funds of the Corporation and all notes or other evidences of indebtedness of the Corporation shall be signed on behalf of the Corporation in such manner as shall from time to time be determined by resolution of the Board. 6.4 Deposits. The funds of the Corporation not otherwise employed -------- shall be deposited from time to time to the order of the Corporation in such banks, trust companies or other depositaries as the Board may select or as may be selected by an officer, employee or agent of the Corporation to whom such power may from time to time be delegated by the Board. ARTICLE 7 STOCK AND DIVIDENDS ------------------- 7.1 Certificates Representing Shares. The shares of capital stock of -------------------------------- the Corporation shall be represented by certificates in such form (consistent with the provisions of Section 158 of the General Corporation Law) as shall be approved by the Board. Such certificates shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and may be sealed with the seal of the Corporation or a facsimile thereof. The signatures of the officers upon a certificate may be facsimiles, if the certificate is countersigned by a transfer agent or registrar other than the Corporation itself or its employee. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon any certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may, unless otherwise ordered by the Board, be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. 15 7.2 Transfer of Shares. Transfers of shares of capital stock of the ------------------ Corporation shall be made only on the books of the Corporation by the holder thereof or by his duly authorized attorney appointed by a power of attorney duly executed and filed with the Secretary or a transfer agent of the Corporation, and on surrender of the certificate or certificates representing such shares of capital stock properly endorsed for transfer and upon payment of all necessary transfer taxes. Every certificate exchanged, returned or surrendered to the Corporation shall be marked "Cancelled," with the date of cancellation, by the Secretary or an Assistant Secretary or the transfer agent of the Corporation. A person in whose name shares of capital stock shall stand on the books of the Corporation shall be deemed the owner thereof to receive dividends, to vote as such owner and for all other purposes as respects the Corporation. No transfer of shares of capital stock shall be valid as against the Corporation, its stockholders and creditors for any purpose, except to render the transferee liable for the debts of the Corporation to the extent provided by law, until such transfer shall have been entered on the books of the Corporation by an entry showing from and to whom transferred. 7.3 Transfer and Registry Agents. The Corporation may from time to ---------------------------- time maintain one or more transfer offices or agents and registry offices or agents at such place or places as may be determined from time to time by the Board. 7.4 Lost, Destroyed, Stolen and Mutilated Certificates. The holder -------------------------------------------------- of any shares of capital stock of the Corporation shall immediately notify the Corporation of any loss, destruction, theft or mutilation of the certificate representing such shares, and the Corporation may issue a new certificate to replace the certificate alleged to have been lost, destroyed, stolen or mutilated. The Board may, in its discretion, as a condition to the issue of any such new certificate, require the owner of the lost, destroyed, stolen or mutilated certificate, or his legal representatives, to make proof satisfactory to the Board of such loss, destruction, theft or mutilation and to advertise such fact in such manner as the Board may require, and to give the Corporation and its transfer agents and registrars, or such of them as the Board may require, a bond in such form, in such sums and with such surety or sureties as the Board may direct, to indemnify the Corporation and its transfer agents and registrars against any claim that may be made against any of them on account of the continued existence of any such certificate so-alleged to have been lost, destroyed, stolen or mutilated and against any expense in connection with such claim. 7.5 Regulations. The Board may make such rules and regulations as it ----------- may deem expedient, not inconsistent with the By-laws or with the Certificate of Incorporation, concerning the issue, transfer and registration or certificates representing shares of its capital stock. 16 successor or transferee of the holder including an executor, administrator, trustee, guardian or other fiduciary entrusted with like responsibility for the person or estate of the holder. Unless noted conspicuously on the certificate representing such capital stock, a restriction, even though permitted by Section 202 of the General Corporation Law, shall be ineffective except against a person with actual knowledge of the restriction. A restriction on the transfer or registration of transfer of capital stock of the Corporation may be imposed either by the Certificate of Incorporation or by an agreement among any number of stockholders or among such stockholders and the Corporation. No restriction so imposed shall be binding with respect to capital stock issued prior to the adoption of the restriction unless the holders of such capital stock are parties to an agreement or voted in favor of the restriction. 7.6 Dividends, Surplus, Etc. Subject to the provisions of the ------------------------ Certificate of Incorporation and of law, the Board: 7.6.1 May declare and cay dividends or make other distributions on the outstanding shares of capital stock in such amounts and at such time or times as, in its discretion, the condition of the affairs of the Corporation shall render advisable; 7.6.2 May use and apply, in its discretion, any of the surplus of the Corporation in purchasing or acquiring any shares of capital stock of the Corporation, or purchase warrants therefor, in accordance with law, or any of its bonds, debentures, notes, scrip or other securities or evidences of indebtedness; 7.6.3 May set aside from time to time out of such surplus or net profits such sum or sums as, in its discretion, it may think proper, as a reserve fund to meet contingencies, or for equalizing dividends or for the purpose of maintaining or increasing the property or business of the Corporation, or for any purpose it may think conducive to the best interests of the Corporation. ARTICLE 8 INDEMNIFICATION --------------- 8.1 Indemnification of Officers and Directors. The Corporation shall ----------------------------------------- indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or an officer of the Corporation or is or was serving at the request of the Corporation as a director or 17 officer of another Corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding to the fullest extent and in the manner set forth in and permitted by the General Corporation Law, and any other applicable law, as from time to time in effect. Such right of indemnification shall not be deemed exclusive of any other rights to which such director or officer may be entitled apart from the foregoing provisions. The foregoing provisions of this Section 8.1 shall be deemed to be a contract between the Corporation and each director and officer who serves in such capacity at any time while this Article 8 and the relevant provisions of the General Corporation Law and other applicable law, if any, are in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts. 8.2 Indemnification of Other Persons. The Corporation may indemnify -------------------------------- any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that he is or was an employee or agent of the Corporation, or is or was serving at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding to the extent and in the manner set forth in and permitted by the General Corporation Law, and any other applicable law, as from time to time in effect. Such right of indemnification shall not be deemed exclusive of any other rights to which any such person may be entitled apart from the foregoing provisions. 8.3 Insurance. The Corporation shall have power to purchase and --------- maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of Sections 8.1 and 8.2 of the By-laws or under Section 145 of the General Corporation Law or any other provision of law. ARTICLE 9 18 BOOKS AND RECORDS ----------------- 9.1 Books and Records. The Corporation shall keep correct and ----------------- complete books and records of account and shall keep minutes of the proceedings of the stockholders, the Board and any committee of the Board. The Corporation shall keep at the office designated in the Certificate of Incorporation or at the office of the transfer agent or registrar of the Corporation, a record containing the names and addresses of all stockholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof. 9.2 Form of Records. Any records maintained by he Corporation in the --------------- regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs, or any other information storage device, provided that the records so kept can be converted into clearly legible written form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same. 9.3 Inspection-of Books and Records. Except as otherwise provided by ------------------------------- law, the Board shall determine from time to time whether, and, if allowed, when and under what conditions and regulations, the accounts, books, minutes and other records of the Corporation, or any of them, shall be open to the inspection of the stockholders. ARTICLE 10 SEAL ---- The Board may adopt a corporate seal which shall be in the form of a circle and shall bear the full name of the Corporation, the year of its incorporation and the word "Delaware." ARTICLE 11 FISCAL YEAR ----------- The fiscal year of the Corporation shall be determined, and may be changed, by resolution of the Board. ARTICLE 12 VOTING OF SHARES HELD --------------------- 19 Unless otherwise provided by resolution of the Board, the President or any Vice President may, from to time, appoint one or more attorneys or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as a stockholder or otherwise in any other corporation, any of whose shares or securities may be held by the Corporation, at meetings of the holders of stock or other securities of such other corporation, or to consent in writing to any action by any such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed on behalf of the Corporation and under its corporate seal, or otherwise, such written proxies, consents, waivers or other instruments as he may deem necessary or proper in the premises; or the President or any Vice President may attend any meeting of the holders of the stock or other securities of any such other corporation and thereat vote or exercise any or all other powers of the Corporation as the holder of such stock or other securities of such other corporation. ARTICLE 13 AMENDMENTS ---------- The By-laws may be altered, amended, supplemented or repealed, or new By-laws may be adopted, by vote of the holders of the shares entitled to vote in the election of directors. The By-laws may be altered, amended, supplemented or repealed, or new By-laws may be adopted, by the Board. Any By-laws adopted, altered, amended, or supplemented by the Board may be altered, amended, or supplemented or repealed by the stockholders entitled to vote thereon. EX-3.37 38 CERT OF INCORP OF EAST TENNESEE COAL COMPANY EXHIBIT 3.37 CERTIFICATE OF INCORPORATION OF EAST TENNESSEE COAL COMPANY 1. The name of the corporation is: EAST TENNESSEE COAL COMPANY 2. The address of its registered office in the State of Delaware is 100 West Tenth Street in the City of Wilmington, county of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number o shares of stock which the corporation shall have authority to issue is One Thousand (1,000) and the par value of each of such shares is One Dollar ($1.00) amounting to the aggregate to One Thousand Dollars ($1,000.00) 5. The board of directors is authorized to make, alter or repeal the by-laws of the corporation. Election of Directors need not be by ballot. 6. The name and mailing address of the incorporator is: W.J. Reif 100 West Tenth Street Wilmington, Delaware 19801 I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forging a corporation pursuant to the General Corporation Law of Delaware, to make this certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 24th day of February 1978. /s/ W.J. Reif ------------------------------- W.J. Reif CERTIFICATE OF AMENDMENT ------------------------ OF -- CERTIFICATE OF INCORPORATION ---------------------------- OF -- EAST TENNESSEE COAL COMPANY --------------------------- EAST TENNESSEE COAL COMPANY, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation and said corporation: RESOLVED, that the Certificate of Incorporation of Exploraciones y Minerales sierra Morena S.A., be amended by changing the Article First thereof so that, as amended, said Article shall be and read as follows: *1. The name of the corporation is GOLD FIELDS OPERATING CO. - ORTIZ". SECOND: That is lieu of a meeting and a vote of stockholders, the stockholders have give unanimous written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. 2 IN WITNESS WHEREOF, said EAST TENNESSEE COAL COMPANY has caused this certificate to be signed by Robert L. Burbanell, its President, and attested by Stephen E. Flechner, its Secretary, this 26th day of December, 1979. EAST TENNESSEE COAL COMPANY By /s/ Robert L. Burbanell ------------------------------- President ATTEST: By /s/ Stephen E. Flechner --------------------------- Secretary EX-3.38 39 BY-LAWS OF GOLD FIELDS OPERATING. CO. - ORTIZ EXHIBIT 3.38 BY-LAWS OF GOLD FIELDS OPERATING CO. - ORTIZ ARTICLE 1 DEFINITIONS As used in these By-laws, unless the context otherwise requires, the term: 1.1 "Assistant Secretary" means an Assistant Secretary of the Corporation. 1.2 "Assistant Treasurer" means an Assistant Treasurer of the Corporation. 1.3 "Board" means the Board of Directors of the Corporation. 1.4 "By-laws" means the initial by-laws of the Corporation, as amended from time to time. 1.5 "Certificate of Incorporation" means the initial certificate of incorporation of the Corporation, as amended, supplemented or restated from time to time. 1.6 "Corporation" means Gold Fields Operating Co. -Ortiz. 1.7 "Directors" means directors of the Corporation. 1.8 "General Corporation Law" means the General Corporation Law of the State of Delaware, as amended from time to time. 2 1.9 "Office of the Corporation" means the executive office of the Corporation, anything in Section 131 of the General Corporation Law to the contrary notwithstanding. 1.10 "President" means the President of the Corporation. 1.11 "Secretary" means the Secretary of the Corporation. 1.12 "Stockholders" means stockholders of the Corporation. 1.13 "Total number of directors" means the total number of directors determined in accordance with Section 141(b) of the General Corporation Law and Section 2 of Article 3 of the By-laws. 1.14 "Treasurer" means the Treasurer of the Corporation. 1.15 "Vice-President" means a Vice President of the Corporation. 1.16 "Whole Board" means the total number of directors of the Corporation. ARTICLE 2 MEETINGS OF STOCKHOLDERS Section 1. Annual Meeting. The annual meeting of the stockholders of GOLD -------------- FIELDS OPERATING CO. - ORTIZ (hereinafter to be called the "Corporation") shall be held at 11:00 a.m. on the first Tuesday in October. At the annual meeting, the stockholders shall elect by a plurality vote a board of directors 3 (hereinafter referred to as the "Board"), and transact such other business as may properly be brought before the meeting. If the annual meeting shall not be held on the day hereinabove provided for, the Board shall cause the meeting to be held as soon thereafter as convenient. Section 2. Special Meetings. Special meetings of the stockholders (other ---------------- than a special meeting for the election of directors), unless otherwise prescribed by statute, may be called for any purpose or purposes at any time by the Board or by the President, or by the Secretary. At any special meeting of stockholders only such business may be transacted as is related to the purpose or purposes of such meeting set forth in the notice thereof given pursuant to Section 4 of this Article or in any waiver of notice thereof given pursuant to Section 4 of this Article. Section 3. Fixing Record Date. For the purpose of determining the ------------------ stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or for the purpose of determining stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix, in advance, a date as the record date for any such determination of stockholders. Such date shall not be more than sixty nor less 4 than ten days before the date of such meeting, nor more than sixty days prior to any action. If no such record date is fixed: 3.1 The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; 3.2 The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting shall be the day on which the first written consent is expressed; 3.3 The record date for determining stockholders for any purpose other than those specified in Sections 3.1 and 3.2 shall be at the close of business on the day on which the Board adopts the resolution relating thereto. When a determination of stockholders entitled to notice of or to vote at any meeting of stockholders has been made as provided in this Section 3 such determination shall apply to any adjournment thereof, unless the Board fixes a new record date for the adjourned meeting. Section 4. Notice of Meetings. Written notice of the place, date and time ------------------ of the holding of each annual and special meeting of the stockholders and, in the case of a special meeting, the purpose or purposes thereof, shall be given personally or by mail in a postage pre-paid envelope to each stockholder entitled to vote at such meeting, not less than ten 5 nor more than sixty days before the date of such meeting, and, if mailed, it shall be directed to such stockholder at his address as it appears on the records of the Corporation, unless he shall have filed with the Secretary of the Corporation a written request that notices to him be mailed to some other address, in which case it shall be directed to him at such other address. If mailed, such notice shall be deemed to be given when deposited in the United States mail. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the Corporation that the notice required by this section has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy and shall not, at the beginning of such meeting, object to the transaction of any business because the meeting is not lawfully called or convened, or who shall, either before or after the meeting, submit a signed waiver of notice, in person or by proxy. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. Unless the Board shall fix after the adjournment a new record date for an adjourned meeting, notice of such adjourned meeting need not be given if the time and place to which the meeting shall be adjourned were announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for 6 more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 5. Place of Meetings. Every meeting of the stockholders shall be ----------------- held at the office of the Corporation or at such other place, within or without the State of Delaware, as the Board or the officer calling the same shall specify in the notice of such meeting, or in a duly executed waiver of notice thereof. Section 6. Quorum. At all meetings of the stockholders the holders of one ------ third of the shares of stock of the Corporation issued and outstanding and entitled to vote shall be present in person or by proxy to constitute a quorum for the transaction of any business. When a quorum is once present to organize a meeting of stockholders, it is not broken by the subsequent withdrawal of any stockholder. In the absence of a quorum, the holders of a majority of the shares of stock present in person or by proxy and entitled to vote, or if no stockholder entitled to vote is present, then any officer of the Corporation may adjourn the meeting from time to time. At any such adjourned meeting at which a quorum may be present any business may be transacted which might have been transacted at the meeting as originally called. Section 7. Organization. At each meeting of the stockholders, the ------------ Chairman of the Board, or in his absence or inability to act, the President, or in the absence or inability to act of the Chairman of the Board and the President, a Vice- 7 President, and in case more than one Vice-President shall be present, that Vice- President designated by the Board (or in the absence of any such designation, the most senior Vice-President, based on age, present), or in the absence of all of the foregoing, any person chosen by a majority of those stockholders present, shall act as chairman of the meeting. The Secretary, or, in his absence or inability to act, the Assistant Secretary or any person appointed by the chairman of the meeting, shall act as secretary of the meeting and keep the minutes thereof. Section 8. Order of Business. The order of business at all meetings of ----------------- the stockholders shall be as determined by the chairman of the meeting, but the order of business to be followed at any meeting at which a quorum is present may be changed by a majority of votes cast at such meeting by the holders of shares of capital stock present in person or represented by proxy and entitled to vote at the meeting. Section 9. Voting. Except as otherwise provided by statute or by the ------ Certificate of Incorporation, each holder of record of shares of stock of the Corporation having voting power shall be entitled at each meeting of the stockholders to one vote for every share of such stock standing in his name on the record of stockholders of the corporation determined in accordance with Section 3 of this Article. If the Certificate of Incorporation provides for more or less than one vote for any share, on any matter, every reference in the By-laws or the General Corporation Law to a majority or other proportion of stock shall refer to such majority or other proportion of the votes of such stock. 8 The provisions of Sections 212 and 217 of the General Corporation Law shall apply in determining whether any shares of capital stock may be voted, and the persons, if any, entitled to vote such shares; but the Corporation shall be protected in treating the persons in whose names shares of capital stock stand on the record of stockholders as owners thereof for all purposes. Each stockholder entitled to vote at any meeting of stockholders may authorize another person or persons to act for him by a proxy signed by such stockholder or his attorney-in-fact. Any such proxy shall be delivered to the secretary of such meeting at or prior to the time designated in the order of business for so delivering such proxies. No proxy shall be valid after the expiration of three years from the date thereof, unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the stockholder executing it, except in those cases where an irrevocable proxy is permitted by law. Except as otherwise provided by statute, these By-laws, or the Certificate of Incorporation, any corporate action to be taken by vote of the stockholders shall be authorized by a majority of the total votes, cast at a meeting of stockholders by the holders of shares present in person or represented by proxy and entitled to vote on such action. All elections of directors shall be by written ballot unless otherwise provided in the Certificate of Incorporation. In voting on any other question on which a vote by ballot is required by law or is demanded by any stockholder entitled to vote, the voting shall be by ballot. On a vote by written ballot, each ballot shall be signed by the stockholder 9 voting, or by his proxy, if there be such proxy, and shall state the number of shares voted. On all other questions, the voting may be viva voce. Every ---- ---- stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy. The validity and enforceability of any proxy shall be determined in accordance with Section 212 of the General Corporation Law. Section 10. List of Stockholders. The Secretary shall prepare and make, -------------------- or cause to be prepared and made, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meetings, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 11. Inspectors. The Board may, in advance of any meeting of ---------- stockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof. If the inspectors shall 10 not be so appointed, the chairman of the meeting may and on the request of any stockholder entitled to vote thereat shall, appoint one or more inspectors. In case any person appointed fails to appear or act, the vacancy may be filled by appointment made by the Board in advance of the meeting or at the meeting by the chairman of the meeting. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or votes with fairness to all stockholders. On request of the chairman of the meeting or any stockholder entitled to vote thereat, the inspectors shall make a report in writing of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. Any report or certificate made by the inspector or inspectors shall be prima facie evidence of the facts stated and of the vote as certified by him or them. No director or candidate for the office of director shall act as inspector of an election of directors. Inspectors need not be stockholders. 11 Section 12. Consent of Stockholders in Lieu of Meeting. Whenever the vote ------------------------------------------ of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, the meeting and vote of stockholders can be dispensed with without prior notice and without a vote (a) if all of the stockholders who would have been entitled to vote upon the action if such meeting were held shall consent in writing to such corporate action being taken, setting forth the action so taken; or (b) unless the Certificate of Incorporation provides otherwise, with the written consent of the holders of not less than the minimum percentage of the total vote required by statute for the proposed corporate action, and provided that prompt notice must be given to all stockholders who have not so consented in writing of the taking of such corporate action without a meeting and by less than unanimous written consent of stockholders. ARTICLE 3 BOARD OF DIRECTORS Section 1. General Powers. The business and affair of the Corporation -------------- shall be managed by or under the direction of the Board. The Board may adopt such rules and regulations, not inconsistent with the Certificate of Incorporation or the By-laws or applicable laws, as it may deem proper for the conduct of its meetings and the management of the Corporation. The Board may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute or the 12 Certificate of Incorporation directed or required to be exercised or done by the stockholders. Section 2. Number, Qualifications, Election and Term of Office. The Board --------------------------------------------------- shall consist of three to fifteen members. The total number of directors shall be fixed initially by the incorporator and may thereafter be changed from time to time by action of the stockholders or by action of the Board. All the directors shall be of full age. Directors need not be stockholders. Except as otherwise provided by statute or the Certificate of Incorporation or these By- laws, the directors shall be elected by plurality vote at the annual meeting of the stockholders. Each director shall hold office until the next annual meeting of the stockholders and until his successor shall have been duly elected and qualified, or until his death, or until he shall have resigned, or have been removed, as hereinafter provided in these By-laws, or as otherwise provided by statute or the Certificate of Incorporation. Section 3. Place of Meetings. Meetings of the Board, regular or special, ----------------- may be held at such place and at such time, within or without the State of Delaware, as the Board may from time to time determine or as shall be specified in the notice or waiver of notice of such meeting. Section 4. Annual Meeting. The Board shall meet for the purpose of -------------- organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of the stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of 13 such meeting need not be given. Such meeting may be held at any other time or place (within or without the State of Delaware) which shall be specified in a notice thereof given as hereinafter provided in Section 7 of this Article II. Section 5. Regular Meetings. Regular meetings of the Board shall be held ---------------- at such time and place as the Board from time to time determines. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day. Notice of regular meetings of the Board need not be given except as otherwise required by statute or these By-laws. Section 6. Special Meetings. Special meetings of the Board shall be held ---------------- whenever called by two or more directors of the Corporation or by the Chairman of the Board or the President or the Secretary. Section 7. Notice of Meetings. Notice of each special meeting of the ------------------ Board (and of each regular meeting for which notice shall be required) shall be given by the Secretary as hereinafter provided in this Section 7, in which notice shall be stated the time and place (within or without the State of Delaware) of the meeting. Notice of each such meeting shall be delivered to each director, either personally or by telephone, telegraph, cable or wireless, at least twenty-four hours before the time at which such meeting is to be held or by first-class mail, postage prepaid, addressed to him at his residence, or usual place of business, at least two days before the day on 14 which such meeting is to be held. If mailed, each notice shall be deemed given when deposited, with postage thereon prepaid, in a post office or official depository under the exclusive care and custody of the United States post office department. Notice of any such meeting need not be given to any director who shall, either before or after the meeting, submit a signed waiver of notice or who shall attend such meeting without protesting, prior to or at its commencement, the lack of notice to him. Except as otherwise specifically required by these By-laws, a notice or waiver of notice of any regular or special meeting need not state the purposes of such meeting. Section 8. Quorum and Manner of Acting. One-third of the directors shall --------------------------- be present in person or by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, at any meeting of the Board in order to constitute a quorum for the transaction of business at such meeting, and, except as otherwise expressly required by statute or the Certificate of Incorporation, the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board. In the absence of a quorum at any meeting of the Board, a majority of the directors present thereat, or if no director be present, the Secretary, may adjourn such meeting to another time and place. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. Except as provided in Article 3 of these By-laws, the directors shall act 15 only as a Board and the individual directors shall have no power as such. Section 9. Organization. At each meeting of the Board, the Chairman of ------------ the Board (or, in his absence or inability to act, the President, or, in his absence or inability to act another director chosen by a majority of the directors present) shall act as Chairman of the meeting and preside thereat. The Secretary (or, in his absence or inability to act, the Assistant Secretary, or in his absence or inability to act any person appointed by the Chairman) shall act as secretary of the meeting and keep the minutes thereof. Section 10. Resignations. Any director of the Corporation may resign at ------------ any time by giving written notice of his resignation to the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt: and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 11. Vacancies. Vacancies and newly created directorships --------- resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, or may be elected by a plurality of the votes cast by the holders of shares of capital stock entitled to vote in the election at a special meeting of stockholders called for that purpose and the directors so chosen shall hold office until the 16 next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. When one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this Section in the filling of other vacancies. Section 12. Removal of Directors. Except as otherwise provided in the -------------------- Certificate of Incorporation or in these By-laws, any director may be removed, either with or without cause, at any time, by the affirmative vote of the holders of record of a majority of the issued and outstanding stock entitled to vote for the election of directors of the Corporation given at a special meeting of the stockholders called and held for that purpose; and 17 the vacancy in the board caused by such removal may be filled by such stockholders at such meeting, or, if the stockholders shall fail to fill such vacancy, as in these By-laws provided. Section 13. Compensation. The Board shall have authority to fix the ------------ compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity, provided, no such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Section 14. Action Without Meeting. Any action required or permitted to ---------------------- be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 15. Telephonic Participation. One or more members of the Board ------------------------ may participate in a meeting by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at the meeting. ARTICLE 4 EXECUTIVE AND OTHER COMMITTEES Section 1. Executive and Other Committees. The Board may, by resolution ------------------------------ passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more 18 of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution, and except as otherwise provided by statute, shall have and may exercise the powers of the Board in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the By-laws of the Corporation; and, unless the resolution designating it expressly so provides, no committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Each committee shall keep written minutes of its proceedings and shall report such minutes to the Board when required. All such proceedings shall be subject to revision or alteration by the Board; 19 provided, however, that third parties shall not be prejudiced by such revision or alteration. Section 2. General. A majority of any committee may determine its action ------- and fix the time and place of its meeting, unless the Board shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Article 3, Section 7. The Board shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. ARTICLE 5 OFFICERS Section 1. Number and Qualifications. The officers of the corporation ------------------------- shall include a President, a Secretary, a Treasurer, and/or Controller, and, if deemed necessary, expedient, or desirable by the Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board, one or more Vice-Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers with such titles as the resolution of the Board of Directors choosing them shall designate. Any two or more offices may be held by the same person. Such officers shall be elected from time to time by the Board, each to hold office until the meeting of the Board following the next annual meeting of the stockholders, or until his successor shall have been duly elected and shall have qualified, or until his death, or until he shall have resigned, or have been removed, as hereinafter provided in these By-laws. 20 Section 2. Resignations. Any officer of the Corporation may resign at any ------------ time by giving written notice of his resignation to the Board, the President or the Secretary. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. The resignation of an officer shall be without prejudice to the contract rights of the corporation, if any. Section 3. Removal. Any officer of the Corporation may be removed, either ------- with or without cause at any time, by the vote of the majority of the entire Board at any meeting of the Board. Such removal shall be without prejudice to the contractual rights, if any, of the person so removed. Section 4. Vacancies. A vacancy in any office, whether arising from --------- death, resignation, removal, disqualification or any other cause, shall be filled for the unexpired portion of the term of the office which shall be vacant, in the manner prescribed in these By-laws for the regular election or appointment to such office. Section 5. The Chairman of the Board. The Chairman of the Board shall, if ------------------------- present, preside at each meeting of the stockholders and of the Board. He shall perform all duties incident to the office of the Chairman of the Board and such other duties as may from time to time be assigned to him by the Board. In the absence or in the case of the death or disability 21 of the President, the Chairman of the Board shall have and exercise all the powers of the President. Section 6. The President. The President shall be the chief executive ------------- officer of the Corporation and shall have general and active supervision and direction over the business and affairs of the Corporation and over its several officers subject, however to the control of the Board and of any duly authorized committee of directors. At the request of the Chairman of the Board, or in the case of his absence or inability to act, the President shall perform the duties of the Chairman of the Board and when so acting shall have all the powers of, and be subject to all the restrictions upon, the Chairman of the Board. The President shall, if present, preside at all meetings of the stockholders and at all meetings of the Board. He may, with the Secretary or the Treasurer, sign certificates for shares of capital stock of the Corporation. He may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts and other instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by the By laws to some other officer or agent of the Corporation, or shall be required by law otherwise to be signed or executed. He shall perform all duties incident to the office of President and such other duties as from time to time may be assigned to him by the Board or these By-laws. Section 7. Vice-Presidents. At the request of the President, or, in his --------------- absence and in the absence of the Chairman of the Board, at the request of the Board, the Vice-Presidents 22 shall (in such order as may be designated by the Board or, in the absence of any such designation, in order of seniority based on age) perform all of the duties of the President and so acting shall have all the powers of and be subject to all restrictions upon the President. Any Vice-President may also, with the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer, sign certificates for shares of capital stock of the Corporation; may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by the By-laws to some other officer or agent of the Corporation, or shall be required by law otherwise to be signed or executed; and shall perform such other duties as from time to time may be assigned to him by the Board or by the President. Section 8. The Treasurer. The Treasurer shall ------------- (a) have charge and custody of, and be responsible for, all the funds, securities, and notes of the Corporation; (b) keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and have control of all books of account of the Corporation; (c) cause all moneys and other valuables to be deposited to the credit of the Corporation in such depositaries as may be designated by the Board; 23 (d) receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever; (e) disburse the funds of the Corporation and supervise the investment of its funds as ordered or authorized by the Board, taking proper vouchers therefor; (f) render to the President or the Board, whenever the President or the Board may require, an account of the financial condition of the Corporation and of all his transactions as Treasurer; (g) sign with the President or a Vice-President certificates for shares of capital stock of the Corporation; and (h) in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board, the Chairman of the Board, or the President. A Controller and Assistant Controller may perform the function of Treasurer and Assistant Treasurer. Section 9. The Secretary. The Secretary shall ------------- (a) act as Secretary of all meetings of the stockholders and of the Board; (b) keep or cause to be kept in one or more books provided for the purpose, the minutes of all meetings of the Board, the committees of the Board and the stockholders; 24 (c) see that all notices are duly given in accordance with the provisions of these By-laws and as required by law; (d) with the President or a Vice President, sign certificates for shares of capital stock of the Corporation; (e) be custodian of the records and the seal of the Corporation and affix and attest the seal to all stock certificates of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal; (f) see that the books, reports, statements, certificates, stock ledgers and other documents and records required by law to be kept and filed are properly kept and filed; and (g) in general, perform all the duties incident to the office of Secretary and such duties as from time to time may be assigned to him by the Board, the Chairman of the Board or the President. Section 10. Assistant Secretaries and Assistant Treasurers. Assistant ---------------------------------------------- Secretaries and Assistant Treasurers shall perform such duties as shall be assigned to them by the Secretary or by the Treasurer, respectively, or by the Board or by the President. Assistant Secretaries and Assistant Treasurers may, with the 25 President or a Vice-President, sign certificates for shares of capital stock of the Corporation. Section 11. Officers' Bonds or other Security. If required by the Board, --------------------------------- any officer of the Corporation shall give a bond or other security for the faithful performance of his duties, in such amount and with such surety or sureties as the Board may require. Section 12. Compensation. The compensation of the officers of the ------------ Corporation for their services as such officers shall be fixed from time to time by the Board. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he is also a director of the Corporation, but any such officer who shall also be a director shall not have any vote in the determination of the amount of compensation paid to him. ARTICLE 6 INDEMNIFICATION Section 1. Agreement to Indemnify. The Corporation shall indemnify any ---------------------- person (including his heirs, executors and administrators) who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint 26 venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 2. Agreement in Derivative Action. The Corporation shall ------------------------------ indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably 27 believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Section 3. Successful Defense. To the extent that a director, officer, ------------------ employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article 6, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Section 4. Determination. Any indemnification under Sections 1 and 2 of ------------- this Article 6 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 1 and 2 of this Article 6. Such determination shall be made (a) by the Board by a majority vote of a quorum consisting of directors who were not parties to such 28 action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable such a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (c) by the stockholders. Section 5. Advances. Expenses incurred in defending a civil or criminal -------- action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation. Section 6. Non-Exclusivity. The indemnification provided by this Article --------------- 6 shall not be deemed exclusive of any other rights to which those may be entitled under any By-law, agreement, vote of stockholders or disinterested directors or otherwise both as to action in his official capacity and as to action in another capacity while holding such office and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 7. Insurance. The Corporation shall have the power to purchase --------- and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such 29 capacity, or arising out of his statues as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article 6. Section 8. Reference. For purposes of this Article 6 references to the --------- "Corporation" include all constituent corporations absorbed in a consolidation or merger as well as the resulting or surviving corporation so that any person who is or was a director, officer, employee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article 6 with respect to the resulting or surviving corporation as he would if he had served the resulting or surviving corporation in the same capacity. ARTICLE 7 CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. Section 1. Execution of Contracts. Except as otherwise required by ---------------------- statute, the Certificate of Incorporation or these By-law, any contracts or other instruments may be executed and delivered in the name and on behalf of the Corporation by such officer or officers (including any assistant officer) of the Corporation as the Board may from time to time direct. Such authority may be general or confined to specific instances as the Board may determine. Unless authorized by the Board or expressly permitted by these By-laws, an officer or agent or employee shall 30 not have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it pecuniarily liable for any purpose or to any amount. Section 2. Loans. The President or any other officer, employee or agent ----- authorized by these By-laws or by the Board may effect loans and advances at any time for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds or other certificates or evidences of indebtedness of the Corporation, but no officer or officers shall mortgage, pledge, hypothecate or transfer any securities or other property of the Corporation, except when authorized by the Board. Such authority conferred by the Board may be general or confined to specific instances or otherwise limited. Section 3. Checks, Drafts, etc. All checks, drafts, bills of exchange or ------------------- other orders for the payment of money out of the funds of the Corporation, and all notes or other evidences of indebtedness of the Corporation, shall be signed in the name and on behalf of the Corporation by such persons and in such manner as shall from time to time be authorized by the Board. Section 4. Deposits. All funds of the Corporation not otherwise employed -------- shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may from time to time designate or as may be designated by any officer or officers of the Corporation to whom such power of designation may from time to time be 31 delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Corporation, checks, drafts and other orders for the payment of money which are payable to the order of the Corporation may be endorsed, assigned and delivered by any officer or agent of the Corporation, or in such other manner as the Board may determine by resolution. Section 5. General and Special Bank Accounts. The Board may from time to --------------------------------- time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may designate or as may be designated by any officer or officers of the Corporation to whom such power of designation may from time to time be delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these By-laws, as it may deem expedient. Section 6. Proxies in Respect of Securities of Other Corporations. Unless ------------------------------------------------------ otherwise provided by resolution adopted by the Board of Directors, the President or a Vice-President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the Corporation as such 32 holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises. ARTICLE 8 SHARES, ETC. Section 1. Stock Certificates. Each holder of stock of the Corporation ------------------ shall be entitled to have a certificate, in such form as shall be approved by the Board, certifying the number of shares of stock of the Corporation owned by him. The certificates representing shares of stock shall be signed in the name of the Corporation by the President or a Vice-President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with the seal of the Corporation (which seal may be a facsimile, engraved or printed); provided, however, that where any such certificate is countersigned by a transfer agent other than the Corporation or one of its employees, or is registered by a registrar other than the Corporation or one of its employees, the signature of the officers of the Corporation upon such certificates may be a facsimile, engraved or printed. In case any officer who shall have signed or whose facsimile signature has been placed upon such certificates shall have ceased to be such officer before such certificates shall be issued, they may nevertheless be 33 issued by the Corporation with the same effect as if such officer were still in office at the date of their issue. Section 2. Books of Account and Record of Stockholders. The books and ------------------------------------------- records of the Corporation may be kept at such places within or without the State of Delaware, as the Board of Directors may from time to time determine. The stock record books and the blank stock certificate books shall be kept by the Secretary or by any other officer or agent designated by the Board of Directors. Section 3. Transfer of Shares. Transfers of shares of stock of the ------------------ Corporation shall be made on the stock records of the Corporation only upon authorization by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or with a transfer agent or transfer clerk, and on surrender of the certificate or certificates for such shares properly endorsed or accompanied by a duly executed stock transfer power and the payment of all taxes thereon. Every certificate exchanged, returned or surrendered to the Corporation shall be marked "Cancelled" with the date of cancellation, by the Secretary or an Assistant Secretary or the transfer agent of the Corporation. Except as otherwise provided by law, the Corporation shall be entitled to recognize the exclusive right of a person in whose name any share or shares stand on the record of stockholders as the owner of such share or shares for all purposes, including without limitation, the right to receive dividends or other distributions and to vote as such owner, and the Corporation may 34 hold any such stockholder of record liable for calls and assessments and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in any such share or shares on the part of any other person whether or not it shall have express or other notice thereof. Whenever any transfers of shares shall be made for collateral security and not absolutely, and both the transferor and transferee request the Corporation to do so, such fact shall be stated in the entry of the transfer. Section 4. Regulations. The Board may make such additional rules and ----------- regulations, not inconsistent with these By-laws, as it may deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer agents or one or more transfer clerks and one or more registrars and may require all certificates for shares of stock to bear the signature or signatures of any of them. Section 5. Lost, Destroyed, Stolen or Mutilated Certificates. The holder ------------------------------------------------- of any certificate representing shares of stock of the Corporation shall immediately notify the Corporation of any loss, destruction, theft or mutilation of such certificate, and the Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it which the owner thereof shall allege to have been lost, stolen, or destroyed or which shall have been mutilated, and the Board may, in its discretion, require such owner or his legal representatives to make proof satisfactory to the Board of such 35 loss, destruction, theft or mutilation and to advertise such fact in such manner as the Board may require, and to give to the Corporation a bond in such sum, limited or unlimited, and in such form and with such surety or sureties as the Board in its absolute discretion shall determine, to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate, or the issuance of a new certificate. Anything herein to the contrary notwithstanding, the Board, in its absolute discretion, may refuse to issue any such new certificate, except pursuant to legal proceedings under the laws of the State of Delaware. Section 6. Restriction on Transfer of Stock. A written restriction on the -------------------------------- transfer or registration of transfer of capital stock of the Corporation, if permitted by Section 202 of the General Corporation Law and noted conspicuously on the certificate representing such capital stock, may be enforced against the holder of the restricted capital stock or any successor or transferee of the holder including an executor, administrator, trustee, guardian or other fiduciary entrusted with like responsibility for the person or estate of the holder. Unless noted conspicuously on the certificate representing such capital stock, a restriction, even though permitted by Section 202 of the General Corporation Law, shall be ineffective except against a person with actual knowledge of the restriction. A restriction on the transfer or registration of transfer of capital stock of the Corporation may be imposed either by the Certificate of Incorporation or by an agreement among any number 36 of stockholders or among such stockholders and the Corporation. No restriction so imposed shall be binding with respect to capital stock issued prior to the adoption of the restriction unless the holders of such capital stock are parties to an agreement or voted in favor of the restriction. Section 7. Dividends, Surplus, Etc. Subject to the provisions of the ----------------------- Certificate of Incorporation and of law, the Board. 7.1 May declare and pay dividends or make other distributions on the outstanding shares of capital stock in such amounts and at such time or times as, in its discretion, the condition of the affairs of the Corporation shall render advisable. 7.2 May use and apply, in its discretion, any of the surplus of the Corporation in purchasing or acquiring any shares of capital stock of the Corporation, or purchase warrants thereof, in accordance with law, or any of its bonds, debentures, notes, scrip or other securities or evidences of indebtedness; 7.3 May set aside from time to time out of such surplus or net profits such sum or sums as, in its discretion, it may think proper, as a reserve fund to meet contingencies, or for equalizing dividends or for the purpose of maintaining or increasing the property or business of the Corporation, or for any purpose it 37 may think conducive to the best interests of the Corporation. ARTICLE 9 BOOKS AND RECORDS Section 1. Books and Records. The Corporation shall keep correct and ----------------- complete books and records of account and shall keep minutes of the proceedings of the stockholders, the Board and any committee of the Board. The Corporation shall keep at the office designated in the Certificate of Incorporation or at the office of the transfer agent or registrar of the Corporation, a record containing the names and addresses of all stockholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof. Section 2. Form of Records. Any records maintained by the Corporation in --------------- the regular course of its business, including its stock ledger, books of accounts, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographys, or any other information storage device, provided that the records so kept can be converted into clearly legible written form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same. Section 3. Inspection of Books and Records. Except as otherwise provided ------------------------------- by law, the Board shall determine from time to time whether, and, if allowed, when and under what conditions and regulations, the accounts, books, minutes and other records of 38 the Corporation, or any of them, shall be open to the inspection of the stockholders. ARTICLE 10 FISCAL YEAR The fiscal year of the Corporation shall be determined by the Board of Directors. ARTICLE 11 SEAL The Board shall provide a corporate seal, which shall be in the form of a circle and bear the name of the Corporation and the words and figures "Corporate Seal-Delaware" and the year of incorporation. ARTICLE 12 AMENDMENTS These By-laws may be altered, amended or repealed or new By-laws may be adopted by the stockholders or by the Board of Directors, when such power is conferred upon the Board of Directors by the Certificate of Incorporation at any regular meeting of the stockholders or of the Board of Directors or any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-laws be contained on the notice of such special meeting. EX-3.39 40 ARTICLES OF INCORP OF GRAND EAGLE MINING, INC. EXHIBIT 3.39 ARTICLES OF INCORPORATION OF GRAND EAGLE MINING, INC. 1. Corporate Name. The Corporation's name shall be Grand Eagle -------------- Mining, Inc. 2. Authorized Shares. The Corporation shall have authority to ----------------- issue 1,000 shares. 3. Registered Office and Agent. The street address of the --------------------------- Corporation's initial registered office shall be 3200 Capital Holding Center, Louisville, Kentucky 40202-3363. The name of the Corporation's initial registered agent at that office shall be BTH Inc. 4. Principal Office. The mailing address of the Corporation's ---------------- principal office shall be 2506 Mount Moriah Road, Summer Shade, Kentucky, 42166. 5. Purpose. The Corporation's purpose shall be to engage in any ------- lawful business. 6. Incorporator. The name and mailing address of the incorporator ------------ are William T. Fields, 3200 Capital Holding Center, Louisville, Kentucky, 40202- 3363. /s/ William T. Fields ------------------------ William T. Fields Date: November 17, 1993 ----------------------- EX-3.40 41 BY-LAWS OF GRAND EAGLE MINING, INC. EXHIBIT 3.40 BYLAWS OF GRAND EAGLE MINING, INC. I certify that the following Bylaws, consisting of four pages, each of which I have initialed for identification, are the Bylaws adopted by the Board of Directors of Grand Eagle Mining, Inc. (the "Corporation"), by a Written Action by Director dated November 22, 1993. /s/ Richard W. Ward --------------------------- Richard W. Ward, Secretary 1 BYLAWS OF GRAND EAGLE MINING, INC. 1. Meeting of Shareholders ----------------------- 1.1 The annual meeting of the shareholders of the Corporation shall be held at 10:00 a.m. on the first Monday in February of each year if not a legal holiday and if a legal holiday, then on the next day not a Saturday, Sunday or legal holiday. 1.2 The annual meeting of the shareholders shall be held at a place designated by the Board of Directors or, if the Board of Directors does not designate a place, then at a place designated by the Secretary or, if the Secretary does not designate a place, at the Companies' registered office. 1.3 Special meetings of the shareholders shall be held at a place designated by the Board of Directors if the special meeting is called by the Board of Directors. If the special meeting is not called by the Board of Directors the meeting shall be held at the Companies' registered office. 2. Board of Directors ------------------ 2.1 The exact number of directors may be fixed, increased or decreased from time to time by a resolution adopted by the vote of the shareholders who (a) are present in person or by proxy at a meeting held to elect directors and (b) have a majority of the voting power of the shares represented at such meeting and entitled to a vote in the election. 2 2.2 Meetings of the Board of Directors may be called by the President or by any director. 2.3 Unless waived as permitted by the Kentucky Business Corporation Act, notice of the time, place and purpose of each meeting of the directors shall be either (a) telephoned or personally delivered to each director at least forty-eight hours before the time of the meeting or (b) mailed to each director at his last known address at least ninety-six hours before the time of the meeting. 3. Officers -------- 3.1 The Corporation may have one or more Vice Presidents and shall have a President, a Secretary and a Treasurer, all of whom shall be elected by the Board of Directors. The Corporation may also have such assistant officers as the Board of Directors may deem necessary, all of whom shall be elected by the Board of Directors or chosen by an officer or officers designated by it. 3.2 The President shall have: (a) General charge and authority over the business of the Corporation subject to the direction of the Board of Directors, (b) Authority to preside at all meetings of the shareholders and of the Board of Directors, (c) Authority acting alone, except as otherwise directed by the Board of Directors, to sign and deliver any document on behalf of the Corporation, including without limitation, any deed conveying title to any real estate owned by 3 the Corporation and any contract for the sale or other disposition of any such real estate, and, (d) Such other powers and duties as the Board of Directors may assign. 3.3 The Vice President, or if there be more than one Vice President, the Vice Presidents in the order of their seniority by designation (or if not designated in the order of their seniority of election), shall perform the duties of the President in his absence. The Vice Presidents shall have such other powers and duties as the Board of Directors or the President may assign to them. 3.4 The Secretary shall: (a) Issue notices of all meetings for which notice is required to be given, (b) Have responsibility for preparing minutes of the directors' and shareholders' meetings and for authenticating records of the Corporation, (c) Have charge of the corporate record books, and (d) Have such other duties and powers as the Board of Directors or the President may assign. 3.5 The Treasurer shall: (a) Have the custody of all funds and securities of the Corporation, (b) Keep adequate and correct accounts of the Corporation's affairs and transactions, and (c) Have such other duties and powers as the Board of Directors or the President may assign. 4 3.6 Other officers and agents of the Corporation shall have such authority and perform such duties in the management of the Corporation as the Board of Directors or the President may assign to them. 4. Certificates and Transfers -------------------------- 4.1 Shares of the Corporation shall be represented by certificates in such form as shall from time to time be prescribed by the President. 4.2 Certificates representing shares of the Corporation shall be signed (either manually or in facsimile) by the President or Vice President and by the Secretary or Treasurer. 4.3 Transfer of shares shall be made only on the stock transfer books of the Corporation. Prepared By BROWN, TODD & HEYBURN 3200 Capital Holding Center Louisville, Kentucky 40202-3363 EX-3.41 42 CERT OF INCORP OF HAYDEN GULCH TERMINAL, INC. EXHIBIT 3.41 CERTIFICATE OF INCORPORATION OF HAYDEN GULCH TERMINAL, INC. * * * * * 1. The name of the corporation is HAYDEN GULCH TERMINAL, INC. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (l,000) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). At all elections of directors of the corporation, each stockholder shall be entitled to as many votes as shall equal the number of votes which (except for such provision as to cumulative voting) he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected by him, and he may cast all of such votes for a single director or may distribute them among the 2 number to be voted for, or for any two or more of them as he may see fit. 5A. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- M.A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 K.A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 L.J. Vitalo Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- G.H. MacLean 99 Wood Avenue South Iselin, New Jersey 08830 P.J. Statile 99 Wood Avenue South Iselin, New Jersey 08830 D.L. Stevenson 1300 South Yale Flagstaff, Arizona 86001 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper 3 purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or by-laws, expressly so provide, no such committee shall have the 4 power or authority to declare a dividend or to authorize the issuance of stock. When and as authorized by the stockholders in accordance with statute, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 8. Elections of directors need not be by written ballot unless the by- laws of the corporation shall so provide. 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 11. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of 5 loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 1st day of September, 1992. /s/ M. A. Brzoska --------------------------- M. A. Brzoska /s/ K. A. Widdoes --------------------------- K. A. Widdoes /s/ L. J. Vitalo --------------------------- L. J. Vitalo EX-3.42 43 BY-LAWS OF HAYDEN GULCH TERMINAL, INC. EXHIBIT 3.42 HAYDEN GULCH TERMINAL, INC. * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Flagstaff, State of Arizona, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. 2 Section 2. Annual meetings of stockholders, commencing with the year 1993, shall be held on the first day of April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole 3 time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, 4 without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. At all elections of directors of the corporation each stockholder having voting power shall be entitled to exercise the right of cumulative voting as provided in the certificate of incorporation. 5 Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one nor more than ten. The first board shall consist of three directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. 6 Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. 7 MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president without notice to each director; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. 8 Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. 9 COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other 10 class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special 11 or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. 12 ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. 13 THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 14 THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 15 THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the 16 absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such 17 officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the 18 corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. 19 REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the 20 interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. 21 INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.43 44 CERT OF INCORP OF INDEPENDENCE MATERIAL HANDLING EXHIBIT 3.43 CERTIFICATE OF INCORPORATION OF INDEPENDENCE MATERIAL HANDLING COMPANY 1. The name of the corporation is Independence Material Handling Company. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is One Hundred (100) and the par value of each of such shares is Ten Dollars and No Cents ($10.00) amounting in the aggregate to One Thousand Dollars and No Cents ($1,000.00). 5. The board of directors is authorized to make, alter or repeal the by- laws of the corporation. Election of directors need not be by written ballot. 6. The name and mailing address of the sole incorporator is: L.J. Vitalo Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 7. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. 8. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the 2 General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 5th day of June, 1996. /s/ L. J. Vitalo ----------------------- L. J. Vitalo Sole Incorporator CERTIFICATE OF CORRECTION FILED TO CORRECT CERTAIN ERROR IN THE CERTIFICATE OF INCORPORATION OF INDEPENDENCE MATERIAL HANDLING COMPANY FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE ON JUNE 5, 1995. INDEPENDENCE MATERIAL HANDLING COMPANY, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: 1. The name of the corporation is INDEPENDENCE MATERIAL HANDLING COMPANY. 2. That a Certificate of INDEPENDENCE MATERIAL HANDLING COMPANY was filed by the Secretary of State of Delaware on June 5, 1996 and that said Certificate requires correction as permitted by Section 103 of the General Corporation Law of the State of Delaware. 3. The inaccuracy or defect of said Certificate to be corrected is as follows: Number of shares authorized should be 1,000 shares not 100 shares. 4. Article 4 of the Certificate is corrected to read as follows: The total number of shares of stock which the corporation shell have authority to issue is One Thousand (1,000) and the par value of each of such shares is Ten Dollars and No Cents ($10.00) amounting in the aggregate to Ten Thousand Dollars and No Cents ($10,000,00). IN WITNESS WHEREOF, said INDEPENDENCE MATERIAL HANDLING COMPANY has caused this Certificate to be signed by D.C. Hegger its Vice President and attested by J.C. Sevem, its secretary, this seventh day of June, 1996. INDEPENDENCE MATERIAL HANDLING COMPANY By: /s/ David C. Hegger ----------------------------------- ATTEST By /s/ James C. Sevem ----------------------------------------- Secretary EX-3.44 45 BY-LAWS OF INDEPENDENCE MATERIAL HANDLING CO. EXHIBIT 3.44 INDEPENDENCE MATERIAL HANDLING COMPANY * * * * * B Y -L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1997, shall be held in the month of May on such other date 2 and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in 3 writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for 4 the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt 5 notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be 2. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily 6 order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. 7 Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on 0 days' notice to each director, either personally or by mail or by facsimile communication; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board, a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in 8 writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of 9 the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151 (a) of the General Corporation Law of Delaware fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. 10 COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United 11 States mail. Notice to directors may also be given by facsimile telecommunication. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. 12 Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the 13 president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such 14 other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then 15 in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each 16 stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General Corporation Law of Delaware or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, 17 upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of 18 stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 19 ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such 20 other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by- laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board 21 of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.45 46 CERT OF INCORP OF INTERIOR HOLDINGS CORP. EXHIBIT 3.45 CERTIFICATE OF INCORPORATION OF INTERIOR HOLDINGS CORP. * * * * * 1. The name of the corporation is INTERIOR HOLDINGS CORP. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is One Hundred Dollars ($100.00) amounting in the aggregate to One Hundred Thousand Dollars ($100,000.00). 5A. The name and mailing address of each incorporator is as follows: 2 NAME MAILING ADDRESS ---- --------------- K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 M. A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 L. J. Vitalo Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- I.F. Engelhardt 701 Market Street, Suite 700 St. Louis, MO 63101 J.E. Lushefski 701 Market Street, Suite 700 St. Louis, MO 63101 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such 3 place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 11. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 7th day of December, 1994. /s/ K. A. Widdoes ------------------------------- K. A. Widdoes 4 /s/ M. A. Brzoska ------------------------------- M. A. Brzoska /s/ L. J. Vitalo ------------------------------- L. J. Vitalo EX-3.46 47 BY-LAWS OF INTERIOR HOLDINGS CORP. EXHIBIT 3.46 INTERIOR HOLDINGS CORP. * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1995, shall be held on the first day of April if not a legal holiday, and if a legal holiday, then on the next secular day 2 following, at 10 A. M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president 3 and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty 4 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which 5 all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one nor more than three. The first board shall consist of two directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted 6 immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as 7 hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on zero days notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any 8 committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. 9 Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. 10 Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at 11 his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. 12 Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any 13 designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or 14 in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. 15 Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. 16 Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed 17 or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stock holders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. 18 REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of 19 the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. 20 INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by- laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.47 48 CERT OF INCORP OF A.T. TWO, INC. EXHIBIT 3.47 CERTIFICATE OF INCORPORATION OF A.T. TWO, INC. FIRST: The name of the Corporation is A.T. Two, Inc. ----- SECOND: The registered office of the Corporation in the State of ------ Delaware is located at 100 West Tenth Street in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. The principal place of business of the Corporation is 2205 Fifth Street Road, Huntington, West Virginia 25701. THIRD: The purposes for which it is formed are: To construct and ----- operate coal loading terminals. To engage in any lawful act or activity for which corporations may be formed under the General Corporation Law of the State of Delaware. To purchase or otherwise acquire, lease as leasee, invest in, hold, use, lease as lessor, encumber, sell, exchange, transfer, and dispose of property of any description or any interest therein. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and tradenames, relating to or useful in connection with any business of this corporation. To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, 2 transfer, mortgage, pledge, or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, script, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, choses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof. To enter into, make and perform contracts of every kind and description with any person, firm, association, corporation, municipality, county, state, body politic or government or colony or dependency thereof. To purchase or otherwise acquire all or any part of the business, good will, rights, property and assets, and to assume all or any part of the liabilities of any corporation, association, partnership or individual engaged in any business in which any corporation organized under the General Corporation Law of the State of Delaware is entitled to engage. 3 To borrow money, and issue, sell, and pledge its notes, bonds, and other evidences of indebtedness, and secure any of its obligations by mortgage, pledge, or deed of trust of all or any of its property, and guarantee or secure obligations of any person. To purchase, hold, sell and transfer the shares of its own capital stock to the extent permitted by law but no such purchase may be made when there is reasonable ground for believing that the corporation is unable, or, by such purchase, may be rendered unable to satisfy its obligations and liabilities. To conduct its business, and to have and maintain one or more offices, within and without the State of Delaware and in all other states and territories, in the District of Columbia, in all dependencies, colonies, or possessions of the United States of America and in foreign countries; and to purchase, or otherwise acquire, hold, own, equip, improve, manage, operate, promote, finance, sell, convey, mortgage or otherwise dispose of real and personal property in all such states and places, to the extent that the same may be permissible under the laws thereof. To carry on other lawful business and to do any and every thing necessary, suitable, convenient or proper for the accomplishment of any of the purposes or the attainment of any one or all of the objects hereinbefore enumerated or incidental to the powers herein named or for the enhancement of the value of the properties of the corporation or which shall at any time appear conducive thereto or expedient, either as holder of, or as 4 interested in, any property or otherwise; to have all the rights, powers, and privileges now or hereafter conferred by the laws of the State of Delaware upon corporations organized under its General Corporation Law or under any act amendatory thereof, supplemental thereto or substituted therefor. The objects and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in these articles of incorporation, but the objects and purposes specified in each of the foregoing clauses of this article shall be regarded as independent objects and purposes. FOURTH: The total number of shares of stock which the Corporation is ------ authorized to issue is ONE THOUSAND (1,000) shares of Common Stock, without par value. FIFTH: The holders of the Common Stock shall, as such, have the ----- right, pro rata, according to their total respective holdings of Common Stock and on such terms and conditions as the Board of Directors may determine, to purchase or subscribe for any of the authorized but unissued shares of Common Stock which the Corporation may hereafter issue; provided, however, that any such right to purchase or subscribe for any such shares of Common Stock or any such obligation shall be nontransferable. SIXTH: The incorporator is Frank J. Smith, Jr., whose mailing address ----- is 2500 Elm Street, Ashland, Kentucky 41101. SEVENTH: Subject to the limitations imposed by this Article SEVENTH, ------- the business affairs of the Corporation shall be 5 managed by the Board of Directors, and the Directors need not be elected by ballot unless required by the By-laws of the Corporation. The following powers shall not be vested in the Directors but shall be reserved in and exercised only by the Stockholders of the Corporation: A. The power to declare dividends. B. The power to borrow money and/or to mortgage, pledge or otherwise encumber assets of the Corporation. C. The power to sell all or substantially all of the assets of the Corporation or to merge, consolidate or to liquidate the Corporation. D. The power to amend the By-laws of the Corporation. E. The power to grant proxies to vote shares of stock owned or held by the Corporation. F. The power to guarantee debts or obligations of any other person, corporation or other entity. EIGHTH: The names of the persons who are to serve as Directors of ------ the Corporation until the first annual meeting of the Stockholders, or until their successors are elected and qualified, and their mailing addresses are as follows: John B. Kebblish 243 Bellefonte Circle Ashland, Kentucky 41101 R. Rex Jones 2607 Hayslette Avenue Hurricane, West Virginia 25526 Richard L. Saunders 101 India Drive Russell, Kentucky 41169 6 NINTH: Subject to the restrictions that the number of Directors shall ----- not be less than three (3), or such larger number as from time to time may be required by the laws of the State of Delaware the number of Directors may be fixed from time to time by the By-Laws of the Corporation. TENTH: The private property of the Stockholders of the Corporation ----- shall not be subject to the payment of any of the debts or liabilities of the Corporation. ELEVENTH: The Corporation reserves the right to amend or repeal any -------- provision contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware. All rights herein conferred are granted subject to this reservation. I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a corporation under the laws of the State of Delaware do make and file this Certificate of Incorporation, do certify that the facts herein stated are true and, accordingly, have hereto set my hand and seal this 5th day of March A. D., 1984. /s/ Frank J. Smith, Jr. ---------------------------------- Frank J. Smith, Jr. Incorporator RECEIVED FOR RECORD Mar 6 1984 Leo J. Dugan, Jr., Recorder CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION A. T. Two, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That the Board of Directors of said corporation by the unanimous written consent of its members, filed with the minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED: That it is declared advisable to amend the Certificate of Incorporation of this corporation by changing Article First so that, as amended, said article shall be read as follows: "The name of the corporation shall be James River Coal Terminal Company." FURTHER RESOLVED: That the Certificate of Incorporation be amended further to delete the name A. T. Two, Inc. wherever same shall appear and substitute therefor the name James River Coal Terminal Company. SECOND: That in lieu of a meeting and vote of stockholder of corporation, the stockholder thereof has given unanimous written consent to said amendment in accordance with the applicable provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendments were duly adopted in accordance with the applicable provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware. 2 IN WITNESS WHEREOF, said A. T Two, Inc. has caused its corporate seal to be hereunto affixed and this certificate to be signed by Marc R. Solochek, its Vice President, and attested by Roy F. Layman, its Assistant Secretary, this 5th day of April A. D., 1984. ATTEST: A. T. TWO, INC. /s/ Roy F. Layman /s/ Marc R. Solochek - --------------------- ---------------------------- Roy F. Layman Marc R. Solochek Assistant Secretary Vice President (S E A L) STATE OF WEST VIRGINIA ) ) SS: COUNTY OF CABELL ) BE IT REMEMBERED that on this 5th day of April, 1984, personally came before me Marc R. Solochek of A. T. Two, Inc., a corporation of the State of Delaware, party to the foregoing indenture, known to me to be his own act and deed and the act and deed of said corporation; that the signature of the Vice President is his own proper handwriting; and that the seal affixed is the common or corporate seal of the said corporation; and that his act of sealing, executing and delivering said indenture was duly authorized by resolution of the Directors and Sole Stockholder of the said corporation. Given under my hand and seal of office the day and year aforesaid. /s/ Wanda Bluebaum ----------------------------- Notary Public My commission expires /s/ Wanda Bluebaum ----------------------------- Commission for West Virginia My Commission expires November 12, 1990 RECEIVED FOR RECORD Apr 19 1984 LEO J. DUGAN, Jr., Recorder EX-3.48 49 RESTATED BY-LAWS OF JAMES RIVER COAL TERMINAL CO EXHIBIT 3.48 RESTATED BY-LAWS OF JAMES RIVER COAL TERMINAL COMPANY (as amended August 16, 1990) ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1990, shall be held on the second Tuesday in April if 2 not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 3 Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting 4 at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice 5 and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one (1) nor more than six (6). The first board shall consist of one (1) director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall 6 qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall 7 be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to 8 time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and 9 not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend 10 or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. 11 ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number 12 of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. 13 Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose 14 supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the 15 president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of 16 directors, or the president or a vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue, LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person 17 claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting 18 of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognized the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 19 ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. 20 CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The Company shall, to the fullest extent permitted by applicable law, indemnify any person (and the heirs, executors and administrators thereof) who was or is made, or threatened to be made, a party to an action, suit or proceeding, whether civil, criminal, administrative or investigative, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or administrative or legislative body or agency, including an action by or in the right of the Company to procure a judgment in its favor and an action by or in the right of any other corporation of any type or kind, domestic or 21 foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Company is serving or served in any capacity at the request of the Company, by reason of the fact that he, his testator or intestate is or was a director or officer of the Company, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement, and costs, charges and expenses, including attorneys' fees, incurred therein or in any appeal thereof. (b) The Company shall indemnify other persons and reimburse the expenses thereof, to the extent required by applicable law, and may indemnify any other person to whom the Company is permitted to provide indemnification or the advancement of expenses, whether pursuant to rights granted pursuant to, or provided by, the Delaware General Corporation Law or otherwise. (c) The Company shall, from time to time, reimburse or advance to any person referred to in paragraph (a) the funds necessary for payment of expenses, including attorneys' fees, incurred in connection with any action, suit or proceeding referred to in paragraph (a) above, upon receipt of a written undertaking by or on behalf of such person to repay such amount(s) if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, (ii) he personally gained in fact 22 a financial profit or other advantage to which he was not legally entitled, or (iii) his conduct was otherwise of a character such that Delaware law would require that such amount(s) be repaid. (d) Any director or officer of the Company serving (i) another corporation, of which a majority of the shares entitled to vote in the election of its directors is held by the Company, or (ii) any employee benefit plan of the Company or any corporation referred in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (e) Any person entitled to be indemnified or to the reimbursement or advancement of expenses as a matter of right pursuant to this Article may elect to have the right to indemnification (or advancement of expenses) interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the action, suit or proceeding, to the extent permitted by applicable law, or on the basis of the applicable law in effect at the time indemnification is sought. (f) The right to be indemnified or to the reimbursement or advancement of expenses pursuant to this Article (1) is a contract right pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth in a separate written contract between the Company and the director or officer, (ii) is intended to be retroactive and shall be available with respect to events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. 23 (g) If a request to be indemnified or for the reimbursement or advancement of expenses pursuant hereto is not paid in full by the Company within thirty days after a written claim has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled also to be paid the expenses of prosecuting such claim. Neither the failure of the Company (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of or reimbursement or advancement of expenses to the claimant is proper in the circumstances, nor an actual determination by the company (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses, shall be a defense to the action or create a presumption that the claimant is not so entitled. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or 24 adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.49 50 CERT OF INCORP OF JUNIPER COAL CO. EXHIBIT 3.49 CERTIFICATE OF INCORPORATION OF JUNIPER COAL COMPANY * * * * * 1. The name of the corporation is Juniper Coal Company. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is One Thousand (1000) and the par value of each of such shares is Ten Dollars and No Cents ($10.00), amounting in the aggregate to Ten Thousand Dollars and No Cents ($10,000.00). 5. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS - ---- --------------- M. A. Brzoska 1209 Orange Street Wilmington, Delaware 19801 K. A. Widdoes 1209 Orange Street Wilmington, Delaware 19801 L. J. Vitalo 1209 Orange Street Wilmington, Delaware 19801 The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS - ---- --------------- T. S. Hilton 701 Market Street, Suite 700, St. Louis, MO 63101 C. G. Farrand 701 Market Street, Suite 700, St. Louis, MO 63101 2 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 9. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 10. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 8th day of April, 1996. M. A. Brzoska ------------------------------ K. A. Widdoes ------------------------------ L. J. Vitalo ------------------------------ EX-3.50 51 BY-LAWS OF JUNIPER COAL CO. EXHIBIT 3.50 JUNIPER COAL COMPANY * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1997, shall be held on the Tenth day of April, if not a legal holiday, and if a legal holiday, then on the next secular day 2 following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president or 3 secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for 4 the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt 5 notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one (1) nor more than three (3). The first board shall consist of two (2) directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, 6 upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of 7 directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one (1) days' notice to each director, either personally or by mail or by facsimile communication; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board, a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any 8 committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. 9 Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. 10 Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with 11 postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by facsimile telecommunication. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. 12 Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the 13 duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties 14 and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by 15 the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming 16 the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to 17 corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of 18 incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. 19 SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by- laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.51 52 CERT OF INCORP OF KAYENTA MOBILE HOME PARK, INC. EXHIBIT 3.51 CERTIFICATE OF INCORPORATION OF KAYENTA MOBILE HOME PARK, INC. * * * * * 1. The name of the corporation is KAYENTA MOBILE HOME PARK, INC. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is One Thousand (1,000) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). 5. The board of directors is authorized to make, alter or repeal the by-laws of the corporation. Election of directors need not be by written ballot. 6. The name and mailing address of the incorporator is: M. C. Kinnamon Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 7. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. 8. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. 2 I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of Delaware, do make this certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 22nd day of August, 1994. /s/ M. C. Kinnamon --------------------------------------- M. C. Kinnamon EX-3.52 53 BY-LAWS OF KAYENTA MOBILE HOME PARK INC. EXHIBIT 3.52 KAYENTA MOBILE HOME PARK, INC. * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Flagstaff, State of Arizona, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1995, shall be held on May 15 if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not 2 so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. 3 Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than two nor more than five. The first board shall consist of two directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. 4 Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on zero days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board two directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors 5 or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. 6 COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholders, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. 7 Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and 8 shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, 9 perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any office, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have ben lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the 10 person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. 11 ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or replaced or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.53 54 CERT OF INCORPORATION OF MARTINKA COAL COMPANY EXHIBIT 3.53 CERTIFICATE OF INCORPORATION OF MARTINKA COAL COMPANY * * * * * 1. The name of the corporation is MARTINKA COAL COMPANY 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description. To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, 2 licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any business of this corporation. To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, choses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof. To borrow or raise money for any of the purposes of the corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or 3 assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes. To purchase, receive, take by grant, gift, devise, bequest or otherwise, lease or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with real or personal property, or any interest therein, wherever situated, and to sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any of the corporation's property and assets, or any interest therein, wherever situated. In general, to possess and exercise all the powers and privileges granted by the General Corporation Law of Delaware or by any other law of Delaware or by this Certificate of Incorporation together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the corporation. The business and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this certificate of incorporation, but the business and purposes specified in each of the foregoing clauses of this article shall be regarded as independent business and purposes. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) 4 and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). 5. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- J. L. Austin Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 M. C. Kinnamon Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 A. S. Wright Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace 5 any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or by-laws, expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. When and as authorized by the stockholders in accordance with statute, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part 6 of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statues) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 11. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. 7 WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 5th day of May, 1992. /s/ J.L. Austin --------------------------- J. L. Austin Incorporator /s/ M.C. Kinnamon --------------------------- M. C. Kinnamon Incorporator /s/ A. S. Wright --------------------------- A. S. Wright Incorporator EX-3.54 55 BY-LAWS OF MARTINKA COAL COMPANY EXHIBIT 3.54 MARTINKA COAL COMPANY * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1993, shall be held on the first day of May if not a legal holiday, and if a legal holiday, then on the next secular 2 day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute 3 or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any 4 business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting 5 forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be one. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as 6 constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as 7 shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of 8 directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of 9 the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such 10 committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. 11 ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. 12 Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed 13 and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it 14 and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his 15 transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president and the treasurer 16 or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or 17 destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent 18 to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of 19 incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. 20 FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.55 56 ARTICLES OF INCORP MIDCO SUPPLY & EQUIPMENT CO. EXHIBIT 3.55 COPY OF ARTICLES OF INCORPORATION --------------------------------- STATE OF ILLINOIS, ) ) ) ss. ) ST. CLAIR COUNTY. ) To CHARLES F. CARPENTIER, Secretary of State: We, the undersigned,
- -------------------------------------------------------------------------------- Address Name Number Street City State - -------------------------------------------------------------------------------- Arthur S. Macke 517 South Main Street, Marissa, Illinois William A. Norton 227 Sunrise Drive, Marissa, Illinois Floyd W. Macke 117 South Grace St., Marissa, Illinois - --------------------------------------------------------------------------------
being natural persons of the age of twenty-one years or more and subscribers to the shares of the corporation to be organized pursuant hereto, for the purpose of forming a corporation under "The Business Corporation Act" of the State of Illinois, do hereby adopt the following Articles of Incorporation: ARTICLE ONE The name of the corporation is: MIDCO SUPPLY AND EQUIPMENT CORPORATION ARTICLE TWO The address of its initial registered office in the State of Illinois is: R. F. D. Street, in the Village of Marissa (Zone) County of St. Clair and the name of its initial Registered Agent at said address is: William A. Norton. ARTICLE THREE The duration of the corporation is: Perpetual ARTICLE FOUR The purpose or purposes for which the corporation is organized are: For the sale at wholesale and retail of mining supplies and equipment and to engage in the general business of the purchase, sale and distribution of mining supplies, machinery and 2 equipment; to engage in activities which are necessary, suitable or convenient for the accomplishment of that purpose or which are incidental thereto or are connected therewith; and to conduct its business and carry out that purpose in any State, Territory, District or Possession of the United States or in any foreign country, to the extent not forbidden by law. Paragraph 2: This Corporation shall have all the powers specified in Section 5 of the Business Corporation Act of 1933, as amended by the laws of 1957. ARTICLE FIVE Paragraph 1: The aggregate number of shares which the corporation is authorized to issue is 500 divided into one classes. The designation of each class, the number of shares of each class, and the par value, if any, of the shares of each class, or a statement that the shares of any class are without par value, are as follows: Class Series Number of Par value per share or statement (If any) Shares that are without par value Common 500 None Paragraph 2: The preferences, qualifications, limitations, restrictions and the special or relative rights in respect of the shares of each class are: The sale of all assets of the corporation or its merger or consolidation with another or other corporations shall not be deemed a dissolution of the corporation. Shares in this corporation shall not be issued for consideration other than money or in payment of a debt of the corporation without the unanimous consent of all the share holders. ARTICLE SIX The class and number of shares which the corporation proposes to issue without further report to the Secretary of State, and the consideration (expressed in dollars) to be received by the corporation therefor, are: Total consideration to be Class of shares Number of shares received therefor, are: Common 100 $5,000.00 $ $ 3 ARTICLE SEVEN The corporation will not commence business until at least one thousand dollars has been received as consideration for the issuance of shares. ARTICLE EIGHT The number of directors to be elected at the first meeting of the shareholders is: Three ARTICLE NINE Paragraph 1: It is estimated that the value of all property to be owned by the corporation for the following year wherever located will be $10,000.00. Paragraph 2: It is estimated that the value of the property to be located within the State of Illinois during the following year will be $10,000.00 Paragraph 3: It is estimated that the gross amount of business which will be transacted by the corporation during the following year will be $500,000.00. Paragraph 4: It is estimated that the gross amount of business which will be transacted at or from places of business in the State of Illinois during the following year will be $500,000.00 Arthur S. Macke -------------------------- -------------------------- Floyd W. Macke Incorporators. -------------------------- -------------------------- William A. Norton OATH AND ACKNOWLEDGMENT STATE OF ILLINOIS, ) ) ss. St. Clair County. ) I, Edward W. Clendenin, a Notary Public do hereby certify that on the 26th day of September, 1959, Arthur S. Macke, William A. Norton, Floyd W. Macke (Names of Incorporators) personally appeared before me and being first duly sworn by me severally acknowledged that they signed the foregoing document in the respective capacities therein set forth and declared that the statements therein contained are true. 4 IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year above written. NOTARIAL SEAL /s/ Edward W. Clendenin ------------------------------------- Notary Public FILED September 28 1959 ----------------- Sec'y of State. EX-3.56 57 BY-LAWS OF MIDCO SUPPLY & EQUIPMENT CORPORATION EXHIBIT 3.56 BY-LAWS ======= OF MIDCO SUPPLY AND EQUIPMENT CORPORATION -------------------------------------- ARTICLE I --------- OFFICES The principal office of the corporation in the State of Illinois shall be located in the City of Marissa and County of St. Clair. The corporation may have such other offices, either within or without the State of Illinois, as the business of the corporation may require from time to time. The registered office of the corporation required by The Business Corporation Act to be maintained in the State of Illinois may be, but need not be, identical with the principal office in the State of Illinois, and the address of the registered office may be changed from time to time by the board of directors. ARTICLE II ---------- SHAREHOLDERS SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders shall be held in April at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting at which they shall elect by a plurality vote a board of directors and transact such other business as may properly be brought before the meeting. SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders may be called by the president, by the board of directors or by the holders of not less than one-fifth of all the outstanding shares of the corporation. SECTION 3. PLACE OF MEETING. The board of directors may designate any place, either within or without the State of Illinois, as the place of meeting for any annual meeting or for any special meeting called by the board of directors. A waiver of notice signed by all shareholders may designate any place, either within or without the State of Illinois, as the place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the registered office of the corporation in the State of Illinois, except as otherwise provided in Section 5 of this article. SECTION 4. NOTICE OF MEETINGS. Written or printed notice stating the place, day and hour of the meeting, and in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more 2 than forty days before the date of the meeting, or in the case of a merger or consolidation not less than twenty nor more than forty days before the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the records of the corporation, with postage thereon prepaid. SECTION 5. MEETING OF ALL SHAREHOLDERS. If all of the shareholders shall meet at any time and place, either within or without the State of Illinois, and consent to the holding of a meeting at such time and place, such meeting shall be valid without call or notice, and at such meeting any corporate action may be taken. SECTION 6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors of the corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, forty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days, or in the case of a merger or consolidation, at least twenty days, immediately preceding such meeting. In lieu of closing the stock transfer books, the board of directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than forty days and, for a meeting of shareholders, not less than ten days, or in the case of a merger or consolidation not less than twenty days, immediately preceding such meeting. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the board of directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. SECTION 7. VOTING LISTS. The officer or agent having charge of the transfer books for shares of the corporation shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten days prior to such meeting, shall be kept on file at the registered office of the corporation and shall be subject to inspection by any shareholder at any time during usual business 3 hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original share ledger or transfer book, or a duplicate thereof kept in this State, shall be prima facie evidence as to who are the shareholders entitled to examine such list or share ledger or transfer book or to vote at any meeting of share holders. SECTION 8. QUORUM. A majority of the outstanding shares of the corporation, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders; provided, that if less than a majority of the outstanding shares are represented at said meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by The Business Corporation Act, the articles of incorporation or these by-laws. SECTION 9. PROXIES. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. SECTION 10. VOTING OF SHARES. Subject to the provisions of Section 12 of this article, each outstanding share, regardless of class, shall be entitled to one vote upon each matter submitted to vote at a meeting of shareholders. SECTION 11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the by-laws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine. Shares standing in the name of a deceased person may be voted by his administrator or executor, either in person or by proxy. Shares standing in the name of a guardian, conservator, or trustee may be voted by such fiduciary, either in person or by proxy, but no guardian, conservator, or trustee shall be entitled, as such fiduciary, to vote shares held by him without a transfer of such shares into his name. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do be contained in an 4 appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such squares until the shares have been transferred into the name of the pledges, and thereafter the pledgee shall be entitled to vote the shares so transferred. Shares of its own stock belonging to this corporation shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding shares at any given time, but shares of its own stock held by it in a fiduciary capacity may be voted and shall be counted in determining the total number of outstanding shares at any given time. SECTION 12. CUMULATIVE VOTING. In all elections for directors, every shareholder shall have the right to vote, in person or by proxy, the number of shares owned by him, for as many persons as there are directors to be elected, or to cumulate said shares, and give one candidate as many votes as the number of directors multiplied by the number of his shares shall equal, or to distribute them on the same principle among as many candidates as he shall see fit. SECTION 13. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. SECTION 14. VOTING BY BALLOT. Voting on any question or in any election may be viva voce unless the presiding officer shall order or any shareholder shall demand that voting be by ballot. ARTICLE III ----------- DIRECTORS SECTION 1. GENERAL POWERS. The business and affairs of the corporation shall be managed by its board of directors. SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. [...] of one or more members as fixed from time to time by resolution of the board of directors or the shareholders. Each director shall hold office until the next annual meeting of shareholders or until his successor shall have been elected and qualified. Directors need not be residents of Illinois or shareholders of the corporation. SECTION 3. REGULAR MEETINGS. A regular meeting of the board of directors shall be held without other notice than this by-law, immediately after, and at the same place as, the annual 5 meeting of shareholders. The board of directors may provide, by resolution, the time and place, either within or without the State of Illinois, for the holding of additional regular meetings without other notice than such resolution. SECTION 4. SPECIAL MEETINGS. Special meetings of the board of directors may be called by or at the request of the president or any two directors. The person or persons authorized to call special meetings of the board of directors may fix any place, either within or without the State of Illinois, as the place for holding any special meeting of the board of directors called by them. SECTION 5. NOTICE. Notice of any special meeting shall be given at least 5 days previously thereto by written notice delivered personally or mailed to each director at his business address, or by telegram. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting. SECTION 6. QUORUM. A majority of the number of directors fixed by these by-laws shall constitute a quorum for transaction of business at any meeting of the board of directors, provided, that if less than a majority of such number of directors are present at said meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. SECTION 7. MANNER OF ACTING. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. SECTION 8. VACANCIES. Any vacancy occurring in the board of directors and any directorship to be filled by reason of an increase in the number of directors, may be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose. SECTION 9. COMPENSATION. The board of directors, by the affirmative vote of a majority of directors then in office, and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise. By resolution of the board of directors the 6 directors may be paid their expenses, if any, of attendance at each meeting of the board. SECTION 10. PRESUMPTION OF ASSENT. A director of the corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken shall be conclusively presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. ARTICLE IV ---------- OFFICERS SECTION 1. NUMBERS. The officers of the corporation shall be a president, one or more vice-presidents (the number thereof to be determined by the board of directors), a treasurer, and a secretary, and such assistant treasurers, assistant secretaries or other officers as may be elected or appointed by the board of directors. Any two or more offices may be held by the same person, except the offices of president and secretary. SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation shall be elected annually by the board of directors at the first meeting of the board of directors held after each annual meeting of shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Vacancies may be filled or new offices filled at any meeting of the board of directors. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Election or appointment of an officer or agent shall not of itself create contract rights. SECTION 3. REMOVAL. Any officer or agent elected or appointed by the board of directors may be removed by the board of directors whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. SECTION 4. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term. SECTION 5. PRESIDENT. The president shall be the principal executive officer of the corporation and shall in general 7 supervise and control all of the business and affairs of the corporation. He shall preside at all meetings of the shareholders and of the board of directors. He may sign, with the secretary or any other proper officer of the corporation thereunto authorized by the board of directors, certificates for shares of the corporation, any deeds, mortgages, bonds, contracts, or other instruments which the board of directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the board of directors or by these by-laws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the board of directors from time to time. SECTION 6. THE VICE-PRESIDENTS. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. Any vice-president may sign, with the secretary or an assistant secretary, certificates for shares of the corporation; and shall perform such other duties as from time to time may be assigned to him by the president or by the board of directors. SECTION 7. THE TREASURER. If required by the board of directors, the treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the board of directors shall determine. He shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Article V of these by-laws; (b) in general perform all the duties incident to the office of treasurer and such other duties as from time to time may be assigned to him by the president or by the board of directors. SECTION 8. THE SECRETARY. The Secretary shall: (a) keep the minutes of the shareholders' and of the board of directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all certificates for shares prior to the issue thereof and to all documents, the execution of which on behalf of the corporation under its seal is duly authorized in accordance with the provisions of these by-laws; (d) keep a register of the post-office address of each 8 shareholder which shall be furnished to the secretary by such shareholder; (e) sign with the president, or a vice-president, certificates for shares of the corporation, the issue of which shall have been authorized by resolution of the board of directors; (f) have general charge of the stock transfer books of the corporation; (g) in general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him by the president or by the board of directors. SECTION 9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The assistant treasurers shall respectively, if required by the board of directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the board of directors shall determine. The assistant secretaries as thereunto authorized by the board of directors may sign with the president or a vice-president certificates for shares of the corporation, the issue of which shall have been authorized by a resolution of the board of directors. The assistant treasurers and assistant secretaries, in general, shall perform such duties as shall be assigned to them by the treasurer or the secretary, respectively, or by the president or the board of directors. SECTION 10. SALARIES. The salaries of the officers shall be fixed from time to time by the board of directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation. ARTICLE V --------- CONTRACTS, LOANS, CHECKS AND DEPOSITS SECTION 1. CONTRACTS. The board of directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. SECTION 2. LOANS. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the board of directors. Such authority may be general or confined to specific instances. SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the board of directors. SECTION 4. DEPOSITS. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as the board of directors may select. 9 ARTICLE VI ---------- CERTIFICATES FOR SHARES AND THEIR TRANSFER SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of the corporation shall be in such form as may be determined by the board of directors. Such certificates shall be signed by the president or a vice- president and by the secretary or an assistant secretary and shall be sealed with the seal of the corporation. All certificates for shares shall be consecutively numbered or otherwise identified. The name of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the corporation as the board of directors may prescribe. SECTION 2. TRANSFERS OF SHARES. Transfers of shares of the corporation shall be made only on the books of the corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the secretary of the corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed the owner thereof for all purposes as regards the corporation. ARTICLE VII ----------- FISCAL YEAR The fiscal year of the corporation shall be fixed by resolution of the board of directors or the shareholders. ARTICLE VIII ------------ DIVIDENDS The board of directors may from time to time, declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its articles of incorporation. ARTICLE IX ---------- SEAL The board of directors shall provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon 10 the name of the corporation and the words, "Corporate Seal, Illinois." ARTICLE X --------- WAIVER OF NOTICE Whenever any notice whatever is required to be given under the provisions of these by-laws or under the provisions of the articles of incorporation or under the provisions of The Business Corporation Act of the State of Illinois, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. ARTICLE XI ---------- AMENDMENTS These by-laws may be altered, amended or repealed and new by-laws may be adopted at any meeting of the board of directors of the corporation by a majority vote of the directors present at the meeting. EX-3.57 58 CERT OF INCORP OF MIDWEST COAL RESOURCES, INC. EXHIBIT 3.57 CERTIFICATE OF INCORPORATION OF MIDWEST COAL RESOURCES, INC. * * * * * 1. The name of the corporation is MIDWEST COAL RESOURCES, INC. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description. To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, 2 licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any business of this corporation. To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, choses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof. To borrow or raise money for any of the purposes of the corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes. 3 To purchase, receive, take by grant, gift, devise, bequest or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with real or personal property, or any interest therein, wherever situated, and to sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any of the corporation's property and assets, or any interest therein, wherever situated. In general, to possess and exercise all the powers and privileges granted by the General Corporation Law of Delaware or by any other law of Delaware or by this Certificate of Incorporation together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the corporation. The business and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this certificate of incorporation, but the business and purposes specified in each of the foregoing clauses of this article shall be regarded as independent business and purposes. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). 5. The name and mailing address of each incorporator is as follows: 4 NAME MAILING ADDRESS - ----------------------------------------------------------------- M. A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 L. J. Vitalo Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, 5 may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or by-laws, expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. When and as authorized by the stockholders in accordance with statute, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 8. Elections of directors need not be by written ballot unless the by- laws of the corporation shall so provide. 6 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 11. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. 7 WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 1st day of July, 1992. /s/ M. A. Brzoska ----------------------------------- M. A. Brzoska, Incorporator /s/ K. A. Widdoes ----------------------------------- K. A. Widdoes, Incorporator /s/ L. J. Vitalo ----------------------------------- L. J. Vitalo, Incorporator EX-3.58 59 BY-LAWS OF MIDWEST COAL RESOURCES, INC. EXHIBIT 3.58 MIDWEST COAL RESOURCES, INC. * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1993, shall be held on the first day of May if not a legal 2 holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by 3 the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as 4 originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would 5 be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be three. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at 6 least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of 7 directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of 8 the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporations. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the 9 powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. 10 Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given 11 in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their 12 offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. 13 THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to 14 any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance 15 of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will 16 furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim 17 that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days 18 prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stock holders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for 19 dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing 20 it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.59 60 CERT OF INCORP OF NUEAST MINING CORP. EXHIBIT 3.59 CERTIFICATE OF INCORPORATION OF NUEAST MINING CORP. * * * * * * 1. The name of the corporation is NUEAST MINING CORP. 2. The address of its registered office in the State of Delaware is No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is One Hundred (100) and the par value of each of such shares is One Dollar ($1.00) amounting in the aggregate to One Hundred Dollars ($100.00). 5. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- Robert K. Bennett c/o C T Corporation System Oliver Building, Mellon Sq. Pittsburgh, PA 15222 Denise Bagnato c/o C T Corporation System Oliver Building, Mellon Sq. Pittsburgh, PA 15222 David C. Holets c/o C T Corporation System Oliver Building, Mellon Sq. Pittsburgh, PA 15222 6. The corporation is to have perpetual existence. 2 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 9. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that 3 this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 22 day of June, 1984. /s/ Robert K. Bennett --------------------- Robert K. Bennett /s/ Denise Bagnato --------------------- Denise Bagnato /s/ David C. Holets --------------------- David C. Holets CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION * * * * * * NUEAST MINING CORP., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation by the unanimous written consent of its members, filed with the minutes of the Board adopted a resolution proposing and declaring advisable the following amendments to the Certificate of Incorporation of said corporation: RESOLVED, that the Certificate of Incorporation of NUEAST MINING CORP. be amended by changing the article 1 thereof so that, as amended, said article shall be and read as follows: "1. the name of the corporation is MOUNTAIN VIEW COAL COMPANY" SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation law of the State of Delaware. 2 IN WITNESS WHEREOF, said NUEAST MINING CORP. has caused this certificate to be signed by its President, this 12th day of October, 1994. NUEAST MINING CORP. By /s/ Dennis L. Stevenson ------------------------------ Dennis L. Stevenson, President ATTEST: /s/ Thomas R. Gallagher - -------------------------------- Thomas R. Gallagher - Secretary EX-3.60 61 BY-LAWS OF NUEAST MINING CORP. EXHIBIT 3.60 NUEAST MINING CORP. * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Pittsburgh, State of Pennsylvania, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1984, shall be held on the second Thursday of April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and 2 time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 3 Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, 4 without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. At all elections of directors of the corporation each stockholder having voting power shall be entitled to exercise the 5 right of cumulative voting as provided in the certificate of incorporation. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one (1) nor more than ten (10). The first board shall consist of one (l) director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, 6 and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. 7 MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one (1) days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings 8 shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such 9 participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights 10 of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of 11 directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether 12 before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the 13 board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 14 THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 15 THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such 16 determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Upon the face or back of each stock certificate issued to represent any partly paid shares, or upon the books and records of the corporation in the case of uncertificated partly paid shares, shall be set forth the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the 17 corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect 18 as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions 19 from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED SHAREHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be 20 bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full 21 and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors 22 or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 23 Amendment of Bylaws ------------------- RESOLVED, That Section 2 of Article II of the Bylaws of the Company is repealed in its entirety and the following provision substituted is lieu thereof. "Section 2. The annual meeting of the stockholders, commencing with the year 1988, shall be held in April, at such time as shall be determined by the Board of Directors, for the purpose of electing directors, and for the transaction of such other business as may be brought before the meeting." EX-3.61 62 ARTICLES OF INCORP OF NORTH PAGE COAL CORP. EXHIBIT 3.61 Filed in the office of Secretary of State of West Virginia, this date: ________________ ARTICLES OF INCORPORATION OF NORTH PAGE COAL CORP. The undersigned, acting as incorporator of a corporation under Section 27, Article 1, Chapter 31 of the Code of West Virginia adopts the following Articles of Incorporation for such corporation, FILED IN DUPLICATE: ------------------ I. The undersigned agrees to become a corporation by the name of NORTH PAGE COAL CORP. II. The address of the principal office of said corporation will be located at One PPG Place, in the City of Pittsburgh, in the County of Allegheny, and State of Pennsylvania 15222. The address of the principal place of business of said corporation will be located at Post office Box 90, in the City of Beckley, in the County of Raleigh, State of West Virginia 25801. III. The purpose or purposes for which this corporation is formed are as follows: To transact any or all lawful business for which corporations may be incorporated under the corporation laws of the State of West Virginia. A. The Corporation shall indemnify each member of the Board and each officer of the Corporation now or hereafter serving as such, who was, is or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative 2 (including an action by, or in the right of, the Corporation), by reason of the fact that he is or was a Board member, officer, or agent of the Corporation or is or was serving at the request of the Corporation as a Board member, officer or agent of another corporation, partnership, joint venture, trust or other enterprise. B. Said indemnification shall be against expenses (including attorney's fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by the aforementioned individuals in connection with such action, suit or proceeding, including any appeal thereof, if they acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interest of the Corporation. C. No indemnification shall be made in respect to any claim, issue, or matter as to which such person shall have been adjudged in such action, suit or proceeding to be liable for gross negligence or wilful misconduct in the performance of his duties to the Corporation, except to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability and in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that such court shall deem proper. Indemnity with respect to any criminal action or proceeding will be provided only when the Board member or officer had no reasonable cause to believe his act was unlawful. D. The amount paid to any Board member, officer or agent of the Corporation by way of indemnification shall not exceed the actual, reasonable and necessary expenses incurred in 3 connection with the matter involved. The foregoing right of indemnification shall be in addition to but not exclusive of, any other right to which such Board member, or officer of the Corporation may otherwise be entitled by law. E. The Board of Directors of this Corporation may, from time to time, in its discretion, declare and pay cash dividends from any reserves for mineral depletion maintained by the Corporation. Such dividends must be identified as a distribution of such reserves, and at the time of distribution the amount per share being paid from such reserves must be disclosed to each shareholder receiving such dividends. IV. No shareholder or other person shall have any preemptive right whatsoever. V. Provisions for the regulation of the internal affairs of the corporation are: None. VI. The amount of the total authorized capital stock of said corporation shall be Twenty Thousand Dollars ($20,000.00), which shall be divided into Twenty Thousand (20,000) shares of the par value of One Dollar ($1.00) each. VII. The full name and address of the incorporator is: NAME ADDRESS - ---- ------- David Allen Barnette P.O. Box 553 Charleston, WV 25322 VIII. The existence of this corporation is to be perpetual. IX. No person to whom notice or process may be sent has been designated. 4 X. The number of directors constituting the initial board of directors of the corporation is one and the name and address of the person who shall serve as director until the first annual meeting of shareholders or until his successor is elected and shall qualify is: NAME ADDRESS - ---- ------- John W. Hancock One PPG Place Pittsburgh, PA 15222 THE UNDERSIGNED, for the purpose of forming a corporation under the laws of the State of West Virginia, does make and file this Articles of Incorporation, and I have accordingly hereto set my hand this 3rd day of March, 1986. /s/ David Allen Barnette ------------------------------- David Allen Barnette Articles of Incorporation prepared by: David Allen Barnette JACKSON, KELLY, HOLT & O'FARRELL 1600 Laidley Tower P.O. Box 553 Charleston, West Virginia 25322 EX-3.62 63 BY-LAWS OF NORTH PAGE COAL CORP. EXHIBIT 3.62 BYLAWS OF NORTH PAGE COAL CORP. ARTICLE I. OFFICES The principal offices of the Corporation shall be located in the City of Pittsburgh, County of Allegheny, State of Pennsylvania. The Corporation may have such other offices, either within or without the State of West Virginia, as the Board of Directors may designate or as the business of the Corporation may require from time to time. ARTICLE II. SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the shareholders -------------- shall be held on the second Thursday in the month of April in each year, at the hour of 2:00 P.M., local time, or at such other time on such other day within such month as shall be fixed by the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of the principal office of the corporation, such meeting shall be held on the next succeeding business day. Section 2. Special Meetings. Special meetings of the shareholders, ---------------- for any purpose or purposes, may be called by the Chairman of the Board, if any, President, Secretary, or by the Board of Directors, and shall be called by the President at the request of the holders of not less than one-tenth of all out standing shares of the Corporation entitled to vote at the meeting. Section 3. Place of Meeting. The Board of Directors may designate ---------------- any place, either within or without the State of West Virginia, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal office of the Corporation. Section 4. Notice of Meeting. Written notice stating the place, day ----------------- and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of the Chairman of the Board, President, Secretary or the officer or other persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. 2 Section 5. Closing of Transfer Books or Fixing of Record Date. For -------------------------------------------------- the purpose of determining shareholders entitled to notice of or vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the Corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, fifty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof. Section 6. Voting Record. The officer or agent having charge of the ------------- stock transfer books for shares of the Corporation shall make a complete record of the shareholders entitled to vote at each meeting of shareholders or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each. Such record shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes thereof. Section 7. Quorum. A majority of the outstanding shares of the ------ Corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. Section 8. Proxies. At all meetings of shareholders, a shareholder ------- may vote in person or by proxy executed in writing by 3 the shareholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. Section 9. Voting of Shares. Subject to the provisions of Section 12 ---------------- of this Article II, each outstanding share entitled to vote shall be entitled to one vote upon each matter submitted to a vote at a meeting of shareholders. Section 10. Voting of Shares by Certain Holders. Shares standing in ----------------------------------- the name of another corporation may be voted by such officer, agent or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the Board of Directors of such other corporation may determine. Shares held by an administrator, executor, guardian, committee, curator, or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledges, and thereafter the pledgee shall be entitled to vote the shares so transferred. Neither treasury shares of its own stock held by the Corporation, nor shares held by another corporation if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the Corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting. Section 11. Informal Action by Shareholders. Any action required or ------------------------------- permitted to be taken at a meeting of the shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. Section 12. Cumulative Voting. At each election for directors every ----------------- shareholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be 4 elected and for whose election he has a right to vote, or to cumulate his votes by giving one candidate as many votes as the number of such directors multiplied by the number of his shares shall equal, or by distributing such votes on the same principle among any number of such candidates. ARTICLE III. BOARD OF DIRECTORS Section 1. General Powers. The business and affairs of the -------------- Corporation shall be managed by its Board of Directors. Section 2. Number, Tenure and Qualifications. The number of --------------------------------- directors of the Corporation shall be not less than one nor more than ten. Each director shall hold office until the next annual meeting of shareholders and until his successor shall have been elected and qualified. Directors need not be residents of the State of West Virginia, or shareholders of the corporation. Section 3. Regular Meetings. A regular meeting of the Board or ---------------- Directors shall be held without other notice than this bylaw immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide, by resolution, the time and place, either within or without the State of West Virginia, for the holding of additional regular meetings without other notice than such resolution. Section 4. Special Meetings. Special meetings of the Board of ---------------- Directors may be called by or at the request of the Chairman of the Board, if any, the President or any two directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of West Virginia, as the place for holding any special meeting of the Board of Directors called by them. Section 5. Notice. Notice of any special meeting shall be given at ------ least three days previously thereto by written notice delivered personally or mailed to each director at his business address, or by telegram. If mailed at least five days prior to the date of meeting, such notice shall be deemed to be delivered when deposited in the United States mail, so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting, except as otherwise provided by statute. Section 6. Quorum. A majority of the number of directors fixed by ------ Section 2 of this Article III shall constitute 5 a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such majority is present at a meeting a majority of the directors present may adjourn the meeting from time to time without further notice. Section 7. Manner of Acting. The act of the majority of the ---------------- directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 8. Action Without a Meeting. Any action required or ------------------------ permitted to be taken by the Board of Directors at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors. Section 9. Vacancies. Any vacancy occurring in the Board of --------- Directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by election by the Board of Directors for a term of office continuing only until the next election of directors by the shareholders. Section 10. Compensation. By resolution of the Board of Directors, ------------ each director may be paid his expenses, if any, of attendance at each meeting of the Board of Directors, or committee thereof, and may be paid a stated salary as director or a fixed sum for attendance at each meeting of the Board of Directors or committee thereof or both. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Section 11. Presumption of Assent. A director of the corporation who --------------------- is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. ARTICLE IV. OFFICERS Section 1. Number. The officers of the Corporation shall be a ------ President, one or more Vice Presidents (the number thereof to be determined by the Board of Directors), a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. A Chairman of the Board of Directors and such other officers and assistant officers as may be deemed necessary may be 6 elected or appointed by the Board of Directors. Any two or more offices may be held by the same person, except the offices of President and Secretary. The President and the Chairman of the Board, if any, shall be elected from the membership of the Board of Directors. Section 2. Election and Term of Office. The officers of the --------------------------- Corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Section 3. Removal. Any officer or agent may be removed by the Board ------- of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. Section 4. Vacancies. A vacancy in any office because of death, --------- resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. Section 5. Chairman of the Board and President. The Chairman of the ----------------------------------- Board or the President, as the Board of Directors may from time to time determine, shall be the principal executive officer of the Corporation. The principal executive officer of the Corporation shall in general supervise and control all of the business and affairs of the Corporation, subject to the control of the Board of Directors. He shall, when present, preside at all meetings of the shareholders. Whether the Chairman of the Board or the President be designated as the principal executive officer of the Corporation the other shall, in the absence or incapacity of the principal executive officer or by his authority may, exercise any of the powers of the principal executive officer. The Chairman of the Board or the President may sign deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and executing thereof shall be expressly delegated by the Board or by these bylaws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed. The Chairman of the Board and the President shall each, in general, perform all duties incident to their respective offices and shall perform such other duties as may be prescribed by the Board of Directors from time to time. Section 6. The Vice Presidents. In the absence of the Chairman of ------------------- the Board and President or in the event of their death, 7 inability or refusal to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated at the time of their election, or in the absence of any designation, then in the order of their election) shall perform the duties of the Chairman of the Board and President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chairman of the Board and President. Any Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the Corporation; and shall perform such other duties as from time to time may be assigned to him by the principal executive officer of the Corporation, the bylaws or the Board of Directors. Section 7. The Secretary. The Secretary shall: (a) keep the minutes ------------- of the proceedings of the shareholders and of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents the execution of which on behalf of the Corporation under its seal is duly authorized; (d) keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) sign with the President, or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the Corporation; and (g) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the principal executive officer of the Corporation, the bylaws or by the Board of Directors. Section 8. The Treasurer. The Treasurer shall: (a) have charge and ------------- custody of and be responsible for all funds and securities of the Corporation; (b) receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Article V of these bylaws; and (c) in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the principal executive officer of the Corporation, the bylaws or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. Section 9. Assistant Secretaries and Assistant Treasurers. The ---------------------------------------------- Assistant Secretaries, when authorized by Directors, may sign with the President or a Vice President certificates for shares of the Corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful 8 discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the principal executive officer of the Corporation, the bylaws or by the Board of Directors. Section 10. Officers' Salaries. The salaries of the officers shall ------------------ be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation. ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS Section 1. Contracts. The Board of Directors may authorize any --------- officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. Section 2. Loans. No loans shall be contracted on behalf of the ----- Corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. The Board of Directors may encumber and mortgage real estate and pledge, encumber and mortgage stocks, bonds and other securities and other personal property of all types, tangible and intangible, and convey any such property in trust to secure the payment of corporate obligations. Section 3. Checks, Drafts, etc. All checks, drafts or other orders ------------------- for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. Section 4. Deposits. All funds of the Corporation not otherwise -------- employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board of Directors may select. ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER Section 1. Certificates for Shares. Certificates representing shares ----------------------- of the Corporation shall be in such form as shall be determined by the Board of Directors. Such certificates shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary and sealed with the Corporate Seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar, other than the Corporation itself or one of its employees. Each certificate for shares shall be consecutively numbered or otherwise identified. 9 The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board of Directors may prescribe. Section 2. Transfer of Shares. Transfer of shares of the Corporation ------------------ shall be made only on the stock transfer books of the Corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes. Section 3. Lost Certificates. Any person claiming a certificate of ----------------- shares to be lost or destroyed shall make an affidavit or affirmation of that fact, and if requested to do so by the Board of Directors of the Corporation shall advertise such fact in such manner as the Board of Directors may require, and shall give the Corporation a bond of indemnity in such sum as the Board of Directors may direct, but not less than double the value of shares represented by such certificate, in form satisfactory to the Board of Directors and with or without sureties as the Board of Directors may prescribe; whereupon the President and the Secretary may cause to be issued a new certificate of the same tenor and for the same number of shares as the one alleged to have been lost or destroyed, but always subject to the approval of the Board of Directors. Section 4. Stock Transfer Books. The stock transfer books of the -------------------- Corporation shall be kept in the principal office of the Corporation and shares shall be transferred under such regulations as may be prescribed by the Board of Directors. ARTICLE VII. FISCAL YEAR The fiscal year of the Corporation may be fixed and may be changed from time to time by resolution of the Board of Directors. Until the Board of Directors has acted to fix such fiscal year, the fiscal year of the Corporation shall begin on the first day of January and end on the thirty-first day of December in each year. 10 ARTICLE VIII. DIVIDENDS The Board of Directors may, from time to time, declare and the Corporation may pay dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its Articles of Incorporation. ARTICLE IX. CORPORATE SEAL The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the Corporation and the state of incorporation and the words "Corporate Seal". ARTICLE X. WAIVER OF NOTICE Whenever any notice is required to be given to any shareholder or director of the Corporation under the provisions of these bylaws or under the provisions of the Articles of Incorporation or by law, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. ARTICLE XI. AMENDMENTS These bylaws may be altered, amended or repealed and new bylaws may be adopted by the Board of Directors at any regular or special meeting. ARTICLE XII. VOTING SHARES OF OTHER CORPORATIONS Unless otherwise ordered by the Board of Directors, shares in other corporations held by this Corporation may be voted by the Chairman of the Board or the President of this Corporation. 11 NORTH PAGE COAL CORP. Amendment of Bylaws ------------------- RESOLVED, That Section 1 of Article II of the Bylaws of the Company is repealed in its entirety and the following provision substituted in lieu thereof. "Section 1. The annual meeting of the shareholders, commencing with the year 1988, shall be held in April, at such time as shall be determined by the Board of Directors, for the purpose of electing directors, and for the transaction of such other business as may be brought before the meeting." EX-3.63 64 ARTICLES OF INCORP OF OHIO COUNTY COAL COMPANY EXHIBIT 3.63 ARTICLES OF INCORPORATION OF OHIO COUNTY COAL COMPANY ------------------------ KNOW ALL MEN BY THESE: That I, David L. Roberts, Old Highway 813, Mortons Gap, Kentucky, do hereby form a Corporation under the Kentucky Business Corporation Act. ARTICLE I --------- The corporation hereby organized shall be named and known as OHIO COUNTY COAL COMPANY. ARTICLE II ---------- The Initial Registered Office of the corporation shall be Laffoon Trail, Madisonville, Kentucky 42431; and the name and address of the initial registered agent of the corporation is David L. Roberts, Laffoon Trail, Madisonville, Kentucky 42431. The mailing address of the Corporation's principal office is P. O. Box 561, Madisonville, Kentucky 42431. ARTICLE III ----------- The corporation shall have all of the powers bestowed upon business corporations under the provisions of the Kentucky Business Corporation Act now in force and effect, and as hereafter amended. ARTICLE IV ---------- 1. The total number of shares of stock which the corporation shall be authorized to issue is 1,000 shares of common stock of a par value of One Hundred ($100.00) Dollars 2 each, which common stock shall be the only type or kind of stock to be issued by the corporation. 2. Holders of the common stock of the corporation of record on the books of the corporation shall be entitled to one (1) vote for each share of stock so held. ARTICLE V --------- The name and place of residence of the incorporator is as follows: NAME ADDRESS ---- ------- David L. Roberts Old Highway 813 Mortons Gap, KY ARTICLE VI ---------- The affairs of the corporation shall be managed by a Board of Directors consisting of such number of persons as may be established by the Bylaws of the Corporation. ARTICLE VII ----------- The Board of Directors of the corporation shall be the governing body of the corporation and shall have the power and authority to prescribe such rules and regulations as may be necessary for the government of the activities of the corporation, not inconsistent with the Laws of the Commonwealth of Kentucky, or the By-Laws of the corporation. ARTICLE VIII ------------ 1. Personal liability of Directors to the Corporation for monetary damages for breach of duties as a Director is expressly eliminated, except with respect to those specific instances enumerated in KRS 271B.2-020 2(d) 1, 2, 3 and 4. 2. Directors of this Corporation shall be indemnified by the Corporation in all cases in which a Director is made a 3 party to a proceeding to the extent, and in the manner, provided in KRS 271 B. 8-510 and KRS 271 B. 1 -520. IN TESTIMONY WHEREOF, witness the signature of the incorporator on this 11th day of December, 1989. /s/ David L. Roberts ------------------------------- David L. Roberts STATE OF KENTUCKY) ) SCT. COUNTY OF HOPKINS) I, Julie Sellers, a Notary Public within and for the county and state aforesaid, do hereby certify that the foregoing Articles of Incorporation of OHIO COUNTY COAL COMPANY, were on this day produced to me in my county by David L. Roberts and Paul E. Roberts, who executed and acknowledged the same before me to be his act and deed in due form of law. Given under my hand and notarial seal on this 11th day of December, 1989. /s/ Julie Sellers ------------------------------ Notary Public, My Commission Expires:1-2-90 ------ The foregoing instrument was prepared by William A. Logan, Attorney at Law, Madisonville, Kentucky: /s/ William A. Logan - -------------------------------- EX-3.64 65 BY-LAWS OF OHIO COUNTY COAL COMPANY EXHIBIT 3.64 BY-LAWS OF OHIO COUNTY COAL COMPANY ------------------------ ARTICLE I --------- Corporate Offices Section 1. The principal office of the corporation in the Commonwealth of Kentucky shall be located in the City of Madisonville, County of Hopkins. The corporation may have such other offices, either within or without the Commonwealth of Kentucky, as the Board of Directors may designate or as the business of the corporation may require from time to time. ARTICLE II ---------- Stockholders Section 1. Annual Meeting -- The annual meeting of the stockholders of the corporation shall be held at the principal office of the corporation at Madisonville, Kentucky, on the last Tuesday in December in each year (or, if said day be a legal holiday, then on the next succeeding day not a holiday), beginning with the year 1990, at 7:00 o'clock in the evening, for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting. In the event that such annual meeting is omitted by oversight or otherwise, on the day and at the time herein provided for, meeting in lieu thereof to be held as soon thereafter as conveniently may be, upon ten (10) day's written notice, which notice shall state the time and place and the objects for which such meeting is called. Any business transacted or elections 2 held at such meeting shall be as valid as if transacted or held at the annual meeting. Section 2. Special Meetings -- Special meetings of the stockholders may be called at any time by the Board of Directors. At any time, upon written request of any director, or of any stockholder or stockholders holding in the aggregate twenty (20%) percent of the voting power of all stockholders, it shall be the duty of the Secretary to call a special meeting of the stockholders, to be held at the registered office at such time as the Secretary may fix, not less than ten (10) nor more than thirty-five (35) days after the receipt of said request, and if the Secretary shall neglect or refuse to issue said call, the director, or stockholder or stockholders, making the request may do so. Section 3. Notices -- Written notice of the time, place, and purpose of the annual meeting shall be given to all stockholders entitled to vote at such meeting, at least ten (10) days prior to the day named for the meeting. Notice shall be mailed to a stockholder at his address appearing on the books of the corporation, unless he shall have filed with the Secretary of the corporation a written request that notice intended for him be mailed to some other address, in which case it shall be mailed to the address designated in such request. Written notice of the time, place, and purpose of a special meeting of stockholders shall be mailed at least three (3) days prior to such meeting, to each stockholder of record entitled to vote. 3 Section 4. Voting Rights -- Each stockholder entitled to vote at any meeting shall have one (1) vote, in person or by proxy duly authorized in writing and filed with the Secretary of the corporation, for each share of stock registered in his name on the books of the corporation. The validity of every unrevoked proxy shall cease eleven (11) months after the date of its execution, unless some other definite period of validity shall be expressly provided therein, but in no event shall a proxy, unless coupled with interest, be voted on after three (3) years from the date of its execution. The revocation of a proxy shall not be effective until the Secretary of the corporation has received notice of such revocation. Cumulative voting shall be permitted only in the election for directors of the corporation. Section 5. Waiver of Notice -- Notice of any shareholders' meeting may be waived in writing by any shareholder at any time before or after the meeting. Section 6. Quorum of Stockholders -- The presence, in person or by proxy, of the holders of a majority of the voting power of all stockholders, shall constitute a quorum, and the stockholders present at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. 4 ARTICLE III ----------- Directors Section 1. General Powers -- The business and affairs of the corporation shall be managed by its Board of Directors. Section 2. Number, Tenure, and Qualifications -- The Board of Directors of the corporation shall consist of not less than three (3) nor more than five (5) persons, with three (3) directors to initially constitute the Board of Directors. Directors shall hold office until the annual meeting of the stockholders next ensuing after their election and until their respective successors are elected and have accepted the election. Directors need not be stockholders. The number of directors to be elected shall be determined by the stockholders at each annual meeting or at any special meeting called for such purposes. Section 3. Regular Meetings -- A regular meeting of the Board of Directors shall be held without other notice than this By-Law immediately after and at the same place as the annual meeting of the stockholders. The Board of Directors may provide, by resolution, the time and place, either within or without the Commonwealth of Kentucky, for the holding of additional regular meetings, without other notice than such resolution. Section 4. Special Meetings -- Special meetings of the Board of Directors may be called by, or at the request of, the President or any two directors. The person, or persons, authorized to call a special meeting of the Board of Directors may fix any place, either within or without the Commonwealth of Kentucky, as the place for holding such special meeting of the Board of Directors called by them. 5 Section 5. Notice -- Notice of any regular meeting of the Board of Directors may be given, and notice of any special meeting shall be given, at least two (2) days prior thereto by written notice delivered personally or mailed to each director at his business address, or by telegram. Any director may waive notice of any meeting, and the attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Notice or waiver of notice of any meeting of the Board of Directors of the corporation need not specify the business to be transacted at such meeting nor the purpose thereof. Section 6. Vacancies -- Whenever any vacancy shall occur on the Board of Directors by reason of death, resignation, or otherwise, such vacancy shall be filled by the remaining member, or members, of the Board. The directors so chosen shall hold office until the next annual election and until their successors shall be duly elected and shall qualify, unless sooner displaced. Section 7. Quorum -- A majority of the Board of Directors shall constitute a quorum for the transaction of business. ARTICLE IV ---------- Officers Section 1. Number -- The officers of the corporation shall be a President, and may include one or more Vice Presidents (the number thereof to be determined by the Board of Directors), 6 a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person. Section 2. Election and Term of Office -- The officers of the corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as is reasonably possible. Each officer shall hold office until his successor shall have qualified, or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Section 3. Removal and Vacancies -- Any officer elected or appointed by the Board of Directors may be removed by the Board whenever in its judgment the best interest of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. A vacancy in any office because of death, resignation, removal, disqualification, or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. Section 4. Duties of the President -- The President shall be the chief executive officer of the corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the affairs of the 7 corporation. He shall preside at all meetings of the stockholders and directors. He shall sign or countersign all certificates, contracts, and other instruments of the corporation, as authorized by the Board of Directors, shall make reports to the Board of Directors and stockholders, and shall perform all other duties as are incident to his office, or are properly required of him by the Board of Directors. Section 5. Duties of Vice-President -- The Vice-President shall exercise the functions of the President during the absence or disability of the President. The Vice-President may sign, with the Secretary or an assistant Secretary, certificates for shares of the corporation; and shall perform such other duties as from time to time may be assigned to him by the President or by the Board of Directors. Section 6. Duties of the Secretary -- The Secretary shall keep accurate minutes of all meetings of the stockholders and of the Board of Directors, and shall perform all of the duties commonly incident to his office, and shall perform such other duties and have other powers as the Board of Directors shall designate. The Secretary shall have power, together with the President or a Vice-President, to sign certificates of stock of the corporation. In his absence at any meeting, an assistant secretary or a secretary pro tempore shall perform his duties thereat. Section 7. Duties of the Treasurer -- The Treasurer shall have the custody and be responsible for all funds and securities of the corporation, and shall keep accurate books of account of the corporation's transactions which shall be the 8 property of the corporation and, together with all its property in his possession, shall be subject at all times to the inspection and control of the Board of Directors. He shall disburse the funds of the corporation in payment of the just demands against the corporation, or as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Board of Directors from time to time, as may be required of him, an account of all of his actions as Treasurer and of the financial condition of the corporation. He shall perform all duties incident to his office, or which are properly required of him by the Board of Directors. ARTICLE V --------- Certificates of Stock Section 1. Form -- Certificates representing shares of the corporation shall be in such form as shall be determined by the Board of Directors. Such certificates shall be signed by the President or a Vice- President and by the Secretary or an assistant Secretary, and all certificates shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the Stock Transfer Books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificates shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed, or mutilated certificate, the new one may be issued 9 therefor upon such terms and indemnity to the corporation as the Board of Directors may prescribe. Section 2. Transfer of Shares -- Transfer of shares of the corporation shall be made only on the Stock Transfer Books of the corporation by the holder of record thereof, or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by Power of Attorney duly executed and filed with the Secretary of the corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. ARTICLE VI ---------- Checks, Notes, Etc. Section 1. All checks and drafts on the corporation's banking accounts, and all bills of exchange, promissory notes, and all acceptances, obligations, and other instruments for the payment of money, shall be signed by such officer, or officers, agent or agents, as shall be thereunto duly authorized from time to time by the Board of Directors of the corporation. ARTICLE VII ----------- Corporate Seal Section 1. The Board of Directors shall provide a corporate seal, which shall be circular in form and shall have inscribed thereon the name of the corporation, the state of incorporation, and the words "Corporate Seal." 10 ARTICLE VIII ------------ Amendments Section 1. These By-Laws may be altered, amended, or repealed and new By-Laws may be adopted by the Board of Directors at any regular or special meeting of the Board of Directors. EX-3.65 66 CERT OF LIMITED PARTNERSHIP OF PATRIOT COAL CO EXHIBIT 3.65 CERTIFICATE OF LIMITED PARTNERSHIP OF PATRIOT COAL COMPANY, L.P. The undersigned, desiring to form a limited partnership pursuant to the Delaware Revised Uniform Partnership Act, 6 Delaware Code, Chapter 17, do hereby certify as follows: I. The name of the limited partnership is Patriot Coal Company, L.P. II. The address of the Partnership's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle. The name of the Partnership's registered agent for service of process in the State of Delaware at such address is The Corporation Trust Company. III. The name and mailing address of each general partner is as follows: Name Mailing Address ---- --------------- Illuminati, Incorporated P.O. Box 209 Hartford, Kentucky 42347 IN WITNESS WHEREOF, the undersigned has executed this Certificate of Limited Partnership of Patriot Coal Company, L.P., as of April 12, 1994. /s/ Debra Francis --------------------------------- Debra Francis President Illuminati, Incorporated General Partner EX-3.66 67 LIMITED PARTNERSHIP AGREE OF PATRIOT COAL CO. EXHIBIT 3.66 LIMITED PARTNERSHIP AGREEMENT OF PATRIOT COAL COMPANY, L.P. Amended and Restated as of May 19, 1995
INDEX ----- ARTICLE I ORGANIZATION, NAME AND PURPOSES............................ 2 ARTICLE II EFFECTIVE DATE AND TERM.................................... 4 ARTICLE III FINANCIAL RESPONSIBILITIES................................. 4 ARTICLE IV VENTURE MANAGEMENT......................................... 9 ARTICLE V ACCOUNTING AND FISCAL PROCEDURES........................... 14 ARTICLE VI PARTNERSHIP DISTRIBUTIONS ELECTIONS AND.................... 15 ARTICLE VII TERMINATION................................................ 29 ARTICLE VIII REPRESENTATIONS AND WARRANTIES............................. 31 ARTICLE IX GENERAL.................................................... 36
LIMITED PARTNERSHIP AGREEMENT ----------------------------- OF -- PATRIOT COAL COMPANY, L.P. -------------------------- This Limited Partnership Agreement ("Agreement"), amended and restated as of the 19 day of May, 1995, by and between BLUEGRASS COAL COMPANY ("Bluegrass"), a Delaware corporation and qualified to do business in Kentucky and SENTRY MINING COMPANY (~Sentry"), a Delaware corporation and qualified to do business in Kentucky, the parties sometimes hereinafter being referred to collectively as the "Venturers", and the joint venture shall be referred to as the "Venture"; WITNESSETH: NOW THEREFORE, in consideration of the mutual covenants and agreements herein made, Bluegrass and Sentry hereby agree as follows: ARTICLE I ORGANIZATION, NAME AND PURPOSES Sec. 1.1 Organization. (a) The Venturers hereby adopt this Agreement as the Articles of Venture of the Venture and hereby agree that the Venture shall be continued for the limited purposes and scope set forth herein. (b) Except to the extent otherwise provided herein, the rights and liabilities of the Venturers and the conduct and termination of the Venture shall continue to be governed by the Delaware Revised Uniform Limited Partnership Act (Delaware Revised Statute (S)17-101 et seq.). (c) The Venturers will promptly execute all certificates and other documents, and make all such filings and recordings and perform such other acts as may now or hereafter be necessary or desirable, to comply with the requirements of Delaware law for the carrying on of the business of the Venture. (d) Sentry shall be the general partner in the Venture and Sentry's ownership interest in the Venture shall be 51% and Bluegrass shall be a limited partner in the Venture and Bluegrass' ownership interest in the Venture shall be 49%. (e) All real and other property including permits and licenses owned by or granted to or held by the Venture shall continue to be deemed to be owned by or granted to or held by the Venture as an entity, and no Venturer, individually, shall have any ownership of, or right to use, any such property, except as provided in this Agreement. Section 1.2 Name. The name of the Venture shall be Patriot Coal Company, ----------- ---- L.P. ("Patriot"). Section 1.3 Purposes. The purposes of the Venture are: ----------- -------- (a) To acquire, develop and conduct coal mining operations at the Patriot Mine, Henderson County, Kentucky (the "Patriot Mine") or such other operations as the Management Committee may elect; (b) To sell to such customers and markets as can be found all economically recoverable coal from the Patriot Mine or other operations; 2 (c) To acquire by purchase, lease or otherwise, all of the machinery, equipment and facilities necessary to develop and conduct such coal mining and sales operations; and (d) To carry on such other activities as are necessary or incidental to the foregoing purposes. Sec. 1.4 Other Activities. The Venture shall not engage in any other -------- ---------------- business or activity without the written agreement of the Venturers. ARTICLE II EFFECTIVE DATE AND TERM Sec. 2.1 Effective Date and Term. This Agreement shall be effective as of -------- ----------------------- the satisfactory completion of the following conditions precedent (the "Effective Date") and shall continue in existence until terminated as hereinafter provided: (a) Approval of each Venturer's shareholders and directors; ARTICLE III FINANCIAL RESPONSIBILITIES Sec. 3.1 Contributions to the Venture. As and when the Venture determines -------- ---------------------------- by unanimous consent from time to time that it requires cash, each Venturer hereby agrees that it shall make cash contributions to the Venture in an amount equal to such Venturers respective interest in the Venture of each such cash requirement. Sec. 3.2 Initial Capital Contributions. The initial capital of the Venture -------- ----------------------------- shall be $18,367,346. Sentry shall be credited with contributions of $9,367,346 and Bluegrass shall be credited 3 with contributions of $9,000,000. Attached hereto and made a part hereof, as Schedule 3.2, is the listing of assets which have been previously contributed to the Venture by Sentry's predecessor. Sec. 3.3 Future Property Acquisitions. It is the intention of the -------- ---------------------------- Venturers that the Venture shall undertake to acquire for its own account and in its own name any coal reserves or other interests adjacent to the Patriot Mine which would be necessary or helpful to the conduct of the Venture's business. Sec. 3.4 Capital Accounts. -------- ---------------- (a) Initial Balance. Each Venturer will have a capital account (a --------------- "Capital Account") which shall initially be equal to (a) the initial Carrying Value (as hereinafter defined) of the assets contributed to the Venture by such Venturer, plus (b) the amount of any cash so contributed by such Venturer. (b) Subsequent Adjustments. Each Venturer's Capital Account generally ---------------------- shall be maintained and adjusted in accordance with Section 1.704-l(b) of the Treasury Regulations. There shall be credited to each Venturer's Capital Account (a) the amount of any cash, and the initial Carrying Value of any assets other than cash, subsequently contributed by such Venturer to the capital of the Venture, (b) such Venturer's share of Venture income (as determined in accordance with Section 6.1), and (c) any items of gross income or gain allocated to such Venturer pursuant to Section b .4, and there shall be charged against each Venturer's Capital Account (w) the amount of all cash distributions to such Venturer, (x) the fair market value of any property distributed to such Venturer by the Venture (net of any liability secured by such property that the Venturer is considered to assume or take 4 subject to under section 752 of the Internal Revenue Code of 1986, as amended (the "Code")), (y) such Venturer's share of Venture loss (as determined in accordance with Section 6.1), and (z) any items of deduction, loss or Section 705 (a)(2)(B) Expenditure (as hereinafter defined) allocated to such Partner pursuant to Section 6.4. (c) In-Kind Distributions. If the Venture at any time distributes any of --------------------- its assets to any Venturer in kind, the Capital Accounts of the Venturers shall be adjusted to account for the Venturer's allocable shares (as determined, in each case, in accordance with Article 6) of the revenue, expense, income or loss that would have been realized by the Venture had the distributed assets been sold for their respective fair market values (taking into account Section 7701(g) of the Code) immediately prior to such distribution. (d) Section 754 Elections. In the event that the Venture makes an --------------------- election under Section 754 of the Code, the amount of any adjustments to the basis (or Carrying Values) of the assets of the Venture made pursuant to Section 743 of the Code shall not be reflected in the Capital Accounts of the Venturers, but the amounts of any adjustments to the bases (or Carrying Values) of the assets of the Venture made pursuant to Section 734 of the Code as a result of the distribution of property by the Venture to the Venturer (to the extent that such adjustments have not previously been reflected in the Venturers' Capital Accounts) shall (a) be reflected in the Capital Accounts of the Venturer receiving such distribution in the case of a distribution in liquidation of such Venturer's interest in the 5 Venture and (b) otherwise be reflected in the Capital Accounts of the Venture in the manner in which the unrealized income and gain that is displaced by such adjustments would have been shared had the property been sold at its Carrying Value immediately prior to such adjustments. (e) Transferee's Capital Accounts. In the event any interest in the ----------------------------- Venture is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent related to the transferred interest. (f) Determinations. Except as otherwise provided in this Agreement, -------------- whenever it is necessary to determine the Capital Account of any Venturer, the Capital Account of such Venturer shall be determined after giving effect to all allocations pursuant to Article 6 with respect to transactions effected, and all distributions made, prior to the date and time as of which such determination is to be made. (g) Negative Balances. No Venturer with a negative balance in its Capital ----------------- Account shall have any obligation to the Venture or any other Venturer to restore such negative balance. Sec. 3.5 Venture Assets and Expenses. The Venture shall purchase, -------- --------------------------- construct, lease or otherwise acquire all other property and assets required to carry on the Venture's business and shall pay all of the Venture's expenses. 6 ARTICLE IV VENTURE MANAGEMENT Sec. 4.1 Venture Organization. The management organization of the Venture -------- -------------------- shall consist of a Management Committee (the "Committee") and a Managing General Partner. Sec. 4.2 Management Committee. -------- -------------------- (a) Except as provided in Section 4.3, all action and decisions in the management of the business of the Venture shall be taken by the Management Committee. Agreement on behalf of either Venturer pursuant to this Agreement shall be communicated through the Venturer's representatives on the Management Committee. (b) Each Venturer, by notice to the other Venturer, has appointed a number of representatives to the Management Committee in conjunction with such Venturer's interest in the Venture, which shall consist of at least three members. The initial Management Committee shall consist of two representatives appointed by Sentry and one representative appointed by Bluegrass. At least one of the representatives of each Venturer shall be an officer with the authority to act on behalf of the Venturer he represents. The Management Committee may be increased in size by mutual consent, but shall always consist of a number of members appointed by each Venturer in proportion to such Venturer's interest in the Venture. At any time and from time to time, either Venturer may remove and appoint a replacement for any of its representatives by notice to the other Venturer. The salaries, benefits and expenses of Committee members, while 7 performing Committee functions, shall be borne by their respective employers. (c) Meetings of the Management Committee may be held at such intervals and at such places as the Committee shall determine, but at least every calendar quarter. (d) The following actions shall require in every event the written consent of each Venturer, executed by an officer thereof duly authorized "hereunto; (i) The liquidation or dissolution of the Venture; (ii) The sale of all or substantially all of the assets of the Venture; (iii) Any merger or consolidation of the Venture into or with any other entity, or any transfer, assignment, or encumbrance of a Venturer's interest; (iv) Any amendment, modification, change or variation in or to this Agreement; (v) Approval of the annual capital and operating budgets of the Venture; (vi) Approval of any coal supply agreement, regardless of term including modifications of existing agreements. (e) The Management Committee is authorized to elect an Executive Manager, Deputy Executive Managers, and a Secretary, all to serve without payment. The Executive Manager and the Deputy Executive Managers shall be authorized to execute. on behalf of the Venture, legal instruments of all types, including applications for permits, contracts and any and all documents and papers of any type relating thereto. The Secretary shall keep correct minutes of any and all meetings 8 or determinations of the Management Committee and shall be authorized to provide certified copies of any resolutions of the Venture. Sec. 4.3 Managing General Partner. (a) Bluegrass shall act as Managing -------- ------------------------ General Partner and in that capacity shall have responsibility for the development, construction and operation of the mines and all related activities to the Venture, including but not limited to, the following: (1) Providing or arranging for and supervising all construction and general engineering services, including any necessary coal reserve drilling; (2) Purchasing of all repair parts and supplies; (3) Providing or arranging for all administration, general supervision, management and technical services; and (4) Providing or arranging for financial and accounting services as described in Articles V and VI herein. (b) All production and supervisory personnel required for the operations of coal mines, including maintenance of equipment and facilities, shall be exclusively employees of shall not be employees of the Venture. It is expressly agreed between the Venturers that the Venture, or any Venturer, shall not control the hiring of employees of the third parties and shall not direct the actions of the workforce. The workforce will be hired and directed by such third parties exclusively, and the Managing General Partner shall direct and control any third parties retained for the operations of coal mines. The Executive Manager shall have the day to day responsibility of administering any 9 third party production contracts, but shall, under no circumstances, undertake responsibility for the hiring of such third party's workforce. (c) The Venture shall employ, from time to time, employees to assist in the administration of the Venture ("Administrative Employees"). Decisions regarding the total number of Administrative Employees of the Venture, shall be subject to annual budget reviews of the Venture. ARTICLE V ACCOUNTING AND FISCAL PROCEDURES Sec. 5.1 Books and Records. Complete books and records accounting for the -------- ----------------- results of operations of the Venture shall be kept and maintained by the Venture and each Venturer shall have the right to inspect and examine such books or records at all reasonable times. Sec. 5.2 Method of Accounting. The books of account of the Venture shall -------- -------------------- be maintained on the accrual basis and in accordance with generally accepted accounting principles which, having been adopted, shall not be changed without unanimous Committee approval. Accounting for financial and tax purposes shall be in accordance with Article VI hereof, except as determined by unanimous vote of the Committee. Sec. 5.3 Fiscal Year. The fiscal year of the Venture for both financial -------- ----------- and tax reporting purposes shall be from October 1 through September 30. 10 Sec. 5.4 Auditors. The independent auditors of the Venture shall be the -------- -------- accounting firm of Ernst and Young and shall not be removed without the unanimous vote of the Venturers. Sec. 5.5 Borrowing. The Venture shall only borrow money upon the unanimous -------- --------- consent of the Venturers. ARTICLE VI PARTNERSHIP DISTRIBUTIONS, ELECTIONS AND ALLOCATIONS Sec. 6.1 Division of Venture Income or Loss. All items of the Venture's -------- ---------------------------------- annual revenue, expense, income or loss, as shown by the certified statement of income for the year, shall be divided between the parties as follows: Sentry 51% Bluegrass 49% Sec. 6.2 Tax Allocation Provisions. -------- ------------------------- (a) Certain Definitions. 1. "Carrying Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (i) the initial Carrying Value of any asset contributed to the Venture shall be such asset's gross fair market value at the time of such contribution; (ii) if the Venture elects to adjust the Capital Account balances of the Venturers to reflect the fair market value of the Venture's assets in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), the Carrying Values 11 of all Venture assets shall be adjusted to equal their respective gross fair market values at the time of such election; and (iii) if the Carrying Value of an asset has been determined pursuant to clause (i) or (ii) of this Section 6.2(a), and if the asset's adjusted tax basis for federal income tax purposes differs from the Carrying Value at such time, such Carrying Value shall thereafter be adjusted in the same manner as would the asset's adjusted basis for federal income tax purposes. 2. "Excess Depletion" means percentage depletion with respect to depletable property which exceeds the adjusted tax basis of such property. 3. "Section 705(a)(2)(B) Expenditure" means any expenditure of the Venture described in Section 705(a)(2)(B) of the Code and any expenditure considered to be an expenditure described in Section 705(a)(1)(B) of the Code pursuant to Treasury Regulations under Section 704(b) of the Code. (b) In General. For income tax purposes, all items of gross income, ---------- gain, loss, deduction and Section 705(a)(2)(B) Expenditure for a fiscal year (other than items allocated pursuant to Section 6.2(c) or Section 6.2(d)) hereof shall be allocated to the Venturers in the same manner as is the Venture's income or loss for such year; provided, however, that, if the Carrying Value of any property of the Venture differs from is adjusted basis for federal income tax purposes, then items of gain, loss and deduction the amount of which is affected by such 12 adjusted basis (other than items allocated pursuant to Section 6.2(c)) shall be allocated among the Venturers in a manner that takes account of the variation between the adjusted basis of the property for tax purposes and its Carrying Value in the manner provided for under Section 704(c)(1)(A) of the Code and the Treasury Regulations thereunder. (c) Excess Depletion. Excess Depletion, if any, for a fiscal year ---------------- shall, pursuant to Treasury Regulation Section 1.704-1(b)(4)(iii), be allocated in accordance with the allocation of gross income for such year. (d) Special Allocations. Allocations pursuant to Section 6.4 of ------------------- items of gross income, gain, loss, deduction and Section 705(a)(2)(B) Expenditure of the Venture shall, except as otherwise required by Treasury Regulations under Section 704(b) of the Code, consist of a pro rata portion of each item of gross income, gain, loss, deduction, and Section 705(a)(2)(B) Expenditure of the Venture, as appropriate, for such fiscal year. Sec. 6.3 Other Tax Matters. -------- ----------------- (a) Designation of Tax Matters Partner. 1. Sentry shall be the tax matters partner (the "TMP") of the Venture within the meaning of Section 6231(a)(7) of the Code. The TMP shall not extend the statute of limitations on behalf of the Venture, select the Venture's choice of litigation forum in a tax controversy or take any other action in its capacity as TMP without the consent of the other Venturers. The TMP shall keep the other Venturers fully advised of the progress of any audit and shall supply the other Venturers with copies of any written communications received from the Internal Revenue 13 Service or other taxing authority relating to any audit within ten days after receipt thereof, and shall at least five business days prior to submitting any materials to the Internal Revenue Service, or other taxing authority, provide such materials to the other Venturers. Any settlement with the Internal Revenue Service shall be agreed upon by all Venturers. The TMP shall be reimbursed by the Venture for any reasonable expenses incurred in its capacity as TMP. 2. Nothing in this Section 6.3(a) is intended to authorize the TMP to take any action that is left to the determination of a Venturer under Sections 6222 through 6233 of the Code. (b) This Venture is -intended to and shall constitute a partnership for income tax purposes. (c) Except as hereinafter specified, the unanimous vote of the Committee shall determine any partnership elections to be made by or on behalf of the Venture for tax purposes. (d) The Managing General Partner shall be responsible for preparing or causing to be prepared and the filing of any required federal and state income tax returns. (e) Compliance with Treasury Regulated. The provisions of this ---------------------------------- Article VI and-the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulation Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Treasury Regulations. 14 6.4 Special Allocation Provisions. (a) Certain Definitions. 1. "Minimum Gain" for the Venture means the amount determined by computing with respect to each non-recourse liability of the Venture the amount of income, if any, that would be realized by the Venture if it disposed of the property securing such liability in full satisfaction thereof, and by then aggregating the amounts so computed. 2. "Share of Minimum Cain" means, for each Venturer, the excess, if any, of (i) the sum of the aggregate Non-Recourse Deductions allocated to such Venturer (and such Venturer's predecessors in interest), cumulatively from the inception of the Venture, and the aggregate distributions to such Venturer (and such Venturer's predecessors in interest), cumulatively from the inception of the Venture,- of proceeds of a non-recourse liability that are allocable~to an increase in Venture Minimum Gain, over (ii) the sum of such Venturer's (and such Venturer's predecessors') aggregate share (determined as described below) of any net decreases in Venture Minimum Gain, cumulatively from the inception of the Venture. For purposes of the Section 6.4: (a) a deduction shall constitute a "Non-Recourse Deduction" if, and to the extent that, at the time such item was incurred it increased the amount of the Venture's Minimum Gain; (b) a Venturer's share of the net decrease in Venture Minimum Gain during a taxable year shall be an amount that bears the same relation to the tenth decrease in Minimum Gain during such year as such Venturer's Share of Minimum Gain at the end of the prior taxable year (or if later at the time immediately following the 15 last time that the Capital Accounts of the Venturers are increase pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) or (r) to reflect the revaluation of Venture property subject to one or more non-recourse liabilities of the Venture) bears to he amount of Minimum Gain at the end of such prior taxable year (or such later date); (c) a Venturer's share of any decrease in Venture Minimum Gain resulting from a revaluation of Venture property equals the amount of the increase in such Venturer's Capital Account attributable to such revaluation to the extent of the reduction in Minimum Gain caused by such revaluation; (d) in determining the net increase or decrease in Venture Minimum Gain during any Venture taxable year in which the Capital Accounts of the Venturers are increased pursuant to a revaluation of Venture property subject to one or more non-recourse liabilities of the Venture, any decrease in Venture Minimum Gain attributable to each such revaluation shall be added back to the net decrease or increase otherwise determined; and (e) a distribution to a venturer by the Venture that is allocable to the proceeds of any non-recourse liability of the Venture is allocable to an increase in the Venture Minimum Gain to the extent of the amount of the net increase, if any, in Venture Minimum Gain for such taxable year that is allocated to such non-recourse liability under Treasury Regulation Section 1.704-2(h). 3. "Partner Minimum Gain" means Minimum Gain that would result if all partner non-recourse debt, as defined in Treasury Regulation Section 1.704-2(b)(4) ("Partner non-Recourse Debt"), were treated as non-recourse liabilities of the Venture and the Venture had no other non-recourse liabilities. 16 4. "Share of Partner Minimum Gain" means, for each Venturer, such Venturer's Share of Minimum Gain that would result if all Partner non- Recourse Debt were treated as non-recourse liabilities of the Venture and the Venture had no other non-recourse liabilities. (b) Minimum Gain Chargeback. Notwithstanding any other provisions in this Agreement to the contrary, if in any fiscal year there is a net decrease in the amount of the Venturers Minimum Gain or in the amount of the Partner Minimum Gain, each Venturer shall be allocated income and gain (including gross income) for such year or other period (and, if necessary, for subsequent years) in proportion to, and to the extent of, an amount equal to the greater of (i) the portion of such venturer Is share of the net decrease in Minimum Gain or Partner Minimum Gain during such year or period that is allocable to the disposition of the Venture property subject to one or more non-recourse liabilities of the Venture (including Partner Non-Recourse Debt), or (ii) the negative balances (computed with the adjustments described below) in such Venturer's Capital Account at the end of such year (prior to any allocation pursuant to Section 6.1, Section 6.4(c), the last sentence of Section 6.4(d) or the last sentence of Section 6.4(e). In determining a Venturer's negative Capital Account balance for purposes of this Section 6.4(b), a Venturer's Capital Account balance shall be increased by the amount, if any, that such Venturer is obligated to restore to the Venture upon liquidation and shall be decreased by the amounts of any net allocations, distributions or other items specified in the first sentence of Section 6.4(c) that, as 17 of the end of the taxable year, are reasonably expected to be made to such Venturer. For purposes of this Section 6.4(b) and Section 6.4(c), the amount that a Venturer may be obligated to contribute to the Venture upon liquidation shall be considered to include: (a) such Venturer's allocable share (as determined under Section 752 of the Code, of any recourse indebtedness of the Venture which could not be repaid out of the Venture's assets if all such assets were sold at their respective Carrying Values; (b) any unconditional obligation of such Venturer to contribute additional amounts to the capital of the Venture in the future (to the extent not previously taken into account in determining such Venturers share of recourse liabilities of the Venture); (c! such Venturer's Share of Minimum Gain; and (d) such Venturers Share of Venture Minimum Gain. In the event any items of income and gain (including gross income) of the Venture are reallocated to a Venturer pursuant to the first sentence of this Section 6.4(b), subsequent items of loss, deduction, or Section 705(a)(2)(B) Expenditure of the Venture shall be allocated (prior to any allocation pursuant to Section 6.1, but subject to Section 6.4(d)) to the Venturers in a manner designed to result in each Venturer having a Capital Account balance equal to what it would have been had the reallocation of items of income and gain (including gross income) pursuant to the first sentence of this Section 6.4(b) not occurred. Allocations of income and gain (including gross income) made pursuant to this Section 6.4(b) shall be made with respect to Venture Minimum Gain prior to any allocation made pursuant to this Section 6.4(b) with respect to Partner Minimum Gain. 18 (c) Qualified Income Offset. Notwithstanding any other provision in ----------------------- this Agreement (other than Section 6.4(b)), if (i) during any fiscal year a Venturer (a) is allocated pursuant to Section 706(d) of the Code or Treasury Regulation Section 1.751-l(b)(2)(ii) any items of loss, deduction or Section 705(a)(2)(B) Expenditure, (b) is distributed any cash or property from the Venture to the extent such distributions exceed offsetting increases to such Venturer's Capital Account that are reasonably expected to occur during such year, or (c) receives any other adjustment, allocation or distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) and, as a result of such adjustment, allocation or distribution, such Venturer has a Qualified Income Offset Amount, then (ii) items of income and gain (including gross income) for such fiscal year (and, if necessary, subsequent years), shall (prior to any allocation pursuant to Section 6.1, the last sentence of Section 6.4(d) or the last sentence of Section 6.4(e), but subsequent to any allocation pursuant to Section 6.4(b)) be allocated to such Venturer in an amount equal to his Qualified Income Offset Amount. As used herein, the term "Qualified Income Offset Amount" for a Venturer means the excess, if any, of (x) the negative balance in a Venturer's Capital Account immediately after the adjustment, allocation or distribution described in clause (i) of the preceding sentence (but without regard to any allocation pursuant to clause (ii) of the preceding sentence), over (y) the maximum amount that such Venturer may be obligated to contribute to the Venture upon liquidation as determined pursuant to the third sentence of Section 6.4(b). In the event any items of 19 income and gain (including gross income) of the Venture are reallocated to a Venturer pursuant to the first sentence of this Section 6.4(c), subsequent items of loss, deduction or Section 705(a)(2)(B) Expenditure of the Venture shall be allocated (prior to any allocation pursuant to Section 6.1, but subject to Sections 6.4(d) and 6.4(e)) to the Venturers in a manner designed to result in each Venturer having a Capital Account balance equal to what it would have been had the reallocation of items of income and gain (including gross income) pursuant to the first sentence of this Section 6.4(c) not occurred. (d) Limitations on Loss Allocation. Notwithstanding the provisions ------------------------------ of Section 6.1, in no event shall net loss (or items thereof) of the Venture be allocated to a Venturer if such allocation would result in such Venturer having a Qualified Income Offset Amount. Any allocation to a Venturer which is prevented by the operation of the preceding sentence shall be reallocated in accordance with Section 6.1, subject to the subsequent provisions of this Section 6.4(d). For purposes of this Section 6.4(d), the determination of whether an allocation of net loss (or items thereof) would produce a Qualified Income Offset Amount for a Venturer shall be made after reducing the Venturer's Capital Account by the amounts of any adjustment, allocation or distribution described in clause (i) of the first sentence of Section 6.4(c) that, as of the end of the fiscal year, are reasonably expected to be made to the Venturer. In the event any net loss of the Venture is reallocated from a Venturer pursuant to the first sentence of this Section 6.4(d), subsequent items of income and gain (including gross income) will first be 20 allocated (subject to Sections 6.4(b) and 6.4(c)) to the Venturers in a manner designed to result in each Venturer having a Capital Account balance equal to what it would have been had the reallocation pursuant to the first sentence of this Section 6.4(d) not occurred. (e) Allocation of Partner Non-Recourse Deductions. Items of loss, --------------------------------------------- deduction and Section 705(a)(2)(B) Expenditures attributable, under Treasury Regulation Section 1.704-2(i), to Partner Non-Recourse Debt shall (prior to any allocation pursuant to Section 6.1, but subject to the provisions of Section 6.4(d)) be allocated, as provided in Treasury Regulation Section 1.704 2(i), to the Venturers in accordance with the ratios in which they bear the economic risk of loss for such debt. In the event any items of loss, deduction and Section 705(a)(2)(B) Expenditure of the Venture are allocated pursuant to the first sentence of this Section 6.4(e), subsequent items of income and gain (including gross income) shall (prior to any allocation pursuant to Section 6.1, and subject to Sections 6.4(b) and 6.4(c)) be allocated to the Venturers in a manner designed to result in each Venturer having a Capital Account balance equal to what it would have been had the reallocation pursuant to the first sentence of this Section 6.4(e) not occurred. Sec. 6.5 Cash Calls and Distributions. Cash contributions and cash -------- ---------------------------- distributions shall be made to or by the Venturers at such times and in such amounts as shall be determined by the Committee. The Venture shall make cash distributions only in excess of the 'Free Cash Flow" of the Venture. "Free Cash Flow" shall be defined as the amount of cash generated by the Venture, 21 determined on a monthly basis, in excess of the foreseeable cash requirements of the Venture over the subsequent 30-day period following the date of such determination. ARTICLE VII TERMINATION Sec. 7.1 Events of Termination. The Venture shall terminate upon the -------- --------------------- occurrence of the earliest of the following events: (a) Exhaustion of the Venture's economically recoverable coal reserves heretofore or hereafter acquired; (b) Bankruptcy of either Sentry or Bluegrass; or (c) As otherwise provided by law. Sec. 7.2 Termination Procedure. Upon termination of the Venture, a final -------- --------------------- audit shall be made and the following procedure shall govern: (a) All assets, other than cash, shall be sold or collected and turned into cash, provided, however, that if termination is other than as a result of the bankruptcy of one of the Venturers that the other Venturer shall have the right, at its option, to buy all (but not less than all) of the assets of the Venture for an amount equal to their then fair market value. In the event such Venturer elects to purchase such assets, the Venturers shall agree upon the fair market value of such assets. If the Venturers cannot agree upon the fair market value of such assets, such value shall be determined by an appraisal made by an independent mining consultant having broad experience in the art of coal mining to be agreed upon by the Venturers within thirty (30) days of their failure to reach agreement on such value. If 22 the Venturers cannot agree upon an independent mining consultant, the selection thereof shall be submitted to arbitration pursuant to Sec. 8.11 hereof; (b) All of the Venture's debts and obligations, including loans or advances from either Venturer, shall be paid in full; and (c) The remaining cash, if any, shall be distributed to the Venturers in proportion to their respective Capital Accounts. No Venturer shall be obligated to restore any negative balance in its Capital Account. ARTICLE VIII REPRESENTATIONS AND WARRANTIES The Venturers hereby represent and warrant to each other, as more specifically provided herein, as follows: (a) Authority. Each Venturer is a corporation duly organized, validly --------- existing and in good standing under the laws of the State of their incorporation and qualified to transact business within the State of Kentucky. All corporate acts and other proceedings required to be taken to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and properly taken. (b) Title to Property. The Venturers have good and valid title to any ----------------- property to be contributed to the Venture, free and clear of any liens, claims and encumbrances of any kind. 23 (c) Governmental Approvals. Each Venturer possesses all governmental ---------------------- franchisees, licenses, permits, authorizations and approvals necessary (including, without limitation, all authorizations and bonds posted in connection therewith, whether pertaining to health or safety, the environment or otherwise) to enable it to use its corporate name and to own, lease or otherwise hold its properties and assets and to carry on its business as presently conducted. (d) Litigation. Neither Venturer is a party to any lawsuit, claim, ---------- proceeding or investigation, and to the best knowledge of each Venturer, no such lawsuit, claim, proceeding or investigation is threatened, as of the date of this Agreement, by or against or affecting any Venturer or any of its properties, assets, operations or businesses other than as set forth on Schedule 8(d) hereto. Neither Venturer is subject to or in default under any judgment, order or decree of any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, applicable to it or any of its properties, assets, operations or businesses. (e) Absence of Changes or Events. Except as disclosed on Schedule 8 (e) ---------------------------- hereto, or otherwise expressly permitted by the terms of this Agreement, there has not been any material adverse change in the business, assets, conditions or results of operations of either Venturer since May 19, 1995. (f) Absence of Certain Liabilities. Bluegrass warrants and indemnifies ------------------------------ Sentry against any claim or cause of action arising out of the operation of the Patriot Mine prior to the Effective Date of this Agreement. All accounts receivable and accounts 24 payable and any other liabilities arising out-of the operation of the Patriot Mine prior to the Effective Date of this Agreement shall remain the property of and the responsibility of Bluegrass. (g) Environmental Matters. Except as disclosed on Schedule 8 (g) hereto: --------------------- (i) Bluegrass warrants that no environmental condition exists, which would have a material adverse effect on the Patriot Mine, nor any Hazardous Substance (as defined herein) has been released, discharged, deposited, emitted, leaked, spilled, poured, emptied, injected, dumped, disposed or otherwise placed or located on, in or under the real property owned or leased at the Patriot Mine. For purposes of this Agreement, "Hazardous Substance" means any "hazardous substance" as that term is defined in 42 U.S.C. (S)11049 (3), or any other material regulated under any environmental law, statute, regulation, code, permit or order of the United States, any state, or any other governing body, authority or agency. All Hazardous Substances that have been removed from the Patriot Mine have been handled, transported, stored, treated and disposed of in compliance with all Environmental Laws. For purposes of this Agreement "Environmental Laws" shall mean the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C., Section 1201, et seq.), as amended, and its state counterpart; the Federal Water Pollution Control Act (33 U.S.C., Section 1251, et seq.) as amended, and its state counterpart; the Clean Air Act (42 U.S.C., Section 7401, et seq.), as amended, and its state counterpart; the Federal Mine Safety and Health Act of 1977 (30 U.S.C. Section 801 et seq.) as amended, and its state counterpart; the Toxic 25 Substances Control Act (14 U.S.C. Section 2601, et seq.) as amended, and its state counterpart; the Resource Conservation and Recovery Act of 1976 (42 U.S.C., Section 6901, et seq.) as amended, and its state counterpart; the Comprehensive Environmental Response, Compensation and Liability Act (92 U.S.C. Section 9601, et seq.) as amended by the Superfund Amendments and Reauthorization Act, and its state counterpart; and other laws or regulations pursuant to which the Patriot Mine has an existing Permit. (ii) Bluegrass warrants that there are no threatened or pending investigations, citations, Quits or notices of violation resulting from or connected with, the Patriot Mine, relating to the use, storage, disposal, transportation, release, discharge or emission of any Hazardous Substance. (iii) Bluegrass warrants that all permits, licenses, consents and authorizations necessary for full compliance of the Patriot Mine with all applicable environmental laws have been obtained and are valid and in full force and effect. (iv) Bluegrass warrants that the Patriot Mine complies with all Environmental Laws. (h) Applicant Violator System. Each Venturer warrants that the Venturer, ------------------------- its officers, shareholders, subsidiaries, affiliates and any other entity that can be attributed to it under the "ownership and control" regulations issued by the Office of Surface Mining are not currently "permit blocked" pursuant to the Surface Mining Reclamation and Control Act of 1977 ("SMCRA"). Bluegrass warrants that no unabated violation of SMCRA or its state counterpart exists at the Patriot Mine on the 26 Effective Date that would cause either or both of the Venturers to be "permit blocked". ARTICLE IX GENERAL Sec. 9.1 Governing Law. This Agreement shall be construed in accordance -------- ------------- with the laws of the State of Delaware, including the provisions of the Revised Uniform Limited Partnership Act thereof. Sec. 9.2 Sole and Only Agreement. This Agreement, including any schedules -------- ----------------------- hereto, represents the full understanding and agreement between the parties and supersedes all previous correspondence, memoranda, and drafts of agreements exchanged by the parties. It is intended that there shall be no conflict between this Agreement and the schedules attached hereto but if such conflict shall be found to exist, this Agreement shall prevail. This Agreement may not be changed, modified, altered or amended except by an agreement in writing signed by the Venturers. The failure of any Venturer at any time or times to require performance of any provision hereof shall in no manner affect the right to later enforce such rights. No waiver by any Venturer of any condition, or of the breach of any term, provision, covenant, representation or warranty contained in this Agreement or in the Schedules hereto or in connection with the transactions contemplated hereby, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition 27 or of the breach of any other term, provision, covenant, representation or warranty. Sec. 9.3 Partial Invalidity. If any term or provision of this Agreement -------- ------------------ shall be rendered invalid, illegal or unenforceable, the remaining terms and provisions of this Agreement shall be unaffected thereby and shall continue in full force and effect. Sec. 9.4 Amendments. This Agreement and the schedules hereto may be -------- ---------- amended only by an instrument in writing signed by the parties. Sec. 9.5 Title to Venture Property. Title to all Venture real or personal -------- ------------------------- property shall be taken and held in the name of the Venture or in such other name or manner as the Committee may from time to time determine or as may be required by applicable law. Sec. 9.6 Further Assurances. Each Venturer shall execute all documents -------- ------------------ and take all action as may reasonably be required to effectuate the purposes and intent of this Agreement, including compliance with all applicable laws and regulations. Sec. 9.7 Inspection. Each Venturer or its authorized representatives may -------- ---------- examine any of the mines or equipment, at any reasonable time, and without notice. Sec. 9.8 Insurance. The Venture shall self insure all property of the -------- --------- Venture against loss by casualty and liability arising from its operations (and ensure any contract miner maintains acceptable insurance coverage on its operations)and activities. 28 Sec. 9.9 Execution of Venture Documents. Contracts, leases, evidences of -------- ------------------------------ indebtedness and other instruments and documents to which the Venture is a party shall be executed in the name and on behalf of the Venture by such person or persons as shall be authorized by the Managing General Partner or by the Committee pursuant to Section 4 herein. Sec. 9.10 Assignment. Neither party may sell, assign or otherwise --------- ---------- transfer all or any part of its interest in this Agreement or the Venture created thereby without the prior written consent of the other party. Sec. 9.11 Arbitration. Any unresolved controversy between the parties, --------- ----------- including inability to agree upon any matter subject to Joint Agreement, other than as expressly provided herein, and claims by one party against the other shall, at the written request of either party, be submitted to arbitration and shall be determined under the Rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Each Venturer shall select one arbitrator and each arbitrator shall select a neutral third arbitrator and in the event of their inability to do so, the party who requested arbitration may apply to the United States District for the district in which the Patriot Mine is located to appoint a third arbitrator. Within thirty (30) days after the appointment of three arbitrators, notice shall be given by the arbitration tribunal to the parties regarding the time and place of hearing which in no event shall be later than sixty (60) days after selection of the arbitrators. After hearing, a majority of the 29 arbitrators shall decide the controversy and render an award in writing to the parties setting forth the issues adjudicated, the resolution thereof and the reasons for the award. All arbitrators shall be disinterested persons familiar with the business of mining coal. Sec 9.12 Defaults. No waiver by either Venturer for any one or more -------- -------- defaults by the other in the performance of any provisions of this Agreement shall operate or be construed as a waiver of any future default or defaults, whether of a like or of a different character. In the event of any dispute under this Agreement, the parties hereto shall, notwithstanding the pendency of such dispute, diligently proceed with the performance of this Agreement without prejudice to the rights of the other party. A default of either party in the performance of any of its covenants or obligations under this Agreement, which, except for this provision, would be the legal basis for an action for breach of contract or termination of this Agreement by the other party, shall not give or result in such a right unless and until the party committing such default shall fail to either (1) correct the default within sixty (60) days after written notice of claim of such default and a statement setting forth the nature thereof is given to such defaulting party by the party claiming such default, except for defaults occurring due to the nonpayment of amounts due hereunder, or (2) give notice within said period of the submission of the validity of the claim of default to arbitration pursuant to Sec. 8.11. Notwithstanding the foregoing, in the event a "permit block" occurs due to the action or inaction of either Venturer, the other Venturer may, upon three 30 days notice giving such Venturer the opportunity to cure the permit block, declare the other Venturer in default under this Agreement and this Agreement would be terminated in accordance with Article VII hereto. Sec. 9.13 Notices. All notices required to be given hereunder shall be --------- ------- considered as properly given when delivered by hand or sent by first class or certified mail to the parties at the following addresses, provided that the person to whom notices are to be given hereunder may be changed by notice in writing from one party to the other: Sentry: President Sentry Mining Company 701 Market St., Suite 700 St. Louis, MO 63101 Bluegrass: President Bluegrass Coal Company 701 Market Street St. Louis, MO 63101 Sec. 9.14 Effect of Other Agreements. General rights granted to and --------- -------------------------- obligations undertaken by the Venture and/or the Venturers hereunder shall be subject to specific rights granted or obligations undertaken pursuant to agreements between the Venture and third parties. Sec. 9.15 Confidentiality. Except as required by law or by any financing --------- --------------- institution with respect to financing made or to be made available by it, the Venturers agree that they shall each keep confidential the terms and provisions of this Agreement, and no party shall release any publicity with respect to this Agreement except following consultation with and obtaining the prior written approval of the other party, which shall not be unreasonably withheld. 31 Sec. 9.16 Interpretation. In this Agreement, unless the context otherwise --------- -------------- requires: (a) words importing the singular include the plural and vice versa and words of one gender include every other gender; (b) headings are for convenience only and do not affect interpretation of this Agreement; (c) references to any party to this Agreement or any other agreement or instrument include the party's successors and permitted assigns; (d) a reference to a document includes an amendment or supplement to, or replacement of that document; (e) where a word or expression is defined, other, grammatical forms have a corresponding meaning. Sec. 9.17 Counterparts. This Agreement may be executed in one or more --------- ------------ counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their proper officers as of the day and year first above written, intending to be legally bound thereby. ATTEST: SENTRY MINING COMPANY [Executed] /s/ Thomas S. Hilton ----------------------- ---------------------- Secretary President ATTEST: BLUEGRASS COAL COMPANY [Executed] [Executed] ----------------------- ---------------------- Secretary President 32 Schedule 3.2 REAL AND PERSONAL PROPERTY CONTRIBUTED TO THE VENTURE I. Leased and Owned Mining Equipment - See attached Schedule 1 II. Coal Mining Leases a. Coal Mining Lease dated September 28, 1984, as amended by and between Reynolds Metals Company and DEW Resources, Inc. b. Coal Mining Sublease dated November 27, 1985 by and between DEW Resources, Inc. and Pyramid Mining, Inc. c. Lease dated November 11, 1985, as amended, by and between Harold D. Allen and Aiko N. Allen, his wife, and Pyramid Mining, Inc. d. Contingent Benefit Agreement, dated as of May 13, 1988, by and between (1) D. C. Hall, Jr., (2) E. R. Phelps, (3) W. N. Poundstone, (4) Dennis Hall and Pyramid Mining, Inc. e. Contingent Interest Agreement, dated as of May 13, 1988, by and between (I) D. C. Hall, Jr., (2) E. R. Phelps, (3) W. N. Poundstone (4) Dennis Hall and Pyramid Mining, Inc. f. Proceeds of a certain Settlement Agreement and Contingent Interest Agreement, dated October 5, 1988 by and between Green Construction of Indiana, Inc. d/b/a Green Coal Company and Dew Resources, Inc. III. Coal Supply Agreements a. Fuel Purchase Order No. 04-22-93-003 dated November 15, 1993 by and between Indiana Michigan Power Company and Pyramid Mining, Inc. for the Tanners Creek Plant #4. b. Coal Marketing and Sales Agreement, dated April 17, 1990 by and between Coal Network, Inc. and Pyramid Mining, Inc. c. Coal Purchase Agreement, BST 493C, dated March 17, 1993 by and between Tampa Electric Company and Pyramid Mining, Inc. IV. Real Property Improvements a. Patriot Dock, Henderson County, Kentucky b. Patriot Preparation Plant, Henderson County, Kentucky c. Office Trailer and Office Furniture, Fixtures and Equipment d. Truck Scales located at the Patriot Mine, Henderson County, Kentucky 33 e. Structure purchased from William and Irene Peckenpaugh on June 4, 1986 located in Henderson County, Kentucky V. Miscellaneous a. All Utility Deposits associated with the Patriot Mine, Henderson County, Kentucky b. All Licenses and Permits associated with the Patriot Mine, Henderson County, Kentucky c. Miscellaneous Equipment, Tools, Supplies, Fuel, Scrap, etc. located at the Patriot Mine, Henderson County, Kentucky as of the Closing Date. d. All coal stockpiles existing at the Patriot Mine at Closing. 34 EX-3.67 68 CERT OF INCORP OF PEABODY AMERICA, INC. EXHIBIT 3.67 CERTIFICATE OF INCORPORATION OF PEABODY AMERICA, INC. * * * * 1. The name of the corporation is PEABODY AMERICA, INC. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). At all elections of directors of the corporation, each stockholder shall be entitled to as many votes as shall equal the number of votes which (except for such provision as to cumulative voting) he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected by him, and he may cast all of such votes for a single director or may distribute them among the number to be voted for, or for any two or more of them as he may see fit. 5A. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS - ---- --------------- M. A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 L. J. Vitalo Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS - ---- --------------- G. H. MacLean 99 Wood Avenue South Iselin, New Jersey 08830 J E. Lushefski 701 Market, Suite 700 St. Louis, Missouri 63101 P. J. Statile 99 Wood Avenue South Iselin, New Jersey 08830 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. 2 To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the 3 by-laws of the corporation; and, unless the resolution or by-laws, expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. When and as authorized by the stockholders in accordance with statute, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 4 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 19th day of October , 1992. /s/ M.A. Brzoska ------------------------- /s/ K.A. Widdoes ------------------------- /s/ L.J. Vitalo ------------------------- 5 EX-3.68 69 BY-LAWS OF PEABODY AMERICA, INC. PEABODY AMERICA, INC. EXHIBIT 3.68 * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1993, shall be held on the first day of April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the 2 president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than 3 thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. At all elections of directors of the corporation each stockholder having voting power shall be entitled to exercise the right of cumulative voting as provided in the certificate of incorporation. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without 4 prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one nor more than ten. The first board shall consist of three directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in 5 office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure 6 of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president without notice to each director; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. 7 Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting 8 and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of 9 stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. 10 ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. 11 Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed 12 and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it 13 and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. 14 Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. 15 Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors 16 may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or 17 allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may 18 be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization 19 and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 20 EX-3.69 70 CERT OF INCORPORATION OF PEABODY COAL COMPANY EXHIBIT 3.69 CERTIFICATE OF INCORPORATION OF PEABODY COAL COMPANY -----ooOoo----- FIRST. The name of the corporation is PEABODY COAL COMPANY. SECOND. Its principal office in the State of Delaware is located at No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name and address of its resident agent is The Corporation Trust Company, No. 100 West Tenth Street, Wilmington, Delaware. THIRD. The nature of the business, or objects or purposes to be transacted, promoted or carried on are: To carry on and conduct general mining operations with respect to the recovery and removal of coal, ores, metals, stone, clay, sand, gravel, oil, gas, petroleum, timber, and all minerals, mineral substances, combustible substances, products and substances of all types, whether solid, liquid or gaseous. To mine, extract, remove, recover, and sever the aforesaid coal, minerals, products, and substances. To search for, prospect for, drill for, explore for, said coal, minerals, products, and substances. To manufacture, process, smelt, mill, treat, concentrate, refine, prepare for market, and otherwise produce and deal in (both at wholesale and retail) and with coal, coke, and all said minerals and substances and products, and the by-products and end products thereof, of every kind and description and by whatsoever process the same can or may now or hereafter be produced. To purchase, lease, rent, option, or in any way or in any manner acquire or hold title or secure franchises or interests in coal, all substances and minerals, mineral interests, mines, coal and mineral properties, mining claims and licenses, franchises, rights and privileges, in any estate, interest or rights in real property, personal or mixed property, and to develop and improve the foregoing. To lease, sell, exchange, or in any manner dispose of said interests and properties, and interests therein. To store, ship, transport, market, buy, sell, export, import, and otherwise deal as principal, agent, or broker in coal, ores, metals, stone, clay, sand, gravel, oil, gas, petroleum, timber, and all mineral, mineral substances, products and substances of all types, whether solid, liquid or gaseous, including coke and by-products and end products, and to transact such other business and operations as may be advisable or necessary to carry out the foregoing purposes. To sink shafts, pipes, slopes, drifts, wells, and construct and operate roads and roadways, reservoirs, pipelines, docks, barges, products and material transfer and handling equipment. To purchase, sell, use, maintain, lease, exchange, acquire, or dispose of in any manner, develop and improve, equip and erect any machinery, equipment, tools, fixtures, supplies, parts, appliances, plants, factories, warehouses, stores, depots, dwellings, mines, coke ovens, oil and gas wells, tipples, buildings, docks, pipelines, and structures of all types and on property real or personal, useful or incidental to the business of the corporation. To make, manufacture, process, purchase, own, hold, use, improve, develop, rent, lease, mortgage, encumber, pledge, buy, sell and otherwise to acquire, use, dispose of and deal in and with, commodities, articles, materials, goods, wares and merchandise, and other personal property of any and all kinds and descriptions. To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, 2 trade-marks and trade names, relating to or useful in connection with any business of this corporation. To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, chooses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof. To enter into, make and perform contracts of every kind and description with any person, firm, association, corporation, municipality, county, state, body politic or government or colony or dependency thereof. To borrow or raise moneys for any of the purposes of the corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes. To loan to any person, firm or corporation any of its surplus funds, either with or without security. To purchase, hold, sell and transfer the shares of its own capital stock, provided it shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital except as otherwise permitted by law, and provided further that shares of its own capital 3 stock belonging to it shall not be voted upon directly or indirectly. To have one or more offices, to carry on all or any of its operations and business and without restriction or limit as to amount to purchase or otherwise acquire, hold, own, mortgage, sell, convey or otherwise dispose of, real and personal property of every class and description in any of the states, districts, territories or colonies of the United States, and in any and all foreign countries, subject to the laws of such state, district, territory, colony or country. In general, to carry on any other business in connection with the foregoing, and to have and exercise all the powers conferred by the laws of Delaware upon corporations formed under the General Corporation Law of the State of Delaware, and to do any or all of the things hereinbefore set forth to the same extent as natural persons might or could do. The objects and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this certificate of incorporation, but the objects and purposes specified in each of the foregoing clauses of this article shall be regarded as independent objects and purposes. FOURTH. The total number of shares of stock which the corporation shall have authority to issue is Two Hundred Thousand (200,000) shares of the par value of Ten Dollars ($10.), amounting in the aggregate to Two Million Dollars, ($2,000,000). FIFTH. The minimum amount of capital with which ___________________ Certificate of Incorporation Amended Jan. 29, 1968 4 the corporation will commence business is One Thousand Dollars ($1,000.00). SIXTH. The names and places of residence of the incorporators are as follows: NAMES RESIDENCES ----- ---------- B. J. Consono Wilmington, Delaware F. J. Obara, Jr. Wilmington, Delaware A. D. Grier Wilmington, Delaware SEVENTH. The corporation is to have perpetual existence. EIGHTH. The private property of the stockholders shall not he subject to the payment of corporate debts to any extent whatever. NINTH. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper 5 purpose and to abolish any such reserve in the manner in which it was created. By resolution passed by a majority of the whole board, to designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in the resolution or in the by-laws of the corporation, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in the by-laws of the corporation or as may be determined from time to time by resolution adopted by the board of directors. When and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholders' meeting duly called for that purpose, or when authorized by the written consent of the holders of a majority of the voting stock issued and outstanding, to sell, lease or exchange all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may be in whole or in part shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 6 TENTH. Meetings of stockholders may be held outside the State of Delaware, if the by-laws so provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. Elections of directors need not be by ballot unless the by-laws of the corporation shall so provide. ELEVENTH. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that the facts herein stated are true, and accordingly have hereunto set our hands and seals this 20th day of March A.D. 1967. B. J. Consono (SEAL) ----------------- F. J. Obara, Jr. (SEAL) ----------------- A. D. Grier (SEAL) ----------------- 7 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION * * * * * PEABODY COAL COMPANY, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the board, adopted a resolution proposing and declaring advisable an amendment to the Certificate of Incorporation of said corporation as follows: RESOLVED, That this Board of Directors considers the amendment of the Company's Certificate of Incorporation by the addition thereto after paragraph "ELEVENTH" of a new paragraph numbered "TWELFTH" and reading as set forth below to be advisable and in accordance with the desire of the Company's sole stockholder that the personal liability of the Company's directors be eliminated or limited except in certain specified instances: TWELFTH. A director of this corporation shall under no circumstances have any personal liability to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for those specific breaches and acts or omissions with respect to which the Delaware General Corporation Law expressly provides that this provision shall not eliminate or limit such personal liability of directors. SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of section 228 of the General Corporation Law of the State of Delaware. 8 THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said PEABODY COAL COMPANY has caused this certificate to be signed by H. W. Williams, its President, and attested by J. L. Klinger, its Secretary, this 12th day of November, 1986. By: /s/ H.W. Williams ---------------------- H.W. Williams, President ATTEST: By: /s/ J. L. Klinger -------------------------- J. L. Klinger, Secretary 9 EX-3.70 71 RESTATED BY-LAWS OF PEABODY COAL COMPANY EXHIBIT 3.70 RESTATED BYLAWS OF PEABODY COAL COMPANY (As Amended August 16, 1990) ARTICLE I --------- OFFICES Section 1. The principal office shall be in Wilmington, Delaware. Section 2. The Company may have offices also at such other places within and without the State of Delaware as the board of directors may from time to time determine. ARTICLE II ---------- MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of New York, State of New York, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the Notice of the Meeting. Meetings of stockholders for any other purpose may be held at such time and place within or without the State of Delaware, as shall be stated in the Notice of the Meeting or in a duly executed Waiver of Notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1972, shall be held during the month of April on such day, but not on a legal holiday, and at such time as shall be designated from time to time by the board of directors and stated in the Notice of the Meeting, at which time they shall 2 elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting, stating the time and place thereof, shall be given at least ten days before the date of the meeting, to each stockholder entitled to vote thereat. Section 4. The officer who has charge of the stock ledger of the Company shall prepare, at least ten days before every election of directors, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order with the residence of and the number of voting shares held by each. Such list shall be open for ten days to the examination of any stockholder at the office of the Company in the City and State where election is to be held, and shall be produced and kept at the time and place of election during the whole time thereof, and subject to the inspection of any stockholder who may be present. Section 5. Special meetings of the stockholders may be called by the president and shall be called by the president or secretary by resolution of the board of directors or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the Company issued and outstanding and entitled to vote. Such resolution or request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting of stockholders, stating the time, place and object thereof, shall 3 be given to each stockholder entitled to vote thereat, at least ten days before the date fixed for the meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation a different vote is required, in which case such express provision shall govern and control the decision of such question. 4 Section 10. Each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after one year from its date, unless the proxy provides for a longer period; and, except where the transfer books of the Company have been closed or a date has been fixed as a record date for the determination of its stockholders entitled to vote, no share of stock shall be voted on at any election for directors which has been transferred on the books of the Company within twenty days next preceding such election of directors. No proxy or power of attorney to vote shall be used to vote at a meeting of the stockholders unless it shall have been filed with the secretary of the meeting when required by the inspectors of election. All questions regarding the qualification of voters, the validity of proxies and the acceptance or rejection of votes shall be decided by two inspectors of election who shall be appointed by the board of directors, or if not so appointed, then by the presiding officer of the meeting. Section 11. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the statutes or of the certificate of incorporation, the meeting and vote of stockholders may be dispensed with if all the stockholders who would have been entitled to vote upon the action if such meeting were held shall consent in writing to such corporate action being taken. 5 ARTICLE III ----------- DIRECTORS Section 1. The number of directors of the Company shall be fixed from time to time by resolution adopted by the holders of two-thirds of the outstanding shares of the Corporation entitled to vote thereon or by resolution of a majority of the entire authorized number of directors, provided that no decrease in the number of directors shall change the term of any director in the office at the time thereof. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this article, and each director shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected, unless sooner displaced. Section 3. The business of the Company shall be managed by its board of directors which may exercise all such powers of the Company and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these Bylaws directed or required to be exercised or done by the stockholders. 6 Section 4. The board of directors of the Company may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held immediately following the adjournment of the meeting of stockholders and at the place thereof. No notice of such meeting shall be necessary to the directors in order legally to constitute the meeting, provided a quorum be present. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board of directors. Section 7. Special meetings of the board of directors may be called by the chairman, if one shall be elected, or in the case of his absence or disability or if one shall not have been elected, by the president, and shall be called by the secretary upon written request of two directors. Notice of special meetings of the board of directors shall be given to each director at least three days before the meeting if by mail, or at least twenty-four hours before the meeting, if given in person or by telephone or by telegraph. The notice need not specify the business to be transacted. Section 8. At meetings of the board of directors, a majority of the directors at the time in office shall constitute 7 a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors. Where the number of directors is fixed at one under Section 1, then one director shall constitute a quorum. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Section 9. The board of directors may, at its discretion at any meeting of the board of directors, elect from among the directors an executive committee, in addition to the president who shall be a member of ex officio, of ---------- such number of directors, not less than two nor more than five, as from time to time may be prescribed by the board of directors, who, if elected, shall hold office until the first meeting of each newly elected board of directors or until their successors are elected and shall qualify. In electing the executive committee, the board of directors shall designate one of the members thereof to serve as chairman of the committee. The board of directors shall promptly fill all vacancies in the executive committee or chairmanship thereof as they occur. The executive committee, when the board of directors is not in session, shall have and may exercise all of the powers and authority of the board of directors in the management of the business and affairs of the Company, whether conferred in these Bylaws or otherwise, except: (1) to the extent, if any, that such 8 powers and authority may be limited by resolution of the board of directors; (2) to amend the articles of incorporation of the Company; (3) to adopt a plan of merger or consolidation with another corporation or corporations; (4) to recommend to the shareholders the sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of the property and assets of the Company if not made in the usual and regular course of its business; (5) to recommend to the shareholders a voluntary dissolution of the Company or a revocation thereof; (6) to amend, alter, or repeal the Bylaws of the Company; (7) to elect or remove officers of the Company or members of the executive committee; (8) to fix the compensation of any member of the executive committee; (9) to declare dividends; or (10) to amend, alter or repeal any resolution of the board of directors which by its terms provides that it shall not be amended, altered or repealed by the executive committee. The executive committee shall fix its own rules of procedure, and shall meet at such time and place as shall be provided by such rules. It shall keep a record of its acts and proceedings, and all actions of the committee shall be reported to the board of directors at the next meeting of the board. At each meeting of the committee the presence of at least a majority of the members shall be necessary to, and shall constitute a quorum. The affirmative vote of a majority of the members present at a meeting at which a quorum is present shall be necessary to, and shall constitute, action by the committee. 9 Each member of the executive committee shall be entitled to a fee for attendance at each meeting of the committee, to be fixed from time to time by the board of directors, and to receive reimbursement for his reasonable expenses incurred in attending such meetings. Any action which may be taken at a meeting of the executive committee may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the members of such committee and filed with the minutes of proceedings of the committee. Section 10. The board of directors may, by resolution adopted by a majority of the entire authorized number of directors, create, name and elect the members of one or more other committees, each committee to consist of two or more of the directors of the Company, which, to the extent provided in the resolution, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the Company and may authorize the seal of the Company to be affixed to all papers which may require it. The members of any such committee present at any meeting and not disqualified from voting may, whether or not they constitute a quorum, unanimously appoint another member of the board of directors to act at the meeting in the place of any absent or disqualified member. Section 11. The committees shall keep regular minutes of their proceedings and report the same to the board of directors. 10 Section 12. Any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting if prior to such action a written consent thereto is signed by all members of the board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the board or committee. Section 13. The directors shall be paid their reasonable expenses of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the Company in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like reimbursement and compensation for attending committee meetings. ARTICLE IV ---------- NOTICES Section 1. Notices to directors and stockholders mailed to them at their addresses appearing on the books of the Company shall be deemed to be given at the time when deposited in the United States mail. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether 11 before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V --------- OFFICERS Section 1. OFFICERS TO BE ELECTED. The officers of the Company shall be elected by the board of directors at its first meeting after each annual meeting of the stockholders and shall be a president, one or more vice presidents, a secretary, a treasurer and a controller. The board of directors may, in its discretion, also elect a chairman of the board, a vice chairman of the board, one or more executive vice presidents, and one or more senior vice presidents. The board of directors may also elect one or more assistant vice presidents, assistant secretaries, assistant treasurers and assistant controllers, and such other officers as deemed necessary. Section 2. REMOVAL AND VACANCIES. The officers of the Company shall hold office at the pleasure of the board of directors. Any officer may resign at any time upon written notice to the Company. A resignation shall become effective when and as specified in the notice, or in the absence of such specification, upon its acceptance by the Company. Any officer may be removed at any time, with or without cause, by the affirmative vote of the majority of the whole board of directors. The board of directors may fill any vacancy created by death, resignation, removal or otherwise. Section 3. CHAIRMAN OF THE BOARD. The chairman of the board, if one be elected, shall preside at all meetings of the 12 shareholders and the board of directors and shall perform such other duties as may from time to time be prescribed by the board of directors. Section 4. VICE CHAIRMAN OF THE BOARD. The vice chairman of the board (also known as "vice chairman"), if one shall be elected, shall have such duties and authority as may be prescribed from time to time by the chairman of the board of directors. Section 5. PRESIDENT. The president shall be the chief executive officer of the Company and shall be directly responsible to the board of directors for all the business affairs of the Company. Subject to the authority of the board of directors, he shall have general supervision, charge, direction and active management of the business, operations, sales and other affairs of the Company and shall see that all orders and resolutions of the board of directors are carried into effect. He shall, unless a chairman be elected and present, preside at all meetings of the shareholders and the board of directors. He may sign, in conjunction with such other officer or officers of the Company as may be designated by the board of directors, checks and certificates of stock of the Company, and sign and execute all authorized bonds, contracts or other obligations in the name of the Company, appoint and discharge assistants, agents, and employees, and shall also perform such other duties as may from time to time be prescribed by the board of directors. Section 6. VICE PRESIDENTS. The vice president, including any executive vice presidents and senior vice 13 presidents, if any, shall be elected, shall act under the direction of the president and shall perform all such duties and have such powers as the president or the board of directors may from time to time prescribe. Any vice president of the Company, including any executive vice president and senior vice president, if any, shall be elected, shall have authority to sign contracts, agreements, conveyances and other instruments and documents in the name and on behalf of the Company to the extent authorized by the board of directors by resolution, or in writing by the president. Section 7. SECRETARY AND ASSISTANT SECRETARIES. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record the proceedings. He shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the president or the board of directors. He shall keep in safe custody the seal of the Company and, when authorized by the president or the board of directors, cause it to be affixed to any instrument requiring it. In the absence or disability of the secretary, the assistant secretaries shall perform the duties and exercise the powers of the secretary, and shall perform such other duties and have such other powers as the president or the board of directors may from time to time prescribe. 14 Section 8. TREASURER AND ASSISTANT TREASURER. The treasurer shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all monies and other valuable effects in the name and to the credit of the Company in such depositories as may be authorized by the board of directors. He shall disburse the funds of the Company as may be ordered by the president or the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the Company. He may affix or cause to be affixed the seal of the Company to documents so requiring. In the absence or disability of the treasurer, the assistant treasurers shall perform the duties and exercise the powers of the treasurer, and shall perform such other duties and have such other powers as the president or the board of directors may from time to time prescribe. Section 9. CONTROLLER AND ASSISTANT CONTROLLERS. The controller shall be the chief accounting officer of the Company. He shall keep, or cause to be kept, all books of account and accounting records of the Company and shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Company. He shall prepare, or cause to be prepared, appropriate financial statements for the Company and shall have such other powers and 15 perform such other duties as may be prescribed by the president or the board of directors. In the absence or disability of the controller, the assistant controllers shall perform the duties and exercise the powers of the controller and shall have such other powers and perform such other duties as may be prescribed by the president or the board of directors. ARTICLE VI ---------- CERTIFICATES OF STOCK Section 1. Every holder of stock in the Company shall be entitled to have a certificate, signed by, or in the name of the Company by, the president or a vice president and the treasurer or an assistant treasurer or the secretary or an assistant secretary of the Company, certifying the number of shares owned by him in the Company. Section 2. If a certificate is signed (1) by a transfer agent or an assistant transfer agent or (2) by a transfer clerk acting on behalf of the Company and a registrar, the signature of any such president, vice president, treasurer, assistant treasurer, secretary or assistant secretary may be a facsimile. In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on, any such certificate or certificates, shall cease to be such officer or officers of the Company, whether because of death, resignation or otherwise, before such certificate or certificates have been delivered by the Company, such certificate or certificates may nevertheless be adopted by the Company and be issued and delivered as though the person or persons who signed such 16 certificate or certificates or whose facsimile signature or signatures have been used thereon had not ceased to be such officer or officers of the Company. The seal of the Company or a facsimile thereof may, but need not, be affixed to certificates of stock. Section 3. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Company alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to give the Company a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. Section 4. Upon surrender to the Company or the transfer agent of the Company of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Company, if it is satisfied with all provisions of the certificate of incorporation and these Bylaws regarding transfer of shares have been complied with, to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. 17 Section 5. The board of directors may close the stock transfer books of the Company for a period not exceeding fifty days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect or for a period of not exceeding fifty days in connection with obtaining the consent of stockholders for any purpose. In lieu of closing the stock transfer books as aforesaid, the board of directors may fix in advance a date, not exceeding fifty days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect or a date in connection with obtaining such consent, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting, and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any 18 transfer of any stock on the books of the Company after any such record date fixed as aforesaid. Section 6. The Company shall be entitled to recognize the person registered on its books as the owner of shares to be the exclusive owner for all purposes including voting and dividends, and the corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII ----------- MISCELLANEOUS Section 1. There may be set aside out of any funds of the Company available for dividends such sum or sums as the board of directors from time to time, in its absolute discretion may think proper, as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Company, or for the purchase of additional property, or for such other purpose as the directors shall think conducive to the interest of the Company, and the board of directors may modify or abolish any such reserve. Section 2. All checks or demands for money and notes of the Company shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. 19 Section 3. The fiscal year of the Company shall be the twelve calendar month period from October 1 to and including September 30 of each year. Section 4. The corporate seal shall have inscribed thereon the name of the Company, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced. ARTICLE VIII ------------ INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS Section 1. The Company shall, to the fullest extent permitted by applicable law, indemnify any person (and the heirs, executors and administrators thereof) who was or is made, or threatened to be made, a party to an action, suit or proceeding, whether civil, criminal, administrative or investigative, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or administrative or legislative body or agency, including an action by or in the right of the Company to procure a judgment in its favor and an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Company is serving or served in any capacity at the request of the Company, by reason of the fact that he, his testator or intestate is or was a director or officer of the 20 Company, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement, and costs, charges and expenses, including attorneys' fees, incurred therein or in any appeal thereof. Section 2. The Company shall indemnify other persons and reimburse the expenses thereof, to the extent required by applicable law, and may indemnify any other person to whom the Company is permitted to provide indemnification or the advancement of expenses, whether pursuant to rights granted pursuant to, or provided by, the Delaware General Corporation Law or otherwise. Section 3. The Company shall, from time to time, reimburse or advance to any person referred to in Section 1 the funds necessary for payment of expenses, including attorneys' fees, incurred in connection with any action, suit or proceeding referred to in Section 1, upon receipt of a written undertaking by or on behalf of such person to repay such amount(s) if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled, or (iii) his conduct was otherwise of a character such that Delaware law would require that such amount(s) be repaid. 21 Section 4. Any director or officer of the Company serving (i) another corporation, of which a majority of the shares entitled to vote in the election of its directors is held by the Company, or (ii) any employee benefit plan of the Company or any corporation referred in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. Section 5. Any person entitled to be indemnified or to the reimbursement or advancement of expenses as a matter of right pursuant to this Article may elect to have the right to indemnification (or advancement of expenses) interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the action, suit or proceeding, to the extent permitted by applicable law, or on the basis of the applicable law in effect at the time indemnification is sought. Section 6. The right to be indemnified or to the reimbursement or advancement of expenses pursuant to this Article (i) is a contract right pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth in a separate written contract between the Company and the director or officer, (ii) is intended to be retroactive and shall be available with respect to events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. Section 7. If a request to be indemnified or for the reimbursement or advancement of expenses pursuant hereto is not 22 paid in full by the Company within thirty days after a written claim has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled also to be paid the expenses of prosecuting such claim. Neither the failure of the Company (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of or reimbursement or advancement of expenses to the claimant is proper in the circumstances, nor an actual determination by the Company (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses, shall be a defense to the action or create a presumption that the claimant is not so entitled. (Amended October 16, 1986.) ARTICLE IX ---------- AMENDMENTS Section 1. The Bylaws may be amended by a majority vote of all of the stock issued and outstanding and entitled to vote at any annual or special meeting of the stockholders, provided notice of intention to amend shall have been contained in the notice of the meeting. Section 2. The board of directors by a majority vote of the whole board at any meeting may amend these Bylaws, 23 including Bylaws adopted by the stockholders, but the stockholders may from time to time specify particular provisions of the Bylaws which shall not be amended by the board of directors. /s/ John Goroncy ----------------------------- John Goroncy /s/ F. L. Burkofske ----------------------------- F.L. Burkofske [executed] ---------------------------------- Secretary October 16, 1986 ---------------------------------- Date * * * * * * EX-3.71 72 CERT OF INCORPORATION OF PEABODY COALSALES CO. EXHIBIT 3.71 CERTIFICATE OF INCORPORATION OF PEABODY COALSALES COMPANY * * * * * 1. The name of the corporation is PEABODY COALSALES COMPANY 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description. To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any business of this corporation. To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, chooses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof. To borrow or raise money for any of the purposes of the corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other 2 negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes. To purchase, receive, take by grant, gift, devise, bequest or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with real or personal property, or any interest therein, wherever situated, and to sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any of the corporation's property and assets, or any interest therein, wherever situated. In general, to possess and exercise all the powers and privileges granted by the General Corporation Law of Delaware or by any other law of Delaware or by this Certificate of Incorporation together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the corporation. The business and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in no wise limited or restricted by reference to, or inference from, the terms of any other clause in this certificate of incorporation, but the business and purposes specified in each of 3 the foregoing clauses of this article shall be regarded as independent business and purposes. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). 5. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- M. A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 J. Vitalo Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper 4 purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or by-laws expressly so provide, no such committee shall have the power or 5 authority to declare a dividend or to authorize the issuance of stock. When and as authorized by the stockholders in accordance with statute, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 8. Elections of directors need not be by written ballot unless the by- laws of the corporation shall so provide. 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation . 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 6 11. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 3rd day of June, 1992. /s/ M. A. Brzoska ----------------------- M. A. Brzoska Incorporator /s/ K. A. Widdoes ----------------------- K. A. Widdoes Incorporator /s/ L. J. Vitalo ----------------------- L. J. Vitalo Incorporator 7 EX-3.72 73 BY-LAWS OF PEABODY COALSALES COMPANY EXHIBIT 3.72 PEABODY COALSALES COMPANY * * * * * BY-LAWS * * * * * ARTICLE I --------- OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II ---------- MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1993, shall be held on the first day of May if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the 2 president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for 3 more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at 4 a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III ----------- DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be three. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at 5 the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. 6 Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings 7 are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the 8 management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from tire to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. 9 COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV ---------- NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same 10 shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V --------- OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. 11 Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so 12 acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and 13 shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there 14 shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI ---------- CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer 15 agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the 16 corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such 17 owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII ----------- GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. 18 ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. 19 ARTICLE VIII ------------ AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 20 EX-3.73 74 CERT OF INCORPORATION OF COALTRADE INC. EXHIBIT 3.73 CERTIFICATE OF INCORPORATION OF COALTRADE, INC. * * * * * 1. The name of the corporation is COALTRADE, INC. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). 5A. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- M. A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 L. J. Vitalo Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- C. G. Farrand 701 Market Street, Suite 830 St. Louis, MO 63101 R. M. Whiting 701 Market Street, Suite 830 St. Louis, MO 63101 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 2 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 11. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, 3 and accordingly have hereunto set our hands this 4th day of February, 1994. /s/ M. A. Brzoska ----------------- M. A. Brzoska /s/ K. A. Widdoes ----------------- K. A. Widdoes /s/ L. J. Vitalo ----------------- L. J. Vitalo 4 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION ******** COALTRADE, INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, that the Certificate of Incorporation of COALTRADE, INC. be amended by changing the 1. Article thereof so that, as amended, said Article shall be and read as follows: 1. The name of the corporation is Peabody COALTRADE, Inc. SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. 5 IN WITNESS WHEREOF, said COALTRADE, INC. has caused this certificate to be signed by T.S. Hilton, its Vice President and Treasurer, this 10th day of July, 1997. COALTRADE, INC. By:/s/ T.S. Hilton -------------------------- 6 EX-3.74 75 BY-LAWS OF COALTRADE INC. EXHIBIT 3.74 COALTRADE, INC. * * * * * B Y - L A W S * * * * * ARTICLE I --------- OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II ---------- MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1995, shall be held on the first day of April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10 A. M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor mere than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute 2 or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at 3 the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of 4 votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III ----------- DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one nor more than three. The first board shall consist of two directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office 5 shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as 6 shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a 7 meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. 8 Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. 9 Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV ---------- NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, 10 but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V --------- OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall 11 hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the 12 vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, 13 then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and 14 other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI ---------- CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of 15 each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. 16 TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the 17 meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII ----------- GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for 18 repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. 19 INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 20 EX-3.75 76 CERT OF INCORP OF PREMIER COAL SALES COMPANY EXHIBIT 3.75 CERTIFICATE OF INCORPORATION OF PREMIER COAL SALES COMPANY * * * * * 1. The name of the corporation is PREMIER COAL SALES COMPANY. 2. The address of its registered office in the State of Delaware is No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is One Hundred Dollars ($100.00) in the aggregate to One Hundred Thousand Dollars ($100,000.00). 5. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- K. L. Husfelt 100 West Tenth Street Wilmington, Delaware 19801 B. A. Schuman 100 West Tenth Street, Wilmington, Delaware 19801 E. L. Kinsler 100 West Tenth Street, Wilmington, Delaware 19801 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 9. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, 2 and accordingly have hereunto set our hands this 28th day of July, 1982. /s/ K. L. Husfelt ------------------ K. L. Husfelt /s/ B. A. Schuman ------------------ B. A. Schuman /s/ E. L. Kinsler ------------------ E. L. Kinsler 3 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION * * * * * PREMIER COAL SALES COMPANY, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, that the Certificate of Incorporation of PREMIER COAL SALES COMPANY be amended by changing the Article 1. thereof so that, as amended, said Article shall be and read as follows: :1. The name of the corporation is PEABODY DEVELOPMENT COMPANY." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said PREMIER COAL SALES COMPANY has caused this certificate to be signed by W. W. Mason its 4 President, and attested by J. J. Gazzoli, its Assistant Secretary, this 16th day of November, 1982. By: /s/ W. W. Mason -------------------------- W. W. Mason, President ATTEST: By: /s/ J. J. Gazzoli ------------------------------- J. J. Gazzoli, Assistant Secretary 5 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION * * * * * PEABODY DEVELOPMENT COMPANY, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, That, in order to provide for an increase in the total number of shares which the Company shall have authority to issue, which increase is deemed to be advisable, the Certificate of Incorporation of PEABODY DEVELOPMENT COMPANY shall be amended by changing Article 4 thereof so that, as amended, said Article shall be and read as follows: "4. The total number of shares of stock which the corporation shall have authority to issue is two million five hundred thousand (2,500,000) and the par value of each of such shares is Ten Dollars ($10.00) in the aggregate to Twenty Five Million Dollars ($25,000,000.00)." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of section 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said PEABODY DEVELOPMENT COMPANY has 6 caused this certificate to be signed by W. V. Hartman its President, and attested by J. J. Gazzoli, its Assistant Secretary, this 6th day of January, 1983. By: /s/ W. V. Hartman ------------------------- President ATTEST: By: J. J. Gazzoli -------------------------------- Assistant Secretary 7 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION * * * * * PEABODY DEVELOPMENT COMPANY, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the board, adopted a resolution proposing and declaring advisable an amendment to the Certificate of Incorporation of said corporation as follows: RESOLVED, That this Board of Directors considers the amendment of the Company's Certificate of Incorporation by the addition thereto after paragraph "9" of a new paragraph numbered "10" and reading as set forth below to be advisable and in accordance with the desire of the Company's sole stockholder that the personal liability of the Company's directors be eliminated or limited except in certain specified instances: 10. A director of this corporation shall under no circumstances have any personal liability to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for those specific breaches and acts or omissions with respect to which the Delaware General Corporation Law expressly provides that this provision shall not eliminate or limit such personal liability of directors. SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of section 228 of the General Corporation Law of the State of Delaware. 8 THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said PEABODY DEVELOPMENT COMPANY has caused this certificate to be signed by I. F. Engelhardt, its Vice President, this 11th day of November, 1986. By: /s/ I. F. Engelhardt -------------------------------- I. F. Engelhardt, Vice President ATTEST: By: /s/ J. J. Gazzoli ------------------------ J. J. Gazzoli, Secretary 9 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION * * * * * * PEABODY DEVELOPMENT COMPANY, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, That, in order to provide for a decrease in the total number of shares which the Company shall have authority to issue, which decrease is deemed to be advisable, the Certificate of Incorporation of PEABODY DEVELOPMENT COMPANY shall be amended by changing Article 4 thereof so that, as amended, said Article shall be and read as follows: "4. The total number of shares of stock which the corporation shall have authority to issue is Ten (10) and the par value of each of such shares is Ten Dollars ($10.00) in the aggregate to One Hundred Dollars ($100.00)." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the state of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of section 242 and 228 of the General Corporation Law of the State of Delaware. 10 IN WITNESS WHEREOF, said PEABODY DEVELOPMENT COMPANY has caused this certificate to be signed by J. W. Blackburn its President, and attested by J. C. Sevem, its Secretary, this 23rd day of October, 1992. By:/s/ J. W. Blackburn ---------------------------- J. W. Blackburn President ATTEST: By: /s/ J. C. Sevem ----------------------- J. C. Sevem, Secretary 11 EX-3.76 77 RESTATED BY-LAWS OF PEABODY DEVELOPMENT COMPANY EXHIBIT 3.76 PEABODY DEVELOPMENT COMPANY --------------------------- RESTATED BY-LAWS ARTICLE I --------- OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE II ---------- MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Lexington, State of Kentucky, at such place as may be fixed from time to time by the Board of Directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders shall be held in April at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the chairman of the Board of Directors or the president and shall be called by the chairman of the Board of Directors, the president or secretary at the request in writing of a majority of the Board 2 of Directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record 3 date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the statutes or of the certificate of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present 4 and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III ----------- DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be at least one (1) and not more than ten (10). The number of directors, within the limits above specified, shall be determined by resolution of the Board of Directors or of the stockholders. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders 5 holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its Board of Directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected Board of Directors shall be held annually, immediately following the adjournment of the annual meeting of the stockholders at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected Board of Directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of 6 Directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the chairman or the president on five days notice to each director, either personally or by mail or by telegram; special meetings shall be called by the chairman, the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director, in which case special meetings shall be called by the chairman, the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. When the number of directors is fixed at one under Section 1, then one director shall constitute a quorum. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action 7 required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation, or these by-laws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they 8 constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the bylaws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the Board of 9 Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV ---------- NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. 10 Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V --------- OFFICERS Section 1. The officers of the corporation shall be chosen by the Board of Directors and shall be a president, a vice-president, a secretary and a treasurer. The Board of Directors may elect from among its number a chairman who shall preside at all meetings of the stockholders and the board. The Board of Directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by- laws otherwise provide. Section 2. The Board of Directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. 11 Section 4. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation and shall preside at all meetings of the stockholders and the Board of Directors in the absence or inability to act of the chairman of the Board of Directors. He shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his ability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) 12 shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, of if there be more than one, the assistant secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, 13 perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall keep or cause to be kept, all books of accounts and accounting records of the Company and shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Company. He shall prepare, or cause to be prepared, appropriate financial statements for the Company and shall render to the president and the Board of Directors, at its regular meeting, or when the Board of Directors so requires, an accounting of all his transactions as treasurer and the financial condition of the Company. He shall have custody of the Company funds and securities and shall keep or cause to be kept, full and accurate accounts of receipts or disbursements of books belonging to the Company and shall deposit, or cause to be deposited, all monies and other valuable effects in the name and to the credit of the Company in such depositories as may be authorized by the Board of Directors. Section 12. If required by the Board of Directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and 14 other property of whatever kind in his possession or under his control belonging to the corporation. Section 13. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. ARTICLE VI ---------- CERTIFICATE OF STOCK Section 1. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by the president or a vice-president and the secretary or an assistant secretary of the corporation, certifying the number of shares owned by him in the corporation. Section 2. Any of or all the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation, with the same effect as if he were such officer, transfer agent or registrar at the date of issue. 15 LOST CERTIFICATES Section 3. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent 16 to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stock holders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII ----------- GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of 17 incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. CHECKS Section 3. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. FISCAL YEAR Section 4. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors. SEAL Section 5. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. 18 INDEMNIFICATION Section 6. (a) The Company shall, to the fullest extent permitted by applicable law, indemnify any person (and the heirs, executors and administrators thereof) who was or is made, or threatened to be made, a party to an action, suit or proceeding, whether civil, criminal, administrative or investigative, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or administrative or legislative body or agency, including an action by or in the right of the Company to procure a judgment in its favor and an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Company is serving or served in any capacity at the request of the Company, by reason of the fact that he, his testator or intestate is or was a director or officer of the Company, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts referred in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (e) Any person entitled to be indemnified or to the reimbursement or advancement of expenses as a matter of right pursuant to this Article may elect to have the right to indemnification (or advancement of expenses) interpreted on the basis of the applicable law in effect at the time of the 19 occurrence of the event or events giving rise to the action, suit or proceeding, to the extent permitted by applicable law, or on the basis of the applicable law in effect at the time indemnification is sought. (f) The right to be indemnified or to the reimbursement or advancement of expenses pursuant to this Section (i) is a contract right pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth in a separate written contract between the Company and the director or officer, (ii) is intended to be retroactive and shall be available with respect to events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. (g) If a request to be indemnified or for the reimbursement or advancement of expenses pursuant hereto is not paid in full by the Company within thirty days after a written claim has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled also to be paid the expenses of prosecuting such claim. Neither the failure of the Company (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of or reimbursement or advancement of expenses to the claimant is proper in the circumstances, nor an actual determination by the Company (including its Board of Directors, independent legal 20 counsel, or its stockholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses, shall be a defense to the action or create a presumption that the claimant is not so entitled. ARTICLE VIII ------------ AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the Board of Directors at any regular meeting of the Board of Directors or at any special meeting of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. 21 EX-3.77 78 CERT OF INCORP OF PEABODY POWERTRADE, INC. EXHIBIT 3.77 CERTIFICATE OF INCORPORATION OF PEABODY POWERTRADE, INC. 1. The name of the corporation is Peabody POWERTRADE, Inc. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is One Thousand (1,000) and the par value of each of such shares is Ten Dollars and No Cents ($10.00) amounting in the aggregate to Ten Thousand Dollars and No Cents ($10,000.00). 5. The board of directors is authorized to make, alter or repeal the by- laws of the corporation. Election of directors need not be by written ballot. 6. The name and mailing address of the sole incorporator is: K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 7. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. 8. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 23rd day of July, 1996. K. A. Widdoes ------------- K. A. Widdoes Sole Incorporator 2 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION PEABODY POWERTRADE, INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, that the Certificate of Incorporation of PEABODY POWERTRADE, INC. be amended by changing the First Article thereof so that, as amended, said Article shall be and read as follows: PEABODY ENERGY SOLUTIONS, INC. SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware and written notice of the adoption of the amendment has been given as provided in Section 228 of the General Corporation Law of the State of Delaware to every stockholder entitled to such notice. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. 3 IN WITNESS WHEREOF, said PEABODY POWERTRADE, INC. has caused this certificate to be signed by T. S. Hilton, its V.P. and Treasurer, this 9th day of October, 1997. PEABODY POWERTRADE, INC. By: /s/ T.S. Hilton ----------------------------- T.S. Hilton Vice President and Treasurer 4 EX-3.78 79 BY-LAWS OF PEABODY POWERTRADE, INC. EXHIBIT 3.78 PEABODY POWERTRADE, INC. * * * * * BY - LAWS * * * * * ARTICLE I --------- OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II ---------- MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. 1 Section 2. Annual meetings of stockholders, commencing with the year 1997, shall be held on May 1st if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 2 Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned 3 meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting 4 forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III ----------- DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one nor more than three. The first board shall consist of two directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in 5 office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected, directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first 6 meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on zero days' notice to each director, either personally or by mail or by facsimile telecommunication; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board two directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. 7 Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they 8 constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of 9 directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV ---------- NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by facsimile telecommunication. 10 Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V --------- OFFICERS Section 1. The officers of the corporation, shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. 11 Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall 12 perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 13 THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the 14 absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI ---------- CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person 15 claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent 16 to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII ----------- GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of 17 incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. 18 SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII ------------ AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 19 EX-3.79 80 RESTATED CERT OF INCORP OF PEABODY HOLDING CO. EXHIBIT 3.79 RESTATED CERTIFICATE OF INCORPORATION OF PEABODY HOLDING COMPANY, INC. Under Section 807 of the Business Corporation Law The undersigned, J. H. Wimberly and J. L. Klinger, being respectively the President and the Secretary of PEABODY HOLDING COMPANY, INC., in accordance with Section 807 of the Business Corporation Law of the State of New York, hereby certify as follows: 1. The name of the corporation is PEABODY HOLDING COMPANY, INC. (hereinafter sometimes called the "Corporation"). 2. The Certificate of Incorporation of the Corporation was filed by the Department of State of the State of New York on January 17, 1977. 3. A Restated Certificate of Incorporation of the Corporation was filed by the Department of State of the State of New York on April 18, 1990. 4. The Certificate of Incorporation as now in full force and effect is hereby amended to effect the following changes as authorized in Section 801 of the Business Corporation Law: a. To delete Article SIXTH in its entirety, which pertains to the fiscal year for reporting the franchise tax on business corporations imposed by Article 9-A of the Tax Law. b. To amend Article EIGHTH (formerly Article NINTH) in its entirety to delete the provisions that certain actions of the Corporation shall require the affirmative vote of a supermajority of the members of the Board of Directors of the Corporation. 5. The Certificate of Incorporation is hereby restated to set forth its entire text as amended as follows: FIRST: The name of the corporation shall be PEABODY HOLDING COMPANY, INC. (hereinafter sometimes called the "Corporation"). SECOND: The purposes for which the Corporation is being formed are as follows: 1. To acquire-by subscription, purchase or otherwise, to hold for investment or for resale, to sell, pledge, hypothecate and to issue in exchange therefor its shares, bonds or other obligations, and in all ways deal with: stocks, shares, script, bonds, debentures, mortgages, notes, trust receipts, certificates, evidences of indebtedness, interim receipts and other obligations and securities of corporations, private, public, quasi-public or municipal, foreign or domestic. To collect the interest and dividends on its holdings and the principal sum thereof when due. To do all things suitable and proper for the protection, conservation or enhancement of the value of the stocks, shares, securities, evidences of indebtedness or other properties held by it, including, but not limited to, the exercise of the right to vote thereon, and the right to -participate in the management of said corporations. 2. To purchase or otherwise acquire, hold, own, sell, lease or otherwise dispose of real property, improved or unimproved, and personal property, tangible or intangible, including, without limitation, products, goods, wares, and merchandise of every description and the securities and obligations of any issuer, whether or not incorporated. 3. To conduct its business and maintain offices and agencies, so far as permitted by law, in the State of New York and in any or in all other states of the United States of America, its territories, dependencies and possessions, including the District of Columbia, and in any foreign country, state or territory. 4. To carry on the business of mining, producing, procuring, acquiring, buying, selling, transporting, and otherwise disposing of and turning into account and dealing in coal and coal products and other subsoil and surface products of all kinds, together with any other substances or by-products thereof; and to acquire, hold and use any and all leases, licenses, easements, rights, permits, grants, concessions and real and personal property necessary or required for such purposes. 5. To carry out all or any part of the foregoing purposes directly or indirectly, as principal, factor, agent, broker, contractor or otherwise, either alone or in 2 conjunction with any persons, firms, associations, corporations or others in any part of the world through wholly or partially owned subsidiaries, as a partner, limited or general, in any partnership, as a joint venturer in any joint venture, or otherwise; and in carrying on its business and for the purpose of attaining or furthering any of its purposes, to make and perform contracts of any kind and description, with any person or entity, and to do anything and everything necessary, suitable, convenient or proper for the accomplishment of any of the purposes herein enumerated. 6. In general, to engage in any activity which may promote the interests of the Corporation or increase the value of its property to the fullest extent permitted by law and, in furtherance of the foregoing and other purposes enumerated herein, to have and exercise all the powers now and hereafter conferred by the laws of the State of New York upon corporations formed under the Business Corporation Law of such state, subject, however, to any limitations contained in Article 2 (Corporate Purposes and Powers) of said Business Corporation Law, and to do any or all of the things hereinbefore set forth to the same extent as natural persons might or could do them. THIRD: The office of the Corporation in the State of New York is to be located in the City of New York, County of New York. FOURTH: The aggregate number of shares which the Corporation shall have authority to issue is five hundred thousand (500,000) shares of Common Stock, par value $1.00 per share, all of which are of the same class. Except as otherwise required by law and the provisions of this Certificate of Incorporation, as amended from time to time, the holders of the Common Stock of the Corporation possess full voting power for the election of directors and for all other purposes, and each holder thereof shall be entitled to one vote for each share held by such holder. The holders of shares of the Corporation shall have no preemptive or preferential rights to subscribe for or purchase any shares of the Corporation or any rights or options to purchase shares of the Corporation or any shares or other securities convertible into or carrying rights or options to purchase shares of the Corporation. FIFTH: The Secretary of State is designated as the agent of the Corporation upon whom process against the Corporation may be served. The address to which the Secretary of State shall mail a copy of any process against the Corporation which may be served upon him is: Peabody Holding Company, Inc., c/o Secretary, 301 North Memorial Drive, St. Louis, Missouri 63102. C. T. Corporation System, 3 1633 Broadway, New York, New York 10019, is designated as the registered agent of the Corporation upon whom process against the Corporation may be served. SIXTH: The number of directors of the Corporation shall be fixed from time to time by, or in the manner provided in, the By-Laws which shall include a provision that any shareholder resolution relating to a change in the number of directors of the Corporation must be adopted by the holders of two-thirds of the outstanding shares of the Corporation entitled to vote thereon. SEVENTH: Any action required or permitted to be taken by the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board of Directors or the committee consent in writing to the adoption of a resolution authorizing the action. Any one or more members of the Board of Directors or any committee thereof may participate in a meeting of such Board of Directors or such committee by means of a telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. EIGHTH: Any plan of merger, consolidation, liquidation or sale of all or substantially all of the assets of the Corporation shall require the approval of the holders of at least two-thirds of all outstanding shares of capital stock of the Corporation entitled to vote thereon. NINTH: Except as otherwise specifically provided therein, the By-Laws may be amended or repealed by the Board of Directors by such vote as may be therein specified or by the affirmative vote of the holders of two-thirds of the outstanding shares of the Corporation entitled to vote thereon. TENTH: A director of this Corporation shall under no circumstance have any personal liability to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for those specific breaches and acts or omissions with respect to which the New York Business Corporation law expressly provides that this provision shall not eliminate or limit such personal liability of directors. Nothing herein shall directly or indirectly increased the liability of any such person based upon acts or omissions occurring before the adoption hereof. 6. This amendment and restatement of the Certificate of Incorporation has been authorized by vote of the Board of Directors of the Corporation followed by the unanimous written consent of the holders of all outstanding shares of the 4 Corporation in lieu of a special meeting of shareholders in accordance with Section 615 of the Business Corporation Law. IN WITNESS WHEREOF, the undersigned have subscribed this Restated Certificate of Incorporation this ___ day of October, 1990 and do hereby affirm, under penalties of perjury, that the statements contained therein have been examined by them and are true and correct. /s/ J. H. Wimberly -------------------- J.H. Wimberly President /s/ J. L. Klinger -------------------- J. L. Klinger Secretary 5 EX-3.80 81 RESTATED BY-LAWS OF PEABODY HOLDINGS CO. EXHIBIT 3.80 RESTATED BY-LAWS OF PEABODY HOLDING COMPANY, INC. ARTICLE I --------- SHAREHOLDERS MEETINGS --------------------- Section 1. Annual Meeting. The annual meeting of the -------------- shareholders of Peabody Holding Company, Inc. (hereinafter the "Corporation") shall be held in April at the principal office of the Corporation, or at such other place within or without the State of New York, and at such time, as shall be determined by the Board of Directors of the Corporation, for the purpose of electing Directors, and for the transaction of such other business as may be brought before the meeting. Section 2. Special Meetings. Special meetings of shareholders may be ---------------- called at any time by a majority of the Board of Directors, its Chairman, Vice Chairman, Executive Committee, or the President of the Corporation. It shall also be the duty of the Secretary, whenever so requested in writing by shareholders owning a majority of the shares of capital stock entitled to vote at a meeting, to call a special meeting, which shall, consistent with the laws of the State of New York and these By-Laws, be held at such time and place and for such purpose or purposes as may be specified in the request therefor. At any such special meeting only such business may be transacted which is related to the purpose or purposes set forth in the notice thereof. Section 3. Notice of Meetings. Written notice of meetings of ------------------ shareholders shall be given whenever shareholders are to take any action at a meeting. Such notice shall state the place, date and hour of the meeting as specified in the call for the meeting or the request for such call and, unless it is the annual meeting, indicate that it is being issued by or at the direction of the person or persons calling the meeting. Notice of a special meeting shall, in addition, state the purpose or purposes for which the meeting is called. A copy of the notice of any meeting shall be given, personally or by mail, not less than ten nor more than fifty days before the date of the meeting, to each shareholder entitled to vote at such meeting. If mailed, such notice is given when deposited in the United States mail, with postage thereon prepaid, directed to the shareholder at his address as it appears on the record of shareholders, or, if he shall have filed with the Secretary of the Corporation a written request that such notices to him be mailed to some other address, than directed to him at such other address. Section 4. Quorum. Except as may be otherwise required by the laws ------ of the State of New York, the Restated Certificate of Incorporation or these By- Laws, the holders of a majority of the shares entitled to vote thereat present in person or by proxy shall constitute a quorum at a meeting of shareholders for the transaction of any business, provided that when a specified item of business is required to be voted on by a class or series, voting as a class, the holders of a majority of the shares of such class or series present in person or by proxy shall constitute a quorum for the transaction of such specified item of business. 2 Section 5. Shareholder Action. At all meetings of shareholders all ------------------ resolutions shall be passed by a majority of the votes cast by shareholders entitled to vote thereon present in person or by proxy, except as otherwise provided by law or the Restated Certificate of Incorporation or these By-Laws. Section 6. Adjourned Meetings. Any meetings of shareholders may be ------------------ adjourned to a designated time and place by a vote of a majority in interest of the shareholders present in person or by proxy and entitled to vote, even though less than a quorum is so present. No notice of such an adjourned meeting need be given, other than by announcement at the meeting, and any business may be transacted which might have been transacted at the meeting as originally called. If, after the adjournment, the Board of Directors of the Corporation fixes a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to notice in accordance with Article I, Section 3 of these By-Laws. Section 7. List of Shareholders Entitled to Vote. At least 10 days ------------------------------------- before every meeting of shareholders a complete list of the shareholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each shareholder and the number of shares registered in the name of each shareholder, shall be prepared and shall be open to the examination of any shareholder for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the 3 place where the meeting is to be held. Such list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 8. Written Consent of Shareholders. Whenever the vote of ------------------------------- shareholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the statutes or of the certificate of incorporation, the meeting and vote of shareholders may be dispensed with if all the shareholders who would have been entitled to vote upon the action if such meeting were held shall consent in writing to such corporate action being taken. ARTICLE II ---------- DIRECTORS --------- Section 1. The Number of Directors. The number of Directors of the ----------------------- Corporation may be determined from time to time by resolution adopted by the holders of two-thirds of the outstanding shares of the Corporation entitled to vote thereon, provided that the number of Directors constituting the entire board shall not be less than three, except that where all the shares of the Corporation are owned beneficially and of record by less than three shareholders, the number of Directors may be less than three but not less than the number of shareholders. Section 2. Term of Directors, Qualifications. Directors shall be --------------------------------- elected at the annual meeting of shareholders in each year and shall hold office for the term of one year and 4 until their successors are elected and qualify. Directors shall be at least 18 years of age but need not be shareholders. Section 3. Powers. The business of the Corporation shall be managed ------ by its Board of Directors. The Board may adopt such rules and regulations for the conduct of its meetings, the exercise of its powers and the management of the affairs of the Corporation as it may deem proper, not inconsistent with the laws of the State of New York, the Restated Certificate of Incorporation or these By-Laws. In addition to the powers and authorities by these By-Laws expressly conferred upon them, the Directors may exercise all such powers of the Corporation and do such lawful acts and things as are not by statute or by the Restated Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the shareholders. Section 4. Meetings, Quorum. The Board of Directors of the ---------------- Corporation may hold an annual meeting immediately after the annual meeting of shareholders. Other regular meetings of the Board of Directors of the Corporation shall be held on such dates, at such times and in such places as shall be fixed by resolution adopted by the Board of Directors of the Corporation. Notice of any regular meeting shall not be required. Special meetings of the Board of Directors of the Corporation shall be held whenever called by the President or any two of the Directors. At least five days' notice of any such special meeting shall be given to each Director. At all meetings of Directors, unless otherwise required by the laws of the State of New York, the Restated Certificate of 5 Incorporation of the Corporation or these By-Laws, a majority of the Directors shall be necessary to constitute a quorum for the transaction of business. The affirmative vote of a majority of a quorum of Directors present and acting throughout any meeting of the Board shall constitute the act of the Board. Section 5. Written Consent of Directors. Any action required or ---------------------------- permitted to be taken at any meeting of the Board of Directors of the Corporation or of any Committee thereof may be taken without a meeting if prior to such action a written consent thereto is signed by all members of the Board or of such Committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or Committee. Section 6. Vacancies, Removal. Vacancies occurring in the membership ------------------ of the Board of Directors of the Corporation resulting from any increase in the authorized number of Directors shall be filled by vote of the holders of Common Stock of the Corporation as provided in the Restated Certificate of Incorporation. Vacancies occurring in the membership of the Board of Directors of the Corporation arising from any other cause, including vacancies by reason of death, resignation or removal, shall be filled by vote of the remaining members of the Board of Directors of the Corporation, who in so voting shall vote only for a nominee proposed (if such a nominee shall be proposed) by a shareholder of the Corporation that, at the preceding annual meeting, proposed as a nominee for Director for the Director who has died, resigned or been removed (or for the predecessor in office of such Director). 6 Any one or more Directors may be removed either for or without cause at any time by vote of the shareholders holding a majority of the outstanding common stock of the Corporation entitled to vote thereon at a meeting duly called and held for that purpose. Section 7. Notice of Meetings of Directors. Notice of any regular or ------------------------------- special meetings of the Board of Directors of the Corporation may be given and shall be effective if sent by mail or telegraph or given by telephone or in person to any Director, which notice shall be deemed to have been given, if sent by mail or telegraph, when deposited in the Post Office or post box in a sealed, postage-paid wrapper addressed to such Director or deposited with the telegraph office with instructions to be sent to him, in each case at his address then appearing on the books of the Corporation. ARTICLE III ----------- COMMITTEES ---------- Section 1. Committees of the Board. Except as otherwise provided in ----------------------- the Restated Certificate of Incorporation or these By-Laws, the Board of Directors of the Corporation, by resolution adopted by a majority of the entire Board, may designate from its members an Executive Committee and/or other committee or committees, each consisting of two or more Directors having such powers and authority (to the extent permitted by law) as may be provided in the resolutions establishing the same; provided, however, neither the Executive Committee nor any other committee shall have the power or authority to approve any 7 liquidation, sale of substantially all assets, merger with third parties (other than subsidiaries), election or removal of officers, declaration of dividends, incurrence of indebtedness or issuance of any shares of capital stock of the Corporation. The Board of Directors of the Corporation shall have the power at any time to fill vacancies in, change the membership of, or dissolve any such committees. The Board may also designate one or more Directors as alternate members of any such committee who may replace any absent member or members at any meeting thereof. Section 2. Meetings of Committees. Committees established by the ---------------------- Board of Directors of the Corporation may meet either regularly at stated times or specially on notice given 24 hours in advance by any member thereof by mail, telegraph, telephone or in person to all the other members thereof; but no notice of any regular meeting need be given; and no notice of any special meeting need be given at which all members shall be present or notice of which shall be waived by all absent members before or after such meeting. Such committees may make rules for the holding and conduct of their meetings and may appoint such subcommittees and assistants as they from time to time may deem necessary. The number of regular members or alternate members or both equal to a majority of the regular members of a committee shall constitute a quorum and the action of a majority of those present at a meeting at which a quorum is present and acting shall be the act of a committee. ARTICLE IV ---------- OFFICERS -------- 8 Section 1. Executive Officers. The officers of the Corporation shall ------------------ be a President (or Chief Executive Officer), one or more Vice Presidents, one or more of whom may be designated Executive Vice President, and one or more of whom may be designated Senior Vice President, a Treasurer, and a Secretary, all of whom shall be elected by the Board of Directors of the Corporation, and such other officers as the Board of Directors of the Corporation, from time to time may elect. Each such officer shall serve at the discretion of the Board of Directors until the next annual election of officers at the annual meeting of the Board of Directors of the Corporation following the annual meeting of shareholders and until his successor is elected and qualified. One person may serve as more than one of such officers, except that the same person shall not serve both as President and Secretary. All vacancies occurring among any of the officers shall be filled by the Board of Directors of the Corporation. Any officer may be removed at any time by the affirmative vote of a majority of the Directors present at a regular or special meeting of Directors. Section 2. Chairman of the Board; Vice Chairman of the Board. The ------------------------------------------------- Board of Directors of the Corporation may elect from among its number a Chairman who shall preside at all meetings of the Board and the shareholders. The Board may also elect from its number a Vice Chairman. In the absence or inability to act of the Chairman, the Vice Chairman shall preside at all meetings of the Board and the shareholders as specified herein. Section 3. President. The President shall be the Chief Executive --------- Officer of the Corporation and shall preside at 9 all meetings of the Board of Directors of the Corporation and of the shareholders in the absence or inability to act of the Chairman of the Board, or the Vice Chairman of the Board. He shall exercise the powers and perform the duties usual to the Chief Executive Officer and, subject to the control and direction of the Board of Directors of the Corporation, shall have general charge of, and shall direct and supervise, the business and affairs of the Corporation. He shall see that all orders and resolutions of the Board of Directors of the Corporation are carried into effect, and shall do and perform such other duties as from time to time may be assigned to him by the Board of Directors of the Corporation or these By-Laws and as are incident to the office of Chief Executive Officer. Section 4. Vice Presidents. The Vice Presidents, one or more of whom --------------- may be designated Executive or Senior Vice President, shall perform such duties in such capacities or as heads of their respective operating divisions, if any, as may be assigned to them by the Board of Directors of the Corporation or the President and shall report to such person or persons with respect to the performance of such duties as the Board of Directors of the Corporation or the President may from time to time specify. In the absence or inability to act of the Chairman of the Board, the Vice Chairman of the Board, and the President, the duties of the offices of Chairman of the Board, the Vice Chairman of the Board, and President shall be performed by the Vice Presidents in the order of priority established by the Board unless and until the Board of Directors of the Corporation shall otherwise direct. 10 Section 5. Secretary. The Secretary shall (a) keep the minutes of --------- the meetings of the Board of Directors of the Corporation, the shareholders and the executive committee and any other committee created by the Board of Directors of the Corporation; (b) see that all notices of meetings of the Directors, shareholders and members of such committees are duly given in accordance with the provisions of these By-Laws or as required by law; and (c) have custody of the seal of the Corporation and affix and attest the same to all instruments requiring the seal when authorized by the Board of Directors of the Corporation or the President. He shall also have charge of the certificate books, stock books and such books and papers as the Board of Directors of the Corporation may specify and shall perform all other duties incident to the office of Secretary or which may be assigned to him from time to time by the Board of Directors of the Corporation or the President. Section 6. Treasurer. The Treasurer shall have the custody of the --------- funds and securities of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors of the Corporation. He shall sign checks, drafts, notes and orders for the payment of money, pay out and disburse funds of the Corporation and, in general, perform the duties customary to the office of Treasurer. He may have such additional duties as may be designated from time to time by the President or the Board of Directors of the Corporation. 11 Section 7. Assistant Officers. The Assistant Secretary, or if there ------------------ be more than one, the Assistant Secretaries in the order determined by the Board of Directors of the Corporation (or if there be no such determination, then in the order of their election) shall, in the absence of the Secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Secretary. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors of the Corporation (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Treasurer. Assistant Secretaries and Assistant Treasurers shall perform such other duties as may be assigned by the Secretary and Treasurer respectively, or by the Board of Directors of the Corporation or the President. Section 8. Other Officers. Each other officer of the Corporation -------------- shall exercise the powers and shall perform the duties incident to his office, subject to the direction of the Board of Directors of the Corporation. Section 9. Compensation. The salaries of all officers shall be fixed ------------ by the Board of Directors of the Corporation and the fact that any officer is a Director shall not preclude him from receiving a salary as an officer, or voting upon the resolution providing the same. ARTICLE V --------- 12 CAPITAL SHARES -------------- Section 1. Form of Certificates and Execution. Certificates for each ---------------------------------- class and series of shares shall be in such form as shall be adopted by the Board of Directors of the Corporation, shall be duly numbered and registered in the order issued and shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the Corporation, and may be sealed with the seal of the Corporation or a facsimile thereof. The signatures of the officers upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation itself or its employee. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of issue. Section 2. Transfer. Transfers of shares shall only be made upon the -------- books of the Corporation by the registered holder in person or by attorney, duly authorized, and upon surrender of the certificate or certificates for such shares, properly signed for transfer. Section 3. Lost or Destroyed Certificates. The holder of any ------------------------------ certificate representing shares of the Corporation may notify the Corporation of any loss, theft or destruction thereof, and the Board of Directors of the Corporation may thereupon, in its discretion, cause a new certificate for the same number of shares, to be issued to such holder upon satisfactory proof of 13 such loss, theft or destruction, and the deposit of indemnity by way of bond or otherwise, in such form and amount and with such surety or sureties as the Board of Directors of the Corporation may require, to indemnify the Corporation against any claim that may be made against it on account of the alleged loss or destruction of any such certificate or the issuance of any such new certificate. ARTICLE VI ---------- MISCELLANEOUS ------------- Section 1. Dividends. The Directors may declare dividends from time --------- to time upon the capital shares of the Corporation from the surplus or net profits available therefor. Section 2. Seal. The Seal of the Corporation shall be circular in ---- form and contain the name of the Corporation and the date of its incorporation and the state in which it was incorporated. Section 3. Checks, Notes, Etc. Checks, notes, drafts, bills of ------------------- exchange and orders for the payment of money shall be signed or endorsed in such manner as shall be determined by the Directors. The funds of the Corporation shall be deposited in such banks or trust companies, and checks drawn against such funds shall be signed in such manner as may be determined from time to time by the Directors. Section 4. Waivers of Notice. Whenever the Corporation or the Board ----------------- of Directors of the Corporation or any committee of the Board is authorized to take any action after notice to any person or persons or after the lapse of a prescribed period of time, such action may be taken without 14 notice and without the lapse of such period of time if at any time before or after such action is completed the person or persons entitled to such notice or entitled to participate in the action to be taken or, in the case of a shareholder, his attorney-in-fact or proxy submits a signed waiver of notice of such requirement. Section 5. Indemnification of Directors, Officers and Others. (a) ------------------------------------------------- The Corporation shall, to the fullest extent permitted by applicable law, indemnify any person (and the heirs, executors and administrators thereof) who is or was made, or threatened to be made, a party to an action or proceeding, whether civil or criminal, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or administrative or legislative body or agency, including an action by or in the right of the Corporation to procure a judgment in its favor and an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Corporation is serving or served in any capacity at the request of the Corporation, by reason of the fact that he, his testator or intestate, is or was a director or officer of the Corporation, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement, and costs, charges and expenses, including attorneys' fees, or 15 any appeal therein; provided, however, that no indemnification shall be provided to any such person if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled. (b) The Corporation may indemnify any other person to whom the Corporation is permitted to provide indemnification or the advancement of expenses by applicable law, whether pursuant to rights granted pursuant to, or provided by, the New York Business Corporation Law or other rights created by (i) a resolution of shareholders, (ii) a resolution of directors, or (iii) an agreement providing for such indemnification, it being expressly intended that these By-Laws authorize the creation of other rights in any such manner. (c) The Corporation shall, from time to time reimburse or advance to any person referred to in Paragraph (a) of this Section 5 the funds necessary for payment of expenses, including attorneys' fees, incurred in connection with any action or proceeding referred to in Paragraph (a) of this Section 5, upon receipt of a written undertaking by or on behalf of such person to repay such amount(s) if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or (ii) he personally gained in 16 fact a financial profit or other advantage to which he was not legally entitled. (d) Any director or officer of the Corporation serving (i) another corporation, of which a majority of the shares entitled to vote in the election of its directors is held by the Corporation, or (ii) any employee benefit plan of the Corporation or any corporation referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Corporation. (e) Any person entitled to be indemnified or to the reimbursement or advancement of expenses as a matter of right pursuant to this Section 5 may elect to have the right to indemnification (or advancement of expenses) interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the action or proceeding, to the extent permitted by law, or on the basis of the applicable law in effect at the time indemnification is sought. (f) The right to be indemnified or to the reimbursement or advancement of expenses pursuant to this Section 5(i) is a contract right pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth in a separate written contract between the Corporation and the director or officer, (ii) is intended to be retroactive and shall be available with respect to events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. 17 (g) If a request to be indemnified or for the reimbursement or advancement of expenses pursuant hereto is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled also to be paid the expenses of prosecuting such claim. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of or reimbursement or advancement of expenses to the claimant is proper in the circumstances, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses, shall be a defense to the action or create a presumption that the claimant is not so entitled. Section 6. Record Date. The Board of Directors of the Corporation ----------- may from time to time fix, in advance, record dates for the determination of shareholders entitled to receive any notice, to vote, to receive payment of a dividend, to give or withhold consent, to receive an allotment of any rights, or to exercise any other right or privilege or to take any other action. In the case of a meeting of shareholders, such date shall be at least ten days but not more than fifty days before the date of such meeting. In any other case, such date shall be 18 not more than fifty days prior to the date of the related corporation action. ARTICLE VII ----------- AMENDMENTS ---------- Section 1. Except as otherwise specifically provided herein or in the Restated Certificate of Incorporation of the Corporation, the By-Laws of the Corporation may be adopted, amended or repealed by the affirmative vote of the holders of a majority of the shares at the time entitled to vote in the election of any Directors; provided, however, any amendment to (i) the first sentence of Section 1 of Article II, (ii), the first sentence of Section 6 of Article II, and (iii) the proviso contained in the first sentence of Section 1 of Article III shall require the affirmative vote of two-thirds of the holders of the outstanding shares of the Corporation entitled to vote thereon. Except as otherwise specifically provided herein, the By-Laws of the Corporation may also be adopted, amended or repealed by the Board of Directors of the Corporation by vote of a majority of the Directors present at the time of the vote if a quorum is then present. If any By-Law regulating an impending election of Directors is adopted, amended or repealed by the Board of Directors of the Corporation, there shall be set forth in the notice of the next meeting of shareholders for the election of Directors the By-Law so adopted, amended or repealed, together with a concise statement of the changes made. 19 EX-3.82 82 2ND AMEND & RESTATED PART AGREE PEABODY NATURA EXHIBIT 3.82 SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT THIS AMENDED AND RESTATED PARTNERSHIP AGREEMENT, dated as of September 28, 1991, by and among CAVENHAM FOREST INDUSTRIES INC., a Delaware corporation ("CFI"), CAVENHAM ENERGY RESOURCES INC., a Delaware corporation ("CER"), and GOLD FIELDS MINING CORPORATION, a Delaware corporation ("GFMC") (each individually, a "Partner" and, collectively, the "Partners"). R E C I T A L S : 2. CFI and GFMC formed a general partnership (the "Partnership") upon the terms and conditions set forth in that certain Partnership Agreement, dated as of March 3, 3991, by and between CFI and GFMC (the "Original Partnership Agreement"), for the purposes of developing, exploiting and enhancing the natural resources businesses owned by Hanson PLC and other businesses related to natural resources as the Partnership may from time to time undertake, and, in particular, the operation of the businesses involving timber and wood products and gold and other mining (the "Businesses"), and to enhance the return and financial strength of the Businesses. 3. As of March 31, 1991, CFI and GFMC amended and restated the Original Partnership Agreement (the "Amended and Restated Partnership Agreement"), to, among other things, add, as partners, CER, Gold Fields Operating Co.-Chimney Creek, a Delaware corporation, Gold Fields Operating Co.-Mule Canyon, a Delaware corporation, Gold Fields Operating Co.-Elkhorn, a Delaware corporation (each individually, an "Additional Partner" and, collectively, the "Additional Partners"), amend Articles 4, 7 and 9 thereof and make certain other changes to the Original Partnership Agreement as therein provided. 4. The Partners pursuant to a contribution agreement among the Partners, dated as of March 31, 1991 (the "Contribution Agreement"), and subject to obtaining any necessary consents or approvals, transferred certain assets, to the Partnership, which from such time has owned and operated, and is intended to continue to own and operate, the Businesses associated with such assets. 5. Subsequent to March 31, 1991, all of the Additional Partners except CER merged into GFMC (the "Merged Partners"). 6. The Partners desire to amend the Amended and Restated Partnership Agreement to provide for the deletion of references to the Merged Partners as partners of the Partnership, and to make certain other modifications. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Partners hereby covenant and agree as follows, and the Amended and Restated Partnership Agreement is hereby further amended and restated to read as follows: ARTICLE 1 ORGANIZATIONAL MATTERS 1.1. The Partnership. Pursuant to the terms of the Original --------------- Partnership Agreement, CFI and GFMC associated themselves as a general partnership (the "Partnership") under the laws of the State of Delaware, which is hereby continued for the purposes and under the terms hereinafter set forth. 1.2. Name. The name of the Partnership shall be: ---- "Hanson Natural Resources Company" The Businesses shall initially be operated as three divisions of the Partnership (the "Divisions"), under the names "Cavenham Forest Industries Division", "Cavenham Energy Resources Division" and "Gold Fields Mining Company", and three subdivisions of Gold Fields Mining Company, under the names "Gold Fields Operating Co.-Chimney Creek", "Gold Fields Operating Co.-Mesquite" and "Gold Fields Operating Co.-Mule Canyon", and thereafter shall be called by such other names as the Partners shall from time to time determine. The Partners shall execute, publish and/or file all assumed or fictitious name, or other similar, certificates required by law to be published and filed, or either, in connection with the formation and operation of the Partnership in each state and locality where it is necessary or desirable to publish or file any of the same in order to form and maintain the Partnership and/or to operate the Businesses. 1.3. Principal Place of Business. The principal place of business of --------------------------- the Partnership shall be at Meadowood II Shopping Center, 2644 Capitol Trail, Suite B-1, Newark, Delaware 19711, or such other place as the Partnership, from time to time, shall determine. 1.4. Partnership Act Ownership. Except as is expressly herein ------------------------- stipulated to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Uniform Partnership Act of the State of Delaware. The interest of each Partner in the Partnership shall be personal property for all purposes. All real and other property owned by the Partnership shall be deemed owned by the Partnership as a partnership, and no Partner, individually, shall have any individual ownership rights in and to such property. 1.5. Individual Authority. Each Partner, acting alone, shall have -------------------- authority to act for, or undertake or assume any obligation or responsibility on behalf of, the Partnership. 1.6. No Partner Responsible for Other's Commitments. No Partner ---------------------------------------------- shall be responsible or liable for any indebtedness or obligation of the other Partner incurred either before or after the execution of this Agreement, nor shall the Partnership be responsible or liable for any such indebtedness or obligation of a Partner, except for those responsibilities, liabilities, indebtedness or obligations assumed or incurred by the Partnership pursuant to the terms of this Agreement or the 2 Contribution Agreement (if and when such Contribution Agreement shall be effective). Each Partner indemnifies and agrees to hold the other Partner and the Partnership harmless from and against such obligations and indebtedness except as aforesaid. ARTICLE 2 PURPOSES AND POWERS 2.1. Purposes. The purpose of the Partnership is to own and operate -------- the Businesses, to develop, exploit and enhance the resources of the Partnership, to create an entity which will increase the financial leverage and strength of the Businesses, and to carry out any other activities necessary or incidental to the conduct, promotion or attainment of any of the purposes herein specified as the Partners may from time to time direct. 2.2. Powers. The Partnership shall have such powers as are necessary ------ or appropriate to carry out the purposes of the Partnership, including, without limitation, the following powers: (a) to purchase, borrow, acquire, hold, exchange, sell, distribute, assign, transfer, lend, mortgage, pledge, hypothecate, convert, redeem, escrow or reissue instruments evidencing its indebtedness; (b) to issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and any other kinds of negotiable and non-negotiable instruments and evidences of indebtedness, whether or not in connection with borrowing money, and to guarantee the obligations of any subsidiary or any other Affiliate (as defined hereinbelow) of the Partnership and to secure the payment thereof (and of the interest thereon) by the creation of any interest in the property or rights of the Partnership, or in any property owned by others when the Partnership has the right so to do, whether owned by or subject to such right of the Partnership at the time such indebtedness is incurred or thereafter; (c) to make such investments as the Partnership deems advisable and approves; (d) to form, own, manage and dissolve one or more subsidiaries; (e) to have and maintain one or more offices within or without the State of Delaware, and in connection therewith to rent, lease or purchase office or manufacturing space, facilities and equipment, to engage and pay personnel and do such other acts and things and incur such other expenses on its behalf as may be necessary or advisable in connection with the maintenance of such offices or manufacturing space or the conduct of the Businesses of the Partnership; (f) to open, maintain and close bank accounts, and to draw checks and other orders for the payment of money; 3 (g) to employ and dismiss from employment any and all employees, agents or independent contractors; (h) to sue and to defend suits, to prosecute, settle or compromise claims against others, to compromise, settle or accept judgments or claims against the Partnership and to execute all documents and make any representations, admissions and waivers in connection therewith; (i) to enter into, make and perform all such contracts, agreements and other undertakings, including indemnity agreements, as may be necessary or advisable or incident to the carrying out of the foregoing purposes; and (j) to execute federal mineral leases and to apply for and hold federal leases, licenses and prospecting permits of all kinds, including, but not limited to, leases or prospecting permits issued under the Mineral Lands Leasing Act, the Mineral Leasing Act for Acquired Lands and Reorganization Plan 3; (k) to take such other actions as the Partnership may deem necessary or advisable in connection with the foregoing, including the retention of agents, independent contractors, attorneys, accountants and other experts selected by the Partnership, and in connection with the preparation and filing of all Partnership tax returns. The Partnership shall have all lawful powers necessary, suitable or convenient for the furtherance of the aforesaid purposes, and, without limiting the foregoing, the Partnership may carry out its objectives and accomplish its purposes as principal or agent, directly or indirectly through one or more of its subsidiaries or Affiliates, alone or with associates, or as a member or as a participant in any firm, association, trust, partnership or other entity. Although the Partnership may engage in any or all of the above activities, the Partnership need not engage in any one or more of them. As used herein, (i) "Affiliate" of a specified Person shall mean a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified, and (ii) "Person" shall mean any individual, corporation, partnership, firm, association or other entity. ARTICLE 3 TERM 3.1. Term. The Partnership shall continue indefinitely, unless ---- terminated as herein provided. ARTICLE 4 CAPITAL CONTRIBUTIONS, INTERESTS AND DISTRIBUTIONS 4 4.1. Contribution by Partners. As of or prior to the date hereof, ------------------------ each Partner has contributed to the Partnership, as its initial capital contribution, $100.00 (the "Initial Contribution"). On or about March 31, 1991 (or, to the extent required by the following sentence of Section 4.1, from time to time thereafter), subject to obtaining any necessary consents or approvals, each Partner shall contribute, or cause its subsidiaries to contribute, to the Partnership, as its additional capital contribution, those assets which are required to be contributed to the Partnership in accordance with the terms of the Contribution Agreement, subject to the liabilities set forth in the Contribution Agreement, which liabilities shall be expressly assumed by the Partnership (the "Additional Capital Contributions"). To the extent that any subsidiary of a Partner shall provide any Additional Capital Contributions and shall not immediately thereafter be merged into such Partner, this Agreement shall be amended to admit such subsidiaries as Partners. To the extent that any assets which are required to be contributed to the Partnership in accordance with the terms of the Contribution Agreement have not been contributed to the Partnership as of the date of the Contribution Agreement, as a result of the absence of contractual, regulatory, governmental or other consents or approvals necessary to be obtained prior to such contribution, such assets shall be contributed to the Partnership as soon as practicable after any such consent or approval has been obtained. Each Partner shall use its best efforts to obtain all consents and approvals necessary to contribute, in a timely fashion, to the Partnership the assets which are required to be contributed to the Partnership in accordance with the terms of the Contribution Agreement. 4.2. Capital Accounts. ---------------- 4.2.1. Initial Balance. Each Partner will have a capital --------------- account (a "Capital Account") which shall initially be equal to (a) the initial Carrying Value (as hereinafter defined) of the assets contributed to the Partnership by such Partner pursuant to the Contribution Agreement, plus (b) the amount of any cash so contributed by such Partner, less (c) the amount of any liability of such Partner assumed by the Partnership pursuant to the Contribution Agreement. 4.2.2. Subsequent Adjustments. Each Partner's Capital Account ----------------------- generally shall be maintained and adjusted in accordance with sections 1.704- 1(b) and 1.704-1T(b) of the Treasury Regulations. There shall be credited to each Partner's Capital Account (a) the amount of any cash, and the initial Carrying Value of any assets other than cash, subsequently contributed by such Partner to the capital of the Partnership, (b) such Partner's share of Net Profit (as determined in accordance with Section 7.1.2), and (c) any items of Gross Income or gain allocated to such Partner pursuant to Section 7.4, and there shall be charged against each Partner's Capital Account (w) the amount of all cash distributions to such Partner, (x) the fair market value of any property distributed to such Partner by the Partnership (net of any liability secured by such property that the Partner is considered to assume or take subject to under section 752 of the Internal Revenue Code of 1986, as amended (the 5 "Code")), (y) such Partner's share of Net Loss (as determined in accordance with Section 7.1.3), and (z) any items of deduction, loss or Section 705(a)(2)(B) Expenditure (as hereinafter defined) allocated to such Partner pursuant to Section 7.4. 4.2.3. In-Kind Distributions. If the Partnership at any time --------------------- distributes any of its assets to any Partner in kind, the Capital Accounts of the Partners shall be adjusted to account for the Partners' allocable shares (as determined, in each case, in accordance with Article 7) of the Gross Income, Net Profit or Net Loss that would have been realized by the Partnership had the distributed assets been sold for their respective fair market values (taking into account section 7701(g) of the Code) immediately prior to such distribution. 4.2.4. Section 754 Elections. In the event that the Partnership --------------------- makes an election under section 754 of the Code, the amount of any adjustments to the bases (or Carrying Values) of the assets of the Partnership made pursuant to section 743 of the Code shall not be reflected in the Capital Accounts of the Partners, but the amounts of any adjustments to the bases (or Carrying Values) of the assets of the Partnership made pursuant to section 734 of the Code as a result of the distribution of property by the Partnership to a Partner (to the extent that such adjustments have not previously been reflected in the Partners' Capital Accounts) shall (a) be reflected in the Capital Account of the Partner receiving such distribution in the case of a distribution in liquidation of such Partner's interest in the Partnership and (b) otherwise be reflected in the Capital Accounts of the Partners in the manner in which the unrealized income and gain that is displaced by such adjustments would have been shared had the property been sold at its Carrying Value immediately prior to such adjustments. 4.2.5. Transferee's Capital Accounts. In the event any ----------------------------- interest in the Partnership is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent related to the transferred interest. 4.2.6. Determinations. Except as otherwise provided in this -------------- Agreement, whenever it is necessary to determine the Capital Account of any Partner, the Capital Account of such Partner shall be determined after giving effect to all allocations pursuant to Article 7 with respect to transactions effected, and all distributions made, prior to the date and time as of which such determination is to be made. 4.2.7. Negative Balances. No Partner with a negative balance ----------------- in its Capital Account shall have any obligation to the Partnership or any other Partner to restore such negative balance. 4.2.8. Oil and Gas Properties. Any other provision of this ---------------------- Agreement to the contrary notwithstanding (a) each Partner's Capital Account shall be adjusted in accordance with Treasury Regulation sections 1.704-1(b) (2) (iv) (k) (3) and 6 (4), dealing with depletion of oil and gas properties; and (b) allocations of the total amount realized by the Partnership on its taxable disposition of an oil or Was property shall' except to the extent governed by section 704(c) of the Code or related principles under Treasury Regulation section 1.704-1(b) (4) (i), be made in accordance with the sixth and seventh sentences of Treasury Regulation section 1-704-1(b) (4) (v) in a manner consistent with Sections 7.1 and 7.2 hereof. 4.3. Additional Contributions. Except as expressly required by ------------------------ Section 4.1 hereof or as expressly agreed upon by the Partners, no Partner shall have any right or obligation to make any contribution to the Partnership or to advance any funds thereto. 4.4. Distributions. The Partnership shall distribute such cash or ------------- other property of the Partnership as may be approved by the Board (as defined in Section 5.1 hereof) from time to time to the Partners, which distributions may or may not, in the Board's discretion, be distributed according to the Percentage Interests of the Partners, as calculated in accordance with Section 4.5 below. 4.5. Percentage Interests. The Percentage Interest of each Partner -------------------- shall initially be equal to the percentage derived by dividing the amount of such Partner's Capital Account, calculated immediately after the contribution described in the second sentence of Section 4.1 hereof by the aggregate amount of the Capital Accounts of all Partners so calculated, and shall be adjusted to reflect any Additional Capital Contributions pursuant to Sections 4.1 and 4.3 hereof. 4.6. No Interest Payable. No Partner shall receive any interest on ------------------- its contributions to the capital of the Partnership. 4.7. No Withdrawals. The capital of the Partnership shall not be -------------- withdrawn except as herein expressly stipulated ARTICLE 5 MANAGEMENT OF THE PARTNERSHIP 5.1. Partnership Board. (a) The business and affairs of the ----------------- Partnership shall be managed under the direction of a board (the "Board") selected by the Partners, and the Board shall have all power and authority to manage, and direct the management and the business and affairs of, the Partnership. Any power not delegated pursuant to a policy of delegation adopted by the Board shall remain with the Board. Approval by or action taken by the Board in accordance with this Agreement shall constitute approval or action by the Partnership and shall be binding on the Partners. The initial members of the Board shall be as set forth in Exhibit A hereto, and their successors shall be chosen by the affirmative vote of a majority of the Board then in office or of the Partners. 7 (b) In addition to the foregoing, each of the Divisions may select their own boards, which shall direct the management, business and affairs of such Divisions. 5.2. Operation of Board Proxies; Written Action. Meetings of the ------------------------------------------ Board shall be held at such times and places as may be fixed by the Board. Notice of meeting may be waived before or after a meeting by a written waiver of notice signed by the member entitled to notice. A member's attendance at a meeting shall constitute a waiver of notice unless the member states at the beginning of the meeting his objection to the transaction of business because the meeting was not lawfully called or convened. The vote of a majority of the members of the Board present at a duly constituted meeting shall govern all of the Board's actions and constitute approval by the Board. Each member of the Board may vote by delivering his proxy to another member of the Board. The Board may act without a meeting if the action taken is approved in advance in writing by the unanimous consent of all members of the Board. 5.3. Officers. The Board (and the boards of each Division may -------- appoint such officers, including, but not limited to, president, treasurer, secretary, controller and one or more vice presidents (each, an "Officer") with such titles and duties as may be approved by the Board (or the board of a Division) . 5.4. Bank Accounts. The Partnership shall maintain bank accounts in ------------- such banks as the Board (or an Officer or Officers designated by the Board) may designate exclusively for the deposit and disbursement of all funds of the Partnership. All funds of the Partnership shall be promptly deposited in such accounts. The Board (or an Officer or Officers designated by the Board) from time to time shall authorize signatories for such accounts. 5.5. Fidelity Bonds and Insurance. The Partnership shall obtain ---------------------------- fidelity bonds with reputable surety companies, covering all persons having access to the Partnership's funds, and indemnifying the Partnership against loss resulting from fraud, theft, dishonesty and other wrongful acts of such persons. The Partnership shall carry or cause to be carried on its behalf with companies acceptable to the Board all property, liability (including, without limitation, product, general and employee medical liability) and workmen's compensation insurance as shall be required under applicable mortgages, leases, agreements and other instruments and statutes or as may be required by the Board, but never in amounts less than those agreed upon by the Board. ARTICLE 6 BOOKS AND RECORDS, AUDITS, ETC. 6.1. Books; Statements. The Partnership shall keep accurate, full ----------------- and complete books and accounts showing its assets and liabilities, operations, transactions and financial condition. The Board shall determine the methods to be used in the preparation of financial statements and federal, state and 8 municipal income and other tax or information returns for the Partnership, in connection with all items of income and expense, including, but not limited to, valuation of assets, the method of depreciation, elections, credits and accounting procedures. 6.2. Other Information. The Partnership shall make available to each ----------------- Partner such information and financial statements in addition to the foregoing as shall be required by either of them in connection with the preparation of tax returns, financial statements and other documents required to be filed under foreign or federal laws and shall cooperate in the preparation of any such documents. 6.3. Fiscal and Tax Year. The fiscal year and taxable year of the ------------------- Partnership shall be April 1 through March 31, unless the Partners shall hereafter in writing agree otherwise; the Partnership may, however, prepare annual financial information as of any date convenient for the Partners and their affiliates. ARTICLE 7 ALLOCATIONS OF GROSS INCOME, NET PROFIT --------------------------------------- AND NET LOSS ------------ 7.1. Basic Allocation Provisions. 7.1.1. Certain Definitions. (a) The term "Gross Income" means the gross income, the term "Net Profit" means the taxable income, and the term "Net Loss" means the taxable loss, in each case, as determined for federal income tax purposes for the relevant period, with the following adjustments: (i) items of gain, loss and deduction shall be computed based upon the Carrying Value (as hereinafter defined) of each of the Partnership's assets rather than upon the asset's adjusted basis for federal income tax purposes; (ii) any tax-exempt income received by the Partnership shall be deemed for these purposes only to be an item of Gross Income; (iii) the amount of any adjustment to the Carrying Value of any asset of the Partnership pursuant to section 743 of the Code shall not be taken into account; (iv) any expenditure of the Partnership described in section 705(a)(2)(B) of the Code and any expenditure, considered to be an expenditure described in section 705(a)(2)(B) of the Code pursuant to the Treasury Regulations under section 704(b) of the Code (each such expenditure a "Section 705(a)(2)(B) Expenditure") shall be treated as a deductible expense; (v) any percentage depletion in respect of an item of depreciable property of the Partnership which exceeds the adjusted tax basis of such property ("Excess Percentage Depletion") shall be excluded from the computation of Net Profit and Net Loss; and 9 (vi) any Gross Income, gain, loss, deduction or Section 7.05(a)(2)(B) Expenditure allocated to the Partners pursuant to Section 7.4 hereof shall be excluded from the computation of Net Profit and Net Loss. (b) "Carrying Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (i) the initial Carrying Value of any asset contributed to the Partnership shall be such asset's gross fair market value at the time of such contribution: (ii) if the Partnership elects to adjust the Capital Account balances of the Partners to reflect the fair market value of the Partnership's assets in accordance with Treasury Regulation section 1.704-l(b)(2)(iv)(f), the Carrying Values of all Partnership assets shall be adjusted to equal their respective gross fair market values at the time of such election; and (iii) if the Carrying Value of an asset has been determined pursuant to clause (i) or (ii) of this Section 7.1.1(b), such Carrying Value shall thereafter be adjusted in the same manner as would the asset's adjusted basis for federal income tax purposes. (c) "Quarterly Preference Amount" with respect to a Partner for a calendar quarter means the product of (i) 1.75%, and (ii) the positive amount, if any, by which (A) the sum of the amount of cash and the initial Carrying Value of any assets contributed to the Partnership by such Partner pursuant to Section 4.1 or Section 4.3 hereof on or before the last day of such quarter, less the liabilities of the Partner assumed by the Partnership in connection with any such contribution, plus the aggregate Quarterly Preference Amount with respect to such Partner for all calendar quarters preceding such quarter, exceeds (B) the aggregate amount of cash distributions, and the aggregate value of property distributions, received by such Partner from the Partnership pursuant to Section 4.4, Section 9.3 or Section 9.4 hereof on or before the last day of such quarter; provided, however, that appropriate adjustment shall be made to the calculation of a Partner's Quarterly Preference Amount to reflect contributions of cash or property, and/or distributions of cash or property, occurring during the calendar quarter for which such Quarterly Preference Amount is being determined. (d) "Untaxed Preference Amount" of a Partner means, at any given date, the excess, if any, of the aggregate of such Partner's Quarterly Preference Amounts with respect to calendar quarters ending on or before such date, over the amount by which (i) the aggregate amount of Net Profit previously allocated to such Partner pursuant to Section 7.1.2(b) hereof, exceeds (ii) the aggregate amount of Excess Depletion previously allocated to such Partner (pursuant to Section 7.2.2 hereof) with respect to Gross Income underlying such Net Profit. 10 7.1.2. Allocation of Net Profit. Net Profit of the Partnership for ------------------------ each fiscal year shall, after giving effect to all Capital Account adjustments attributable to contributions and distributions made during such year, be allocated among the Partners as follows: (a) First, to the Partners, in an amount not exceeding their aggregate negative Capital Account balances (i) first, so as to cause their respective negative Capital Account balances to be i the same proportions as are their respective Percentage Interests, and (ii) thereafter, in accordance with their respective Percentage Interests; (b) Second, to the Partners, in proportion to their respective untaxed Preference Amounts (determined as of the end of such year), until the Net Profit so allocated, less the amount of Excess Depletion allocable to the Partners (pursuant to Section 7.2.2 hereof) with respect to the Gross Income underlying such Net Profit, equals their aggregate Untaxed Preference Amounts (as so determined); and (c) Third, to the Partners in accordance with their respective Percentage Interests. 7.1.3. Allocation of Net Loss. Net Loss of the Partnership for ---------------------- each fiscal year shall, after giving effect to all Capital Account adjustments attributable to contributions and distributions made during such year, be allocated among the Partners as follows: (a) First, to the Partners, in an amount not exceeding the amount of Net Profit, if any, theretofore allocated pursuant to clause (i) to Section 7.1.2(a), in proportion to the respective amounts, if any, so allocated; and (b) Second, to the Partners in accordance with their respective Percentage Interests. 7.2. Tax Allocation Provisions. ------------------------- 7.2.1. In General. For income tax purposes, all items of Gross ---------- Income, gain, loss, deduction and Section 705(a)(2)(B) Expenditure for a fiscal year (other than items allocated pursuant to Section 7.2.2 or Section 7.2.3.) hereof shall be allocated to the Partners in the same manner as is the Partnership's Net Profit or Net Loss for such year; provided, however, that, if the Carrying Value of any property of the Partnership differs from its adjusted basis for federal income tax purposes, then items of gain, loss and deduction the amount of which is affected by such adjusted basis (other than items allocated pursuant to Section 7.2.2) shall be allocated among the Partners in a manner that takes account of the variation between the adjusted basis of the property for tax purposes and its Carrying Value in the manner provided for under section 704(c)(1)(A) of the Code and the Treasury Regulations thereunder. 7.2.2. Excess Depletion. Excess Depletion, if any, for a fiscal ---------------- year shall, pursuant to Treasury Regulation 11 section 1.704-1(b)(4)(iii), be allocated in accordance with the allocation of Gross Income for such year. 7.2.3. Special Allocations. Allocations pursuant to Section 7.4 ------------------- of items of Gross Income, gain, loss, deduction, and Section 705(a)(2)(B) Expenditure of the Partnership shall, except as otherwise required by Treasury Regulations under section 704(b) of the Code, consist of a pro rata portion of each item of Gross Income, gain, loss, deduction, and Section 705(a)(2)(B) Expenditure of the Partnership, as appropriate, for such fiscal year. 7.2.4. Credits. Any credits of the Partnership shall be ------- allocated among the Partners in accordance with their respective Percentage Interests. 7.3. Other Tax Matters. ----------------- 7.3.1. Designation of Tax Matters Partner. (a) GFMC shall be ---------------------------------- the tax matters partner (the "TMP") of the Partnership within the meaning of section 6231(a)(7) of the Code. The TMP shall not extend the statute of limitations on behalf of the Partnership, select the Partnership's choice of litigation forum in a tax controversy or take any other action in its capacity as TMP without the consent of the other Partners. The TMP shall keep the other Partners fully advised of the progress of any audit and shall supply the other Partners with copies of any written communications received from the Internal Revenue Service or other taxing authority relating to any audit within ten days after receipt thereof, and shall at least five business days prior to submitting any materials to the Internal Revenue Service, or other taxing authority, provide such materials to the other Partners. The TMP shall be reimbursed by the Partnership for any reasonable expenses incurred in its capacity as TMP. (b) Nothing in this Section 7.3.1 is intended to authorize the TMP to take any action that is left to the determination of a Partner under sections 6222 through 6233 of the Code. 7.3.2. Compliance with Treasury Regulations. The provisions of ------------------------------------ this Article 7 and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulation sections 1.704-1(b) and 1.704-1T(b), and shall be interpreted and applied in a manner consistent with such Treasury Regulations. 7.4. Special Allocation Provisions. ----------------------------- 7.4.1. Certain Definitions. (a) "Minimum Gain" for the ------------------- Partnership means the amount determined by computing with respect to each non- recourse liability of the Partnership the amount of Net Profit, if any, that would be realized by the Partnership if it disposed of the property securing such liability in full satisfaction thereof, and by then aggregating the amounts so computed. 12 (b) "Share of Minimum Gain" means, for each Partner, the excess, if any, of (i) the sum of the aggregate Non-Recourse Deductions allocated to such Partner (and such Partner's predecessors in interest), cumulatively from the inception of the Partnership, and the aggregate distributions to such Partner (and such Partner's predecessors in interest), cumulatively from the inception of the Partnership, of proceeds of a non-recourse liability that are allocable to an increase in Partnership Minimum Gain, over (ii) the sum of such Partner's (and such Partner's predecessors') aggregate share (determined as described below) of any net decreases in Partnership Minimum Gain, cumulatively from the inception of the Partnership. For purposes of this Section 7.4: (a) a deduction shall constitute a "Non-Recourse Deduction" if, and to the extent that, at the time such item was incurred it increased the amount of the Partnership's Minimum Gain; (b) a Partner's share of the net decrease in Partnership Minimum Gain during a taxable year shall be an amount that bears the same relation to the net decrease in Minimum Gain during such year as such Partner's Share of Minimum Gain at the end of the prior taxable year (or if later at the time immediately following the last time that the capital accounts of the Partners are increased pursuant to Treasury Regulation Section 1.704- l(b)(2)(iv)(f) or (r) to reflect the revaluation of Partnership property subject to one or more non-recourse liabilities of the Partnership) bears to the amount of Minimum Gain at the end of such prior taxable year (or such later date); (c) a Partner's share of any decrease in Partnership Minimum Gain resulting from a revaluation of Partnership property equals the amount of the increase in such Partner's Capital Account attributable to such revaluation to the extent of the reduction in Minimum Gain caused by such revaluation; (d) in determining the net increase or decrease in Partnership Minimum Gain during any Partnership taxable year in which the Capital Accounts of the Partners are increased pursuant to a revaluation of Partnership property subject to one or more non-recourse liabilities of the Partnership, any decrease in Partnership Minimum Gain attributable to each such revaluation shall be added back to the net decrease or increase otherwise determined; and (e) a distribution to a Partner by the Partnership that is allocable to the proceeds of any non-recourse liability of the Partnership is allocable to an increase in the Partnership Minimum Gain to the extent of the amount of the net increase, if any, in Partnership Minimum Gain for such taxable year that is allocated to such non-recourse liability under Treasury Regulation Section 1.704-1T(b)(4) (iv)(g)(2). (c) "Partner Minimum Gain" means Minimum Gain that would result if all partner non-recourse debt, as defined in Treasury Regulation Section 1.704-1T(b)(4)(iv)(k)(4) ("Partner Non-Recourse Debt"), were treated as non- recourse liabilities of the Partnership and the Partnership had no other non- recourse liabilities. (d) "Share of Partner Minimum Gain" means, for each Partner, such Partner's Share of Minimum Gain that would result if all Partner Non- Recourse Debt were treated as non-recourse liabilities of the Partnership and the Partnership had no other non-recourse liabilities. 13 7.4.2. Minimum Gain Chargeback. Notwithstanding any other ----------------------- provisions in this Agreement to the contrary, if in any fiscal year there is a net decrease in the amount of the Partnership's Minimum Gain or in the amount of Partner Minimum Gain, each Partner shall be allocated income and gain (including Gross Income) for such year or other period (and, if necessary, for subsequent years) in proportion to, and to the extent of, an amount equal to the greater of (i) the portion of such Partner's share of the net decrease in Minimum Gain or Partner Minimum Gain during such year or period that is allocable to the disposition of Partnership property subject to one or more non-recourse liabilities of the Partnership (including Partner Non-Recourse Debt), or (ii) the negative balances (computed with the adjustments described below) in such Partner's Capital Accounts at the end of such year (prior to any allocation pursuant to Section 7.1, Section 7.4.3, the last sentence of Section 7.4.4 or the last sentence of Section 7.4.5). In determining a Partner's negative Capital Account balance for purposes of this Section 7.4.2, a Partner's Capital Account balance shall be increased by the amount, if any, that such Partner is obligated to restore to the Partnership upon liquidation and shall be decreased by the amounts of any net allocations, distributions or other items specified in the first sentence of Section 7.4.3 that, as of the end of the taxable year, are reasonably expected to be made to such Partner. For purposes of this Section 7.4.2 and Section 7.4.3, the amount that a Partner may be obligated to contribute to the Partnership upon liquidation shall be considered to include: (a) such Partner's allocable share (as determined under section 752 of the Code) of any recourse indebtedness of the Partnership which could not be repaid out of the Partnership's assets if all such assets were sold at their respective Carrying Values; (b) any unconditional obligation of such Partner to contribute additional amounts to the capital of the Partnership in the future (to the extent not previously taken into account in determining such Partner's share of recourse liabilities of the Partnership); (c) such Partner's Share of Minimum Gain; and (d) such Partner's Share of Partnership Minimum Gain. In the event any items of income and gain "including Gross Income) of the Partnership are reallocated to a Partner pursuant to the first sentence of this Section 7.4.2, subsequent items of loss, deduction, or Section 705(a)(2)(B) Expenditure of the Partnership shall be allocated (prior to any allocation pursuant to Section 7.1, but subject to Section 7.4.4) to the Partners in a manner designed to result in each Partner having a Capital Account balance equal to what it would have been had the reallocation of items of income and gain (including Gross Income) pursuant to the first sentence of this Section 7.4.2 not occurred. Allocations of income and gain (including Gross Income) made pursuant to this Section 7.4.2 shall be made with respect to Partnership Minimum Gain prior to any allocation made pursuant to this Section 7.4.2 with respect to Partner Minimum Gain. 7.4.3. Qualified Income Offset. Notwithstanding any other ----------------------- provision in this Agreement (other than Section 7.4.2), if (i) during any fiscal year a Partner (a) is allocated pursuant to section 706(d) of the Code or Treasury Regulation section 1.751-1(b)(2)(ii) any items of loss, deduction or Section 705(a)(2)(B) Expenditure, (b) is distributed any cash or property 14 from the Partnership to the extent such distributions exceed offsetting increases to such Partner's Capital Account that are reasonably expected to occur during such year, or (c) receives any other adjustment, allocation or distribution described in Treasury Regulation section 1.704-1(b)(2) (ii) (d) (4), (5) or (6) and, as a result of such adjustment, allocation or distribution, such Partner has a Qualified Income Offset Amount, then (ii) items of income and gain (including Gross Income) for such fiscal year (and, if necessary, subsequent years), shall (prior to any allocation pursuant to Section 7.1, the last sentence of Section 7.4.4 or the last sentence of Section 7.4.5, but subsequent to any allocation pursuant to Section 7.4.2) be allocated to such Partner in an amount equal to his Qualified Income Offset Amount. As used herein, the term "Qualified Income Offset Amount" for a Partner means the excess, if any, of (x) the negative balance in a Partner's Capital Account immediately after the adjustment, allocation or distribution described in clause (i) of the preceding sentence (but without regard to any allocation pursuant to clause (ii) of the preceding sentence), over (y) the maximum amount that such Partner may be obligated to contribute to the Partnership upon liquidation as determined pursuant to the third sentence of Section 7.4.2. In the event any items of income and gain (including Gross Income) of the Partnership are reallocated to a Partner pursuant to the first sentence of this Section 7.4.3, subsequent items of loss, deduction or Section 705(a)(2)(B) Expenditure of the Partnership shall be allocated (prior to any allocation pursuant to Section 7.1, but subject to Sections 7.4.4 and 7.4.5) to the Partners in a manner designed to result in each Partner having a Capital Account balance equal to what it would have been had the reallocation of items of income and gain (including Gross Income) pursuant to the first sentence of this Section 7.4.3 not occurred. 7.4.4. Limitations on Loss Allocation. Notwithstanding the ------------------------------ provisions of Section 7.1.4, in no event shall Net Loss (or items thereof) of the Partnership be allocated to a Partner if such allocation would result in such Partner having a Qualified Income Offset Amount. Any allocation to a Partner which is prevented by the operation of the preceding sentence shall be reallocated in accordance with Section 7.1.4, subject to the subsequent provisions of this Section 7.4.4. For purposes of this Section 7.4.4, the determination of whether an allocation of Net Loss (or items thereof) would produce a Qualified Income Offset Amount for a Partner shall be made after reducing the Partner's Capital Account by the amounts of any adjustment, allocation or distribution described in clause (i) of the first sentence of Section 7.4.3 that, as of the end of the fiscal year, are reasonably expected to be made to the Partner. In the event any Net Loss of the Partnership is reallocated from a Partner pursuant to the first sentence of this Section 7.4.4, subsequent items of income and gain (including Gross Income) will first be allocated (subject to Sections 7.4.2 and 7.4.3) to the Partners in a manner designed to result in each Partner having a Capital Account balance equal to what it would have been had the reallocation pursuant to the first sentence of this Section 7.4.4 not occurred. 15 7.4.5. Allocation of Partner Non-Recourse Deductions. Items of --------------------------------------------- loss, deduction and Section 705(a)(2)(B) Expenditures attributable, under Treasury Regulation section 1.704-1T(b)(4)(iv)(h), to Partner Non-Recourse Debt shall (prior to any allocation pursuant to Section 7.1, but subject to the provisions of Section 7.4.4) be allocated, as provided in Treasury Regulation section 1.704-1T(b)(4)(iv)(h), to the Partners in accordance with the ratios in which they bear the economic risk of loss for such debt. In the event any items of loss, deduction and Section 705(a)(2)(B) Expenditure of the Partnership are allocated pursuant to the first sentence of this Section 7.4.5, subsequent items of income and gain (including Gross Income) shall (prior to any allocation pursuant to Section 7.1, and subject to Sections 7.4.2 and 7.4.3) be allocated to the Partners in a manner designed to result in each Partner having a Capital Account balance equal to what it would have been had the reallocation pursuant to the first sentence of this Section 7.4.5 not occurred. ARTICLE 8 ASSIGNMENT AND RIGHTS TO SALE OF INTEREST 8.1. Consent Required. Except as provided in this Agreement, without ---------------- the prior written consent of the other Partner (which may be withheld for any or no reason), no Partner, or any assignee or successor in interest of any Partner, shall (voluntarily or involuntarily) sell, assign, give, pledge, hypothecate, encumber or otherwise transfer its interest in the Partnership (including a transfer pursuant to a foreclosure sale of any of the assets of a Partner), or in any part thereof, except that a Partner may sell, assign or otherwise transfer its interest in the Partnership to any of its Affiliates without such prior written consent. 8.2. Other Assignment Void. Any purported assignment or transfer of --------------------- an interest in the Partnership not permitted by this Article 8 shall be null and void and have no effect whatsoever. ARTICLE 9 DISSOLUTION 9.1. Right to Dissolve the Partnership. The Partnership shall --------------------------------- continue until dissolved and terminated pursuant to the terms of this Agreement. No Partner shall have the right to terminate this Agreement or dissolve the Partnership by its express will or by withdrawal without the express written consent of the other Partners or the Board as herein set forth. The Partnership shall dissolve at any time upon the agreement of a majority of the Partners or the approval of a majority of the Board. 9.2. Winding us of the Partnership. Upon dissolution of the ----------------------------- Partnership, the Partnership's business shall be wound up and all its assets distributed in liquidation; provided, however, -------- ------- 16 that the Businesses of the Partnership shall be operated in the normal course of events during the winding up period (except for sales of assets of the Businesses, or parts thereof, as approved by the Board). Upon dissolution, the Partnership shall continue to act through the Board or an Officer designated by the Board. 9.3. Distributions of Cash; Allocations. Upon the dissolution of the ---------------------------------- Partnership for any reason, during the period of liquidation and until termination of the Partnership, the Partners shall continue to receive the cash and/or other property and to share profits and losses for all tax and other purposes as provided elsewhere in this Agreement. 9.4. Distribution of Proceeds of Liquidation. Regardless of the --------------------------------------- capital and undistributed earnings accounts of the Partners or their shares of profits and losses or their respective rights to receive distributions, the proceeds from liquidation shall be applied and distributed in the following order of priority: (a) First, to the payment of (i) debts and liabilities of the Partnership, except loans or advances that may have been made by any of the Partners to the Partnership, and (ii) expenses of liquidation; (b) Second, to the setting up of any reserves which the Board may deem necessary for any contingent or unforeseen liabilities or obligations of the Partnership or of the Partners arising out of or in connection with the Partnership. Such reserves may be paid over by the Partners to a bank or trust company acceptable to the Board to be held in escrow for the purpose of disbursing such reserves in payment of any of the aforementioned liabilities or obligations, and, at the expiration of such period as the Board shall deem advisable, distributing the balance, if any, thereafter remaining, in the manner hereinafter provided: (c) Third, to the repayment of any other loans that may have been made by any of the Partners to the Partnership: and (d) Fourth, any balance remaining shall be distributed to the Partners in accordance with their respective positive Capital Account balances. No Partner shall be obliged to restore any negative balance in its Capital Account. If a liquidating distribution is to be made at a time when there is a material difference between the aggregate Carrying Values and the aggregate fair market values of the Partnership's properties, each Partner's Capital Account shall be adjusted immediately before the distribution to reflect a revaluation of the Partnership's properties to their respective fair market values in accordance with the provisions of Treasury Regulation section 1.704- 1(b)(2)(iv)(f)(5). 17 ARTICLE 10 MISCELLANEOUS 10.1. Notices. All notices and other communications under this ------- Agreement shall be in writing and shall be considered given when delivered, if hand delivered, delivered by facsimile transmission, or mailed by prepaid registered mail, return receipt requested, to the parties at the address given below (or at such other address as a party may specify by notice pursuant to this provision): (a) If to CFI or CER, to: 1500 Southwest First Avenue Suite 500 Portland, Oregon 97201 Attention: William B. Freck (b) If to GFMC, to: 1687 Cole Boulevard P.O. Box 4014 Golden, Colorado 80402-4014 Attention: Stephen E. Flechner 10.2. Additional Documents and Acts. In connection with this ----------------------------- Agreement, as well as all transactions contemplated by this Agreement, each Partner agrees to execute and deliver such additional documents and instruments, and to perform such additional acts, as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement, and all such transactions. All approvals of either party hereunder shall be in writing. 10.3. Interpretation. This Agreement and the rights and obligations -------------- of the parties shall be construed in accordance with and governed by the laws of the State of Delaware applicable to agreements made and to be performed wholly within such jurisdiction. 10.4. Pronouns. All pronouns and any variations thereof shall be -------- deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require. 10.5. Entire Agreement. This instrument contains all of the ---------------- understandings and agreements of whatsoever kind and nature existing between the parties hereto with respect to this Agreement and the rights, interests, understandings, agreements and obligations of the respective parties pertaining to the Partnership. 10.6. References of this Agreement. Numbered or lettered articles, ---------------------------- sections and subsections herein contained refer to articles, sections and subsections of this Agreement unless otherwise expressly stated. 18 10.7. Headings. All headings herein are inserted only for -------- convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement. 10.8. Binding Effect. Except as herein otherwise expressly -------------- stipulated to the contrary, this Agreement shall be binding upon and inure to the benefit of the parties signatory hereto, and their respective successors and assigns. 10.9. Counterparts. This Agreement may be executed in counterparts, ------------ each of which shall be deemed an original and each of which shall constitute one and the same Agreement. 10.10. Amendments. This Agreement may not be amended, altered or ---------- modified except by a written instrument signed by each of the Partners. 10.11. Severability. If any term or condition of this Agreement ------------ shall be invalid or unenforceable to any extent or in any application, then the remainder of this Agreement, and such term or condition except to such extent or in such application, shall not be affected thereby, and each and every term and condition of this Agreement shall be valid and enforceable to the fullest extent and in the broadest application permitted by law. 19 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. CAVENHAM FOREST INDUSTRIES INC., a Delaware corporation By: /s/ George H. Hempstead, III ----------------------------- Title: ___________________________ CAVENHAM ENERGY RESOURCES INC., a Delaware corporation By: /s/ George H. Hempstead, III ----------------------------- Title: ___________________________ GOLD FIELDS MINING CORPORATION, a Delaware corporation By: /s/ George H. Hempstead, III ----------------------------- Title: ___________________________ 20 EXHIBIT A --------- INITIAL MEMBERS OF THE BOARD OF THE PARTNERSHIP ----------------------------------------------- William C. Bleimeister Russell A. Carson George H. Hempstead, III Robert C. Stift John H. Wimberly 21 FIRST AMENDMENT OF SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT THIS FIRST AMENDMENT OF SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT (this "Amendment"), dated as of June 25, 1993, by and among CAVENHAM FOREST INDUSTRIES INC., a Delaware corporation, CAVENHAM ENERGY RESOURCES INC., a Delaware corporation, and GOLD FIELDS MINING CORPORATION, a Delaware corporation (each individually, a "Partner" and, collectively, the "Partners"). R E C I T A L S : The Partners are parties of the Second Amended and Restated Partnership Agreement, dated as of September 28, 1991 (the "Partnership Agreement") which establishes a general partnership known as Hanson Natural Resources Company (the "Partnership"). 1. The Partnership, pursuant to the Asset Exchange Agreement dated January 25, 1993, between Santa Fe Pacific Minerals Corporation and certain of its affiliates and the Partnership, has acquired certain coal and coal related properties and certain quarry and quarry related properties, and in exchange for certain gold and gold related properties. 2. In view of the addition of the coal and quarry assets and related assets to the assets of the Partnership, the Partners desire to make the following amendment to the Partnership Agreement:. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Partners hereby agree to amend the Partnership Agreement as follows: Section 1.2 of the Partnership Agreement is hereby amended to read as follows: "1.2 Name. The name of the Partnership shall be: ---- "Hanson Natural Resources Company" The Businesses shall be operated as five divisions of the Partnership (the "Divisions"), under the names "Cavenham Forest Industries Division", "Cavenham Energy Resources Division", "Gold Fields Mining Company", "Lee Ranch Coal Company" and "Western Rock Products", "Western Arizona Rock Products", and "Cal West Rock Products" (and such other names as the Partners may adopt from time to time for a division consisting of the quarry and quarry related assets of the Partnership), and shall thereafter be called by such other names as the Partners shall from time to time determine. The Partners shall execute, publish and/or file all assumed or fictitious name, or other similar, certificates required by law to be published and filed, or either, in connection with the formation and operation of the Partnership in each state and locality it is necessary or desirable to publish or file any of the same in order to form and maintained the Partnership and/or to operated the Businesses." 22 IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written CAVENHAM FOREST INDUSTRIES, INC., a Delaware corporation By: [Executed] -------------------------------- Title: ______________________________ CAVENHAM ENERGY RESOURCES, INC., a Delaware corporation By: [Executed] -------------------------------- Title: ______________________________ GOLD FIELDS MINING CORPORATION, a Delaware corporation By: [Executed] -------------------------------- Title: ______________________________ 23 EX-3.83 83 CERT OF INCORP OF ARMCO TERMINAL COMPANY Exhibit 3.83 CERTIFICATE OF INCORPORATION OF ARMCO TERMINAL COMPANY FIRST: The name of the Corporation is Armco Terminal Company. SECOND: The address of its registered office in the State of Delaware is No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The total number of shares which the Corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is one dollar ($1.00) amounting in the aggregate to one thousand dollars ($1,000). FIFTH: The name and mailing address of the sole incorporator is as follows: NAME MAILING ADDRESS ---- --------------- Thomas H. Atkins 703 Curtis Street Middletown, Ohio 45043 SIXTH: The books of the Corporation may be kept within or without the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation. Election of directors need not be by written ballot. 2 SEVENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. The undersigned, being the sole incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, does make this certificate, hereby declaring and clarifying that this is my act and deed and that the facts herein stated are true, and accordingly have hereunto set my hand this 1st day of April, 1982. /s/ Thomas H. Atkins ---------------------------------- Thomas H. Atkins RECEIVED FOR RECORD May 17 1982 LEO J. DUGAN, Jr., Recorder CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION * * * * * * ARMCO TERMINAL COMPANY, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, That the Certificate of Incorporation of ARMCO TERMINAL COMPANY be amended by changing Article FIRST thereof so that, as amended, said Article shall be and read as follows: "FIRST: The name of the corporation is: PEABODY TERMINALS, INC." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of sections 242 and 228 of the General Corporation Law of the State of Delaware. 2 IN WITNESS WHEREOF, said ARMCO TERMINAL COMPANY has caused this certificate to be signed by its President and attested by its Secretary, this 1st day of March, 1984. By [executed] ---------------------------- President ATTEST: [executed] - --------------------------------- Asst. Secretary RECEIVED FOR RECORD May 12 1984 LEO J. DUGAN, Jr., Recorder EX-3.84 84 BY-LAWS OF PEABODY TERMINALS, INC. Exhibit 3.84 BY-LAWS of PEABODY TERMINALS, INC. ARTICLE I - OFFICES Section 1.1. Location. The address of the registered office of the -------- Corporation in the State of Delaware and the name of the registered agent at such address shall be as specified in the Certificate of Incorporation or, if subsequently changed, as specified in the most recent certificate of change filed pursuant to law. The Corporation may also have other offices at such places within or without the State of Delaware as the Board of Directors may from time to time designate or the business of the Corporation may require. Section 1.2. Change of Location. In the manner permitted by law, the ------------------ Board of Directors or the registered agent may change the address of the Corporation's registered office in the State of Delaware and the Board of Directors may make, revoke or change the designation of the registered agent. ARTICLE II - MEETINGS OF STOCKHOLDERS Section 2.1. Annual Meeting. The annual meeting of the stockholders -------------- of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held at the registered office of the Corporation, or at such other place within or without the State of Delaware as the Board of Directors may fix, during the month of April. (Amended May 21, 1984.) Section 2.2. Special Meetings. Special meetings of stockholders, ---------------- unless otherwise prescribed by law, may be called at any time by the Chairman of the Board, by the President or by order of the Board of Directors. Special meetings of stockholders prescribed by law for the election of directors shall be called by the Board of Directors, the President, or the Secretary whenever required to do so pursuant to the applicable law. Special meetings of stockholders shall be held at such place within or without the State of Delaware as shall be designated in the notice of meeting. Section 2.3. List of Stockholders Entitled to Vote. The officer who ------------------------------------- has charge of the stock ledger of the Corporation shall prepare and make, or cause to be prepared and made, at least ten days before every meeting of stockholders, a complete list, based upon the record date for such meeting determined pursuant to Section 5.8, of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the 2 examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting or, if such place shall not be so specified, at the place where said meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled (i) to examine the stock ledger, the list of stockholders entitled to vote at any meeting, or the books of the Corporation, or (ii) to vote in person or by proxy at any meeting of stockholders. Section 2.4. Notice of Meetings. Written notice of each annual and ------------------ special meeting of stockholders, other than any meeting the giving of notice of which is otherwise prescribed by law, stating the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes thereof, shall be delivered or mailed in writing at least ten but not more than sixty days before such meeting, to each stockholder required or permitted to take any action or entitled to vote thereat. If mailed, such notice shall be deposited in the United States mail, postage prepaid, directed to such stockholder at his address as the same appears on the records of the Corporation. An affidavit of the Secretary, an Assistant Secretary or the transfer agent of the Corporation that notice has been duly given shall be evident of the facts stated therein. Section 2.5. Adjourned Meetings and Notice Thereof. Any meeting of ------------------------------------- stockholders may be adjourned to another time or place, and the Corporation may transact at any adjourned meeting any business which might have been transacted at the original meeting. Notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken, unless (a) any adjournment or series of adjournments cause the original meeting to be adjourned for more than thirty days after the date originally fixed therefor, or (b) a new record date is fixed for the adjourned meeting. If notice of an adjourned meeting is given, such notice shall be given to each stockholder of record entitled to vote at the adjourned meeting in the manner prescribed in Section 2.4 for the giving of notice of meetings. Section 2.6. Quorum. At any meeting of stockholders, except as ------ otherwise expressly required by law, or by the Certificate of Incorporation, the holders of record of at least a majority of the outstanding shares of capital stock entitled to vote at or act at such meetings shall be present or represented by proxy in order to constitute a quorum for the transaction of any business, but less than a quorum shall have power to adjourn any meeting until a quorum shall be present. When a quorum is once present to organize a meeting, the quorum cannot be destroyed by the subsequent withdrawal or revocation of the proxy of any stockholder. Shares of capital stock owned by the Corporation or by another corporation, if a majority of the shares of such other corporation entitled to vote in the election of directors is held by the Corporation, shall not be counted for quorum purposes or entitled to vote. Section 2.7. Voting. At any meeting of stockholders each stockholder ------ holding as of the record date shares of stock entitled to be voted on any matter at such meeting shall have one vote on each such matter submitted to vote at such meeting for each such share of stock held by such stockholder as of the record date as shown by the list of stockholders entitled to vote at the meeting, unless the Certificate of Incorporation provides for more or less than one vote for any share on any matter, in which case every reference to a required proportion of stock shall refer to the proportion of the votes of such stock. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy, provided that no proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only so long as, it is coupled with an interest, whether in the stock itself or in the Corporation, sufficient in law to support an irrevocable power. The Board of Directors, the President, or the person presiding at a meeting of stockholders, may appoint one or more persons to act as inspectors of voting at any meeting with respect to any matter to be submitted to a vote of stockholders at such meeting, with such powers and duties, not inconsistent with applicable law, as may be appropriate. Section 2.8. Action by Consent of Stockholders. Unless otherwise --------------------------------- provided in the Certificate of Incorporation whenever any action by the stockholders at a meeting thereof is required or permitted by law, the Certificate of Incorporation, or these By-Laws, such action may be taken without a meeting, without prior notice and without a vote if a consent in writing, setting forth the action so taken, shall be signed by the holders of the outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of such action without a meeting and by less than unanimous written consent shall be given to those stockholders who have not consented in writing. 4 ARTICLE III - BOARD OF DIRECTORS Section 3.1. General Powers. The property, business and affairs of -------------- the Corporation shall be managed by the Board of Directors. The Board of Directors may exercise all such powers of the Corporation and have such authority and do all such lawful acts and things as are permitted by law, the Certificate of Incorporation or these By-Laws. Section 3.2. Number of Directors. The Board of Directors of the ------------------- Corporation shall consist of one or more members; the exact number of directors which shall constitute the whole Board of Directors shall be fixed from time to time by resolution adopted by a majority of the whole Board of Directors. Until the number of directors has been so fixed by the Board of Directors, the number of directors constituting the whole Board of Directors shall be five. After fixing the number of directors constituting the whole Board of Directors, the Board of Directors may, by resolution adopted by a majority of the whole Board of Directors, from time to time change the number of directors constituting the whole Board of Directors. Section 3.3. Qualification. Directors need not be stockholders of ------------- the Corporation. Section 3.4. Election. Except as otherwise provided by law, the -------- Certificate of Incorporation, or these By-Laws, after the first meeting of the Corporation at which directors are elected, directors of the Corporation shall be elected in each year at the annual meeting of stockholders, or at a special meeting in lieu of the annual meeting called for such purpose, by a plurality of votes cast at such meeting. The voting on directors at any such meeting need not be by written ballot. Section 3.5. Term. Each director shall hold office until his ---- successor is duly elected and qualified, except in the event of the earlier termination of his term of office by reason of death, resignation, removal or other reason. Section 3.6. Resignation and Removal. Any director may resign at any ----------------------- time upon written notice to the Board of Directors, the President or the Secretary. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Any director may be removed at any time and his place filled in the manner provided in Section 3.7. Section 3.7. Vacancies. Vacancies in the Board of Directors (unless --------- the vacancy be caused by the removal of a director) and newly created directorships resulting from any increase in the authorized number of directors shall be filled by 5 a majority of the directors then in office, though less than a quorum, or by a sole remaining director. If one or more directors shall resign from the Board of Directors effective at a future date, a majority of the directors then in office, including those who have so resigned at a future date, shall have power to fill such vacancy or vacancies, the vote thereon to take effect and the vacancy to be filled when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies. Each director chosen to fill a vacancy on the Board of Directors shall hold office until the next annual election of directors and until his successor shall be elected and qualified. Section 3.8. Quorum and Voting. Unless the Certificate of ----------------- Incorporation provides otherwise, at all meetings of the Board of Directors a majority of the total number of directors shall be present to constitute a quorum for the transaction of business. A director interested in a contract or transaction may be counted in determining the presence of a quorum at a meeting of the Board of Directors which authorizes the contract or transaction. In the absence of a quorum, a majority of the directors present may adjourn the meeting until a quorum shall be present. Unless the Certificate of Incorporation provides otherwise, members of the Board of Directors or any committee designated by the Board of Directors may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at such meeting. The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors unless the Certificate of Incorporation or these By-Laws shall require a vote of a greater number. Section 3.9. Regulations. The Board of Directors may adopt such ----------- rules and regulations for the conduct of the business and management of the Corporation, not inconsistent with law or the Certificate of Incorporation or these By-Laws, as the Board of Directors may deem proper. The Board of Directors may hold its meetings and cause the books and records of the Corporation to be kept at such place or places within or without the State of Delaware as the Board of Directors may from time to time determine. A member of the Board of Directors shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or reports made to the Corporation by any of its officers, by an independent certified public accountant, or by an appraiser selected with reasonable 6 care by the Board of Directors or any committee of the Board of Directors or in relying in good faith upon other records of the Corporation. Section 3.10. Annual Meeting of Board of Directors. An annual ------------------------------------ meeting of the Board of Directors shall be called and held for the purpose of organization, election of officers and transaction of any other business. If such meeting is held promptly after and at the place specified for the annual meeting of stockholders, no notice of the annual meeting of the Board of Directors need be given. Otherwise such annual meeting shall be held at such time (not more than thirty days after the annual meeting of stockholders) and place as may be specified in a notice of the meeting. Section 3.11. Regular Meetings. Regular meetings of the Board of ---------------- Directors shall be held at the time and place, within or without the State of Delaware, as shall from time to time be determined by the Board of Directors. After there has been such determination and notice thereof has been given to each member of the Board of Directors, no further notice shall be required for any such regular meeting. Except as otherwise provided by law, any business may be transacted at any regular meeting. Section 3.12. Special Meetings. Special meetings of the Board of ---------------- Directors may, unless otherwise prescribed by law, be called from time to time by the President, and shall be called by the President or the Secretary upon the written request of a majority of the whole Board of Directors directed to the President or the Secretary. Except as provided below, notice of any special meeting of the Board of Directors, stating the time, place and purpose of such special meeting, shall be given to each director. Section 3.13. Notice of Meetings; Waiver of Notice. Notice of any ------------------------------------ meeting of the Board of Directors shall be deemed to be duly given to a director (i) if mailed to such director, addressed to him at his address as it appears upon the books of the Corporation, or at the address last made known in writing to the Corporation by such director as the address to which such notices are to be sent, at least two days before the day on which such meeting is to be held, or (ii) if sent to him at such address by telegraph, cable, radio or wireless not later than the day before the day on which such meeting is to be held, or (iii) if delivered to him personally or orally, by telephone or otherwise, not later than the day before the day on which such meeting is to be held. Each such notice shall state the time and place of the meeting and the purposes thereof. Notice of any meeting of the Board of Directors need not be given to any director if waived by him in writing (or by telegram, cable, radio or wireless and confirmed in writing) whether before or after the holding of such meeting, or if such 7 director is present at such meeting. Any meeting of the Board of Directors shall be a duly constituted meeting without any notice thereof having been given if all directors then in office shall be present thereat. Section 3.14. Committees of Directors. The Board of Directors may, ----------------------- by resolution or resolutions passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Except as herein provided, vacancies in membership of any committee shall be filled by the vote of a majority of the whole Board of Directors. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Members of a committee shall hold office for such period as may be fixed by a resolution adopted by a majority of the whole Board of Directors, subject, however, to removal at any time by the vote of a majority of the whole Board of Directors. Section 3.15. Powers and Duties of Committees. Any committee, to the ------------------------------- extent provided in the resolution or resolutions creating such committee, shall have and may exercise the powers of the Board of Directors in the management of the business affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. No such committee shall have the power or authority with regard to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the ByLaws. The Board of Directors may, in the resolution creating a committee, grant to such committee the power and authority to declare a dividend or authorize the issuance of stock. Each committee may adopt its own rules of procedure and may meet at stated times or on such notice as such committee may determine. Except as otherwise permitted by these By-Laws, each committee shall keep regular minutes of its proceedings and report the same to the Board of Directors when required. Section 3.16. Compensation of Directors. The Board of Directors may ------------------------- from time to time, in its discretion, fix the amounts which shall be payable to directors and to members of any committee of the Board of Directors for attendance at the 8 meetings of the Board of Directors or of such committee and for services rendered to the Corporation. Section 3.17. Action Without Meeting. Unless otherwise restricted by ---------------------- the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or such committee. ARTICLE IV - OFFICERS Section 4.1. Principal Officers. The principal officers of the ------------------ Corporation shall be elected by the Board of Directors and shall include a President, a Secretary and a Treasurer and may, at the discretion of the Board of Directors, also include a Chairman of the Board, one or more Vice Presidents, and a Controller. Except as otherwise provided in the Certificate of Incorporation or these By-Laws, one person may hold the offices and perform the duties of any two or more of said principal offices except the offices and duties of President and Vice President or of President and Secretary. None of the principal officers, except the Chairman of the Board and the President, need be directors of the Corporation. Section 4.2. Election of Principal Officers; Term of Office. The ---------------------------------------------- principal officers of the Corporation shall be elected annually by the Board of Directors at each annual meeting of the Board of Directors. Failure to elect any principal officer annually shall not dissolve the Corporation. If the Board of Directors shall fail to fill any principal office at an annual meeting, or if any vacancy in any principal office shall occur, or if any principal office shall be newly created, such principal office may be filled at any regular or special meeting of the Board of Directors. Each principal officer shall hold office until his successor is duly elected and qualified, or until his earlier death, resignation or removal, provided that the terms of office of all Vice Presidents shall terminate at any annual meeting of the Board of Directors at which the President or any Vice President is elected. Section 4.3. Subordinate Officers, Agents and Employees. In addition ------------------------------------------ to the principal officers, the Corporation may have one or more Assistant Treasurers, Assistant Secretaries and such other subordinate officers, agents and employees as the Board of Directors may deem advisable, each of whom shall hold office for such period and have such authority and perform such duties as the Board of Directors, the President, or any officer 9 designated by the Board of Directors, may from time to time determine. The Board of Directors at any time may appoint and remove, or may delegate to any principal officer the power to appoint and to remove, any subordinate officer, agent or employee of the Corporation. Section 4.4. Delegation of Duties of Officers. The Board of -------------------------------- Directors may delegate the duties and powers of any officer of the Corporation to any other officer or to any director for a specified period of time for any reason that the Board of Directors may deem sufficient. Section 4.5. Removal of Officers. Any officer of the Corporation may ------------------- be removed with or without cause by resolution adopted by a majority of the directors then in office at any regular or special meeting of the Board of Directors or by a written consent signed by all of the directors then in office. Section 4.6. Resignations. Any officer may resign at any time by ------------ giving written notice of resignation to the Board of Directors, to the President or to the Secretary. Any such resignation shall take effect upon receipt of such notice or at any later time specified therein. Unless otherwise specified in the notice, the acceptance of a resignation shall not be necessary to make the resignation effective. Section 4.7. Chairman of the Board. The Chairman of the Board shall --------------------- preside at all meetings of stockholders and of the Board of Directors at which he is present. The Chairman of the Board shall have such other powers and perform such other duties as may be assigned to him from time to time by the Board of Directors. Section 4.8. President. The President shall, in the absence of the --------- Chairman of the Board, preside at all meetings of the stockholders and of the Board of Directors at which he is present. The President shall have all powers and duties usually incident to the office of the President except as specifically limited by a resolution of the Board of Directors. The President shall have such other powers and perform such other duties as may be assigned to him from time to time by the Board of Directors. Section 4.9. Vice President. In the absence or disability of the -------------- President or if the office of President be vacant, the Vice Presidents in the order determined by the Board of Directors, or if no such determination has been made in the order of their seniority, shall perform the duties and exercise the powers of the President, subject to the right of the Board of Directors at any time to extend or confine such powers and duties or to assign them to others. Any Vice President may have such additional designation in his title as the Board of Directors may determine. The Vice Presidents shall generally assist the President in such manner as the President shall direct. Each Vice President shall have such other powers and perform such 10 other duties as may be assigned to him from time to time by the Board of Directors or the President. Section 4.10. Secretary. The Secretary shall act as Secretary of all --------- meetings of stockholders and of the Board of Directors at which he is present, shall record all the proceedings of all such meetings in a book to be kept for that purpose, shall have supervision over the giving and service of notices of the Corporation, and shall have supervision over the care and custody of the records and seal of the Corporation. The Secretary shall be empowered to affix the corporate seal to documents, the execution of which on behalf of the Corporation under its seal is duly authorized, and when so affixed may attest the same. The Secretary shall have all powers and duties usually incident to the office of Secretary, except as specifically limited by a resolution of the Board of Directors. The Secretary shall have such other powers and perform such other duties as may be assigned to him from time to time by the Board of Directors or the President. Section 4.11. Treasurer. The Treasurer shall have general --------- supervision over the care and custody of the funds and over the receipts and disbursements of the Corporation and shall cause the funds of the Corporation to be deposited in the name of the Corporation in such banks or other depositaries as the Board of Directors may dictate. The Treasurer shall have supervision over the care and safekeeping of the securities of the Corporation. The Treasurer shall have all powers and duties usually incident to the office of Treasurer except as specifically limited by a resolution of the Board of Directors. The Treasurer shall have such other powers and perform such other duties as may be assigned to him from time to time by the Board of Directors or the President. Section 4.12. Controller. The Controller shall be the chief ---------- accounting officer of the Corporation and shall have supervision over the maintenance and custody of the accounting operations of the Corporation, including the keeping of accurate accounts of all receipts and disbursements and all other financial transactions. The Controller shall have all powers and duties usually incident to the office of Controller except as specifically limited by a resolution of the Board of Directors. The Controller shall have such other powers and perform such other duties as may be assigned to him from time to time by the Board of Directors or the President. Section 4.13. Bond. The Board of Directors shall have power, to the ---- extent permitted by law, to require any officer, agent or employee of the Corporation to give bond for the faithful discharge of his duties in such form, and with such surety or sureties as the Board of Directors may determine. 11 ARTICLE V - CAPITAL STOCK Section 5.1. Issuance of Certificates for Stock. Each stockholder of ---------------------------------- the Corporation shall be entitled to a certificate or certificates in such form as shall be approved by the Board of Directors, certifying the number of shares of capital stock of the Corporation owned by such stockholder. Section 5.2. Signatures on Stock Certificates. Certificates for -------------------------------- shares of capital stock of the Corporation shall be signed by, or in the name of the Corporation by, the Chairman of the Board, the President or a Vice President and by the Secretary, the Treasurer, an Assistant Secretary or an Assistant Treasurer. Any of or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may be issued by the Corporation with the same effect as if such signer were such officer, transfer agent or registrar at the date of issue. Section 5.3. Stock Ledger. A record of all certificates for capital ------------ stock issued by the Corporation shall be kept by the Secretary or any other officer or employee of the Corporation designated by the Secretary or by any transfer clerk or transfer agent appointed pursuant to Section 5.4 hereof. Such record shall show the name and address of the person, firm or corporation in which certificates for capital stock are registered, the number of shares represented by each such certificate, the date of each such certificate, and in case of certificates which have been cancelled the dates of cancellation thereof. The Corporation shall be entitled to treat the holder of record of shares of capital stock as shown on the stock ledger as the owner thereof and as the person entitled to receive dividends thereon, to vote such shares and to receive notice of meetings, and for all other purposes. The Corporation shall not be bound to recognize any equitable or other claim to or interest in any share of capital stock on the part of any other person whether or not the Corporation shall have express or other notice thereof. Section 5.4. Regulations Relating to Transfer. The Board of -------------------------------- Directors may make such rules and regulations as it may deem expedient, not inconsistent with law, the Certificate of Incorporation or these By-Laws, concerning issuance, transfer and registration of certificates for shares of capital stock of the Corporation. The Board of Directors may appoint, or authorize any principal officer to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars and may require all certificates for capital stock to bear the signature or signatures of any of them. 12 Section 5.5. Transfers. Transfers of capital stock shall be made on --------- the books of the Corporation only upon delivery to the Corporation or its transfer agent of (i) a written direction of the registered holder named in the certificate or such holder's attorney lawfully constituted in writing, (ii) the certificate for the shares of capital stock being transferred, and (iii) a written assignment of the shares of capital stock evidenced thereby. Section 5.6. Cancellation. Each certificate for capital stock ------------ surrendered to the Corporation for exchange or transfer shall be cancelled and no new certificate or certificates shall be issued in exchange for any existing certificate (other than pursuant to Section 5.7) until such existing certificate shall have been cancelled. Section 5.7. Lost, Destroyed, Stolen and Mutilated Certificates. In -------------------------------------------------- the event that any certificate for shares of capital stock of the Corporation shall be mutilated the Corporation shall issue a new certificate in place of such mutilated certificate. In case any such certificate shall be lost, stolen or destroyed the Corporation may, in the discretion of the Board of Directors or a committee designated thereby with power so to act, issue a new certificate for capital stock in the place of any such lost, stolen or destroyed certificate. The applicant for any substituted certificate or certificates shall surrender any mutilated certificate or, in the case of any lost, stolen or destroyed certificate, furnish satisfactory proof of such loss, theft or destruction of such certificate and of the ownership thereof. The Board of Directors or such committee may, in its discretion, require the owner of a lost or destroyed certificate, or his representatives, to furnish to the Corporation a bond with an acceptable surety or sureties and in such sum as will be sufficient to indemnify the Corporation against any claim that may be made against it on account of the lost, stolen or destroyed certificate or the issuance of such new certificate. A new certificate may be issued without requiring a bond when, in the judgment of the Board of Directors, it is proper to do so. Section 5.8. Fixing of Record Dates. (a) The Board of Directors may ---------------------- fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of any meeting of stockholders, nor more than sixty days prior to any other action, for the purpose of determining stockholders entitled to notice of or to vote at such meeting of stockholders or any adjournment thereof, or to express consent or dissent to corporate action in writing without a meeting, or to receive payment or any dividend or other distribution or allotment of any rights, or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action. 13 (b) If no record date is fixed by the Board of Directors: (i) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (ii) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first consent is expressed; (iii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. (c) A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided that the Board of Directors may fix a new record date for the adjourned meeting. ARTICLE VI - INDEMNIFICATION Section 6.1. Indemnification of Officers and Directors. The Company ----------------------------------------- shall, to the fullest extent permitted by applicable law, indemnify any person (and the heirs, executors and administrators thereof) who was or is made, or threatened to be made, a party to an action, suit or proceeding, whether civil, criminal, administrative or investigative, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or administrative or legislative body or agency, including an action by or in the right of the Company to procure a judgment in its favor and an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Company is serving or served in any capacity at the request of the Company, by reason of the fact that he, his testator or intestate is or was a director or officer of the Company, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement, and costs, charges and expenses, including attorneys' fees, incurred therein or in any appeal thereof. Section 6.2. Indemnification of Others. The Company shall indemnify ------------------------- other persons and reimburse the expenses thereof, to the extent required by applicable law, and may indemnify any other person to whom the Company is permitted to provide indemnification or the advancement of expenses, whether pursuant to rights granted pursuant to, or provided by, the Delaware General Corporation Law or otherwise. 14 Section 6.3. Reimbursement. The Company shall, from time to time, ------------- reimburse or advance to any person referred to in Section 6.1 the funds necessary for payment of expenses, including attorneys' fees, incurred in connection with any action, suit or proceeding referred to in Section 6.1, or upon receipt of a written undertaking by or on behalf of such person to repay such amount(s) if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled or (iii) his conduct was otherwise of a character such that Delaware law would require that such amount(s) be repaid. Section 6.4. Service to Other Corporations. Any director or officer ----------------------------- of the Company serving (i) another corporation, of which a majority of the shares entitled to vote in the election of its directors is held by the Company, or (ii) any employee benefit plan of the Company or any corporation referred in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. Section 6.5. Applicable Law. Any person entitled to be indemnified -------------- or to the reimbursement or advancement of expenses as a matter of right pursuant to this Article may elect to have the right to indemnification (or advancement of expenses) interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the action, suit or proceeding, to the extent permitted by applicable law, or on the basis of the applicable law in effect at the time indemnification is sought. Section 6.6. Contract Right. The right to be indemnified or to the -------------- reimbursement or advancement of expenses pursuant to this Article (i) is a contract right pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth in a separate written contract between the Company and the director or officer, (ii) is intended to be retroactive and shall be available with respect to events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. Section 6.7. Failure to Indemnify. If a request to be indemnified or -------------------- for the reimbursement or advancement of expenses pursuant hereto is not paid in full by the Company within thirty days after a written claim has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled also to be paid the expenses of prosecuting such claim. Neither the failure of the Company (including its Board of Directors, independent legal counsel, or its stockholders) to have made a 15 determination prior to the commencement of such action that indemnification of or reimbursement or advancement of expenses to the claimant is proper in the circumstances, nor an actual determination by the Company (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses, shall be a defense to the action or create a presumption that the claimant is not so entitled. (Amended October 16, 1986.) ARTICLE VII - MISCELLANEOUS PROVISIONS Section 7.1. Fiscal Year. The fiscal year of the Corporation shall be the ----------- calendar year, or such other twelve consecutive months as the Board of Directors may designate. Section 7.2. Waiver of Notice. Whenever any notice is required to be ---------------- given under any provision of law, the Certificate of Incorporation, or these By- Laws, a written waiver thereof, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders' directors, or members of a committee of directors need be specified in any written waiver of notice unless so required by the Certificate of Incorporation. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Section 7.4. Execution of Instruments, Contracts, etc. (a) All ----------------------------------------- checks, drafts, bills of exchange, notices or other obligations or orders for the payment of money shall be signed in the name of the Corporation by such officer or officers or person or persons, as the Board of Directors may from time to time designate. (b) Except as otherwise provided by law, the Board of Directors, any committee given specific authority in the premises by the Board of Directors, or any committee given authority to exercise generally the powers of the Board of Directors during the intervals between meetings of the Board of Directors, may authorize any officer, employee or agent, in the name of and on behalf of the Corporation, to enter into or execute and deliver deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances. (c) All applications, written instruments and papers required by or filed with any department of the United States Government or any state, county, municipal or other governmental official or authority, may if permitted by applicable law be executed in the name of the Corporation by any principal officer or subordinate officer of the Corporation, or, 16 to the extent designated for such purpose from time to time by the Board of Directors, by an employee or agent of the Corporation. Such designation may contain the power to substitute, in the discretion of the person named, one or more other persons. ARTICLE VIII - AMENDMENTS; EMERGENCY BY-LAWS Section 8.1. By Stockholders. These By-Laws may be amended, added --------------- to, altered or repealed, or new By-Laws may be adopted, at any meeting of stockholders by the vote of the holders of not less than a majority of the outstanding shares of stock entitled to vote thereat, provided that, in the case of a special meeting, notice that an amendment is to be considered and acted upon shall be inserted in the notice or waiver of notice of said meeting. Section 8.2. By Directors. To the extent permitted by the ------------ Certificate of Incorporation, these By-Laws may be amended, added to, altered or repealed, or new By-Laws may be adopted at any regular or special meeting of the Board of Directors. Section 8.3. Emergency By-Laws. The Board of Directors may adopt ----------------- emergency by-laws subject to repeal or change by action of the stockholders which shall, notwithstanding any different provision of law, the Certificate of Incorporation or these By-Laws, be operative during any emergency resulting from any nuclear or atomic disaster, an attack on the United States or on a locality in which the Corporation conducts its business or customarily holds meetings of the Board of Directors or stockholders, any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors or a standing committee thereof cannot readily be convened for action. Such emergency by-laws may make any provision that may be practicable and necessary for the circumstances of the emergency. No officer, director or employee acting in accordance with any emergency by-laws shall be liable except for willful misconduct. EX-3.85 85 CRT OF INCORP OF PEABODY VENEZUELA COAL CORP. EXHIBIT 3.85 CERTIFICATE OF INCORPORATION OF PEABODY VENEZUELA COAL CORP. * * * * * 1. The name of the corporation is PEABODY VENEZUELA COAL CORP. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description. To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any business of this corporation. To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, chooses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof. To borrow or raise money for any of the purposes of the corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other 2 negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes. To purchase, receive, take by grant, gift, devise, bequest or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with real or personal property, or any interest therein, wherever situated, and to sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any of the corporation's property and assets, or any interest therein, wherever situated. In general, to possess and exercise all the powers and privileges granted by the General Corporation Law of Delaware or by any other law of Delaware or by this Certificate of Incorporation together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the corporation. The business and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this certificate of incorporation, but the business and purposes specified in each of the foregoing clauses 3 of this article shall be regarded as independent business and purposes. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). 5. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- M. A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 L. J. Vitalo Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper 4 purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or by-laws, expressly so provide, no such committee shall have the 5 power or authority to declare a dividend or to authorize the issuance of stock. When and as authorized by the stockholders in accordance with statute, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 8. Elections of directors need not be by written ballot unless the by- laws of the corporation shall so provide. 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 6 11. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 4th day of May, 1992. /s/ M. A. Brzoska ------------------ M. A. Brzoska /s/ K. A. Widdoes ------------------ K. A. Widdoes /s/ L. J. Vitalo ----------------- L. J. Vitalo 7 EX-3.86 86 BY-LAWS OF PEABODY VENEZUELA COAL CORP. EXHIBIT 3.86 PEABODY VENEZUELA COAL CORP. * * * * * BY - LAWS * * * * * ARTICLE I --------- OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II ---------- MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1993, shall be held on the first day of the month of May if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the 2 president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than 3 thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at 4 a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III ----------- DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be one. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, 5 summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. 6 Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings 7 are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the 8 issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be 9 paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV ---------- NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, 10 signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V --------- OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of 11 directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY 12 Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 13 THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the 14 absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI ---------- CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, 15 transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction 16 upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be 17 bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII ----------- GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. 18 CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII ------------ AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or 19 adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 20 EX-3.87 87 CERT OF INCORPORATION OF PEABODY WESTERN COAL CO EXHIBIT 3.87 CERTIFICATE OF INCORPORATION OF PEABODY WESTERN COAL COMPANY * * * * * NAME MAILING ADDRESS ---- --------------- M. A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 L. J. Vitalo Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- W. H. Carson 1300 S. Yale Flagstaff, AZ 86001 G. L. Melvin 1300 S. Yale Flagstaff, AZ 86001 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: 2 To make, alter or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or 3 by-laws, expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. When and as authorized by the stockholders in accordance with statute, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the. manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 11. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve 4 intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. 5 WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 3rd day of January, 1994. /s/ M. A. Brzoska --- ------------- Incorporator /s/ K. A. Widdoes --- ------------- Incorporator /s/ L. J. Vitalo --- ------------ Incorporator EX-3.88 88 BY-LAWS OF PEABODY WESTERN COAL COMPANY EXHIBIT 3.88 PEABODY WESTERN COAL COMPANY * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Flagstaff, State of Arizona, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1994, shall be held on the 15th day of May if not a legal holiday, and if a legal holiday, then on the 2 next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a 3 majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which 4 by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than two (2) nor more than five (5). The first board shall consist of two (2) directors. Thereafter, within the limits above specified, the number of directors shall be 5 determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. 6 Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on zero (0) days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present 7 thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. 8 Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. 9 COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. 10 Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. 11 Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the 12 corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to 13 the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. 14 Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that 15 may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. 16 REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. 17 ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is 18 conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by- laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.89 89 CERT OF INCORP OF PINE RIDGE COAL COMPANY EXHIBIT 3.89 CERTIFICATE OF INCORPORATION OF PINE RIDGE COAL COMPANY * * * * * 1. The name of the corporation is PINE RIDGE COAL COMPANY 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). 5A. The name and mailing address of each incorporator is as follows: 2 NAME MAILING ADDRESS ---- --------------- M. A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 D. M. Dembkowski Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- G. S. Shiflett 800 Laidley Tower Charleston, WV 25324 D. L. Stevenson 800 Laidley Tower Charleston, WV 25324 R. A. Armstrong 800 Laidley Tower Charleston, WV 25324 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. 3 To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by- laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the 4 by-laws of the corporation; and, unless the resolution or by-laws, expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. When and as authorized by the stockholders in accordance with statute, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 5 11. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 27th day of September, 1994. /s/ M. A. Brzoska ------------------------------- M. A. Brzoska Incorporator /s/ K. A. Widdoes ------------------------------- K. A. Widdoes Incorporator /s/ D. M. Dembkowski ------------------------------- D. M. Dembkowski Incorporator EX-3.90 90 BY-LAWS OF PINE RIDGE COAL COMPANY EXHIBIT 3.90 PINE RIDGE COAL COMPANY * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Charleston, State of West Virginia, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1995, shall be held on the _____ of May if not a legal holiday, and if a legal holiday, then on the 2 next secular day following, at 10 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and 3 outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which 4 by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one nor more than three. The first board shall consist of three directors. Thereafter, within the limits above specified, the number of directors shall be determined by 5 resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. 6 Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president without notice to each director; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. 7 Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors 8 in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151 (a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of 9 the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. 10 ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general 11 and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors 12 or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. 13 Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each 14 stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. 15 TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. 16 REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. 17 ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. 18 ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.91 91 CERT OF INCORP OF POWDER RIVER COAL COMPANY EXHIBIT 3.91 CERTIFICATE OF INCORPORATION OF POWDER RIVER COAL COMPANY FIRST: The name of the corporation is POWDER RIVER COAL COMPANY SECOND: Its registered office in the State of Delaware is located at 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name and address of its registered agent is The Corporation Trust Company, 100 West Tenth Street, Wilmington, Delaware. THIRD: The nature of the business, or purposes to be conducted or promoted, are: A. To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. B. Without limiting the generality of the foregoing, to engage in the business of mining, extracting, recovering and removing coal; to construct, own and operate all necessary facilities; and to do all things necessary or convenience in connection therewith, C. To conduct its business in all or any of its branches in the State of Delaware and in any or all other states, territories or possessions of the United States of America and the District of Columbia, and in any or all foreign countries, to have one or more offices within or outside the State of Delaware, and to enter into partnership, joint venture or similar arrangements to engage in any of the foregoing activities. FOURTH: The corporation shall have authority to issue 1,000 shares of cordon stock with a par value of $100.00 per share. The minimum capital with which the corporation will commence business is One Thousand Dollars ($1,000.00). 2 FIFTH: The name and mailing address of the incorporator is as follows: Marvin O. Young 301 North Memorial Drive St. Louis, Missouri 63102 SIXTH: The private property the stockholders shall not be subject to the payment of corporate debts to any extent whatever. SEVENTH: The corporation is to have perpetual existence. EIGHTH: The number of directors shall be fixed by the by-laws. NINTH: The power to make, alter and repeal by-laws of the corporation is conferred upon the board of directors. TENTH: The corporation reserves the right to agency, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, does make this certificate, hereby declaring and certifying that the facts herein stated are true, this 14th day of November, 1972. /s/ Marvin O. Young ----------------------------------- Marvin O. Young 3 STATE OF MISSOURI ) ) SS. CITY OF ST. LOUIS ) BE IT REMEMBERED, that on this 14th day of November, 1972, personally came before me, a Notary Public for the State of Missouri, Marvin O. Young, the party to the foregoing certificate of incorporation, known to me personally to be such, and acknowledged the said certificate to be his free act and deed and that the facts therein stated are true. GIVEN under my hand and seal of office the day and year aforesaid. /s/ Marian E. Weir ----------------------------------- Notary Public My Commission expires: July 27, 1975 - ----------------------- CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION * * * * * POWDER RIVER COAL COMPANY, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the board, adopted a resolution proposing and declaring advisable an amendment to the Certificate of Incorporation of said corporation as follows: RESOLVED, That the Certificate of Incorporation of the Company be amended by the addition thereto after paragraph "Fourth" of a new paragraph reading as follows: "That the presently authorized and issued two shares of capital stock of the Company be changed and split up on the basis of three hundred shares without a par value for each issued and outstanding share with a par value of $100 per share for a total of 600 shares to be issued and outstanding; and that the remaining authorized and unissued shares with a par value of $100 per share be changed into 400 shares without a par value." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of sections 242 and 228 of the General Corporation Law of the State of Delaware. 2 IN WITNESS WHEREOF, said POWDER RIVER COAL COMPANY has caused this certificate to be signed by J. F. Lake, its President, and attested by T. L. O'Connor, it Secretary, this ____ day of October, 1987. (SEAL) By /s/ J.F. Lake ------------------------------ J. F. Lake, President ATTEST: By /s/ T. L. O'Connor ------------------------- T. L. O'Connor, Secretary EX-3.92 92 RESTATED BY-LAWS OF POWDER RIVER COAL COMPANY EXHIBIT 3.92 RESTATED BY-LAWS OF POWDER RIVER COAL COMPANY (as amended August 16, 1990) ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. 2 Section 2. Annual meetings of stockholders, commencing with the year 1990, shall be held on the second Tuesday in April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by 3 the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 4 Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. 5 ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one (1) nor more than six (6). The first board shall consist of one (1) director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. 6 Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case 7 special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. 8 COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders 9 a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. 10 ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. 11 Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be 12 expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by 13 the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of 14 his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative 15 participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. 16 TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. 17 REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. 18 ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. (a) The Company shall, to the fullest extent permitted by applicable law, indemnify any person (and the heirs, executors and administrators thereof) 19 who was or is made, or threatened to be made, a party to an action, suit or proceeding, whether civil, criminal, administrative or investigative, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or administrative or legislative body or agency, including an action by or in the right of the Company to procure a judgment in its favor and an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Company is serving or served in any capacity at the request of the Company, by reason of the fact that he, his testator or intestate is or was a director or officer of the Company, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement, and costs, charges and expenses, including attorneys' fees, incurred therein or in any appeal thereof. (b) The Company shall indemnify other persons and reimburse the expenses thereof, to the extent required by applicable law, and may indemnify any other person to whom the Company is permitted to provide indemnification or the advancement of expenses, whether pursuant to rights granted pursuant to, or provided by, the Delaware General Corporation Law or otherwise. (c) The Company shall, from time to time, reimburse or advance to any person referred to in paragraph (a) the funds necessary for payment of expenses, including attorneys' fees, incurred in connection with any action, suit or proceeding referred to in paragraph (a) above, upon receipt of a written undertaking by or on behalf of such person to repay such 20 amount(s) if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled, or (iii) his conduct was otherwise of a character such that Delaware law would require that such amount(s) be repaid. (d) Any director or officer of the Company serving (i) another corporation, of which a majority of the shares entitled to vote in the election of its directors is held by the Company, or (ii) any employee benefit plan of the Company or any corporation referred in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (e) Any person entitled to be indemnified or to the reimbursement or advancement of expenses as a matter of right pursuant to this Article may elect to have the right to indemnification (or advancement of expenses) interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the action, suit or proceeding, to the extent permitted by applicable law, or on the basis of the applicable law in effect at the time indemnification is sought. (f) The right to be indemnified or to the reimbursement or advancement of expenses pursuant to this Article (i) is a contract right pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth in a separate written contract between the Company and the director or officer, (ii) is intended to be retroactive and shall be available with respect to events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. 21 (g) If a request to be indemnified or for the reimbursement or advancement of expenses pursuant hereto is not paid in full by the Company within thirty days after a written claim has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled also to be paid the expenses of prosecuting such claim. Neither the failure of the Company (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of or reimbursement or advancement of expenses to the claimant is proper in the circumstances, nor an actual determination by the company (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses, shall be a defense to the action or create a presumption that the claimant is not so entitled. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of 22 incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.93 93 CERT OF INCORP OF RIO ESCONDIDO COAL CORP. EXHIBIT 3.93 CERTIFICATE OF INCORPORATION OF RIO ESCONDIDO COAL CORP. * * * * * 1. The name of the corporation is RIO ESCONDIDO COAL CORP. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue one thousand (1,000) and the par value of each' of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). At all elections of directors of the corporation, each stockholder shall be entitled to as many votes as shall equal the number of votes which (except for such provision as to cumulative voting) he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected by him, and he may cast all of such votes for a single director or may distribute them among the 2 number to be vestal for, or for any two or more of them as he may see fit. 5A. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- J. E. Lushefski 701 Market Street, Suite 700 St. Louis, Missouri 63101 J. M Wootten P.O. Box 66746 St. Louis, Missouri 63166 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 3 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 11. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, 4 do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this day of , 1993. /s/ M.A. Bizoska ----------------------------------- Incorporator /s/ K.A. Widdoes ----------------------------------- Incorporator /s/ L.J. Vitulo ----------------------------------- Incorporator EX-3.94 94 BY-LAWS OF RIO ESCONDIDO COAL CORP. EXHIBIT 3.94 BY-LAWS OF RIO ESCONDIDO COAL CORP. (a Delaware corporation) ARTICLE I Stockholders ------------ SECTION 1. Annual Meetings. (a) All meetings of the Stockholders --------------- for the election of directors shall be held in the County of New Castle, State of Delaware, at such place as may be fixed from time to time by the Board of Directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Meetings of Stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. (b) Annual meetings of Stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting. (c) Written notice of the annual meeting stating the place, date, and hour of the meeting shall be given to each Stockholder entitled to vote at such meeting not less than ten days nor more than sixty days prior to the date of the meeting. (d) The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of Stockholders, a complete list of the Stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each Stockholder and the number of shares registered in the name of each Stockholder. Such list shall be open to the examination of any Stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any Stockholder who is present. The stock ledger shall be the only evidence as to the Stockholders entitled to examine the stock ledger, the list required by this section or the books of the Corporation, or to vote in person or by proxy at any meeting of Stockholders. SECTION 2. Special Meetings. (a) Special meetings of the ---------------- Stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation of the Corporation, may be called by the President and shall be called by the 2 President or Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of a Stockholder or Stockholders owning a majority in amount of the entire capital stock of the Corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. (b) Written notice of a special meeting stating the place, date, and hour of the meeting and, in general terms, the purpose or purposes for which the meeting is called, shall be given not less than ten days nor more than sixty days prior to the date of the meeting, to each Stockholder entitled to vote at such meeting. Whenever the directors shall fail to fix such place, the meeting shall be held at the principal executive offices of the Corporation. (c) Business transacted at any special meeting of Stockholders shall be limited to the purpose or purposes stated in the notice. SECTION 3. Quorums. (a) The holders of a majority of the stock ------- issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the Stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the Stockholders, the Stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting, at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Stockholder of record entitled to vote at the meeting. When a quorum is once present it is not broken by the subsequent withdrawal of any Stockholder. (b) When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one on which by express provision of the Delaware General Corporation Law or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. SECTION 4. Organization. Meetings of Stockholders shall be presided ------------ over by the Chairman, if any, or if none or in the Chairman's absence the President, if any, or if none or in the President's absence, by a Chairman to be chosen by the Stockholders entitled to vote who are present in person or by proxy at the meeting. The Secretary of the Corporation, or in the Secretary's absence an Assistant Secretary, shall act as Secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present, the presiding officer of the meeting shall appoint any person present to act as Secretary of the meeting. SECTION 5. Voting; Proxies; Required Vote. (a) At each meeting of ------------------------------ Stockholders, every Stockholder shall be entitled to vote in person or by proxy appointed by 3 an instrument in writing, subscribed by such Stockholder or by such Stockholder's duly authorized attorney-in-fact (but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period), and, unless the Certificate of Incorporation provides otherwise, shall have one vote for each share of stock entitled to vote registered in the name of such Stockholder on the books of the Corporation on the applicable record date fixed pursuant to these By-Laws. At all elections of directors the voting may but need not be by ballot and a plurality of the votes cast there shall elect. Except as otherwise required by law or the Certificate of Incorporation, any other action shall be authorized by a majority of the votes cast. (b) Any action required or permitted to be taken at any meeting of Stockholders may, except as otherwise required by law or the Certificate of Incorporation, be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of record of the issued and outstanding capital stock of the Corporation having a majority of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and the writing or writings are filed with the permanent records of the Corporation. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those Stockholders who have not consented in writing. (c) Where a separate vote by a class or classes, present in person or represented by proxy, shall constitute a quorum to vote on that matter, the affirmative vote of the majority of shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class, unless otherwise provided in the Corporation's Certificate of Incorporation. SECTION 6. The Board of Directors, in advance of any meeting, may, but need not, appoint one or more inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not so appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, and the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all Stockholders. On request of the person presiding at the meeting, the inspector or inspectors, if any, shall make a report in writing of any challenge, question or matter determined by such inspector or inspectors and execute a certificate of any fact found by such inspector or inspectors. 4 ARTICLE II Board of Directors ------------------ SECTION 1. General Powers. The business, property and affairs of the -------------- Corporation shall be managed by, or under the direction of, the Board of Directors. SECTION 2. Qualification; Number; Term; Remuneration. (a) Each ----------------------------------------- director shall be at least 18 years of age. A director need not be a Stockholder, a citizen of the United States, or a resident of the State of Delaware. The number of directors constituting the entire Board shall be one or such other number not greater than ten as may be fixed from time to time by the Board of Directors or the Stockholders. One of the directors may be selected by the Board of Directors to be its Chairman, who shall preside at meetings of the Stockholders and the Board of Directors and shall have such other duties, if any, as may from time to time be assigned by the Board of Directors. In the absence of formal selection, the President of the Corporation shall serve as Chairman. The use of the phrase "entire Board" herein refers to the total number of directors which the Corporation would have if there were no vacancies. (b) Directors who are elected at an annual meeting of Stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of Stockholders and until their successors are elected and qualified or until their earlier resignation or removal. (c) Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing Committees may be allowed like compensation for attending Committee meetings. SECTION 3. Quorum and Manner of Voting. Except as otherwise provided --------------------------- by law, a majority of the entire Board of Directors shall constitute a quorum. A majority of the directors present, whether or not a quorum is present, may adjourn a meeting from time to time to another time and place without notice. The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. SECTION 4. Places of Meetings. Meetings of the Board of Directors ------------------ may be held at any place within or without the State of Delaware, as may from time to time be fixed by resolution of the Board of Directors, or as may be specified in the notice of meeting. SECTION 5. Annual Meeting. Following the annual meeting of -------------- Stockholders, the newly elected Board of Directors shall meet for the purpose of the election of officers and the transaction of such other business as may properly come before the meeting. Such meeting may be held without notice immediately after the annual meeting of Stockholders at the same place at which such Stockholders' meeting is held. 5 SECTION 6. Regular Meetings. Regular meetings of the Board of ---------------- Directors shall be held at such times and places as the Board of Directors shall from time to time by resolution determine. SECTION 7. Special Meetings. Special meetings of the Board of ---------------- Directors shall be held whenever called by the Chairman of the Board, President, or by a majority of the directors then in office. SECTION 8. Notice of Meetings. A notice of the place, date and time ------------------ and the purpose or purposes of each meeting of the Board of Directors shall be given to each director by mailing the same at least two days before the meeting, or by telephoning or faxing the same or by delivering the same personally not later than the day before the day of the meeting. SECTION 9. Organization. At all meetings of the Board of Directors, ------------ the Chairman or in the Chairman's absence or inability to act, the President, or in the President's absence, a Chairman chosen by the directors, shall preside. The Secretary of the Corporation shall act as secretary at all meetings of the Board of Directors when present, and, in the Secretary's absence, the presiding officer may appoint any person to act as Secretary. SECTION 10. Resignation. Any director may resign at any time upon ----------- written notice to the Corporation and such resignation shall take effect upon receipt thereof by the President or Secretary, unless otherwise specified in the resignation. Any or all of the directors may be removed, with or without cause, by the holders of a majority of the shares of stock outstanding and entitled to vote for the election of directors. SECTION 11. Vacancies. Unless otherwise provided in these By-Laws, --------- vacancies on the Board of Directors, whether caused by resignation, death, disqualification, removal, an increase in the authorized number of directors or otherwise, may be filled by the affirmative vote of a majority of the remaining directors, although less than a quorum, or by a sole remaining director, or at a special meeting of the Stockholders, by vote of the Stockholders required for the election of directors generally. SECTION 12. Action by Written Consent. Any action required or ------------------------- permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all the directors consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors. SECTION 13. Electronic Communication. Any member or members of the ------------------------ Board of Directors may participate in a meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear and speak to each other. 6 ARTICLE III Committees ---------- SECTION 1. Appointment. The Board of Directors may, by resolution ----------- passed by a majority of the whole board, designate one or more Committees, each Committee to consist of two or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any Committee, who may replace any absent or disqualified member at any meeting of the Committee. Any such Committee, to the extent provided in the resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Such Committee or Committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. SECTION 2. Procedures, Quorum and Manner of Acting. Each Committee --------------------------------------- shall fix its own rules of procedure, and shall meet where and as provided by such rules or by resolution of the Board of Directors. Except as otherwise provided by law, the presence of a majority of the then appointed members of a Committee shall constitute a quorum for the transaction of business by that Committee, and in every case where a quorum is present the affirmative vote of a majority of the members of the Committee present shall be the act of the Committee. Each Committee shall keep minutes of its proceedings, and actions taken by a Committee shall be reported to the Board of Directors. SECTION 3. Action by Written Consent. Any action required or ------------------------- permitted to be taken at any meeting of any Committee of the Board of Directors may be taken without a meeting if all the members of the Committee consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Committee. SECTION 4. Electronic Communication. Any member or members of a ------------------------ Committee of the Board of Directors may participate in a meeting of a Committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear and speak to each other. SECTION 5. Termination. In the event any person shall cease to be a ----------- director of the Corporation, such person shall simultaneously therewith cease to be a member of any Committee appointed by the Board of Directors. ARTICLE IV Officers -------- SECTION 1. Election and Qualifications. The Board of Directors at --------------------------- its first meeting held after each annual meeting of Stockholders shall elect the officers of the Corporation, which shall include a President and a Secretary, and may include, by election or appointment, one or more Vice-Presidents (any one or more of whom may be given an 7 additional designation of rank or function), a Treasurer and such Assistant Secretaries, such Assistant Treasurers and such other officers as the Board of Directors may from time to time deem proper. Each officer shall have such powers and duties as may be prescribed by these By-Laws and as may be assigned by the Board of Directors or the President. Any two or more offices may be held by the same person. SECTION 2. Term of Office and Remuneration. The term of office of ------------------------------- all officers shall be one year and until their respective successors have been elected and qualified, but any officer may be removed from office, either with or without cause, at any time by the Board of Directors. Any vacancy in any office arising from any cause may be filled for the unexpired portion of the term by the Board of Directors. The remuneration of all officers of the Corporation may be fixed by the Board of Directors or in such manner as the Board of Directors shall provide. SECTION 3. Resignation; Removal. Any officer may resign at any time -------------------- upon written notice to the Corporation and such resignation shall take effect upon receipt thereof by the President or Secretary, unless otherwise specified in the resignation. Any officer shall be subject to removal, with or without cause, at any time by vote of a majority of the entire Board of Directors. SECTION 4. Powers and Duties of Officers. (a) The Chairman of the ----------------------------- Board of Directors, if there be one, shall preside at all meetings of the Board of Directors and shall have such other powers and duties as may from time to time be assigned by the Board of Directors. (b) The President shall be the chief executive officer of the Corporation and shall preside at all meetings of the Stockholders and, if there is no Chairman, of the Board of Directors and shall have general management of and supervisory authority over the property, business and affairs of the Corporation and its other officers. The President may execute and deliver in the name of the Corporation powers of attorney, contracts, bonds and other obligations and instruments, and shall have such other authority and perform such other duties as from time to time may be assigned by the Board of Directors. The President shall see that all orders and resolutions of the Board of Directors are carried into effect and shall perform such additional duties that usually pertain to this office. (c) A Vice President may execute and deliver in the name of the Corporation powers of attorney, contracts, bonds and other obligations and instruments pertaining to the regular course of such Vice President's duties, and shall have such other authority and perform such other duties as from time to time may be assigned by the Board of Directors or the President. (d) The Treasurer shall in general have all duties and authority incident to the position of Treasurer and such other duties and authority as may be assigned by the Board of Directors or the President. The Treasurer shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as 8 may be designated by or at the direction of the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors or the President, and shall render, upon request, an account of all such transactions. (e) The Secretary shall in general have all the duties and authority incident to the position of Secretary and such other duties and authority as may be assigned by the Board of Directors or the President. The Secretary shall attend all meetings of the Board of Directors and all meetings of Stockholders and record all the proceedings thereat in a book or books to be kept for that purpose. The Secretary shall give, or cause to be given, notice of all meetings of the Stockholders and special meetings of the Board of Directors. The Secretary shall have custody of the seal of the Corporation and any officer of the Corporation shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or any other officer. (f) Any assistant officer shall have such duties and authority as the officer such assistant officer assists and, in addition, such other duties and authority as the Board of Directors or President shall from time to time assign. ARTICLE V Contracts, Etc. -------------- SECTION 1. Contracts. The Board of Directors may authorize any --------- person or persons, in the name and on behalf of the Corporation, to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances. SECTION 2. Proxies; Powers of Attorney; Other Instruments. (a) The ---------------------------------------------- Chairman, the President, any Vice President, the Treasurer or any other person designated by any of them shall have the power and authority to execute and deliver proxies, powers of attorney and other instruments on behalf of the Corporation in connection with the execution of contracts, the purchase of real or personal property, the rights and powers incident to the ownership of stock by the Corporation and such other situations as the Chairman, the President, such Vice President or the Treasurer shall approve, such approval to be conclusively evidenced by the execution of such proxy, power of attorney or other instrument on behalf of the Corporation. (b) The Chairman, the President, any Vice President, the Treasurer or any other person authorized by proxy or power of attorney executed and delivered by any of them on behalf of the Corporation may attend and vote at any meeting of Stockholders of any company in which the Corporation may hold stock, and may exercise on behalf of the Corporation any and all of the rights and powers incident to the ownership of such stock at any such meeting, or otherwise as specified in the proxy or power of attorney so authorizing any such person. The Board of Directors, from time to time, may confer like powers upon any other person. 9 ARTICLE VI Books and Records ----------------- SECTION 1. Location. The books and records of the Corporation may be -------- kept at such place or places within or outside the State of Delaware as the Board of Directors or the respective officers in charge thereof may from time to time determine. The record books containing the names and addresses of all Stockholders, the number and class of shares of stock held by each and the dates when they respectively became the owners of record thereof shall be kept by the Secretary as prescribed in the By-Laws or by such officer or agent as shall be designated by the Board of Directors. SECTION 2. Addresses of Stockholders. Notices of meetings and all ------------------------- other corporate notices may be delivered personally or mailed to each Stockholder at the Stockholder's address as it appears on the records of the Corporation. SECTION 3. Fixing Date for Determination of Stockholders of Record. ------------------------------------------------------- (a) In order that the Corporation may determine the Stockholders entitled to notice of or to vote at any meeting of Stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date shall not be more than 60 days nor less than 10 days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining Stockholders entitled to notice of or to vote at a meeting of Stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of Stockholders of record entitled to notice of or to vote at a meeting of Stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. (b) In order that the Corporation may determine the Stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining Stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of Stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining Stockholders entitled to consent 10 to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. (c) In order that the Corporation may determine the Stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the Stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action not contemplated by paragraph (a) or (b) of this Section 3, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining Stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. ARTICLE VII Certificates Representing Stock ------------------------------- SECTION 1. Certificates; Signatures. The shares of the Corporation ------------------------ shall be represented by certificates, provided that the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate, signed by or in the name of the Corporation by the Chairman or Vice-Chairman of the Board of Directors, or the President or Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, representing the number of shares registered in certificate form. Any and all signatures on any such certificate may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. The name of the holder of record of the shares represented thereby, with the number of such shares and the date of issue, shall be entered on the books of the Corporation. The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the Corporation. SECTION 2. Transfers of Stock. Upon compliance with provisions ------------------ restricting the transfer or registration of transfer of shares of stock, if any, shares of capital stock shall be transferable on the books of the Corporation only by the holder of record thereof in person, or by duly authorized attorney, upon surrender and cancellation of certificates for a like number of shares, properly endorsed, and the payment of all taxes due thereon. SECTION 3. Fractional Shares. The Corporation may, but shall not be ----------------- required to, issue certificates for fractions of a share where necessary to effect authorized 11 transactions, or the Corporation may pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or it may issue scrip in registered or bearer form over the manual or facsimile signature of an officer of the Corporation or of its agent, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights of a Stockholder except as therein provided. SECTION 4. Lost, Stolen or Destroyed Certificates. The Corporation -------------------------------------- may issue a new certificate of stock in place of any certificate, theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Board of Directors may require the owner of any lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate. ARTICLE VIII Dividends --------- Subject to the provisions of applicable law and the Certificate of Incorporation, the Board of Directors shall have full power to determine whether any, and, if any, what part of any, funds legally available for the payment of dividends shall be declared as dividends and paid to Stockholders; the division of the whole or any part of such funds of the Corporation shall rest wholly within the lawful discretion of the Board of Directors, and it shall not be required at any time, against such discretion, to divide or pay any part of such funds among or to the Stockholders as dividends or otherwise; and before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve. Stockholders shall receive dividends pro rata in proportion to the number of shares of Common Stock respectively held by them. A holder of Common Stock shall be deemed to share pro rata in all dividends declared by the Board of Directors within the meaning of the preceding sentence if such Stockholder receives assets (whether consisting of cash, securities, real property, equipment, inventory or other assets) the fair market value of which is in the same proportion to the fair market value of the total assets of the Corporation available for distribution as a dividend as the number of shares of Common Stock held by such holder of Common Stock is to the total number of issued and outstanding shares of Common Stock of the Corporation. A Stockholder shall not have the right to receive a pro rata share of each or any such asset available for distribution as a dividend; however, the Corporation shall not be prohibited hereby for making a pro rata distribution of each or any such asset available for distribution as a dividend. The fair market value of any and all assets of the Corporation distributed as a dividend shall be determined in the sole discretion of the Corporation's Board of Directors. 12 ARTICLE IX Ratification ------------ Any transaction, questioned in any lawsuit on the ground of lack of authority, defective or irregular execution, adverse interest of director, officer or Stockholder, non-disclosure, miscomputation, or the application of improper principles or practices of accounting, may be ratified before or after judgment, by the Board of Directors or by the Stockholders, and if so ratified shall have the same force and effect as if the questioned transaction had been originally duly authorized. Such ratification shall be binding upon the Corporation and its Stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned transaction. ARTICLE X Corporate Seal -------------- The corporate seal shall be in either of the following forms: (a) the letters "L.S." or (b) a circular inscription which contains the words "Corporate Seal" and such additional information as the officer inscribing such seal shall determine in such officer's sole discretion. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise displayed or it may be manually inscribed. ARTICLE XI Fiscal Year ----------- The fiscal year of the Corporation shall be fixed, and shall be subject to change, by the Board of Directors. Unless otherwise fixed by the Board of Directors, the fiscal year of the Corporation shall end on the Saturday closest to September 30. ARTICLE XII Waiver of Notice ---------------- Whenever notice is required to be given by these By-Laws or by the Certificate of Incorporation or by law, a written waiver thereof, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to notice. ARTICLE XIII Amendments ---------- The Board of Directors shall have power to adopt, amend or repeal By- Laws. By-Laws adopted by the Board of Directors may be repealed or changed, and new By-Laws 13 made, by the Stockholders, and the Stockholders may prescribe that any By-Law made by them shall not be altered, amended or repealed by the Board of Directors. ARTICLE XIV Indemnification --------------- SECTION 1. Power To Indemnify In Actions, Suits Or Proceedings Other --------------------------------------------------------- Than Those By Or In the Right Of The Corporation. Subject to Section 3 of this - ------------------------------------------------ Article XIV, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' and other professionals' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo ---- contendere or its equivalent, shall not, of itself, create a presumption that - ---------- the person did not act in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the conduct was unlawful. SECTION 2. Power To Indemnify In Actions, Suits Or Proceedings By Or --------------------------------------------------------- In The Right Of The Corporation. Subject to Section 3 of this Article XIV, the - ------------------------------- Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' and other professionals' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. 14 SECTION 3. Authorization of Indemnification. Any indemnification -------------------------------- under this Article XIV (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article XIV, as the case may be. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) if the Board of Directors so directs, by the Stockholders. To the extent, however, that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' and other professionals' fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case. SECTION 4. Good Faith Defined. For purposes of any determination ------------------ under Section 3 of this Article XIV, a person shall be deemed to have acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe the conduct was unlawful, if the action is based on (a) the records or books of account of the Corporation or another enterprise (as defined below in this Section 4), or on information supplied to such person by the officers of the Corporation or another enterprise in the course of their duties, unless such person had reasonable cause to believe that reliance thereon would not be justifiable, or on (b) the advice of legal counsel for the Corporation or another enterprise, or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant, independent financial adviser, appraiser or other expert, as to matters reasonably believed to be within such other person's professional or expert competence. The term "another enterprise" as used in this Section 4 shall mean any other corporation or any partnership, joint venture, trust or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 1 or 2 of this Article XIV, as the case may be. SECTION 5. Indemnification By A Court. Notwithstanding any contrary -------------------------- determination in the specific case under Section 3 of this Article XIV, and notwithstanding the absence of any determination thereunder, any director, officer, employee or agent may apply to any court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 1 and 2 of this Article XIV. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standards of conduct set forth in Sections 1 or 2 of this Article XIV, as the case may be. Notice of any application for indemnification pursuant to this Section 5 shall be given to the Corporation promptly upon the filing of such application. 15 SECTION 6. Expenses Payable In Advance. Expenses (including --------------------------- attorneys' and other professionals' fees) incurred by an officer or director in defending any threatened or pending civil, criminal, administrative or investigative action, suit or proceeding may, but shall not be required to, be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer, to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Article XIV. Such expenses (including attorneys' and other professionals' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. SECTION 7. Non-exclusivity and Survival of Indemnification. The ----------------------------------------------- indemnification and advancement of expenses provided by or granted pursuant to this Article XIV shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any By-Law, agreement, contract, vote of Stockholders or of disinterested directors, or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, it being the policy of the Corporation that indemnification of the persons specified in Sections 1 and 2 of this Article XIV (as distinguished from advancement of funds pursuant to Section 6 of this Article XIV) shall be made to the fullest extent permitted by law. The provisions of this Article XIV shall not be deemed to preclude the indemnification of any person who is not specified in Sections 1 and 2 of this Article XIV but whom the Corporation has the power or obligation to indemnify under the provisions of the General Corporation Law of the State of Delaware, or otherwise. The indemnification provided by this Article XIV shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, administrators and other comparable legal representatives of such person. The rights conferred in this Article XIV shall be enforceable as contract rights, and shall continue to exist after any rescission or restrictive modification hereof with respect to events occurring prior thereto. SECTION 8. Meaning of "other enterprises" in connection with Employee ---------------------------------------------------------- Benefit Plans, etc. For purposes of this Article XIV (including Sections 1, 2, - ------------------- 4 and 9 hereof), references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who has acted in good faith and in a manner reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article XIV. SECTION 9. Insurance. The Corporation may, but shall not be required --------- to, purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, EX-3.95 95 CERT OF INCORPORATION OF SENECA COAL COMPANY EXHIBIT 3.95 CERTIFICATE OF INCORPORATION OF SENECA COAL COMPANY * * * * * 1. The name of the corporation is SENECA COAL COMPANY 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Low of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). 2 5A. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- M. A. Brzoska Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 K. A. Widdoes Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 L. J. Vitalo Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- W. H. Carson 1300 S. Yale Flagstaff, AZ 86001 G. L. Melvin 1300 S. Yale Flagstaff, AZ 86001 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. 3 To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member, Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or by-laws, expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. 4 When and as authorized by the stockholders in accordance with statute, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or properly including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 9. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 11. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware 5 General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. 6 WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 3rd day of January, 1994. /s/ M. A. Brzoska -------------------------------------- Incorporator /s/ K. A. Widdoes -------------------------------------- Incorporator /s/ L. J. Vitalo -------------------------------------- Incorporator EX-3.96 96 BY-LAWS OF SENECA COAL COMPANY EXHIBIT 3.96 SENECA COAL COMPANY * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Flagstaff, State of Arizona, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1994, shall be held on the 15th day of May if not a legal holiday, and if a legal holiday, then on the 2 next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a 3 majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which 4 by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than two (2) nor more than five (5). The first board shall consist of two (2) directors. Thereafter, within the limits above specified, the number of directors shall be 5 determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. 6 Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on zero (0) days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present 7 thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. 8 Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. 9 COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. 10 Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. 11 THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be 12 given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of 13 directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the Treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the 14 information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. 15 TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. 16 REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. 17 ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is 18 conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by- laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.97 97 CERT OF INCORP OF SENTRY MINING COMPANY EXHIBIT 3.97 CERTIFICATE OF INCORPORATION OF SENTRY MINING COMPANY * * * * * 1. The name of the corporation is: SENTRY MINING COMPANY 2. The address of its registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of common stock which the corporation shall have authority to issue is one hundred (100) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to One Thousand Dollars ($l,000.00). 2 5A. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS ---- --------------- J. J. Masters 906 Olive Street St. Louis, Missouri 63101 M. S. Kinkead 906 Olive Street St. Louis, Missouri 63101 S. A. Gramlich 906 Olive Street St. Louis, Missouri 63101 5B. The name and mailing address of each person, who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS ---- --------------- Francis L. Barkofske 301 N. Memorial Drive St. Louis, Missouri 63102 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation. 8. No director shall be personally liable to the corporation or its stockholders for monetary damages for breach or fiduciary duty as a director; provided, however, this provision shall not eliminate or limit the liability of a director: (i) for any breach of the director's duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of 3 law; (iii) under Section 174 of the Delaware Corporation Law; or (iv) for any transaction from which the director derived an improper personal benefit. 9. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 10. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 26th day of April, 1989. /s/ J. J. Masters ------------------------------------- J. J. Masters, Incorporator /s/ M. S. Kinkead ------------------------------------- M. S. Kinkead, Incorporator /s/ S.A. Gramlich ------------------------------------- S.A. Gramlich, Incorporator EX-3.98 98 CERT OF INCORPORATION OF SENTRY MINING COMPANY EXHIBIT 3.98 SENTRY MINING COMPANY * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. 2 Section 2. Annual meetings of stockholders, commencing with the year 1990, shall be held on the second Tuesday in April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a 3 majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy 4 shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. 5 ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one (1) nor more than six (6). The first board shall consist of one (1) director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and 6 do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case 7 special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. 8 COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders 9 a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. 10 ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. 11 Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be 12 expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by 13 the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of 14 his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, 15 optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. 16 TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. 17 REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. 18 ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. (a) The Company shall, to the fullest extent permitted by applicable law, indemnify any person (and the heirs, executors and administrators thereof) 19 who was or is made, or threatened to be made, a party to an action, suit or proceeding, whether civil, criminal, administrative or investigative, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or administrative or legislative body or agency, including an action by or in the right of the Company to procure a judgment in its favor and an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Company is serving or served in any capacity at the request of the Company, by reason of the fact that he, his testator or intestate is or was a director or officer of the Company, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement, and costs, charges and expenses, including attorneys' fees, incurred therein or in any appeal thereof. (b) The Company shall indemnify other persons and reimburse the expenses thereof, to the extent required by applicable law, and may indemnify any other person to whom the Company is permitted to provide indemnification or the advancement of expenses, whether pursuant to rights granted pursuant to, or provided by, the Delaware General Corporation Law or otherwise. (c) The Company shall, from time to time, reimburse or advance to any person referred to in paragraph (a) the funds necessary for payment of expenses, including attorneys' fees, incurred in connection with any action, suit or proceeding referred to in paragraph (a) above, upon receipt of a written undertaking by or on behalf of such person to 20 repay such amount(s) if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled, or (iii) his conduct was otherwise of a character such that Delaware law would require that such amount(s) be repaid. (d) Any director or officer of the Company serving (i) another corporation, of which a majority of the shares entitled to vote in the election of its directors is held by the Company, or (ii) any employee benefit plan of the Company or any corporation referred in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (e) Any person entitled to be indemnified or to the reimbursement or advancement of expenses as a matter of right pursuant to this Article may elect to have the right to indemnification (or advancement of expenses) interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the action, suit or proceeding, to the extent permitted by applicable law, or on the basis of the applicable law in effect at the time indemnification is sought. (f) The right to be indemnified or to the reimbursement or advancement of expenses pursuant to this Article (i) is a contract right pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth in a separate written contract between the Company and the director or officer, (ii) is intended to be retroactive and shall be available with respect to events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. 21 (g) If a request to be indemnified or for the reimbursement or advancement of expenses pursuant hereto is not paid in full by the Company within thirty days after a written claim has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled also to be paid the expenses of prosecuting such claim. Neither the failure of the Company (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of or reimbursement or advancement of expenses to the claimant is proper in the circumstances, nor an actual determination by the company (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses, shall be a defense to the action or create a presumption that the claimant is not so entitled. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by- laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of 22 incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.99 99 CERT OF INCORP OF SNOWBERRY LAND COMPANY EXHIBIT 3.99 CERTIFICATE OF INCORPORATION OF SNOWBERRY LAND COMPANY * * * * * 1. The name of the corporation is Snowberry Land Company. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the city of Wilmington, County of New Castle. The name of its registered agent at such address is the Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware . 4. The total number of shares of stock which the corporation shall have authority to issue is Ten (10) and the par value of each of such shares in One hundred Dollars and No Cents ($100.00) amounting in the aggregate to One Thousand Dollars and No Cents ($1,000.00). 2 5. The board of directors is authorized to make, alter or repeal the by-laws of the corporation. Election of directors need not be by written ballot. 6. The name and mailing address of the sole incorporator is: D. M. Dembkowski Corporation Trust Company 1209 Orange Street Wilmington, Delaware 19801 7. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholder, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction form which the director derived any improper personal benefit. 8. The corporation shall indemnity its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. 3 I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 18th day of August, 1995. /s/ D.M. Dembkowski --------------------------- D.M. Dembkowski Sole Incorporator EX-3.100 100 BY-LAWS OF SNOWBERRY LAND COMPANY EXHIBIT 3.100 SNOWBERRY LAND COMPANY * * * * * B Y - L A W S * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of St. Louis, State of Missouri, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1996, shall be held in the month of May on such day and at such time as shall be stated in the 2 notice of the meeting, or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a 3 majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which 4 by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. At all elections of directors of the corporation each stockholder having voting power shall be entitled to exercise the right of cumulative voting as provided in the certificate of incorporation. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. 5 ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one (1) nor more than three (3). The first board shall consist of two (2) directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and 6 do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on zero (0) days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. 7 Section 8. At all meetings of the board two directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as 8 alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such 9 committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on 10 the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice- presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. 11 Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive of fleer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 12 THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the 13 name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 14 ARTICLE VI CERTIFICATES SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Upon the face or back of each stock certificate issued to represent any partly paid shares, or upon the books and records of the corporation in the case of uncertificated partly paid shares, shall be set forth the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations restrictions of such preferences and/or rights. 15 Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that 16 may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. 17 REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. 18 ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is 19 conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by- laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. EX-3.101 101 AGMT OF INCORP OF LOW VOLATILE COALS, INC. EXHIBIT 3.101 READ CAREFULLY THE INSTRUCTIONS ------------------------------- AGREEMENT OF INCORPORATION (See Arts. 2-9, both incl., of c. 31, also c. 33, Code, for provisions regarding certain corporations.) I. The undersigned agree to become a corporation by the name of (1) LOW VOLATILE COALS, INC. (1) The name of the corporation shall contain one of the words "association," "company," "corporation," "club," "incorporated," "society," "union," or "syndicate," or one of the abbreviations, "co." "inc."; but no name shall be assumed already in use by another existing corporation of this State, or by a foreign corporation lawfully doing business in this State, or so similar thereto, in the opinion of the Secretary of State, as to lead to confusion. II. The principal Office or Place of Business of said Corporation will be located at (1) No. Rt. 87, Box 72, in the (2) village of Shady Springs, West Virginia in the County of Raleigh and State of West Virginia. Its chief works will be located (3) in Fireco, West Virginia. (1) Insert number and name of street if in a city having street numbers, if not, strike out. (2) Erase the word "city," "town" or "village," leaving the one required. (3) Give location of chief works; if at the same place as principal office or place of business, say "Its chief works will be located at the same place." If there be no chief works, say "Said corporation will have no chief works." If chief works are in West Virginia, give name of magisterial district and county in which they are or will be located. In case of oil well, gas well, or prospecting companies, and other like companies, where the chief works will be shifting, and in cases of companies that will have chief works, or works at different points in this State, say "chief works will be located in ______________ district, in __________ county. State of West Virginia and elsewhere in said State." If chief works are not to be in West Virginia, then it is only necessary to give the name of the State or county in which they will be located. III. The objects for which this Corporation is formed are as follows: (Please type double space if not sufficient room here to cover this point add one or more sheets of paper of this size.) 1. To mine, develop, work and operate coal mines, coal lands and coal property, and to carry on the business of coal mining and processing in all of its branches and all methods of production now known or hereafter developed, including, but not limited to, deep mining, punch mining, strip mining and auger mining, and the manufacturing of all coal products and by-products. 2 2. To acquire, purchase, lease, hold, operate, mortgage, exchange and sell, and trade and deal in, real property of every kind, including, but not limited to, coal lands. 3. To engage in the business of buying and selling coal and products of coal, and to sell on commission and to act as broker in the sale or purchase of coal. 4. To purchase, lease or otherwise acquire such personal property, rights, easements, permits and franchises as may be lawfully purchased, leased or acquired. 5. To make, perform and carry out contracts of every kind pertaining to the purposes of this corporation, and for any lawful purpose necessary and expedient to carry out the purposes of this corporation. 6. To borrow and raise money upon bonds, notes and other negotiable or transferable instruments, and to secure the same by deeds of trust, pledges or otherwise. 7. To do all and everything necessary, suitable and proper for the accomplishment of any of the purposes, or the furtherance of any of the powers hereinbefore set forth, either alone or in association with other corporations, firms, or individuals. 8. To do or perform any and all other lawful acts in furtherance of any of the aforesaid corporate purposes, or any other lawful purpose which the said corporation may elect to undertake. 3 WE, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws of the State of West Virginia do make and file this Agreement; and we have accordingly hereunto set our respective hands this 23rd day of April, 1962. All the incorporators must sign below. /s/Lewis Meadows -------------------------------------- Lewis Meadows /s/Helen Meadows -------------------------------------- Helen Meadows /s/Charles Meadows -------------------------------------- Charles Meadows 4 CERTIFICATES The agreement must be acknowledged by all the incorporators who signed it, before the president of a county court, a justice of the peace, notary, recorder, prothonotary or clerk of any court, within the United States, etc., and such acknowledgements certified by the officer before whom they were made, and his seal affixed if not in West Virginia. Acknowledgements taken in a foreign country must be certified under the official seal of any ambassador, minister plenipotentiary, minister resident, charge d'affaires, consul general, consul, deputy consul, etc., appointed by the government of the United States to any foreign town or corporation therein, etc. -- Code, c. 39, Art. 1, (S) 3.] State of West Virginia County of Raleigh, to wit: I, _______________________, a Notary Public in and for the County and State aforesaid, hereby certify that Lewis Meadows, Helen Meadows and Charles L. Meadows (Names of all incorporators must be inserted in this space by official taking acknowledgements) whose names are signed to the foregoing agreement bearing date on the 23rd day of April, 1962, this day personally appeared before me in my said county and severally acknowledged their signature to the same. Given under my hand and official seal this 23 day of April, 1962. [Executed] ---------------------- Notary Public My Commission expires on the 29 day of November, 1972. IV. The amount of the total authorized capital stock of said corporation shall be Five Thousand ($5,000.00) dollars, which shall be divided into 50 shares of the par value of One Hundred ($100.00) dollars each. Use space below for statement as to stock without par value, or where more than one class of stock is to be issued, or one or more series within a class, and as to any designations, powers, etc., as provided in subdivision (d), (S) 6. art 1. c. 31., Code. In the case of a corporation not organized for profit and not authorized to issue capital stock, a statement to that effect shall be set forth together with a statement as to the conditions of membership. Code 33-1-6(d). 5 The amount of capital stock with which it will commence business is One Thousand Dollars ($1,000.00) (shall not be less than one thousand dollars) being Ten (10) shares One Hundred Dollars ($100.00) each. V. The names and post office addresses of the incorporators and the number of shares of stock subscribed for by each are as follows: (The number of incorporators to be not less than three as to stock, nor less than five as to nonstock corporations.) ============================================================================= NO. OF SHARES TOTAL P.O. NO. OF SHARES PREFERRED NO. OF NAME(5) ADDRESS (6) COMMON STOCK STOCK SHARES - ----------------------------------------------------------------------------- Lewis Shady 8 8 Meadows Springs, West Virginia - ----------------------------------------------------------------------------- Helen Shady 1 1 Meadows Springs, West Virginia - ----------------------------------------------------------------------------- Charles Shady 1 1 L. Springs, Meadows West Virginia - ----------------------------------------------------------------------------- VI. The existence of this corporation is to be perpetual. VII. For any additional provisions desired and which are authorized by law, see Art. 1, c. 31, Code. Also set forth number of acres of land desired to be held in West Virginia, if such number be above 10,100 acres, pursuant to (S) 75, Art. 12, c. 11 Code. If more space is required, add one or more sheets of paper this size. 6 I, Lewis Meadows, President of "Low Volatile Coals, Inc.", a corporation created, organized and existing under and by virtue of the laws of the State of West Virginia, do hereby certify to the Secretary of State of the State of West Virginia that at a special meeting of the stockholders of Low Volatile Coals, Inc., duly held at the law offices of Sayre and Sayre, Room 613 Raleigh County Bank Building, Beckley, West Virginia, on the 5th day of May, 1965, at 7:30 o'clock, P.M., pursuant to a waiver of notice of said meeting, signed by all the stockholders of this corporation, as provided by the bylaws of the corporation and the laws of the State of West Virginia, at which meeting all of the issued and outstanding shares of the common capital stock of said corporation entitled to vote at such meeting was represented in person, the following resolutions were duly and regularly adopted and passed, to wit: "RESOLVED, That the authorized capital of Low Volatile Coals, Inc. be increased from fifty (50) shares of the par value of One Hundred Dollars ($100.00) each to four thousand (4000) shares of the par value of $100.00 each, so that the authorized capital stock of said corporation shall be Four Hundred Thousand Dollars ($400,000.00)." "RESOLVED, That the principal office and place of business of Low Volatile Coals, Inc., a corporation, be moved and changed from Route 87, Box 72, Shady Springs, Raleigh County, West Virginia, to the Office Building of Vecellio & Grogan Incorporated, on the Crab Orchard Road, Beckley, Raleigh County, West Virginia." "RESOLVED, That the charter of this corporation with respect to the objects for which this corporation is formed be amended to include the following: "To purchase, acquire, held and dispose of stocks, bonds and other obligations, including judgments, interest, accounts or debts of any corporation, domestic or foreign, owning or controlling any articles which are or might be or become useful in the business of this corporation, and to purchase, acquire, held and dispose of stocks, bonds, or other obligations, including 7 judgments, interests, accounts or debts of any corporation, domestic or foreign, engaged in a business similar to that of this corporation.'" Given under my hand as President of Low Volatile Coals, Inc. and the corporate seal of said corporation this the 5th day of May, 1965. /s/Lewis Meadows ------------------------------------- President of Low Volatile Coals, Inc. (Corporate Seal) 8 THIS AGREEMENT OF MERGER, dated the 6th day of October, 1967, by and between LOW VOLATILE COALS, INC., a corporation organized and existing under the laws of the State of West Virginia, and the undersigned Directors thereof, parties of the first part, and STERLING SMOKELESS COAL COMPANY, a corporation organized and existing under the laws of the State of West Virginia, and the undersigned Directors thereof, parties of the second part; WHEREAS, Low Volatile Coals, Inc. is a corporation duly organized and existing under the laws of the State of West Virginia, having been incorporated on the 25th day of April, 1962, and has an authorized capital stock of Four Hundred Thousand Dollars ($400,000.00), consisting of four thousand (4000) shares of common stock of the par value of One Hundred Dollars ($100.00) each, all of which stock is issued and outstanding; and WHEREAS, Sterling Smokeless Coal Company is a corporation duly organized and existing under the laws of the State of West Virginia, having been incorporated on the 18th day of November, 1926, and has an authorized capital stock of Two Hundred Eighty Thousand Dollars ($280,000.00), consisting of twenty-eight hundred (2800) shares of common stock of the par value of One Hundred Dollars ($100.00 each, all of which stock is issued and outstanding; and WHEREAS, the board of directors of each of said corporations deems it advisable for the general welfare and advantage of said corporations, and their respective stockholders, that Sterling Smokeless Coal Company merge with and into Low Volatile Coals, Inc.; and that Low Volatile Coals, Inc. merge into itself Sterling Smokeless Coal Company; and 9 WHEREAS, the board of directors of each of said constituent corporations deems it for the best interests and welfare of both constituent corporations that the name of the surviving corporation, Low Volatile Coals, Inc., be changed from Low Volatile Coals, Inc. to Sterling Smokeless Coal Company: and WHEREAS, the board of directors of each of said constituent corporations has determined that the principal office of the surviving corporation, with the changed name from Low Volatile Coals, Inc. to Sterling Smokeless Coal Company, will be in the Office Building of Vecellio & Grogan Incorporated, on the Crab Orchard Road, Beckley, Raleigh County, West Virginia; and WHEREAS, the board of directors of each of said constituent corporations has determined that the chief works of the surviving corporation with the changed name from Low Volatile Coals, Inc. to Sterling Smokeless Coal Company will be located at Whitby, Raleigh County, West Virginia; and WHEREAS, the board of directors of each of the constituent corporations has approved this merger; NOW, THEREFORE, in consideration of the premises and the payment of the sum of One Dollar ($1.00) by each of the parties to the other in hand paid, and of the mutual provisions, conditions, covenants and grants herein contained, the parties hereto hereby agree, in accordance with the provisions of the Code of West Virginia, Chapter 31, Article 1, Section 63, that Low Volatile Coals, Inc. hereby merges into itself Sterling Smokeless Coal Company, and, likewise, said Sterling Smokeless Coal Company shall be, and hereby is, merged into Low Volatile Coals, Inc. with Low VolatiLe Coals, Inc. as the surviving corporation (as hereinafter defined). Sterling Smokeless Coal Company and Low Volatile 10 Coals, Inc. are hereafter sometimes referred to as the "Constituent Corporations"; the corporation which shall survive the merger is sometimes hereinafter referred to as the "Surviving Corporations"; and the date on which the Constituent Corporations shall so become said single corporation is hereinafter sometimes referred to as the "effective date of this Agreement". It is hereby agreed by and between the parties hereto that the terms and conditions of said merger and the mode of carrying the same into effect shall be the same as those set forth in the following Articles FIRST to FIFTEENTH inclusive. FIRST: Except as herein otherwise specifically set forth, the identify, existence, objects, powers, rights, privileges, purposes, franchises and immunities of Low Volatile Coals, Inc. shall continue unaffected and unimpaired by the merger, and the corporate identity, objects, powers, rights, privileges, purposes, franchises and immunities of Sterling Smokeless Coal Company shall be merged into Low Volatile Coals, Inc., and Low Volatile Coals, Inc. shall be fully vested therewith. The organization of Sterling Smokeless Coal Company, except insofar as it may be continued by statute, shall cease as soon as this Agreement shall become effective, and thereupon Low Volatile Coals, Inc. and Sterling Smokeless Coal Company shall become a single corporation, to wit, Low Volatile Coals, Inc., one of the parties hereto, which shall survive such merger and shall continue as the Surviving Corporation to exist under and be governed by the laws of the State of West Virginia. SECOND: The name of the Surviving Corporation, Low Volatile Coals, Inc., a corporation, shall be changed from Low Volatile Coals, Inc., a corporation, to Sterling Smokeless Coal Company, a corporation. THIRD: The principal office of the Surviving Corporation with the changed name from Low Volatile Coals, Inc. to Sterling Smokeless Coal Company, will be in the 11 Office Building of Vecellio & Grogan Incorporated, on the Crab Orchard Road, Beckley, Raleigh County, West Virginia. FOURTH: The chief works of the Surviving Corporation with the changed name from Low Volatile Coals, Inc. to Sterling Smokeless Coal Company will be located at Whitby, Raleigh County, West Virginia. FIFTH: The objects, powers, rights, privileges and purposes of the Surviving Corporation, with such change in name, shall include the following: To purchase, own, hold, lease, sublease, sell, mortgage, convey, and otherwise acquire and dispose of, coal mines, coal lands, coal properties, oil, gas and other minerals and mining rights, and other real estate; to own, operate and conduct deep coal mines, strip coal mines, and to do a general coal mining business; to engage in the mining of coal by all lawful methods of mining coal, including strip mining, auger mining, web mining, punch mining, wagon mining, conveyor mining, and all other methods for the mining and removal of coal; to mine, prepare, distribute, sell and generally deal in coal and other minerals and their by-products; to manufacture and sell coke and its by-products; to act as agent and broker for coal and other fuel, and to make contracts with individuals and corporations with reference to handling and selling their coal, and on such terms as may be agreed upon; to buy and sell merchandise at wholesale and retail and conduct general retail merchandise stores, and otherwise trade in goods, wares and merchandise of every class and description; to own, operate and maintain all necessary tracks, sidetracks and tramroads as may be necessary and convenient to carry on all business herein authorized; to own, operate and maintain electrical lighting plant, machinery and appliances and to purchase or otherwise acquire electrical current or power from any manufacturer thereof for the purpose of carrying on the several things or enterprises herein authorized; to buy, own, build, operate, sell, lease, sublease, and otherwise acquire and dispose of tipples, processing plants, storage silos, powder magazines, shops, storehouses, warehouses, docks, piers and all buildings and structures necessary to the carrying on such business as is herein authorized; to buy, own, build, operate, sell, lease, sublease, and otherwise acquire and dispose of tenement houses, dwelling houses, and all other buildings and structures appurtenant thereto; and to do all things generally that may be 12 necessary or convenient in connection with the operation and conduct of any of the aforesaid lines of business. To purchase, own, hold, lease, sublease, sell, mortgage, convey, and otherwise acquire and dispose of, oil and gas lands, and rights and mining rights pertaining thereto; to own, develop, lease, sublease, sell, dispose of, operate and conduct drilling operations and all other works necessary for the exploration, production, storage, distribution, transportation and sale of oil and gas and their by-products; to lay and operate pipe lines, and to do all things generally that may be necessary or convenient in connection with the operation and conduct of any of the aforesaid lines of business. To purchase, own, hold, lease, sublease, and sell timber and timber lands, and to cut, log and manufacture into lumber and other products of such timber and to buy and sell lumber and other products of timber at wholesale and retail; to own, lease, construct and operate railroads, tramroads, and all other roads, needful or expedient to the business of the corporation; to acquire, own, sell, lease, sublease and operate saw mills and planing mills, together with all other kinds of machinery, equipment and appliances of every kind and character for the manufacturing of timber, lumber and other products therefrom, and to do all things generally that may be necessary or convenient in connection with the manufacture of timber into lumber and other products of timber, and the sale of the same, and the transportation thereof to market. To conduct and carry on the business of general contractors and builders for the purpose of building, erecting, altering, repairing, or doing any other work in connection with any and all classes of buildings and improvements of any kind and nature whatsoever; including the building, rebuilding, alteration, repairing or improvement of public buildings, commercial buildings, hotels, apartment houses, factories, warehouses, cold storage houses, dwellings, works or constructions of every kind and description whatsoever, including the locating, laying out and construction, altering, repairing and maintenance of roads, turnpikes, railroads, streets, avenues, docks, ships, sewers, septic tanks, sewerage systems, bridges, wells, parks, swimming pools, athletic fields, stadiums, airfields, recreation facilities, foundations, wells, excavations, canals, street railways, mine tracks, power plants, manufacturing plants, wholesale plants, water distribution plants, reservoirs, aqueducts, artificial and natural gas distribution systems, pipe 13 lines, and generally in all classes of buildings, erections and works of every kind and character, both public and private, or integral parts thereof, and to have performed civil, mechanical and chemical engineering and architectural work, including the preparation of plans and specifications in expert work, as acting and consulting and superintending engineers and architects, and generally to do and perform any and all works as contractors and builders and with that end in view to solicit, obtain, make, perform and carry out contracts covering the contracting and building business and the work connected therewith. To purchase, own, hold, use, maintain, manage, operate, develop, lease, sublease, sell, mortgage, exchange, improve, convey, and otherwise acquire and dispose of, real estate and real property, apartment houses, commercial buildings, office buildings, hotels, factories, warehouses, cold storage houses, refrigeration locker plants, grain elevators, filling stations, manufacturing plants, wholesale plants, dwellings, buildings, works or constructions of every kind and description whatsoever. To purchase, own, hold, use, maintain, manage, operate, develop, lease, sublease, sell, mortgage, exchange, improve, convey, and otherwise acquire and dispose of, real and personal property, or any interest or rights therein, together with any buildings and improvements thereon, and all appurtenances, rights, privileges and easements pertaining thereto, and any equipment necessary and convenient for the use and enjoyment of the aforesaid purposes, and to have surveyed and subdivided the real estate into lots, parks, reservations, avenues, streets, and alleys, for the purpose of sale, development, or otherwise, and to do and perform all things necessary and convenient for the development and improvement of the same, for residence, trade or business. To transact a general real estate agency and brokerage business; to collect rents, and in general to manage real property for others, and to do all things necessary and convenient for the purposes of conducting said businesses. To conduct and carry on a general roofing, sheet metal, air- conditioning, heating and plumbing, insulation, and weather stripping business. To conduct and carry on the business of manufacturing, constructing, altering, repairing, setting, maintaining and servicing all kinds of electrical machinery and electrical 14 appliances; and to carry on the business of electricians, electrical engineers and generally deal in all classes of electrical machinery and electrical appliances. To conduct and carry on the business of manufacturing, constructing, altering, repairing, selling, maintaining, and servicing all kinds of machinery and equipment of every kind and character; and to carry on the business of machinists, mechanical engineers, and generally deal in all classes of mechanical machinery and appliances of every kind and character. To manufacture, buy, sell, trade and deal in all and every kind of material, product, manufactured or unmanufactured, iron, coal, coke, steel, wood, brick, cement, granite, stone and other products and building materials. To acquire, own, develop, work, lease, sublease, mortgage, sell and dispose of any mines, mining rights and metalliferous lands, rock quarries, limestone deposits, sandstone deposits, sand deposits, gravel deposits, clay deposits, topsoil, coal, oil and gas and mining rights thereof, and all other minerals and mining rights thereof, or any interest therein, and to explore, work, exercise, develop and turn to account the same. To crush, win, get, quarry, smelt, calcine, refine, dress, amalgamate, manipulate and prepare for market ore, metal and mineral substances of all kinds and to carry on any other metallurgical operations which may seem conducive to any of the company's objects. To buy, acquire, hold, use, employ, mortgage, convey, lease and dispose of patent rights, letters patent, copyrights, processes, devices, inventions, trademarks, formulae, good will and other rights. To purchase, acquire, hold and dispose of stocks, bonds, and other obligations, including judgments, interest accounts or debts of any corporation, domestic or foreign, owning or controlling any articles which are or might be or become useful in the business of this company and to purchase, acquire, hold and dispose of stocks, bonds, or other obligations, including judgments, interests, accounts or debts of any corporations, domestic or foreign, engaged in a business similar to that of this company, or engaged in the manufacture, use or sale of property or in the construction or operation of works necessary or useful 15 in the business of this company, or in which, or in connection with which, the manufactured articles, product or property of this company may be used, or of any corporation with which this corporation is or may be authorized to consolidate according to law, and this company may issue in exchange therefor the stock, bonds, or other obligations of this company. To own, operate and conduct a general wholesale business, or a chain of wholesale businesses, and all such other businesses incident thereto or connected therewith, and a general retail business, or a chain of retail businesses, for the purpose of buying and selling mining machinery, equipment and supplies of every kind and character, oil and gas well supplies, builders' supplies, electrical supplies, sheet metal supplies, air conditioning supplies, agricultural supplies, paints, chemicals, oils, gasoline, automobile supplies, office supplies, store equipment, hotel equipment, bank supplies, radios, musical instruments, feeds, flour, fertilizer, farm implements, farm supplies, of all kinds and character, plumbing supplies, heating supplies, electrical refrigeration supplies, groceries, foods, produce, bakery products, dairy products, farm products, tobacco, cigars, cigarettes, snuff, candy, confectioneries, ice, ice cream, fruit syrups, chocolate, chewing gum, notions, drugs, playing cards, soft drinks, peanut butter, medicines, sanitary supplies, peanut butter sandwiches, peanuts, fruits, nuts, grains, cereals, meats, hay, books, school supplies, stationery, glassware, crockery, pottery, queensware, jewelry, shoes, boots, toys, millinery, hardware, leather goods, sporting goods, carpets, rugs, decorations, furniture, roofing supplies, and all other articles of machinery, equipment, supplies, food products and merchandise necessary and convenient for dress, personal and household use and use in agriculture, mining and manufacturing, and building and construction work. To manufacture, lease, buy, sell and deal in the aforesaid lines of mining machinery, equipment, supplies of every kind and character, food products and merchandise. To do a general business as commission merchant, broker, selling agent or factor, for the purpose of buying, selling, dealing in or selling on commission, or otherwise, any of the aforesaid lines of mining machinery, electrical equipment, supplies, products and merchandise of every kind and character. To conduct and carry on the business of manufacturing, buying, selling and dealing in building supplies of every kind 16 and character, alkalies and chemicals of all kinds, and all articles and things used in the manufacture, maintenance and working thereof, and also all apparatus and implements and things for use either alone or in connection with the products of which they are ingredients, or in the manufacture of which they are a factor. To buy, sell and deal in at retail or wholesale automobiles, trailers, buses, trucks, tractors, motorcycles, bicycles, airplanes, and all other means of conveyance and transportation, and all parts and accessories thereof, and to carry on any trade or business incident thereto or connected therewith. To conduct a general insurance agency and bond business and insurance brokerage business, consisting of fire, casualty, plate glass, steam boilers, elevator, accident, fidelity, debt, burglary, physician's defense, marine, credit and life insurance, and all other kinds of insurance on property. To build, own, acquire, lease, sell, operate and maintain stores, showrooms, buildings, houses, plots, warehouses, depots, garages, trucks, trailers, and any other kind of equipment for transportation of products, power shovels, bulldozers, and any other equipment or appliance that may be necessary or convenient in connection with the operation of any of the aforesaid lines of business. To own, operate and conduct a general storage and warehouse business, for compensation, for the public generally, for the purpose of storage of all kinds of personal property of every kind and character. To transact a general real estate agency and brokerage business. To buy, sell, own, rent and convey property, both personal and real, as the same is necessary and convenient for the purposes of carrying on any and all of the aforesaid lines of business. To acquire, own, operate, lease and sublease a general outdoor advertising business, including billboards, signs and posters of every kind and description, and to do and perform all kinds of public advertising for persons, fires and corporations. To do all things generally that may be necessary to conduct any of the aforesaid lines of business. 17 SIXTH: The amount of authorized capital stock of Low Volatile Coals, Inc., a corporation, upon the date of this Agreement is Four Hundred Thousand Dollars ($400,000.00), consisting of four thousand (4000) shares of common stock of the par value of One Hundred Dollars ($100.00) per share; and all of said stock has been issued and outstanding and is now owned and held by the following stockholders of Low Volatile Coals, Inc. as of October 6, 1967, in the following respective stock ownerships: Shares ------ Vecellio & Grogan Incorporated 1,750 Southern Coals Corporation 1,500 Leo Vecellio 235 Leo Vecellio, Jr. 20 Enrico Charles Vecellio 20 Patricia Anne Vecellio 20 Erma V. Grogan 50 Malcolm F. Smith 50 Wilfred H. Smith 50 James C. Justice 50 Al Janutolo 50 Howard E. Lane 50 Donald R. Basham 75 Irwin B. Wall 20 Shoals, Inc. 60 ----- 4,000 SEVENTH: Since Low Volatile Coals, Inc. owns all of the 2800 shares of stock of Sterling Smokeless Coal Company and Low Volatile Coals, Inc. is in fact the parent company of Sterling Smokeless Coal Company, the stockholders, of Low Volatile Coals, Inc. have in fact an ownership interest in and to the underlying assets of Sterling Smokeless Coal Company; and if the merger is accomplished on the target date on October 31, 1967, by the merger of Sterling Smokeless Coal Company into Low Volatile Coals, Inc. and Low Volatile Coals, Inc. merges Sterling Smokeless Coal Company into itself, and Low Volatile Coals, Inc. 18 thereby becomes the surviving corporation, the aforesaid 2800 shares of stock in Sterling Smokeless Coal Company owned by Low Volatile Coals, Inc. shall be surrendered, retired and cancelled. Low Volatile Coals, Inc. would then succeed to all the corporate objects, powers, rights, privileges and purposes of Sterling Smokeless Coal Company and retain all of its present objects, powers, rights, privileges and purposes. The merged corporation or surviving corporation, Low Volatile Coals, Inc., would continue its operations with the same respective stockholders, each holding the same respective number of shares of stock in such surviving corporation; provided, however, if it should be determined by the stockholders and boards of directors of both constituent corporations that it was for the best interests and welfare of both constituent corporations that the name of the surviving corporation be changed from Low Volatile Coals, Inc. to Sterling Smokeless Coal Company; that in that event a new stock certificate book be obtained in the amended name of Sterling Smokeless Coal Company for the surviving corporation, with an authorized capital stock of Four Hundred Thousand Dollars ($400,000.00), as evidenced by four thousand (4000) shares of common stock of the par value of One Hundred Dollars ($100.00) per share; and that upon accomplishing the merger on October 31, 1967, that the board of directors of the surviving corporation, with the changed name to Sterling Smokeless Coal Company, direct, authorize and empower the president and secretary to issue and deliver to the aforesaid respective stockholders of the surviving corporation, Low Volatile Coals, Inc., their aforesaid corresponding numbers of shares of stock in the name of Sterling Smokeless Coal Company, the amended name of the surviving corporation, in such size stock certificates as requested by the respective owners of said stock, upon the surrender by each of said stockholders of the constituent corporation, Low Volatile Coals, Inc., of all their aforesaid shares of stock in such 19 Low Volatile Coals, Inc. with properly executed certificates of assignments to Sterling Smokeless Coal Company, the amended name of the surviving corporation, Low Volatile Coals, Inc., of all of the stock certificates evidencing all of the four thousand (4000) shares of stock of Low Volatile Coals, Inc., for retirement and cancellation. EIGHTH: The bylaws of Low Volatile Coals, Inc., as they shall exist on the date of this Agreement, shall be and remain the bylaws of Sterling Smokeless Coal Company, the amended name of the Surviving Corporation, Low Volatile Coals, Inc., until the same shall be altered, amended or repealed, as therein provided. NINTH: The names and addresses of the Directors of Sterling Smokeless Coal Company, the amended name of the Surviving Corporation, Low Volatile Coals, Inc., who shall hold office until the annual meeting of stockholders and until the election and qualification of their successors are as follows: Leo Vecellio 508 South Kanawha Street Beckley, West Virginia James C. Justice 805 Northwestern Avenue Beckley, West Virginia Wilfred H. Smith 104 Maxwell Hill Road Beckley, West Virginia Upon the effective date of this Agreement, the officers of Low Volatile Coals, Inc., now serving as officers of Low Volatile Coals, Inc., will continue to serve as officers of Sterling Smokeless Coal Company, the amended name of the Surviving Corporation, Low Volatile Coals, Inc., until their successors are selected as provided by the bylaws of Low Volatile Coals, Inc., now by amendment of name, Sterling Smokeless Coal Company. TENTH: On the effective date of this Agreement, Sterling Smokeless Coal Company, the amended name of the Surviving Corporation, Low Volatile Coals, Inc., shall, 20 without other transfer, succeed to and possess all the rights, capacity, privileges, powers, franchises and immunities, and be subject to all the restrictions, disabilities, liabilities, obligations and duties of each of the said constituent corporations, and all and singular, the rights, privileges, powers, franchises and immunities of each of said constituent corporations, and all property, real, personal and mixed, and all debts, obligations and liabilities due to either of the said constituent corporations on whatever account shall be vested in Sterling Smokeless Coal Company, the amended name of the Surviving Corporation, Low Volatile Coals, Inc., and all property, leases, rights, privileges, powers, franchises and immunities, and all and every other interest, shall be thereafter as effectually the property of Sterling Smokeless Coal Company, the amended name of the Surviving Corporation, Low Volatile Coals, Inc., as they were of the said respective constituent corporations, and the title to any real estate vested by deed or otherwise in either of the said constituent corporations, shall not revert or be in any way impaired by reason of the merger or the statute providing therefor, provided that all rights of creditors and all liens upon any property of each of the said constituent corporations shall be preserved impaired, limited to the property affected by such liens at the time of such merger, and all debts, liabilities and duties of the respective constituent corporations shall henceforth attach to Sterling Smokeless Coal Company, the amended name of the Surviving Corporation, Low Volatile Coals, Inc., and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it in its amended name of Sterling Smokeless Coal Company, a corporation. ELEVENTH: This Agreement shall be submitted to the respective stockholders of the Constituent Corporations, as provided by law, and upon the adoption thereof by the requisite two-thirds (2/3) votes of the stockholders of each of the Constituent Corporations, as 21 provided by law, then due certification of such adoption and approvals shall be made on this Agreement by the Secretary of each such corporation, under the seals thereof, and the Agreement so adopted, approved and certified, shall be signed by the president and secretary of each such corporation, under the corporate seals thereof, and acknowledged by the president of each such corporation, and the Agreement, so certified, executed and acknowledged, shall be filed in the Office of the Secretary of State and shall thence be taken and deemed to be the Agreement and act of merger of said corporations into the Surviving Corporation, Low Volatile Coals, Inc., and by change of name to Sterling Smokeless Coal Company, a corporation, as the Surviving Corporation, and this Agreement shall take effect and be deemed and taken to be the Agreement and act of merger of the said Surviving Corporation, Sterling Smokeless Coal Company, as amended, and the merger shall be and become effective immediately after the close of business on the day of the filing of this Agreement in the Office of the Secretary of State of the State of West Virginia, and a duly certified copy of such Agreement and act of merger by the Secretary of State, under the seal of his office, shall be duly recorded in the Office of the Clerk of the County Court of Raleigh County, West Virginia, as provided by Chapter 31, Article 1, Section 63 of the Code of West Virginia. TWELFTH: The existence of this corporation shall be perpetual. THIRTEENTH: Upon the effective date of this Agreement, Sterling Smokeless Coal Company, as chartered by the State of West Virginia on November 18, 1926, shall execute to Sterling Smokeless Coal Company, a corporation, the amended name of the Surviving Corporation, Low Volatile Coals, Inc., a confirmatory deed or deeds to the respective parcels of real estate owned by it, which deed or deeds shall be recorded in the 22 offices of the clerks of the county courts of the respective counties in which such real estate is located, and such deed or deeds shall recite as the consideration therefor this merger and shall be confirmatory of the title of such real estate in Sterling Smokeless Coal Company, a corporation, the amended name of the Surviving Corporation, Low Volatile Coals, Inc. If at any time thereafter Sterling Smokeless Coal Company, a corporation, as amended, as aforesaid, shall deem or be advised that any deeds or further assignments are necessary or desirable to vest, or to perfect or confirm of record, or otherwise, in Sterling Smokeless Coal Company, as amended, the title to any property of Sterling Smokeless Coal Company, as chartered by the State of West Virginia on November 18, 1926, acquired or to be acquired by Low Volatile Coals, Inc., as amended by Sterling Smokeless Coal Company, by reason of or as a result of the merger, Sterling Smokeless Coal Company, as chartered by the State of West Virginia on November 18, 1926, and its proper officers and directors, shall and will execute and deliver any and all such proper deeds and assignments and do all things necessary or proper so to vest, perfect or confirm title to such property in Sterling Smokeless Coal Company, as amended, and to otherwise carry out the purposes of this Agreement. FOURTEENTH: Sterling Smokeless Coal Company, as amended, shall pay the expense of carrying this Agreement into effect and of accomplishing the merger, if the same is finally approved by the directors and stockholders of both corporations, and all other requirements of the merger are completed and the same takes effect. If, for any reason, the said merger does not take effect, each corporation shall pay the expenses incurred by it. FIFTEENTH: Upon the effective date of this Agreement, the separate existence of Sterling Smokeless Coal Company, as incorporated on November 18, 1926, by the Secretary of State of the State of West Virginia, shall cease, and said corporation shall be 23 merged in accordance with the provisions of this Agreement into Low Volatile Coals, Inc., and by amendment of the name of the Surviving Corporation, Low Volatile Coals, Inc., to Sterling Smokeless Coal Company, into Sterling Smokeless Coal Company, a corporation, which shall survive such merger and continue in existence as such Surviving Corporation. IN WITNESS WHEREOF, this Agreement of Merger has been executed by the board of directors of each of the Constituent Corporations, and the corporate seal of each of the Constituent Corporations has been hereunto affixed and attested by the secretary of each of the Constituent Corporations, as of the day and year first above written. FOR LOW VOLATILE COALS, INC. [Executed] -------------------------------- Being all of the Board of Directors of Low Volatile Coals, Inc. [Executed] -------------------------------- [Executed] -------------------------------- (Corporate Seal) ATTEST: [Executed] - ----------------------------- Secretary 24 FOR STERLING SMOKELESS COAL COMPANY [Executed] ----------------------------------------- [Executed] ----------------------------------------- [Executed] ----------------------------------------- [Executed] ----------------------------------------- Being all of the Board of Directors of Sterling Smokeless Coal Company. (Corporate Seal) ATTEST: [Executed] ------------------------------- Secretary 25 I, Wilfred H. Smith, Secretary of Sterling Smokeless Coal Company, corporation, organized on the 18th day of November, 1926, and existing under the laws of the State of West Virginia, do hereby certify as such Secretary and under the seal of said corporation, that the Agreement of Merger on which this certificate is made was duly submitted to and considered by the stockholders of Sterling Smokeless Coal Company, a corporation, at a special meeting of said stockholders duty called separately in the manner provided by law for the purpose of considering said Agreement of Merger, and duly held on the 31st day of October, 1967, after publication of a notice of special meeting of stockholders of Sterling Smokeless Coal Company in the issues of October 9, 1967, and October 19, 1967, in the Beckley Post-Herald, a newspaper published in Raleigh County, wherein the respective principal offices of Sterling Smokeless Coal Company, a corporation, and Low Volatile Coals, Inc., a corporation, are located, and after a copy of such notice was mailed on October 6, 1967, to the last known post office address of each stockholder of Sterling Smokeless Coal Company, a corporation, more than twenty (20) days prior to the date of such meeting; and after a letter dated October 6, 1967, addressed to all the stockholders of Sterling Smokeless Coal Company, signed by all the members of the Board of Directors of Sterling Smokeless Coal Company, calling such special meeting of said stockholders for the purpose of considering said Agreement of Merger, was mailed on October 6, 1967, to the last known post office address of each such stockholder, as required by the bylaws of the corporation, more than twenty (20) days prior to the date of such meeting; that at such meeting said agreement was considered by the stockholders, and a vote by ballot was taken in person and by proxy for the adoption or rejection of the same; that the votes of stockholders representing more than two-thirds (2/3) of the total number of shares of the capital stock of said 26 corporation, issued and outstanding, at said time were cast for the adoption of such agreement; that all the stockholders and members of the board of directors of both constituent corporations have determined that it is for the best interests and welfare of both constituent corporations that the name of the surviving corporation in this merger be changed from Low Volatile Coals, Inc. to Sterling Smokeless Coal Company; that the name of the surviving corporation of --------------------------------------------- Low Volatile Coals, Inc., a corporation, be, and the same was, thereby amended - ------------------------------------------------------------------------------ and changed to Sterling Smokeless Coal Company, a corporation; and that said - ------------------------------------------------------------- Agreement of Merger was at said meeting duly adopted as aforesaid. WITNESS my hand and the seal of said Sterling Smokeless Coal Company, a corporation, this 31st day of October, 1967. [Executed] ----------------------------------------------- Secretary of Sterling Smokeless Coal Company, a corporation incorporated November 18, 1926. (Corporate Seal) 27 I, Wilfred H. Smith, Secretary of Low Volatile Coals, Inc., a corporation, organized and existing under the laws of the State of West Virginia, do hereby certify as such Secretary and under the seal of said corporation, that the Agreement of Merger on which this certificate is made was duly submitted to and considered by the stockholders of Low Volatile Coals, Inc., a corporation, at a special meeting of said stockholders duly called separately in the manner provided by law for the purpose of considering said Agreement of Merger, and duty held on the 31st day of October, 1967, after publication of a notice of special meeting of stockholders of Low Volatile Coals, Inc. in the issues of October 9, 1967, and October 19, 1967, in the Buckley Post-Herald, a newspaper published in Raleigh County, wherein the respective principal offices of Low Volatile Coals, Inc., a corporation, and Sterling Smokeless Coal Company, a corporation, are located, and after a copy of such notice was mailed on October 6, 1967, to the last known post office address of each stockholder of Low Volatile Coals, Inc., a corporation, more than twenty (20) days prior to the date of such meeting; and after a letter dated October 6, 1967, addressed to all the stockholders of Low Volatile Coals, Inc., signed by Leo Vecellio, President, calling such special meeting of said stockholders for the purpose of considering said Agreement of Merger, was mailed on October 6, 1967, to the last known post office address of each such stockholder, as required by the bylaws of the corporation, more than twenty (20) days prior to the date of such meeting; that at such meeting said agreement was considered by the stockholders, and a vote by ballot was taken in person and by proxy for the adoption or rejection of the same; that the votes of stockholders representing more than two-thirds (2/3) of the total number of shares of the capital stock of said corporation, issued and outstanding, at said time were cast for the adoption of such agreement; that all the stockholders and members of the board of directors of both constituent 28 corporations have determined that it is for the best interests and welfare of both constituent corporations that the name of the surviving corporation in this merger be changed from Low Volatile Coals, Inc. to Sterling Smokeless Coal Company; that the name of the surviving corporation of Low Volatile Coals, Inc., ----------------------------------------------------------------------- a corporation, be, and the same was, thereby amended and changed to Sterling - ---------------------------------------------------------------------------- Smokeless Coal Company, a corporation; and that said Agreement of Merger was at - ------------------------------------- said meeting duly adopted as aforesaid. WITNESS my hand and the seal of said Low Volatile Coals, Inc., a corporation, this 31st day of October, 1967. [Executed] ------------------------------------------ Secretary of Low Volatile Coals, Inc., a (Corporate Seal) corporation WITNESS my hand and seal of said Sterling Smokeless Coal Company, a corporation, the amended name of the surviving corporation, Low Volatile Coals, Inc. on October 31, 1967, this 31st day of October, 1967. (Corporate Seal) [Executed] ------------------------------------------ Secretary of Sterling Smokeless Coal Company, a corporation, the amended name of the surviving corporation, Low Volatile Coals, Inc., on October 31, 1967. 29 The above and foregoing Agreement of Merger, having been authorized by all of the directors and executed by all of the board of directors and by the duly authorized officers under the corporate seal of each corporate party thereto, and having been duly submitted to and considered by the stockholders of each corporate party thereto, at a special meeting thereof separately called and held, in accordance with the statutes of the State of West Virginia, and having been duly adopted by the votes cast by ballot of the stockholders of each corporate party thereto, representing more than two-thirds (2/3) of the total number of issued and outstanding shares of the capital stock of each corporate party, all in accordance with the statutes of the State of West Virginia; and the fact that all the stockholders and members of the board of directors of both constituent corporations have determined that it is for the best interests and welfare of both constituent corporations that the name of the surviving corporation in this merger be changed from Low Volatile Coals, Inc. to Sterling Smokeless Coal Company; that the name of the surviving corporation of Low ------------------------------------------------- Volatile Coals, Inc., a corporation, be, and the same was, thereby amended and - ------------------------------------------------------------------------------ changed to Sterling Smokeless Coal Company, a corporation; and that the - --------------------------------------------------------- foregoing facts having been certified on said Agreement of Merger by the Secretary of Low Volatile Coals, Inc., a West Virginia corporation, and by the Secretary of Sterling Smokeless Coal Company, a West Virginia corporation, and by the Secretary of Sterling Smokeless Coal Company, a corporation, amended name of the surviving corporation of Low Volatile Coals, Inc., on October 31, 1967, under the respective corporate seals of each said corporate party, the President and Secretary of Low Volatile Coals, Inc., a corporation, the President and Secretary of Sterling Smokeless Coal Company, incorporated on November 18, 1926, and the President and Secretary of Sterling Smokeless Coal Company, the amended name of the surviving corporation, Low 30 Volatile Coals, Inc., on October 31, 1967, do now sign the said Agreement of Merger under the respective corporate seals of each such corporation by authority of the board of directors and stockholders thereof as the respective act, deed and agreement of each of said corporations, on the 31st day of October, 1967. [Executed] [Ececuted] - ------------------------------ --------------------------------------- President of Sterling Smoke- President of Low Volatile Coals, less Coal Company, a corp- Inc., a corporation. oration, amended name of surviving corporation, Low Volatile Coals, Inc., on [Executed] --------------------------------------- October 31, 1967. Secretary of Low Volatile Coals, Inc., a corporation. [Executed] [Executed] - ----------------------------- --------------------------------------- Secretary of Sterling Smoke- President of Sterling Smokeless less Coal Company, a corporation, Coal Company, incorporated on amended name of surviving November 18, 1926. corporation, Low Volatile Coals, Inc., on October 31, 1967. [Executed] --------------------------------------- Secretary of Sterling Smokeless Coal Company, incorporated on November 18, 1926. 31 STATE OF WEST VIRGINIA, COUNTY OF RALEIGH, SS: I, Beulah Pulliam, a Notary Public in and for said county and state aforesaid, do hereby certify that Leo Vecellio, the President of Low Volatile Coals, Inc., a West Virginia corporation, who is personally known to me to be the same person whose name is subscribed to the foregoing Agreement of Merger as such president, and is personally known to me to be the president of such corporation, appeared before me this day in person and acknowledged that he signed, sealed and delivered the said Agreement of Merger as his free and voluntary act as such president and as the free and voluntary act, deed and agreement of said corporation, to wit, Low Volatile Coals, Inc., for the uses and purposes therein set forth, and further acknowledged said Agreement of Merger to be the free and voluntary act, deed and agreement of said corporation, and to have been authorized by the board of directors of said corporation, and to have been adopted by the affirmative votes (cast by ballot at a special meeting of the stockholders of said corporation duly called and held according to the statutes of the State of West Virginia governing the merger of corporations) of the stockholders representing more than two-thirds (2/3) of the total number of the issued and outstanding shares of capital stock of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and notarial seal on this 31st day of October, 1967. My commission expires: March 1, 1969. [Executed] --------------------------------- Notary Public of Raleigh (Notarial Seal) County, West Virginia. 32 STATE OF WEST VIRGINIA, COUNTY OF RALEIGH, SS: I, Beulah Pulliam, a Notary Public in and for said county and state aforesaid, do hereby certify that Leo Vecellio, the President of Sterling Smokeless Coal Company, a West Virginia corporation, incorporated on November 18, 1926 who is personally known to me to be the same person whose name is subscribed to the foregoing Agreement of Merger as such president, and is personally known to me to be the president of such corporation, appeared before me this day in person and acknowledged that he signed, sealed and delivered the said Agreement of Merger as his free and voluntary act as such president and as the free and voluntary act, deed and agreement of said corporation, to wit, Sterling Smokeless Coal Company, a West Virginia corporation, incorporated on November 18, 1926, for the uses and purposes therein set forth, and further acknowledged said Agreement of Merger to be the free and voluntary act, deed and agreement of said corporation, and to have been authorized by the board of directors of said corporation, and to have been adopted by the affirmative votes (cast by ballot at a special meeting of the stockholders of said corporation duly called and held according to the statutes of the State of West Virginia governing the merger of corpora tions) of the stockholders representing more than two-thirds (2/3) of the total number of the issued and outstanding shares of capital stock of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and notarial seal on this 31st day of October, 1967. My commission expires: March 1, 1969. /s/Beulah Pulliam -------------------------------------- Notary Public of Raleigh (Notarial Seal) County, West Virginia. 33 STATE OF WEST VIRGINIA, COUNTY OF RALEIGH, SS: I, Beulah Pulliam, a Notary Public in and for said county and state aforesaid, do hereby certify that Leo Vecellio, the President of Sterling Smokeless Coal Company, a corporation, amended name of the surviving corporation, Low Volatile Coals, Inc., on October 31, 1967, who is personally known to me to be the same person whose name is subscribed to the foregoing Agreement of Merger as such president, and is personally known to me to be the president of such corporation, appeared before me this day in person and acknowledged that he signed, sealed and delivered the said Agreement of Merger as his free and voluntary act as such president and as the free and voluntary act, deed and agreement of said corporation, to wit, Sterling Smokeless Coal Company, a corporation, amended name of the surviving corporation, Low Volatile Coals, Inc. on October 31, 1967, for the uses and purposes therein set forth, and further acknowledged said Agreement of Merger to be the free and voluntary act, deed and agreement of said corporation, and to have been authorized by the board of directors of said corporation, and to have been adopted by the affirmative votes (cast by ballot at a special meeting of the stockholders of said corporation duly called and held according to the statutes of the State of West Virginia governing the merger of corporations) of the stockholders representing more than two-thirds (2/3) of the total number of the issued and outstanding shares of capital stock of said corporation. 34 IN WITNESS WHEREOF, I have hereunto set my hand and notarial seal on the 31st day of October, 1967. My commission expires: March 1, 1969. /s/Beulah Pulliam ------------------------------------ Notary Public of Raleigh (Notarial Seal) County, West Virginia. The foregoing Agreement of Merger, together with all certificates attached thereto, was prepared by: Floyd M. Sayre Attorney at Law Room 613 Raleigh County Bank Building Main Street Beckley, West Virginia 35 STATE OF WEST VIRGINIA CERTIFICATE I, ROBERT D. BAILEY, Secretary of State of the State of West Virginia, hereby certify that: the foregoing AGREEMENT OF MERGER, dated the 6th day of October, 1967, duly certified, executed, signed, sealed and acknowledged, between LOW VOLATILE COALS, INC. and STERLING SMOKELESS COAL COMPANY, both being corporations created, organized and existing under the laws of the State of West Virginia, providing for a merger of STERLING SMOKELESS COAL COMPANY with and into LOW VOLATILE COALS, INC., was duly filed in my office on the 1st day of November, 1967, as required by law, and that by virtue thereof and pursuant to the provisions of Chapter 31, Article 1, Section 63, Code of West Virginia, 1931, as amended, said LOW VOLATILE COALS, INC. is the continuing, resulting and surviving corporation which changed its name in said agreement of merger to STERLING SMOKELESS COAL COMPANY, and chief works located at Whitby, Raleigh County, West Virginia, and shall have the right of perpetual existence unless sooner dissolved by law. Given under my hand and the Great Seal of the said (G. S.) State, at the City of Charleston, this first day of November, 1967 Robert D. Bailey, Secretary of State EX-3.102 102 BY-LAWS OF STERLING SMOKELESS COMPANY EXHIBIT 3.102 BY-LAWS of STERLING SMOKELESS COAL COMPANY ------------------------------------- ARTICLE I MEETING OF STOCKHOLDERS SECTION 1. Annual Meeting. The annual meeting of stockholders shall -------------- be held on the second Wednesday of April in each year (or, if that be a legal holiday, on the next succeeding business day) at one o'clock in the afternoon or at such other hour as may from time to time be designated by the Board of Directors and specified in the notice of meeting. [AMENDED 8-1-87] SECTION 2. Special Meetings. Special meetings of the stockholders ---------------- for any purpose or purposes may be called by the President or by order of the Board of Directors, and it shall be the duty of the Secretary to call such a meeting upon a request in writing therefor stating the purpose or purposes thereof, delivered to the Secretary, signed by the holders of record of not less than one-tenth of the outstanding capital stock of the corporation. SECTION 3. Place of Meeting. Meetings of the stockholders may be ---------------- held at its principal office in Beckley, West Virginia, or elsewhere within the State of West Virginia, or may be held outside the State of West Virginia, or may be held outside the State of West Virginia at such place or places as the Board of Directors may from time to time determine. SECTION 4. Notice of Stockholders' Meeting. Notice of the annual and ------------------------------- of any special meeting of stockholders shall be given to each stockholder of record at least ten and not more than forty days before the meeting by personally delivering to each stockholder or by depositing in the United States mails, addressed to the address last left by such stockholder with the Transfer Agent, or in the absence of a Transfer Agent, the Registrar, or in the absence of a Transfer Agent and a Registrar, the Secretary of the corporation, a written or printed notice, signed by the President or a Vice President or the Secretary or an Assistant Secretary, stating the place, day and hour of the meeting and the purpose or purposes for which the meeting is called, and any such notice shall be deemed given when personally delivered or deposited postage prepaid in the United States mail. Any stockholder, or his attorney thereunto authorized, may waive notice of any meeting either before, at or after the meeting. SECTION 5. Quorum. At all meetings of stockholders the holders or ------ record of a majority of the issued and outstanding capital stock of the corporation, present in person or by proxy, 2 shall constitute a quorum for the transaction of business. In the absence of a quorum, a majority in interest of those present or represented may adjourn the meeting by resolution to a date fixed therein, and no further notice thereof shall be required. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 6. Voting. At each meeting of the stockholders every ------ stockholder holding one or more shares of the capital stock of the corporation shall be entitled to one vote for each such share registered in his name on the books of the corporation at the time of the closing of the transfer books of the corporation for such meeting or on the record date therefor, as the case may be, except that, in the case of an election of directors, each stockholder shall be entitled to as many votes as shall equal the number of votes which (except for this cumulative voting provision) such stockholder would be entitled to cast for the election of directors with respect to his shares of stock, multiplied by the number of directors to be elected, and such stockholder may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them, as he may see fit. Except for the election of directors, all resolutions shall be adopted by a majority of votes properly cast at the meeting; at elections of directors, those nominees up to the number to be elected, receiving the largest number of votes shall be deemed elected. All elections for directors shall be by ballot, but this requirement shall be deemed to have been waived if at the meeting no stockholder shall demand a ballot vote. SECTION 7. Proxies. Every stockholder entitled to vote at any ------- meeting of stockholders may vote by proxy. Every proxy must be executed in writing by the stockholder or by his duly authorized attorney. No proxy shall be voted after the expiration of three years from the date of its execution unless the stockholder executing it shall have specified a longer duration, and then only within the period specified. Every proxy shall be revocable at the pleasure of the person executing it or of his personal representative or assigns except as otherwise provided by law. SECTION 8. Inspectors of Election. Two inspectors of election, who ---------------------- shall act as such at elections of directors, shall be elected by and shall serve at the pleasure of the Board of Directors. If one or both of such inspectors fails to appear at any meeting for the election of directors, the Chairman of the meeting may appoint a substitute or substitutes to act at such meeting in place of such absent inspector or inspectors. Each inspector shall be entitled to a reasonable compensation for his services, to be paid by the corporation. The inspectors, before entering upon the discharge of their duties, shall be sworn faithfully to execute the duties of inspectors at such meeting 3 with strict impartiality and according to the best of their ability, and the oath so taken shall be subscribed by them. ARTICLE II BOARD OF DIRECTORS SECTION 1. General Powers. The property, affairs and business of the -------------- corporation shall be managed by the Board of Directors. SECTION 2. Number. The number of directors shall be not less than ------ three (3) nor more than twenty (20), as may be determined from time to time by the stockholders or the Board of Directors. [ANNULLED 4-11-84] SECTION 3. Term of office and Qualification. Directors need not be -------------------------------- stockholders and shall be elected to serve until the next annual election of directors and until their successors are elected and shall have qualified. SECTION 4. Chairman of the Board. The stockholders or the Board of --------------------- Directors may elect a Chairman of the Board from among its members to serve at its pleasure, who shall preside at all meetings of the Board of Directors and shall have such other duties as from time to time may be assigned to him by the Board of Directors or by the Executive Committee. SECTION 5. Vacancies. Vacancies in the Board of Directors because of --------- death, resignation, disqualification, physical or mental incapacity to act, an increase in the number of members of the Board of Directors, or resulting from any other cause whatsoever, shall be filled for the unexpired portion of the term by a majority vote of the remaining directors, although less than a quorum, given at a regular meeting, or at a special meeting called for the purpose. SECTION 6. Place of Meeting. The Board of Directors shall hold its ---------------- meetings at such places within or without the State of West Virginia as it may decide. SECTION 7. Regular Meetings; Notice. The Board of Directors by ------------------------ resolution may establish regular periodic meetings and notice of such meetings need not be given. SECTION 8. Special Meetings. Special meetings of the Board of ---------------- Directors shall be called by the Secretary or an Assistant Secretary whenever ordered by the Board of Directors or requested in writing by the President or any two other directors. Such meetings shall be held at the principal office of the corporation unless the Board of Directors, by its order calling a special meeting, shall fix a different place for such meeting. Notice of each special meeting shall be mailed to each director, 4 addressed to his residence or usual place of business, at least four days before the day on which the meeting is to be held, or shall be sent to such address by telegraph, or be given personally or by telephone, not later than two days before the day on which the meeting is to be held. Notice of any meeting may be waived in writing by any director before, at or after the meeting. SECTION 9. Quorum and Manner of Acting. A majority of the members of --------------------------- the Board of Directors then in office shall constitute a quorum for the transaction of any business at any meeting of the Board of Directors and, except as herein otherwise provided, the act of a majority of those present at the meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum of the Board of Directors a majority of the members present may adjourn the meeting from time to time until a quorum be had, and no notice of any such adjournment need be given. SECTION 10. Fees. The Board of Directors may from time to time ---- prescribe reasonable fees for attendance by members of the Board of Directors and members of the Executive Committee and other committees, and for reimbursement for travel and other expenses incidental to such attendance. ARTICLE III EXECUTIVE AND OTHER COMMITTEES SECTION 1. How Constituted and the Powers Thereof. The Board of -------------------------------------- Directors by the vote of a majority of the entire Board, may designate three or more directors to constitute an Executive Committee, who shall serve during the pleasure of the Board of Directors. Except as otherwise provided by law, by these by-laws or by resolution adopted by a majority of the whole Board of Directors, the Executive Committee shall possess and may exercise during the intervals between the meetings of the directors, all of the powers of the Board of Directors in the management of the business, affairs and property of the corporation, including the power to cause the seal of the corporation to be affixed to all papers that may require it. SECTION 2. Organization, etc. The Executive Committee shall choose ----------------- its own Chairman and its Secretary and may adopt rules for its procedure. The Committee shall keep a record of its acts and proceedings and report the same from time to time to the Board of Directors. SECTION 3. Meetings. Meetings of the Executive Committee may be -------- called by the Chairman of the Committee, and shall be called by him at the request of any member of the Committee, or by any member if there shall be no Chairman. Notice of each meeting of the Committee shall be sent to each 5 member of the Committee by mail at least two days before the meeting is to be held, or given personally or by telegraph or telephone at least one day before the day on which the meeting is to be held. Notice of any meeting may be waived before, at or after the meeting. SECTION 4. Quorum and Manner of Acting. A majority of the Executive --------------------------- Committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at the meeting at which a quorum is present shall be the act of the Executive Committee. SECTION 5. Removal. Any member of the Executive Committee may be ------- removed, with or without cause, at any time, by the Board of Directors. SECTION 6. Vacancies. Any vacancy in the Executive Committee shall --------- be filled by the Board of Directors. SECTION 7. Other Committees. The Board of Directors of the Executive ---------------- Committee may by resolution provide for such other standing or special committees as it deems desirable, and discontinue the same at pleasure. Each Committee shall have such powers and perform such duties, not inconsistent with law, as may be assigned to it by the Board of Directors or by the Executive Committee. ARTICLE IV OFFICES AND OFFICERS SECTION 1. Officers--Number. The officers of the Corporation shall ---------------- be the Chairman, the President, one or more Vice-Presidents as the Board of Directors or Executive Committee may determine, a Treasurer and a Secretary. The Board of Directors or Executive Committee may from time to time appoint one or more Assistant Secretaries and Assistant Treasurers. The same person may hold any two or more offices except those of President and Vice-President. No officer except the President need be a member of the Board of Directors. SECTION 2. Salaries. The Board of Directors or Executive Committee -------- may from time to time fix the salary of the President, as well as the salaries of other officers of the corporation. SECTION 3. Election, Term of Office and Qualification. All officers ------------------------------------------ of the corporation shall be elected annually (unless otherwise specified at the time of election) by the Board of Directors or Executive Committee and each officer shall hold office until his successor shall have been duly chosen and shall have qualified. 6 SECTION 4. Vacancies. If any vacancy shall occur in any office of --------- the corporation, such vacancy shall be filled by the Board of Directors or by the Executive Committee. SECTION 5. Other Officers, Agents and Employees. The Board of ------------------------------------ Directors or the Executive Committee may from time to time appoint such other officers, agents and employees of the corporation as may be deemed proper, and may authorize any officer to appoint and remove agents and employees. The Board of Directors or the Executive Committee or the President may from time to time prescribe the powers and duties of such officers, agents and employees of the corporation in the management of its property, affairs and business. SECTION 6. Removal. Any officer of the corporation may be removed, ------- either with or without cause, by vote of a majority of the Board of Directors or of the Executive Committee, or, in the case of any officer, agent or employee not elected by the Board of Directors or the Executive Committee, by any committee or superior officer upon such power of removal may be conferred by the Board of Directors or by the Executive Committee. SECTION 7. Chairman. The Chairman shall preside at all meetings of -------- the stockholders and of the Board of Directors, and shall perform such other duties as shall be delegated to him at any time or from time to time by the Board of Directors. SECTION 8. President. The President shall be the chief executive --------- officer of the corporation and shall have general direction of its business, affairs and property and over its several officers. He shall see that all orders and resolutions of the Board of Directors and of the Executive Committee are carried into effect, and he shall have the power to execute in the name of the corporation all authorized deeds, mortgages, ship mortgages, bonds, contracts or other instruments, except in cases in which the signing and execution thereof shall have been expressly delegated to some other officer or agent of the corporation; and in general, he shall perform all duties incident to the office of a president of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors or by the Executive Committee. He shall be ex officio a member of all committees. He shall from time to time report to the Board of Directors or to the Executive Committee all matters within his knowledge which the interest of the corporation may require to be brought to their notice. SECTION 9. Vice-Presidents. The Vice-President or Vice-Presidents of --------------- the corporation, under the direction of the President, shall have such powers and perform such duties as the Board of Directors or Executive Committee or President may from time to time prescribe, and shall perform such other duties as may be prescribed in these by-laws. In case of the absence or inability of the President to act, then the Vice-Presidents, in 7 the order designated therefor by the Board of Directors or Executive Committee, shall have the powers and discharge the duties of the President. SECTION 10. Treasurer. The Treasurer, under the direction of the --------- President, shall have charge of the funds, securities, receipts and disbursements of the corporation. He shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such banks or trust companies or with such other depositories as the Board of Directors or Executive Committee may from time to time designate. He shall supervise and have charge of keeping correct books of account of all the corporation's business and transactions. If required by the Board of Directors, he shall give a bond in such sum as the Board of Directors or Executive Committee may designate, conditioned upon the faithful performance of the duties of his office and the restoration to the corporation, at the expiration of his term of office, or in case of his death, resignation or removal from office, of all books, papers, vouchers, money or other property of whatever kind in his possession belonging to the corporation. He shall also have such other powers and perform such other duties as pertain to his office, or as the Board of Directors or the Executive Committee or the President may from time to time prescribe. SECTION 11. Assistant Treasurers. In the absence or disability of -------------------- the Treasurer, the Assistant Treasurers, in the order designated by the Board of Directors or by the Executive Committee, shall perform the duties of the Treasurer, and, when so acting, shall have all the powers of, and be subject to all restrictions upon, the Treasurer. They shall also perform such other duties as from time to time may be assigned to them by the Board of Directors or by the Executive Committee or the President. SECTION 12. Secretary. The Secretary shall attend all meetings of --------- the stockholders of the corporation and of its Board of Directors and shall keep the minutes of all such meetings in a book or books kept by him for that purpose. He shall keep in safe custody the seal of the corporation, and, when authorized by the Board of Directors or the Executive Committee, he shall affix such seal to any instrument requiring it. In the absence of a Transfer Agent or a Registrar, the Secretary shall have charge of the stock certificate books, and the Secretary shall have charge of such other books and papers as the Board of Directors or Executive Committee may direct. He shall also have such other powers and perform such other duties as pertain to his office, or as the Board of Directors or the Executive Committee or the President may from time to time prescribe. SECTION 13. Assistant Secretaries. In the absence or disability of --------------------- the Secretary, the Assistant Secretaries, in the order designated by the Board of Directors or Executive Committee, shall perform the duties of the Secretary, and, when 8 so acting, shall have all the powers of, and be subject to all the restrictions upon, the Secretary. They shall also perform such other duties as from time to time may be assigned to them by the Board of Directors or Executive Committee or the President. ARTICLE V CHECKS, DRAFTS, ETC. All checks, drafts or orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents, person or persons, to whom the Board of Directors or Executive Committee shall have delegated the power, but under such conditions and restrictions as in said resolutions may be imposed. The signature of any officer upon any of the foregoing instruments may be a facsimile whenever authorized by the Board of Directors or by the Executive Committee. ARTICLE VI SHARES AND THEIR TRANSFER SECTION 1. Issue of Certificates of Stock. The Board of Directors or ------------------------------ Executive Committee shall provide for the issue and transfer of the certificates of capital stock of the corporation, and prescribe the form of such certificates. Every owner of stock of the corporation shall be entitled to a certificate of stock, which shall be under the seal of the corporation (which seal may be a facsimile, engraved or printed), specifying the number of shares owned by him, and which certificate shall be signed by the President or Vice- President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the corporation. Said signatures may, wherever permitted by law, be facsimile, engraved or printed. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on any such certificate or certificates shall cease to be such officer or officers of the corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers of the corporation. SECTION 2. Transfer Agents and Registrars. The corporation may have ------------------------------ one or more Transfer Agents and one or more Registrars of its stock, whose respective duties the Board of Directors may, from time to time, prescribe. If the corporation shall have a Transfer Agent, no certificate of stock shall be 9 valid until countersigned by such Transfer Agent, and if the corporation shall have a Registrar, until registered by the Registrar. The duties of the Transfer Agent and Registrar may be combined. SECTION 3. Transfer of Shares. The shares of the corporation shall ------------------ be transferable only upon its books and by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock transfer books and ledgers or to such other person as the Directors may designate for such purpose, and new certificates shall thereupon be issued. SECTION 4. Addresses of Stockholders. Every stockholder shall ------------------------- furnish the Transfer Agent, or in the absence of a Transfer Agent, the Registrar, or in the absence of a Transfer Agent and a Registrar, the Secretary, with an address at or to which notices of meetings and all other notices may be served upon or mailed to him, and in default thereof, notices may be addressed to him at the office of the corporation. SECTION 5. Closing of Transfer Books: Record Date. The Board of -------------------------------------- Directors shall have power to close the stock transfer books of the corporation for a period not exceeding forty (40) days and not less than ten (10) days prior to the date of any meeting of stockholders; provided, however, that in lieu of closing the stock transfer books as aforesaid the Board of Directors may fix a date not exceeding forty (40) days and not less than ten (10) days prior to the date of any such meeting as the time as of which stockholders entitled to notice of and to vote at such meeting shall be determined, and all persons who were holders of record of voting stock at such time and no others shall be entitled to notice of and to vote at such meeting. The Board of Directors shall also have power to close the stock transfer books of the corporation for a period not exceeding forty (40) days preceding the date fixed for the payment of any dividend or the making of any distribution or for the delivery of any evidence of right or evidence of interest; provided, however, that in lieu of closing the stock transfer books as aforesaid the Board of Directors may fix a date not exceeding forty (40) days preceding the date fixed for the payment of any such dividend or the making of any such distribution or for the delivery of any such evidence of right or interest as a record time for the determination of the stockholder entitled to receive any such dividend, distribution, right or interest, and in such case only stockholders of record at the time so fixed shall be entitled to receive such dividend, distribution, right or interest. SECTION 6. Lost and Destroyed Certificates. The Board of Directors ------------------------------- or Executive Committee may direct a new certificate 10 or certificates of stock to be issued in the place of any certificate or certificates theretofore issued and alleged to have been lost or destroyed; by the Board of Directors or Executive Committee when authorizing such issue of a new certificate or certificates, may in its discretion require the owner of the stock represented by the certificate so lost or destroyed or his legal representative to furnish proof by affidavit or otherwise to the satisfaction of the Board of Directors or Executive Committee of the ownership of the stock represented by such certificate alleged to have been lost or destroyed and the facts which tend to prove its loss or destruction. The Board of Directors or Executive Committee may also require such person to execute and deliver to the corporation a bond, with or without sureties, in such sum as the Board of Directors or Executive Committee may direct, indemnifying the corporation against any claim that may be made against it by reason of the issue of such new certificate. The Board of Directors or Executive Committee, however, may, in its discretion, refuse to issue any such new certificate, except pursuant to court order. ARTICLE VII SEAL The corporate seal of the corporation shall be in such form as shall be from time to time approved by the Board of Directors. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced. ARTICLE VIII MISCELLANEOUS SECTION 1. Examination of Books and Records. The Board of Directors -------------------------------- or Executive Committee may determine from time to time whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the corporation, or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the corporation, except as provided by the statutes of the State of West Virginia, or authorized by the Board of Directors or Executive Committee. SECTION 2. Voting of Stock in Other Corporations. Any shares of ------------------------------------- stock in any other corporation, which may from time to time be held by the corporation, may be represented and voted at any of the stockholders' meetings thereof by the President or a Vice-President of the corporation or by proxy appointed by the President or one of the Vice-Presidents of the corporation. The Board of Directors or Executive Committee, however, may by 11 resolution appoint any other person or persons to vote such shares, in which case such other person or persons shall be entitled to vote such shares upon the production of a certified copy of such resolution. SECTION 3. Fiscal Year. The fiscal year of the corporation shall ----------- begin on the first day of January in each year. ARTICLE IX INDEMNIFICATION Any person made a party to any action, suit or proceeding by reason of the fact that he, his testator or intestate, is or was a director, officer or employee of the corporation or of any corporation which he served as such at the request of the corporation, shall be indemnified by the corporation against the reasonable expenses, including attorney's fees, actually and necessarily incurred by him in connection with the defense of such action, suit, proceeding, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties; provided, however, that if any such amount is paid otherwise than pursuant to court order of action by the stockholders, the corporation shall within eighteen (18) months from the date of such payment mail to its stockholders at the time entitled to vote for the election of directors a statement specifying the person paid, the amount of the payment and the final disposition of the litigation. Except provided by law, every such person shall be entitled, without demand by him upon the corporation, or any action by the corporation, to enforce the right of indemnification or reimbursement hereinabove provided in an action at law against the corporation. The right of indemnification or reimbursement hereinabove provided or under any applicable statutes shall not be deemed exclusive of any other right to which any such person may now or hereafter be otherwise entitled. ARTICLE X AMENDMENTS SECTION 1. By Stockholders. These by-laws may be made, amended, --------------- altered or repealed, by the affirmative vote of the holders of a majority of the stock of the corporation, or their proxies, who shall be present and entitled to vote at any annual or special meeting of stockholders, provided that notice of the proposed amendment, alteration or repeal shall have been included in the notice of the meeting. 12 SECTION 2. By Directors. The Board of Directors shall have the ------------ power, by a vote of a majority of the Directors then in office, at a meeting upon waiver of notice or called pursuant to a notice in which any such proposed modification of the by-laws is set forth, to make, amend, alter or repeal these by-laws except that the Board of Directors shall have no power to alter, amend, or repeal a by-law adopted by the stockholders subsequent to any original adoption of these by-laws by the stockholders. * * * * * * * * * * EX-3.103 103 CERT OF FORMATION OF THOROUGHBRED, L.L.C. EXHIBIT 3.103 CERTIFICATE OF FORMATION OF THOROUGHBRED, L.L.C. 1. The name of the limited liability company is THOROUGHBRED, L.L.C. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The latest date on which the limited liability company is to dissolve is June 30, 2024. IN WITNESS WHEREOF, the undersigned have executed this Certificate of Formation of this 15th day of August, 1994. /s/ James C. Seven --------------------------------------------- James C. Sevem - Secretary --------------------------------------------- EX-3.104 104 OPERATING AGMT OF THOROUGHBRED, L.L.C. EXHIBIT 3.104 OPERATING AGREEMENT OF THOROUGHBRED, L.L.C THE INTERESTS REPRESENTED BY THIS OPERATING AGREEMENT HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER STATE SECURITIES LAW. WITHOUT REGISTRATION, THE INTERESTS MAY NOT BE TRANSFERRED, EXCEPT UPON DELIVERY TO THE LIMITED LIABILITY COMPANY OF ADVANCE NOTICE OF THE INTENDED TRANSFER AND, IF REQUESTED BY THE AUTHORIZED PERSON, AN OPINION OF COUNSEL SATISFACTORY TO THE AUTHORIZED PERSON THAT NEITHER THE SECURITIES ACT OF 1933, AS AMENDED, NOR STATE SECURITIES LAWS REQUIRE REGISTRATION OF THE TRANSFER AND THAT THE TRANSFER WILL NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. TABLE OF CONTENTS
Page ---- ARTICLE 1 -- ORGANIZATION.................................................. 1 1.1 Organization of the Company................................... 1 1.2 Name.......................................................... 1 1.3 Principal Office.............................................. 1 1.4 Term.......................................................... 1 1.5 Purpose....................................................... 1 1.6 Title to Company Assets....................................... 1 1.7 Registered Agent and Registered Office........................ 1 ARTICLE 2 -- CAPITAL CONTRIBUTIONS......................................... 1 2.1 Member Contributions.......................................... 1 2.2 Initial Capital Contribution.................................. 2 2.3 Additional Capital Contributions.............................. 2 2.4 Return of Distributions....................................... 2 2.5 No Priority................................................... 2 2.6 No Third Party Beneficiaries.................................. 2 ARTICLE 3 -- MANAGEMENT.................................................... 2 3.1 Management Vested in Members and Not in Managers.............. 2 3.2 Authorized Persons............................................ 2 3.3 Management of Company Business................................ 3 3.4 Compensation.................................................. 3 3.5 No Liability.................................................. 4 3.6 Indemnification............................................... 4 ARTICLE 4 -- RIGHTS AND DUTIES OF MEMBERS.................................. 4 4.1 Representation and Warranties................................. 4 4.2 Interests Not Registered Under the Securities Laws............ 4 4.3 Approval Rights............................................... 4 4.4 Admission of Additional Members............................... 5 4.5 Expulsion..................................................... 6 4.6 Restrictions.................................................. 6 4.7 Rights of an Assignee......................................... 6 4.8 Voluntary Withdrawal of a Member.............................. 6 ARTICLE 5 -- MEETINGS: APPROVALS WITHOUT A MEETING......................... 7 ARTICLE 6 -- OTHER BUSINESS VENTURES....................................... 7
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Page ---- ARTICLE 7 -- RECORDS, ACCOUNTING, TAX MATTERS............................. 7 7.1 Books and Records of Account................................. 7 7.2 Data Storage................................................. 8 7.3 Filing of Tax Reports........................................ 8 7.4 Tax Matters Partner.......................................... 8 7.5 Fiscal and Tax Year.......................................... 9 7.6 Accounts..................................................... 9 7.7 Tax Status................................................... 9 ARTICLE 8 -- DISTRIBUTION AND ALLOCATION RULES............................ 9 8.1 Cash Available for Distribution.............................. 9 8.2 Cash from Sales or Refinancing............................... 9 8.3 Allocations of Income, Gain, and Profit...................... 10 8.4 Allocations of Loss and Deduction............................ 10 8.5 Tax Regulation Allocations................................... 10 8.6 Curative Allocations......................................... 11 ARTICLE 9 -- DISSOLUTION. LIQUIDATION AND WINDING UP...................... 12 9.1 Dissolution and Winding Up................................... 12 9.2 Liquidating Trustee.......................................... 12 9.3 Liquidation and Termination.................................. 12 ARTICLE 10 -- GENERAL..................................................... 13 10.1 Amendment.................................................... 13 10.2 Benefit...................................................... 13 10.3 Computation of Time.......................................... 13 10.4 Construction................................................. 13 10.5 Entire Agreement............................................. 14 10.6 Equitable Relief............................................. 14 10.7 Execution.................................................... 14 10.8 Exhibits..................................................... 14 10.9 Expenses of Prevailing Party................................. 14 10.10 Further Assurances........................................... 14 10.11 Invalidity of Provisions..................................... 14 10.12 No Waiver.................................................... 15 10.13 Notices...................................................... 15 ARTICLE 11 -- DEFINITIONS................................................. 15 EXHIBIT A -- CAPITAL CONTRIBUTIONS........................................ 21
ii OPERATING AGREEMENT The Members enter this Agreement as of the Effective Date. The Members mutually agree as follows: ARTICLE 1-- ORGANIZATION ------------------------ 1.1 Organization of the Company. The Members organize the Company as --------------------------- a limited liability company under the Act and desire that the Company continue to qualify as a limited liability company. The Authorized Person will file or cause to be filed Articles of Organization and all necessary conforming documents and perform such other filing, recording, publishing and other acts as are necessary to comply with all requirements for the formation and operation of a limited liability company in Delaware and all other jurisdictions where the Company desires to conduct its business. 1.2 Name. The name of the Company is "Thoroughbred, L.L.C." ---- 1.3 Principal Office. The Company will locate its principal office at ---------------- 701 Market Street, Suite 815, St. Louis, MO 63101-1826, or such other place designated by the Authorized Person. 1.4 Term. The existence of the Company began on the Effective Date ---- and will end thirty (30) years later unless terminated earlier under this Agreement. 1.5 Purpose. The Company is organized for the following purposes: any ------- lawful business for which a limited liability company may be organized under the Act. 1.6 Title to Company Assets. The Company will hold title to assets in ----------------------- the name of the Company or such nominees as the Authorized Person determines appropriate. 1.7 Registered Agent and Registered Office. The initial registered -------------------------------------- agent for the Company has the following name and Delaware address: Corporation Trust Company, 1209 Orange Street, Wilmington (County of New Castle), Delaware. The registered agent will send copies of any notices received on behalf of the Company to each Member. ARTICLE 2 -- CAPITAL CONTRIBUTIONS ---------------------------------- 2.1 Member Contributions. Each Member will make an initial Capital -------------------- Contribution of money and/or other property as of the Effective Date in the amounts and form listed by the Member's name in Exhibit A. 2 2.2 Initial Capital Contribution. If a Member fails to make their ---------------------------- initial Capital Contribution on a timely basis, then the Member's Proportionate Share will be adjusted to reflect such failure. 2.3 Additional Capital Contributions. The Members have not agreed to -------------------------------- make any additional Capital Contributions but the Members may make additional contributions and/or loans to the Company at such time and on such conditions as all of the Members may agree. 2.4 Return of Distributions. If a Member has received the return, by ----------------------- cash distribution or otherwise, of the whole or part of such Member's capital, the Member will remain liable to the Company, to the extent provided under the Act, for any sums (not in excess of the capital so returned) necessary to discharge the Company's liabilities to all creditors who extended credit or whose claims arose before such return. 2.5 No Priority. Except as specifically provided in this Agreement, ----------- no Member may either demand a distribution from the Company or have the right to withdraw from the Company or to demand the return of any Capital Contribution or have priority over any other Member either as to the return of any Capital Contribution or as to distributions. 2.6 No Third Party Beneficiaries. The contribution obligation of the ---------------------------- Members under this Article is not intended to create any obligation to third party beneficiaries. No creditor may rely on that obligation unless the Member against whom the obligation is asserted has expressly agreed in writing that the creditor may do so. ARTICLE 3 -- MANAGEMENT ----------------------- 3.1 Management Vested in Members and Not in Managers. Management of ------------------------------------------------ the Company is vested in the Members and not in one or more managers. Upon the approval of the Members as provided by Section 4.3, the Company may change its status from a limited liability company in which management is vested in the members to one in which management is vested in one or more managers, or vice versa. 3.2 Authorized Persons. ------------------ (a) All Members will be Authorized Persons if management of the Company is vested in the Members, and, if management is vested in one or more managers, all Managers will be Authorized Persons. The Members intend Section 10.4 to apply to each reference to Authorized Person. If the Company has more than one Authorized Person, each reference to decisions or actions of the Authorized Person will require the agreement of either a Majority-in-interest of the Members, if management is vested in the Members, or a Majority-in-Number of the Managers, if management is vested in Managers. The Authorized Person will devote such time and 3 attention to the Company as such Authorized Person deems reasonable necessary and advisable to manage the affairs of the Company to its best advantage. (b) The following offices shall be established, the incumbents of which shall be Authorized Persons and serve at the pleasure and upon the approval of the Majority-in-Interest Member, if the management is vested in the members, or the majority-in-number of the Managers, if the management is vested in Managers: The General Manager, Secretary, Treasurer, Assistant Treasurer, Assistant Secretary and various other offices which may be established from time to time by Members. 3.3 Management of Company Business. Subject to the Approval Rights of ------------------------------ the Members as provided by Section 4.3, the Authorized Person will have the power, on behalf of the Company, to do all things necessary or convenient to carry out the business and affairs of the Company, including the following: (a) to transfer or acquire property or the use of property; (b) to enter into contracts and guaranties; (c) to borrow money and to issue notes, bonds, and other obligations and to secure any of the same by mortgage or pledge of Company property or income; (d) to lend money, to invest and reinvest the Company's funds, and to receive and hold property as security for repayment; (e) to open bank accounts and designate the number and identity of the individuals authorized to write checks and make withdrawals of funds; (f) to hire employees and appoint agents of the Company; (g) to pay, collect, compromise, arbitrate, prosecute or defend legal action with respect to, or otherwise adjust, claims or demands of or against the Company; (h) to indemnify any person; (i) to participate in partnership agreements, joint ventures, or other associations of any kind with any person or persons; and (j) to execute, acknowledge and deliver any and all instruments appropriate to the foregoing, and to apply Company assets. 3.4 Compensation. The Authorized Person will receive no compensation ------------ without the approval of the Members as provided by Section 4.3 other than reasonable expenses incurred in managing the Company. 3.5 No Liability. Unless specifically assumed in writing, no Member ------------ or Manager will have personal liability for the liabilities of the Company. The failure of 4 the Company to observe any formalities or requirements relating to the exercise of its powers or management of its business or affairs under this Agreement or the Act will not result in the imposition of personal liability on any Member or Manager. The Authorized Person will have no liability to any member resulting from the disallowance or adjustment of any deductions or credits in the income tax returns of the Company or the Members. 3.6 Indemnification. The company will indemnify and hold harmless the --------------- Authorized Person from and against any loss, expense, damage, or injury suffered or sustained by any of them by reason of any acts, errors in judgment, omissions, or alleged acts or omissions related to the business of the Company, including any judgment, award, settlement, reasonable legal fees, and other costs and expenses related to the defense of any actual or threatened action, proceeding, or claim and including any payments made by the Authorized Person, or by reason of any disallowance by any taxing authority of any deduction taken on any Company tax return, provided such acts, errors in judgment, omissions, or alleged acts or omissions upon which such actual or threatened actions, proceedings, or claims are based were in good faith, for a purpose reasonably believed to be in the best interests of the Company and were not performed or omitted as a result of fraud, gross negligence, or willful misconduct of the Authorized Person. ARTICLE 4 -- RIGHTS AND DUTIES OF MEMBERS ----------------------------------------- 4.1 Representation and Warranties. Each Member, and in the case of an ----------------------------- organization, the person executing the Agreement on behalf of the organization, represents and warrants to the Company and each other Member as follows: (a) if that Member is an organization, that it is duly organized, validly existing, and in good standing under the law of the jurisdiction of its organization and that it has full power to execute the agreement and agrees to perform its obligations under the Agreement; and (b) that the Member is acquiring its Interest for its own account as an investment and without an intent to distribute the interest. 4.2 Interests Not Registered Under the Securities Laws. Each Member -------------------------------------------------- acknowledges that the Interests have not been registered under the Securities Laws and may not be Transferred by the Member without appropriate registration or the availability of an exemption from such requirements. 4.3 Approval Rights. Each Member will have Approval Rights. --------------- (a) Actions which require the approval of a Majority-in-interest of the Members will include the following: (i) a Capital Event; 5 (ii) the designation of the liquidating trustee in a dissolution and winding up of the Company; (iii) the change of the Company's status from member-managed to manager-managed and vice versa; or (iv) if the Company is manager-managed, the addition, replacement or removal of a Manager. (b) Actions which require the approval of all Members will include the following: (i) the admission of a new Member; (ii) any additional mandatory Capital Contributions; (iii) the expulsion of a Member; (iv) a voluntary withdrawal of a Member; (v) any of the approvals described in paragraph (d) of the definition for Event of Withdrawal; (vi) a voluntary dissolution of the Company; (vii) a merger or consolidation with another person; (viii) authorization for any transaction, agreement or action unrelated to the Company's purpose as set forth in the Articles of Organization, that otherwise contravenes this Agreement; (ix) the continuation of the Company after an Event of Withdrawal; or (x) any amendment to this Agreement. Unless otherwise required by this Agreement or by law, a Majority-in- interest of the Members may approve any other matter submitted for the approval of the Members. 4.4 Admission of Additional Members. Upon the approval of the Members ------------------------------- as provided by Section 4.3, the Company may admit new Members and determine the Capital Contributions for such new Members. The person so admitted will become a Member after making any required Capital Contribution and after signing this Agreement. 4.5 Expulsion. Upon approval as provided by Section 4.3, the other --------- Members may expel a Member who commits fraud, gross negligence, or willful 6 misconduct having a material adverse affect on the Company or on any of the other Members. 4.6 Restrictions. No Member will Transfer in whole or in part any ------------ Interest to an Assignee until the Company receives from the proposed Assignee such information and agreements that the Company may reasonably require, including any taxpayer identification number and any agreement that federal, state or local tax laws may require and the proposed Assignee's written agreement to be bound by all of the terms of the Agreement as an Assignee, and, if admitted as a Member, as a Member. Unless a Transfer occurs by reason of or incident to the death, dissolution, divorce, liquidation, merger or termination of the transferor Member and the transferee is a Permitted Assignee, no Member will Transfer in whole or part any Interest to an Assignee until the Company receives an opinion of Counsel to the Company that any such Transfer, alone or when combined with other transactions, would not result in a termination of the Company within the meaning of Code Section 708 (or if so that no material adverse tax consequences would result to the Company or the Members by reason of such termination), the Company's losing its status as a partnership for income tax purposes or the taxation of the Company as a publicly-traded partnership for income tax purposes. An attempted Transfer in violation of this Section is void. 4.7 Rights of an Assignee. Unless and until admitted as a Member --------------------- under Section 4.4, an Assignee (including a permitted Assignee) will have no Approval Rights ( or Management Rights, if management is vested in the Members). An Assignee that has not become a Member will receive, to the extent assigned, the share of distributions and profits, including distributions representing the return of contributions, to which the assignor would otherwise be entitled with respect to the assigned interest. 4.8 Voluntary Withdrawal of a Member. A Member may only voluntarily -------------------------------- withdraw from the Company upon giving ninety (90) days' prior written notice of withdrawal to the other Members. If the withdrawing Member fails to receive the written approval of all Members as provided by Section 4.3(b), then such voluntary withdrawal will violate this Agreement for the purposes of the Act. After such voluntary withdrawal, the withdrawn Member will have the rights of an Assignee under Section 4.7. If the Company dissolves and winds up its business and affairs as a result of a voluntary withdrawal not approved by all Members, the Company may reduce any distributions to which such Member would be otherwise entitled by the damages sustained by the Company as a result of such dissolution and winding up. If the Company continues its business and affairs after a voluntary withdrawal not approved by all Members, the Company will within a reasonable time make a distribution to the withdrawn Member in an amount equal to fifty percent (50%) of the fair market value of the withdrawn Member's Interest as of the date of withdrawal as calculated by the Company in its reasonable discretion. In making distributions under the preceding sentence, the following rules will apply: (a) the Company will exclude the value of goodwill in determining fair market value; (b) the Company may reduce the amount payable to the withdrawn Member by any damages suffered as a result of the voluntary withdrawal; and (c) the Company may defer distributions to the 7 withdrawn Member until such time as making them will not result in unreasonable hardship to the Company. ARTICLE 5 -- MEETINGS: APPROVALS WITHOUT A MEETING -------------------------------------------------- The Authorized Person's or the Members may take any action or vote at a meeting at the Company's principal of lice after ten (10) days' prior written notice to all the Authorized Persons or Members eligible to attend, as appropriate, given by a Majority-in-Number of the Authorized Persons or Members eligible to attend, or without a meeting if the Authorized Persons or Members otherwise required to act or approve the action to make it effective sign a written approval of the action so taken (eg., the Company may taken any action requiring the approval of a Majority-in-Interest of the Members by a written approval of a Majority-in-interest of the Members and without unanimous written approval). Any action required or permitted to be taken at any meeting of the Members may be taken without a meeting if the Majority-in-Interest Member consents thereto in writing, and the writing or writings are filed with the minutes of the proceedings of the Member. ARTICLE 6 -- OTHER BUSINESS VENTURES ------------------------------------ Any Member, Authorized Person, or Manager may engage in or possess an interest in other business ventures of every nature and description, independently or with others, and neither the Company nor any of the Members, Authorized Persons, or Managers will have any right by virtue of this Agreement in or to such independent ventures or to the income or profits derived therefrom. ARTICLE 7 -- RECORDS, ACCOUNTING, TAX MATTERS --------------------------------------------- 7.1 Books and Records of Account. Authorized Person will keep proper ---------------------------- and complete records and books of account in which it will records all transactions and other matters relative to the Company's business in accordance with generally accepted accounting principles, consistently applied, or in accordance with such other accounting method customarily used by businesses similar to the Company. As required by the Act, the Company will keep at its principal place of business the following: (a) a current and a past list, setting forth the full name and last known mailing address of each Member and Manager, if any, in alphabetical order; (b) a copy of the Articles of Organization and all articles of amendment thereto, together with executed copies of any powers of attorney pursuant to which any articles have been executed; (c) copies of Company's federal, state and local income tax returns and reports, if any, for the three (3) most recent years or, if such returns and reports were not prepared for any reason, copies of the information and records provided to, or 8 which should have been provided to, the Members to enable them to prepare their federal, state and local tax returns for such period; (d) copies of this Agreement, and all amendments thereto, and copies of any written operating agreements no longer in effect; (e) copies of any financial statements of the Company for the three (3) most recent years; (f) copies of any written promise by a Member to make a Contribution to the Company; (g) copies of any written approvals by the Members to the admission of any person as a Member; (h) copies of any written approvals by the Members to continue the Company upon an Event of Withdrawal; (i) copies of any other instruments or documents reflecting matters required to be in writing pursuant to this Agreement; and (j) any other records required by the Act. 7.2 Data Storage. The Company may compile the data for any books, ------------ accounts, or records required by this Agreement in any form (including in electronic media) from which a person may retrieve such information into a readily usable form. 7.3 Filing of Tax Reports. The Authorized Person will submit to the --------------------- official or agency administering the tax laws of any applicable jurisdiction any information, reports or other documents required or requested to be filed, as and when due. The Company will bear the cost of preparing such information, reports or other documents. Within seventy-five (75) days after the close of each taxable year of the Company, the Authorized Person prepare or cause to be prepared and delivered to each Member a report containing all Company information necessary to prepare such Member's federal income tax returns. 7.4 Tax Matters Partner. PHCI shall be the Tax Matters Partner of the ------------------- partnership within the meaning of Code Section 6231 (a)(7). The Tax Matters Partner may (a) represent the Company and its Members before federal, state, and local taxing authorities, and before courts of competent jurisdiction, in tax matters affecting the Company, the Members in their capacity as members, or both, or (b) execute agreements or other documents relating to or affecting such tax matters including (i) agreements or consents to extend the period of limitations on assessment of deficiencies with respect to "partnership items" or "affected items," as such terms are defined in Code Section 6231, and (ii) other agreements or documents that bind the Members with respect to such tax matters or otherwise affect the rights of the Company, the Members, or both. The Tax Matters Partner will have the sole right, in 9 its discretion, to make any election for the Company permitted by the Code; provided that any Member or Assignee may unilaterally require the Company to make a Code Section 754 election if such Member or Assignee agrees to pay all expenses incurred in connection with such election. The Tax Matters Partner may retain accountants, attorneys, and other professionals to assist him in such matters. The Company will pay for or reimburse the Tax Makers Partner for all expenses incurred in performing the duties described in this Section. 7.5 Fiscal and Tax Year. The fiscal and taxable year of the Company ------------------- will end on the 30th day of September. 7.6 Accounts. The Company will deposit its funds in such bank account -------- or accounts, or invested in such interest-bearing investments established and maintained in the name of the Company only, as designated by the Authorized Person. Only the Authorized Person or agents of the Authorized Person may make a withdrawal from any account or investment. The Authorized Person will not commingle Company funds with those of any other person. 7.7 Tax Status. Solely for income tax purposes, the Company will be ---------- subject to all provisions of Subchapter K of Chapter 1 of Subtitle A of the Code; provided, however, the filing of partnership tax returns with any jurisdiction will not be construed to expand the obligations or liabilities of the Company or its Members. No Member will take any action that would cause the Company to be excluded from the application of any provision of Subchapter K of Chapter 1 of Subtitle A of the Code, or any similar provision of any state tax laws. The Members intend this Agreement to be construed as appropriate to classify the Company as a partnership for tax purposes. The Members expressly do not intend of form a partnership under the Uniform Partnership Law or the Uniform Limited Partnership Act. The Members do not intend to be partners one to another, or partners as to any third party. ARTICLE 8 -- DISTRIBUTION AND ALLOCATION RULES ---------------------------------------------- 8.1 Cash Available for Distribution. Except as otherwise provided in ------------------------------- Section 9.3, at such times as the Authorized Person will designate, the Company will distribute Cash Available for Distribution in accordance with the Members' respective Proportionate Shares. 8.2 Cash from Sales or Refinancing. Except as otherwise provided in ------------------------------ Section 9.3, at such times as the Authorized Person designates, the Company will distribute Cash from Sales or Refinancing in accordance with Members' respective Proportionate Shares. 8.3 Allocations of Income, Gain, and Profit. After making the Tax --------------------------------------- Regulation Allocations, the Company will allocate Company net taxable income, including each item of Company income, gain, and profit required to be separately stated under Code Section 702, in accordance with the Members' respective Proportionate Shares. 10 8.4 Allocations of Loss and Deduction. After making the Tax --------------------------------- Regulation Allocations, the Company will allocate Company net taxable loss, including each item of Company loss and deduction required to be separately stated under Code Section 702, in accordance with the Members' respective Proportionate Shares. 8.5 Tax Regulation Allocations. The Company will make the following -------------------------- allocations in the following order: (a) Company Minimum Gain Chargeback. If Company Minimum Gain has ------------------------------- a net decrease during any Company taxable year, the Company will allocate items of income and gain for such year (and, if necessary, for subsequent years) to each Member in the amounts required by Regulations Sections 1.704-2(f) and 1.704-2(g)(2). (b) Member Nonrecourse Debt Minimum Gain Chargeback. If Member ----------------------------------------------- Nonrecourse Debt Minimum Gain has a net decrease during any Company taxable year, the Company will allocate items of income and gain for such year (and, if necessary, for subsequent years) to each Member who has a share of the Member Nonrecourse Debt Minimum Gain as determined in accordance with Regulations Section 1.704-2(i). (c) Qualified Income Offset. If a Member unexpectedly receives an ----------------------- adjustment, allocation, or distribution described in Regulations Sections 1.704-l(b)(2)(ii)(d)(4), (5), or (6), the Company will allocate to the Member items of Company income and gain (consisting of a pro rata portion of each item of Company income, including gross income, and gain for such year) in an amount and manner sufficient to eliminate the Capital Account Deficit, if any, caused by such adjustment, allocation, or distribution, as quickly as possible as required by Regulations Section 1.704- l(b)(2)(ii)(d). (d) Allocation of Nonrecourse Deductions. The Company will ------------------------------------ allocate each Nonrecourse Deduction, as defined in Regulations Section 1.704-2(b)(1) and determined in accordance with Regulations Section 1.704- 2(c), in the same manner in which the Company allocates net taxable loss. (e) Allocation of Member Nonrecourse Deductions. The Company will ------------------------------------------- allocate each Member Nonrecourse Deduction to the Members who bear the economic risk of loss with respect to the liability to which such Member Nonrecourse Deductions are attributable under Regulations Section 1.704- 2(i)(1). (f) Code Section 704(c) and Re-evaluation Allocation. If any ------------------------------------------------ Member contributes property (other than money) to the Company (or is deemed so to contribute under applicable income tax principles) and the fair market value of such property at the time it is contributed differs from the contributing Member's adjusted tax basis therein, or if the property of the Company is revalued pursuant to Regulations Section 1.704-l(b)(iv)(f), items of income, gain, profit, depreciation, cost recovery and cost depletion relating to such property shall be allocated pursuant to 11 Treas. Reg. section 1.704-3(b) (the "Traditional Method"), to the extent they are applicable. Allocations pursuant to this subsection are solely for purposes of federal, state and local taxes and shall not affect or in any way be taken into account in computing any Member's Capital Account or share of profits, losses, similar items or distributions pursuant to any of the provisions of this Agreement. (g) Allocation of Cancellation of Debt Income. The Company will ----------------------------------------- allocate any cancellation of debt income realized by the Company among the Members in proportion to the allocation among the Members (under Code Section 752) of the debt to which such income is attributable. (h) Allocations to Reflect Changing Interests. If (i) a person ----------------------------------------- becomes a new Member after the first day of the Company's then-current taxable year, (ii) the Interest of any Member increases or decreases after the first day of the Company's then-current taxable year, or (iii) a member Transfers the Member's Interest after the first day of the Company's then- current taxable year, unless such disposition and all other dispositions on the same day and within the twelve-month period prior to that day result in a termination of the Company for federal income tax purposes, the Company will not close its books until the end of the taxable year, at which time the Company will determine the Members' and former Members' respective shares of profits and losses by applying (1) a ratio having a numerator equal to the number of days during the year that each person was a Member and a denominator equal to the total number of days in the Company's taxable year and (2) taking into account each Member's Interest on each day such Member held an Interest. These rules will apply whether or not as a result of such decrease or disposition, the transferee becomes a new or substituted Member or whether or not the transferor remains a Member. 8.6 Curative Allocations. The Company intends the Tax Regulation -------------------- Allocations to comply with Regulation Sections 1.704-l(b) and 1.704-2. The Tax Regulation Allocations may not be consistent with the manner in which the Members intend to divide distributions. Accordingly, the Authorized Person, to the extent not inconsistent with Code Section 704(b), may allocate income, gain, profit, loss, deduction and other items among the Members so as to effect the economic objectives of the Members, and to offset any distortion of such objectives otherwise resulting from the Tax Regulation Allocations. In general, the Members anticipate that the Authorized Person will accomplish this by making special allocations of other items of income, gain, profit, loss, and deduction among the Members so that the net amount of the Tax Regulation Allocations and such special allocations to each such Member is zero. This Section 8.6 is not intended to, and the Company does not, adopt the traditional method with curative allocations specified in Treas. Reg. Section 1.704-3(c). ARTICLE 9 -- DISSOLUTION. LIQUIDATION AND WINDING UP ---------------------------------------------------- 9.1 Dissolution and Winding Up. The dissolution of the Company will -------------------------- occur upon any of the following events: 12 (a) the happening of the events specified in this Agreement or in the Articles of Organization as grounds for dissolution, including the expiration of the term provided for in Section 1.4; (b) the written approval of the Members as provided by Section 4.3; (c) an Event of Withdrawal of a Member or a Capital Event unless the Company still has at least one remaining Member and the business of the Company is continued either under a right to continue stated in the Articles of Organization and in this Agreement, or by the approval of the remaining Members as provided by Section 4.3 within ninety (90) days after the Event of Withdrawal; (d) entry of a decree of dissolution under Subchapter VIII of the Act; or (e) when the Company is not the surviving entity in a merger or consolidation. Dissolution will take effect on the date of the event giving rise to the dissolution, but the Company will not terminate until its assets have been distributed pursuant to Section 9.3. 9.2 Liquidating Trustee. In a dissolution and winding up of the ------------------- Company, the liquidating trustee approved by the Members as provided by Section 4.3, will proceed diligently to wind up the affairs of the Company and distribute its assets pursuant to Section 9.3. During the interim, the liquidating trustee will continue to exercise the rights and operate the Company consistently with the liquidation thereof, exercising all the power and authority vested by the Act. 9.3 Liquidation and Termination. As expeditiously as possible after --------------------------- the dissolution of the Company: (a) The liquidating trustee will cause the Company's accountants to make a complete accounting of the assets, liabilities and operations of the Company as of the last day of the month in which the dissolution occurs. (b) The liquidating trustee will pay all liabilities of the Company (including loans from Members but excluding Member Capital Contributions and Member Capital Accounts) and establish a Reserve, if the trustee deems a Reserve necessary, for payment of future or contingent Company obligations. (c) The Company will allocate its estimated net taxable loss for the year and any loss realized by the Company on liquidation, including any book adjustment loss under paragraph (e) of this Section, in accordance with Article 8 and its estimated net taxable gain for the year and any gain realized upon liquidation, including any book adjustment gain under paragraph (e) of this Section, in accordance with Article 8. 13 (d) The liquidating trustee will distribute the balance of the proceeds of the liquidation after allocating gain or loss under paragraph (b) of this Section among the Members who or which have positive balances in their Capital Accounts in proportion to and to the extent of their positive Capital Account balances. Distributions of Company assets may be made in Cash or in kind, in the sole and absolute discretion of the liquidating trustee, but, if in kind, they will be deemed distributed at their fair market values on the date of distribution (for federal income tax purposes). (e) If any Company property is distributed to the Members in kind, for purposes of reflecting the allocation of gain or loss from liquidation in the Members' Capital Accounts, the Company will make a book adjustment with respect to the property distributed in kind as provided in the Regulations under Code Section 704(b). (f) All salable assets of the Company may be sold in connection with any liquidation at public or private sale, at such price and upon such terms as the liquidating trustee, in his, her or its sole discretion, may deem advisable. Any Member, Manager, or Authorized Person and any person related to any Member, Manager, or Authorized Person may purchase assets at such sale. ARTICLE 10 -- GENERAL --------------------- 10.1 Amendment. The Members may only amend this Agreement in whole or --------- in part by a written agreement executed in the same manner as, and specifically referring to, this Agreement. 10.2 Benefit. This Agreement binds and benefits the parties, their ------- heirs, legal representatives, successors and assigns. 10.3 Computation of Time. In computing any period of time, the day of ------------------- the act, event or default from which the designated period time begins to run will not be included. The last day of the period so computed will be included, unless it is a Saturday, Sunday, or legal holiday, and, if so, the period will run until the end of the next day not a Saturday, Sunday, or legal holiday. 10.4 Construction. Unless the context otherwise requires, when used ------------ in the Agreement, the singular includes the plural and vice versa and the masculine includes the feminine (and neuter) and vice versa. The words "include", "includes", and "including" will be deemed to be followed by the phrase "without limitation". Captions are inserted for convenience only and will have no legal effect. Each reference to a Code Section shall be deemed to be followed by the words "and/or the Regulations thereunder." This Agreement is to be deemed to have been prepared jointly by the parties hereto, and any uncertainty or ambiguity existing herein, if any, shall not be interpreted against any party, but shall be interpreted according to the application of the rules of interpretation for arm's length agreements. The substantive law of Missouri will govern this Agreement without regard to its choice of laws rules. 14 10.5 Entire Agreement. This instrument constitutes the entire ---------------- agreement among the parties to this Agreement. The parties have made no representations, warranties, understandings or agreements other than those expressly included in this Agreement. 10.6 Equitable Relief. The Company and each Member will have the ---------------- right to seek and obtain equitable relief to enforce the Agreement. 10.7 Execution. The parties may execute this Agreement in any number --------- of counterparts, and each counterpart will, for all purposes, be deemed an original instrument, but all such counterparts together will constitute but one and the same Agreement. Facsimile transmission of any original signed counterpart and retransmission of any signed facsimile transmission, will be the same as transmission of an original counterpart. At the request of any party, the parties will confirm facsimile transmitted signatures by signing an original Agreement. 10.8 Exhibits. All exhibits referred to in this Agreement are -------- attached hereto and incorporated herein by this reference. 10.9 Expenses of Prevailing Party. The prevailing party in any ---------------------------- litigation in connection with this Agreement may recover legal fees and litigation costs incurred in prosecuting and/or defending such litigation from the nonprevailing party. 10.10 Further Assurances. Each of the parties to this Agreement ------------------ agrees to execute, acknowledge, deliver, file, record and publish such further certificates, instruments, agreements and other documents, and to take all such further action required by law or necessary in furtherance of the Company's purposes and the objectives and intentions underlying this Agreement and not inconsistent with the terms of this Agreement. 10.11 Invalidity of Provisions. If any provision in this Agreement is ------------------------ or shall become invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining provisions of this agreement and any other application thereof shall not in any way be affected or impaired thereby; provided that if permitted by applicable law, any invalid, illegal or unenforceable provision may be considered in determining the intent of the parties with respect to other provisions of this Agreement. 10.12 No Waiver. The failure or delay of any party to this Agreement --------- in requiring strict performance by any other party of any covenant of this Agreement shall not constitute a waiver of the covenant or of the right to require strict performance of the covenant. 10.13 Notices. A party may only effect a notice, approval or other ------- communication required or permitted under this Agreement by giving such notice in writing, postage or charges paid, and addressed to the address following the person's name of the signature page hereto, and delivering it in person, by certified mail (return 15 receipt requested), or by overnight express delivery service. Delivery by messenger or courier will constitute personal delivery. Members may change their addresses for the purpose of this Section by notice to the Company at its principal office in the manner provided in this Section. Such notice will become effective two (2) days after it is deposited in the mail, postage prepaid, or one (1) day after it is consigned to an overnight delivery service, or upon receipt of personal delivery. ARTICLE 11 -- DEFINITIONS ------------------------- The definitions below govern this Agreement unless the context unambiguously requires otherwise: 11.1 "Act" means the Delaware Limited Liability Company Act, (S)18- 101, et seq., as amended from time to time, and any successor statute, as applicable to the Company. 11.2 "Agreement" means this Operating Agreement, as amended from time to time. 11.3 "Approval Rights" means the rights of a Member to vote, approve, or consent to matters described in Section 4.3. 11.4 "Articles of Organization" means the Certificate of Formation referred to in section 18-201 of the Act, filed with the Delaware Secretary of State for the purpose of forming the Company, as the same may be amended or restated from time to time as provided in the Act. 11.5 "Assignee" means a transferee of an interest who has not become a Member. 11.6 "Authorized Person" means a Member, if management of the Company is vested in the Members, or a Manager, if management is vested in Managers. 11.7 "Bankruptcy" means the entry of an order for relief by the court in a proceeding under the United States Bankruptcy Code, Title 11, U.C.C., as amended, or its equivalent under a state insolvency act or a similar law of other jurisdictions. 11.8 "Capital Account" means an account maintained for each Member pursuant to Regulations Section 1.704-l(b)(2)(iv). 11.9 "Capital Account Deficit" means the debit balance in a Member's Capital Account at the end of a taxable year, after (a) crediting the account with (i) the amount, if any, of the debit balance the Member must restore under this Agreement, and (ii) the amount of the debit balance the Member is deemed to be obligated to restore under Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5), and (b) debiting the account with the items described in Regulations Section 1.704-l(b)(2)(ii)(d)(4), (5), and (6). 16 11.10 "Capital Contributions" means, with respect to any Member, the amount of money and the fair market value (net of each liability assumed by the Company in connection with such contribution and net of each liability subject to which the Company received such contribution) of any property (other than money) contributed to the Company as provided in Article 2. 11.11 "Capital Event" means a Transfer of all or substantially all of the Company's property, including a foreclosure or condemnation. 11.12 "Cash" means money and equivalents, such as checks, but only when collected, and bank transfers. 11.13 "Cash Available for Distribution" means all sums received in Cash, or converted to Cash by the Company during any fiscal period, provided by operations, excluding Capital Contributions, Cash from Sales or Refinancing or loans or advances by Members to the Company, but including sums released from Reserves, less Expenses. 11.14 "Cash from Sales or Refinancing" means the net Cash realized by the Company from a Capital Event, and from any refinancing of any property or interest therein, real or personal, acquired directly or indirectly by the Company or a portion thereof after retirement of applicable mortgage debt and other debt and all expenses related to the transaction and after an allowance for reserves for repairs, replacements, contingencies and anticipated obligations (including debt service and costs of improvements) as determined by the Authorized Person in it sole discretion less Expenses. Cash from Sales or refinancing shall include all principal and interest payments with respect to any note or other obligation received by the Company in connection with Sales and other Transfers of property by the Company (other than in the ordinary course of business). 11.15 "Code" means the Internal Revenue Code of 1986, as amended from time to time (including any successor statute or statutes constituting the United States tax laws), as applicable to the Company and the Members. 11.16 "Company" means a Delaware Limited Liability company governed by the Agreement and the Act, having the name specified in Section 1.2. 11.17 "Company Minimum Gain" means an amount computed as described in Regulations Section 1.704-2(d). 11.18 "Contribution" means Cash, other property, the use of property, services rendered, a promissory note or other binding obligation to contribute cash or property or perform services or any other valuable consideration transferred by a person to the Company as a prerequisite for membership and any subsequent transfer to the Company by a person as a Member. 17 11.19 "Effective Date" means the date of the filing of the Articles of Organization. 11.20 "Event of Withdrawal" means any of the following: (a) a Member voluntarily withdraws from the Company; (b) except as provided in Section 4.6, a Member assigns all of the Member's interest; (c) a Member is expelled from the Company; (d) unless approved by the Members as provided by Section 4.3, a Member: (i) makes an assignment for the benefit of creditors; (ii) is the subject of a Bankruptcy; (iii) files a petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, or similar relief under any statute, law or regulation or files an answer or other pleading admitting or failing to contest the material allegations of a petition filed in such a proceeding; or (iv) seeks, approves of or acquiesces in the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial part of the Member's property; (e) one hundred twenty (120) days after the start of any proceeding against a Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, the proceeding has not been dismissed, or if within ninety (90) days after the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial part of the Member's property, without the Member's approval, the appointment is not vacated or stayed, or within ninety (90) days after the expiration of any such stay, the appointment is not vacated; (f) if a Member is a natural person: (i) the Member's death; or the entry by a court of competent jurisdiction adjudicating the member incompetent to manage the Member's person or estate; (g) if a Member is a trust, the termination of the trust or a distribution of its entire interest but not merely the substitution of a new trustee; 18 (h) if a Member is a general or limited partnership, the dissolution and commencement of winding up of the partnership or a distribution of its entire interest; (i) if a Member that is a corporation, the filing of articles of dissolution, or their equivalent, for a corporation or revocation of its charter or a distribution of its entire interest; (j) if a Member is an estate, the distribution by the fiduciary of the estate's entire interest; or (k) if a Member is a limited liability company, the filing of articles of dissolution or termination, or their equivalent, for the limited liability company or a distribution of its entire interest. 11.21 "Expenses" means for any fiscal period, (a) the amount of Cash disbursed in the period in order to operate the Company (including capital expenditures and debt service) and to pay expenses of the Company (excluding expenditures in connection with Capital Events) and (b) amounts set aside for the period for working capital and to pay taxes, insurance and other costs and expenses incident to the operation of the Company including Reserves. 11.22 "Immediate Family" means the Member's spouse, children (including natural, adopted and stepchildren), grandchildren and parents. 11.23 "Interest" or "Member's Interest" means a Member's share of the profits and losses of the Company and the right to receive distributions of the Company assets. 11.24 "Limited Liability Company" means a company organized and existing under the Act. 11.25 "Majority-in-Interest" means those Members whose aggregate Proportionate Shares exceed fifty percent (50%). 11.26 "Management Rights" means the right to participate in the management of the Company, including the rights described in Article 3. 11.27 "Manager" means if management of the Company is vested in one or more managers, the person or persons designated, appointed or elected as such pursuant to the Act. 11.28 "Member" means any person that signs in person or by an attorney-in-fact, or otherwise is a party to the Agreement at the time the Company is formed and is identified as a Member in this Agreement and any person who is 19 subsequently admitted as a Member, until an Event of Withdrawal occurs with respect to such person. 11.29 "Member's Nonrecourse Debt Minimum Gain" means an amount computed as required by Regulations Section 1.704-2(i)(3). 11.30 "Member's Interest" means a member's share of the profits and losses of the Company and the right to receive distributions of the Company assets. 11.31 "Organization" means any person other than an individual. 11.32 "Permitted Assignee" means any member of the Member's Immediate Family, the estate of the Member or any Member of the Member's Immediate Family, a trust for the sole benefit of the Member and/or any Member of the Member's Immediate Family, or any other organization controlled by such Member or by members of the Member's Immediate Family. 11.33 "Person" includes individuals, partnerships, domestic or foreign limited partnerships, domestic or foreign limited liability companies, domestic or foreign corporations, trusts, business trusts, real estate investment trusts, estates and other associations or business entities. 11.34 "Proportionate Share" means the percentages provided for each Member in Exhibit A, as amended from time to time, or as otherwise adjusted to reflect changes in such Member's Capital Contributions relative to the aggregate Capital Contributions of all Members. 11.35 "Regulations" means the Income Tax Regulations promulgated under the Code, as amended from time to time, including corresponding provisions of succeeding regulations. 11.36 "Reserves" means any sums which the Authorized Person or liquidating trustee sets aside for the payment of taxes, future expenses (including capital expenditures) or any other purposes as the Authorized Person or liquidating trustee, in its sole discretion, determines to be desirable for the Company. 11.37 "Securities Laws" means all applicable federal and state securities laws, including the Securities Act of 1933, as amended, and any regulations promulgated thereunder. 11.38 "Tax Matters Partner" has the meaning contained in Code Section 6231(a)(7). 11.39 "Tax Regulation Allocations" means the allocations described in Section 8.5. 20 11.40 "Transfer" includes any sale, assignment, disposition, exchange, mortgage, pledge, grant, hypothecation, or other transfer, absolute or as security or encumbrance (including transfers by operation of law). IN WITNESS WHEREOF, the Members have executed this Operating Agreement as of the Effective Date. "MEMBERS" PEABODY HOLDING COMPANY, INC. By: T.S. HILTON ----------------------------- Vice President Address: 701 Market Street Suite 700 St. Louis, MO 63101-1826 PEABODY DEVELOPMENT COMPANY By: [Executed] ----------------------------- President Address: 701 Market Street Suite 820 St. Louis, MO 63101-1826 21 EXHIBIT A -- CAPITAL CONTRIBUTIONS ---------------------------------- Member Initial Capital Proportionate Name and address Contribution Share Peabody Holding Co., Inc. Cash and Notes 72% 701 Market Street valued at $93,327,000 Suite 700 St. Louis, MO 63101 - 1826 Peabody Development Co. Real Estate Interests 28% 701 Market Street valued at $36,000,000 Suite 700 St. Louis, MO 63101-1826
EX-4.1 105 SENIOR NOTE INDENTURE DTD 5/18/1998 BET P&L COAL EXHIBIT 4.1 Execution Copy ================================================================================ P&L COAL HOLDINGS CORPORATION SERIES A AND SERIES B 8-7/8% SENIOR NOTES DUE 2008 SENIOR NOTE INDENTURE Dated as of May 18, 1998 STATE STREET BANK AND TRUST COMPANY Senior Note Trustee ================================================================================ CROSS-REFERENCE TABLE* Trust Indenture Act Section Senior Note Indenture Section 310 (a)(1)............................................................7.10 (a)(2) ...............................................................7.10 (a)(3)................................................................N.A. (a)(4)................................................................N.A. (a)(5)................................................................7.10 (i)(b)................................................................7.10 (ii)(c)...............................................................N.A. 311(a)................................................................7.11 (b)...................................................................7.11 (iii)(c)..............................................................N.A. 312 (a)...............................................................2.05 (b)...................................................................12.03 (iv)(c)...............................................................12.03 313(a)................................................................7.06 (b)(2)................................................................7.07 (v)(c)................................................................7.06; 12.02 (vi)(d)...............................................................7.06 314(a)................................................................4.03; 12.02 (c)(1)................................................................12.04 (c)(2)................................................................12.04 (c)(3)................................................................N.A. (vii)(e)..............................................................12.05 (f) .................................................................NA 315 (a)...............................................................7.01 (b)...................................................................7.05, 12.02 (A)(c)................................................................7.01 (d)...................................................................7.01 (e) .................................................................6.11 316 (a)(last sentence)................................................2.09 (a)(1)(A).............................................................6.05 (a)(1)(B).............................................................6.04 (a)(2)................................................................N.A. (b)...................................................................6.07 (B)(c)................................................................2.12 317 (a)(1)............................................................6.08 (a)(2)................................................................6.09 (b)...................................................................2.04 318 (a)...............................................................12.01 (b)...................................................................N.A. (c) .................................................................12.01 N.A. means not applicable. *This Cross-Reference Table is not part of the Senior Note Indenture. TABLE OF CONTENTS Page ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE................ 1 Section 1.01. Definitions................................................ 1 Section 1.02. Other Definitions.......................................... 19 Section 1.03. Incorporation by Reference of Trust Indenture Act.......... 19 Section 1.04. Rules of Construction...................................... 20 ARTICLE 2. THE SENIOR NOTES.............................. 20 Section 2.01. Form and Dating............................................ 20 Section 2.02. Execution and Authentication............................... 21 Section 2.03. Registrar and Paying Agent................................. 22 Section 2.04. Paying Agent to Hold Money in Trust........................ 22 Section 2.05. Holder Lists............................................... 22 Section 2.06. Transfer and Exchange...................................... 23 Section 2.07. Replacement Senior Notes................................... 35 Section 2.08. Outstanding Senior Notes................................... 35 Section 2.09. Treasury Senior Notes...................................... 35 Section 2.10. Temporary Senior Notes..................................... 35 Section 2.11. Cancellation............................................... 36 Section 2.12. Defaulted Interest......................................... 36 Section 2.13. CUSIP Numbers.............................................. 36 ARTICLE 3. REDEMPTION AND PREPAYMENT......................... 36 Section 3.01. Notices to Senior Note Trustee............................. 36 Section 3.02. Selection of Senior Notes to Be Redeemed................... 37 Section 3.03. Notice of Redemption....................................... 37 Section 3.04. Effect of Notice of Redemption............................. 38 Section 3.05. Deposit of Redemption Price................................ 38 Section 3.06. Senior Notes Redeemed in Part.............................. 38 Section 3.07. Optional Redemption........................................ 38 Section 3.08. Mandatory Redemption....................................... 39 Section 3.09. Offer to Purchase by Application of Excess Proceeds........ 39 Section 3.10 Special Mandatory Redemption............................... 41 i ARTICLE 4. COVENANTS................................. 41 Section 4.01. Payment of Senior Notes.................................... 41 Section 4.02. Maintenance of Office or Agency............................ 41 Section 4.03. Reports.................................................... 42 Section 4.04. Compliance Certificate..................................... 42 Section 4.05. Taxes...................................................... 43 Section 4.06. Stay, Extension and Usury Laws............................. 43 Section 4.07. Restricted Payments........................................ 43 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries............................................. 47 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock. 48 Section 4.10. Asset Sales................................................ 51 Section 4.11. Transactions with Affiliates............................... 52 Section 4.12. Liens...................................................... 53 Section 4.13. Business activities........................................ 53 Section 4.14. Corporate Existence........................................ 53 Section 4.15. Offer to Repurchase Upon Change of Control................. 53 Section 4.16. Additional Senior Subsidiary Guarantees.................... 54 Section 4.17. Payments for consents...................................... 54 ARTICLE 5. SUCCESSORS................................. 55 Section 5.01. Merger, Consolidation, or Sale of Assets................... 55 Section 5.02. Successor Corporation Substituted.......................... 55 ARTICLE 6. DEFAULTS AND REMEDIES............................ 56 Section 6.01. Events of Default.......................................... 56 Section 6.02. Acceleration............................................... 57 Section 6.03. Other Remedies............................................. 58 Section 6.04. Waiver of Past Defaults.................................... 58 Section 6.05. Control by Majority........................................ 59 Section 6.06. Limitation on Suits........................................ 59 Section 6.07. Rights of Holders of Senior Notes to Receive Payment....... 59 Section 6.08. Collection Suit by Senior Note Trustee..................... 59 Section 6.09. Senior Note Trustee May File Proofs of Claim............... 60 Section 6.10. Priorities................................................. 60 Section 6.11. Undertaking for Costs...................................... 61 ARTICLE 7. SENIOR NOTE TRUSTEE............................. 61 Section 7.01. Duties of Senior Note Trustee.............................. 61 Section 7.02. Rights of Senior Note Trustee.............................. 62 ii Section 7.03. Individual Rights of Senior Note Trustee................... 62 Section 7.04. Senior Note Trustee's Disclaimer........................... 63 Section 7.05. Notice of Defaults......................................... 63 Section 7.06. Reports by Senior Note Trustee to Holders of the Senior Notes.................................................... 63 Section 7.07. Compensation and Indemnity................................. 63 Section 7.08. Replacement of Senior Note Trustee......................... 64 Section 7.09. Successor Senior Note Trustee by Merger, etc............... 65 Section 7.10. Eligibility; Disqualification.............................. 65 Section 7.11. Preferential Collection of Claims Against Company.......... 65 ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.................. 66 Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance... 66 Section 8.02. Legal Defeasance and Discharge............................. 66 Section 8.03. Covenant Defeasance........................................ 66 Section 8.04. Conditions to Legal or Covenant Defeasance................. 67 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.................... 68 Section 8.06. Repayment to Company....................................... 68 Section 8.07. Reinstatement.............................................. 69 ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER...................... 69 Section 9.01. Without Consent of Holders of Senior Notes................. 69 Section 9.02. With Consent of Holders of Senior Notes.................... 70 Section 9.03. Compliance with Trust Indenture Act........................ 71 Section 9.04. Revocation and Effect of Consents.......................... 71 Section 9.05. Notation on or Exchange of Senior Notes.................... 71 Section 9.06. Senior Note Trustee to Sign Amendments, etc................ 72 ARTICLE 10. SENIOR SUBSIDIARY GUARANTEES........................ 72 Section 10.01. Guarantee.................................................. 72 Section 10.02. Limitation on Senior Note Guarantor Liability.............. 73 Section 10.03. Execution and Delivery of Senior Subsidiary Guarantee...... 73 Section 10.04. Senior Note Guarantors May Consolidate, etc., on Certain Terms.................................................... 74 Section 10.05. Releases Following Sale of Assets.......................... 75 ARTICLE 11. MISCELLANEOUS............................... 75 Section 11.01. Trust Indenture Act Controls............................... 75 Section 11.02. Notices.................................................... 75 iii Section 11.03. Communication by Holders of Senior Notes with Other Holders of Senior Notes.......................................... 76 Section 11.04. Certificate and Opinion as to Conditions Precedent......... 76 Section 11.05. Statements Required in Certificate or Opinion.............. 77 Section 11.06. Rules by Senior Note Trustee and Agents.................... 77 Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders............................................. 77 Section 11.08. Governing Law.............................................. 77 Section 11.09. No Adverse Interpretation of Other Agreements.............. 78 Section 11.10. Successors................................................. 78 Section 11.11. Severability............................................... 78 Section 11.12. Counterpart Originals...................................... 78 Section 11.13. Table of Contents, Headings, etc........................... 78 EXHIBITS Exhibit A1 FORM OF SENIOR NOTE Exhibit A2 FORM OF TEMPORARY REGULATION S SENIOR NOTE Exhibit B FORM OF CERTIFICATE OF TRANSFER Exhibit C FORM OF CERTIFICATE OF EXCHANGE Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Exhibit E FORM OF SENIOR SUBSIDIARY GUARANTEE Exhibit F FORM OF SUPPLEMENTAL SENIOR NOTE INDENTURE SCHEDULES Schedule I Schedule of Senior Note Guarantors iv SENIOR NOTE INDENTURE dated as of May 18, 1998 between P&L Coal Holdings Corporation, a Delaware corporation (the "Company") and State Street Bank and Trust Company, as Senior Note Trustee (the "Senior Note Trustee"). The Company and the Senior Note Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 8-7/8% Series A Senior Notes due 2008 (the "Series A Senior Notes") and the 8-7/8% Series B Senior Notes due 2008 (the "Series B Senior Notes" and, together with the Series A Senior Notes, the "Senior Notes"): ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01.DEFINITIONS. "144A Global Senior Note" means a global note in the form of Exhibit A1 hereto bearing the Global Senior Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Senior Notes sold in reliance on Rule 144A. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Acquisition" means the acquisition by the Company of: (i) all of the common stock of Peabody Holding Company, (ii) all of the common stock of Gold Fields Mining Corp., (iii) all of the membership interests of Citizens Power LLC, (iv) the 1% interests in CL Hartford, L.L.C., a Delaware limited liability company, and Citizens Power Sales, a Delaware general partnership, both subsidiaries of Citizens Power, LLC, (v) all of the shares of Darex Capital, Inc., a company incorporated in the Republic of Panama, and (vi) all of the ordinary shares of Peabody Australia, LTD., which together with Darex Capital, Inc. owns Peabody Resources Limited. "Additional Assets" means (i) any property or assets (other than Capital Stock, Indebtedness or rights to receive payments over a period greater than 180 days, other than with respect to coal supply contract restructurings) that is usable by the Company or a Restricted Subsidiary in a Permitted Business or (ii) the Capital Stock of a Person that is at the time, or becomes, a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary. "Additional Senior Notes" means up to $150.0 million in aggregate principal amount of Senior Notes (other than the Initial Senior Notes) issued under this Senior Note Indenture in accordance with Sections 2.02 and 4.09 hereof. "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Senior Note, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business consistent with past practices (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of Section 4.15 and/or Section 5.01 hereof and not by the provisions of Section 4.10 hereof), and (ii) the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company's Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $5.0 million or (b) for Net Proceeds in excess of $5.0 million. Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (iii) a Restricted Payment that is permitted by, or an Investment that is not prohibited by Section 4.07 hereof, (iv) a disposition of Cash Equivalents or obsolete equipment, (v) foreclosures on assets, (vi) the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof and (vii) the factoring of accounts receivable arising in the ordinary course of business pursuant to arrangements customary in the industry. "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Bengalla Joint Venture" means Bengalla Mining Co. Pty Limited, Bengalla Agricultural Co. Pty Limited and Bengalla Coal Sales Co. Pty Ltd., which are the joint venture companies related to the Bengalla mine in New South Wales, Australia. "Black Beauty Coal Company" means the Indiana general partnership among Thoroughbred, L.L.C., Black Beauty Resources, Inc. and Pittsburg and Midway Coal Mining Co., and any Person collectively owned by those three partners including, but not limited to, Eagle Coal Company and Falcon Coal Company. 2 "Board of Directors" means the Board of Directors of the Company, or any authorized committee of the Board of Directors. "Business Day" means any day other than a Legal Holiday. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (a) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed or insured by the U.S. Government or any agency thereof, (b) certificates of deposit and time deposits with maturities of one year or less from the date of acquisition and overnight bank deposits of any lender under the Senior Credit Facilities or of any commercial bank having capital and surplus in excess of $500.0 million, (c) repurchase obligations of any lender under the Senior Credit Facilities or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 90 days with respect to securities issued or fully guaranteed or insured by the U.S. Government, (d) commercial paper of a domestic issuer rated at least A-2 by Standard & Poor's Rating Group or P-2 by Moody's Investor Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency if both of Standard & Poor's Rating Group and Moody's Investor Service, Inc. cease publishing ratings of investments, (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by Standard & Poor's Rating Group or A by Moody's Investor Service, Inc., (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any lender under the Senior Credit Facilities or any commercial bank satisfying the requirements of clause (b) of this definition or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Cedel" means Cedel Bank, SA. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than a Principal or a Related Party of a Principal (as defined below), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) 3 the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of more than 50% of the Voting Stock of the Company (measured by voting power rather than number of shares) or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. "Company" means P&L Coal Holdings Corporation, and any and all successors thereto. "Citizens Power" means Citizens Power LLC, a Delaware limited liability company and its direct and indirect Subsidiaries. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (ii) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs, deferred financing fees and original issue discount, noncash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iii) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Consolidated Net Income), plus (iv) depreciation, depletion, amortization (including amortization of goodwill and other intangibles) and other noncash expenses (including, without limitation, writedowns and impairment of property, plant and equipment and intangibles and other long-lived assets) (excluding any such noncash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, depletion, amortization and other noncash expenses were deducted in computing such Consolidated Net Income, minus (v) noncash items increasing such Consolidated Net Income for such period (other than accruals in accordance with GAAP), plus (vi) without duplication for amounts otherwise included in Consolidated Cash Flow, the amount of the Company's and its Restricted Subsidiaries' proportionate share of the Consolidated Cash Flow of Black Beauty Coal Company and its Subsidiaries for such period (calculated in proportion to the Company's and its Restricted Subsidiaries' common equity ownership), in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation, depletion and amortization and other noncash expenses of, a Restricted Subsidiary that is not a Senior Note Guarantor shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent that a 4 corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary that is not a Senior Note Guarantor shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded, and (v) the Net Income (or loss) of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Restricted Subsidiaries. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of the closing of the Acquisition or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office of the Senior Note Trustee" shall be at the address of the Senior Note Trustee specified in Section 11.02 hereof or such other address as to which the Senior Note Trustee may give notice to the Company. "Credit Facilities" means, with respect to the Company or any of its Restricted Subsidiaries, one or more debt facilities (including, without limitation, the Senior Credit Facilities) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. Indebtedness under Credit Facilities outstanding on the date on which Senior Notes are first issued and authenticated under this Senior Note Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of the definition of Permitted Indebtedness. "Custodian" means the Senior Note Trustee, as custodian with respect to the Senior Notes in global form, or any successor entity thereto. 5 "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Definitive Senior Note" means a certificated Senior Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in the form of Exhibit A1 hereto except that such Senior Note shall not bear the Global Senior Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Senior Note" attached thereto. "Depositary" means, with respect to the Senior Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Senior Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Senior Note Indenture. "Designated Noncash Consideration" means the fair market value of noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officer's Certificate, setting forth the basis of such valuation, executed by the principal executive officer and the principal financial officer of the Company, less the amount of cash or Cash Equivalents received in connection with a sale of such Designated Noncash Consideration. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Senior Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07 hereof. "Domestic Subsidiary" means a Subsidiary that is (i) formed under the laws of the United States of America or a state or territory thereof or (ii) as of the date of determination, treated as a domestic entity or a partnership or a division of a domestic entity for United States federal income tax purposes. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means any public or private sale of equity securities (excluding Disqualified Stock) of the Company, other than any private sales to an Affiliate of the Company. "Escrow Account" means the escrow account maintained pursuant to the Escrow Letter. 6 "Escrow Letter" means that certain escrow letter dated March 2, 1998, by and among Lazard Brothers & Co., Limited, The Energy Group PLC, Peabody Investments Inc. and P&L Coal Holdings Corporation. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Exchange Senior Notes" means the Senior Notes issued in the Exchange Offer pursuant to Section 2.06(f) hereof. "Existing Citizens Power Investment" means the Investments in Citizens Power by the Company and its Restricted Subsidiaries as of the date of the closing of the Acquisition. "Existing Indebtedness" means up to $292.5 million in aggregate principal amount of Indebtedness of the Company and its Restricted Subsidiaries (other than Indebtedness under the Senior Credit Facilities, the Senior Notes, the Senior Notes and related Guarantees) in existence on the date of the closing of the Acquisition, until such amounts are repaid. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of original issue discount, noncash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letters of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations, but excluding amortization of debt issuance costs) and (ii) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on the portion of Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the effective combined federal, state and local tax rate of such Person for such period, expressed as a decimal, in each case, for the Company and its Restricted Subsidiaries on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person and its Restricted Subsidiaries for any period, the ratio of the Consolidated Cash Flow of such Person 7 and its Restricted Subsidiaries for such period to the Fixed Charges of such Person and its Restricted Subsidiaries for such period. In the event that the referrent Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions and including pro forma cost savings permitted by Article 11 of Regulation S-X, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "Foreign Subsidiaries" means Subsidiaries of the Company that are not Domestic Subsidiaries. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date hereof. "Global Senior Note Legend" means the legend set forth in Section 2.06(g)(ii), which is required to be placed on all Global Senior Notes issued under this Senior Note Indenture. "Global Senior Notes" means, individually and collectively, each of the Restricted Global Senior Notes and the Unrestricted Global Senior Notes, in the form of Exhibits A1 and A2 hereto issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. 8 "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or commodity prices, in each case for the purpose of risk management and not for speculation. "Holder" means a Person in whose name a Senior Note is registered. "IAI Global Senior Note" means the global Senior Note in the form of Exhibit A1 hereto bearing the Global Senior Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Senior Notes sold to Institutional Accredited Investors. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, if and to the extent any of the foregoing (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person, but excluding from the definition of "Indebtedness," any of the foregoing that constitutes (1) an accrued expense, (2) trade payables and (3) Obligations in respect of reclamation, workers' compensation, including black lung, pensions and retiree health care, in each case to the extent not overdue for more than 90 days. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Indirect Participant" means a Person who holds a beneficial interest in a Global Senior Note through a Participant. "Initial Senior Notes" means $400.0 million in aggregate principal amount of Senior Notes issued under this Senior Note Indenture on the date hereof. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who are not also QIBs. 9 "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of direct or indirect loans (including guarantees, other than performance guarantees provided for the benefit of Citizens Power, of any portion of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in Section 4.07 hereof. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York, the city in which the principal office of the Trustee is located or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Senior Notes for use by such Holders in connection with the Exchange Offer. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Liquidated Damages" means all liquidated damages then owing pursuant to Section 5 of the Registration Rights Agreement. "Marketable Securities" means, with respect to any Asset Sale, any readily marketable equity securities that are (i) traded on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market; and (ii) issued by a corporation having a total equity market capitalization of not less than $250.0 million; provided that the excess of (A) the aggregate amount of securities of any one such corporation held by the Company and any Restricted Subsidiary over (B) ten times the average daily trading volume of such securities during the 20 immediately preceding trading days shall be deemed not to be Marketable Securities; as determined on the date of the contract relating to such Asset Sale. "Net Income" means, with respect to any Person, the net income or loss of such Person, determined in accordance with GAAP and before any reduction in respect of preferred 10 stock dividends, excluding, however, (i) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain or loss, together with any related provision for taxes on such extraordinary or nonrecurring gain or loss. "Net Proceeds" means the aggregate proceeds (cash or property) received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any noncash consideration received in any Asset Sale) or the sale or disposition of any Investment, net of the direct costs relating to such Asset Sale, sale or disposition, (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "Non-Guarantor Subsidiaries" means (i) Citizens Power and its direct and indirect Subsidiaries, (ii) the Company's future Unrestricted Subsidiaries and (iii) the Company's current and future Foreign Subsidiaries. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) other than a pledge of the Equity Interests of any Unrestricted Subsidiaries, (b) is directly or indirectly liable (as a guarantor or otherwise) other than by virtue of a pledge of the Equity Interests of any Unrestricted Subsidiaries, or (c) constitutes the lender; and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness (other than the Senior Notes being offered hereby) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity. "Non-U.S. Person" means a Person who is not a U.S. Person. "Obligations" means any principal, premium (if any), interest, penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, Guarantees and other liabilities and amounts payable under the documentation governing any Indebtedness or in respect thereto. "Offering" means the offering of the Senior Notes by the Company. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officer's Certificate" means a certificate signed on behalf of the Company by an Officer of the Company who must be a vice-president, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Sections 11.04 and 11.05 hereof. 11 "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Senior Note Trustee, that meets the requirements of Sections 11.04 and 11.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Senior Note Trustee. "Participant" means, with respect to the Depositary, Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel, respectively (and, with respect to The Depository Trust Company, shall include Euroclear and Cedel). "Participating Broker-Dealer" has the meaning set forth in the Registration Rights Agreement. "Permitted Business" means coal production, coal mining, coal brokering, coal transportation, mine development, power marketing, electricity generation, power/energy sales and trading, energy transactions/asset restructurings, risk management products associated with energy, fuel/power integration and other energy related businesses, ash disposal, environmental remediation, coal, natural gas, petroleum or other fossil fuel exploration, production, marketing, transportation and distribution and other related businesses, and activities of the Company and its Subsidiaries as of the date of the closing of the Acquisition and any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto. "Permitted Investments" means (a) any Investment in the Company or in a Restricted Subsidiary of the Company; (b) any Investment in Cash Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Restricted Subsidiary of the Company or (ii) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (d) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (e) any Investment existing on the date of the closing of the Acquisition (an "Existing Investment") and any Investment that replaces, refinances or refunds an Existing Investment, provided that the new Investment is in an amount that does not exceed the amount replaced, refinanced or refunded and is made in the same Person as the Investment replaced, refinanced or refunded, (f) advances to employees not in excess of $10.0 million outstanding at any one time; (g) Hedging Obligations permitted under clause (ix) of Section 4.09 hereof; (h) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case incurred in the ordinary course of business; (i) any Investment in a Permitted Business (whether or not an Investment in an Unrestricted Subsidiary) having an aggregate fair market value, when taken together with all other Investments made pursuant to this clause (i), does not exceed in aggregate amount the sum of (1) 10% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value) plus (2) 100% of the Net Proceeds from the sale or disposition of any Investment previously made pursuant to this clause (i) or 100% of the amount of any dividend, distribution or payment from any such Investment, net of income taxes paid or payable in respect thereof, in each case up to the amount of the Investment that was made pursuant to this clause (i) and 50% of the amount of such Net Proceeds or 50% of such dividends, distributions or payments, in each case received in excess of the amount of the Investments made pursuant to this clause (i); (j) guarantees (including Guarantees) of Indebtedness permitted by Section 4.09 hereof; (k) any Investment acquired by the Company or any of its Restricted Subsidiaries (A) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (B) as a result of the transfer of title with respect to any secured Investment in default as a result of a foreclosure by the 12 Company or any of its Restricted Subsidiaries with respect to such secured Investment; (l) any Investment in Black Beauty Coal Company having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (l), that are at the time outstanding not to exceed $50.0 million (with any write-down or write-off of any such Investment deemed to remain outstanding); (m) Investments in Citizens Power having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (m), that are at that time outstanding not to exceed $50.0 million at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (n) any Investment in the Bengalla Joint Venture and the Warkworth Associates Joint Venture having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (n), that are at the time outstanding, not to exceed $25.0 million (with any write-down or write-off of any such Investment deemed to remain outstanding); (o) that portion of any Investment by the Company or a Restricted Subsidiary in a Permitted Business to the extent that the Company or such Restricted Subsidiary will receive in a substantially concurrent transaction an amount in cash equal to the amount of such Investment (or the fair market value of such Investment), net of any obligation to pay taxes or other amounts in respect of the receipt of such cash; provided that the receipt of such cash does not carry any obligation by the Company or such Restricted Subsidiary to repay or return such cash; and (p) the forgiveness or cancellation of any payable due from Citizens Power and its direct and indirect Subsidiaries outstanding on the date of the closing of the Acquisition; provided, however, that with respect to any Investment, the Company may, in its sole discretion, allocate all or any portion of any Investment to one or more of the above clauses so that the entire Investment would be a Permitted Investment. "Permitted Liens" means (i) Liens securing Indebtedness under Credit Facilities that were permitted by the terms of this Senior Note Indenture to be incurred; (ii) Liens in favor of the Company; (iii) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (v) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (vi) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance or other kinds of social security; (vii) Liens existing on the date of the closing of the Acquisition; (viii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (ix) Liens on assets of Senior Note Guarantors to secure Senior Debt of such Senior Note Guarantors that was permitted by this Senior Note Indenture to be incurred; (x) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Restricted Subsidiary; (xi) Liens on assets of Foreign Subsidiaries to secure Indebtedness that was permitted by this Senior Note Indenture to be incurred; (xii) statutory liens of landlords, mechanics, suppliers, vendors, warehousemen, carriers or other like Liens arising in the ordinary course of business; (xiii) judgment Liens not giving rise to an Event of Default so long as any appropriate legal proceeding that may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such legal proceeding may be initiated shall not have expired; (xiv) easements, rights-of-way, zoning and similar restrictions and other similar encumbrances or title defects incurred or imposed, as applicable, in the ordinary course of business 13 and consistent with industry practices which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto (as such property is used by the Company or its Subsidiaries) or interfere with the ordinary conduct of the business of the Company or such Subsidiaries; provided, however, that any such Liens are not incurred in connection with any borrowing of money or any commitment to loan any money or to extend any credit; (xv) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (vi) of the second paragraph of Section 4.09 hereof and other purchase money Liens to finance property or assets of the Company or any Restricted Subsidiary acquired in the ordinary course of business; provided that such Liens are only secured by such property or assets so acquired or improved (including, in the case of the acquisition of Capital Stock of a Person who becomes a Restricted Subsidiary, Liens on the assets of the Person whose Capital Stock was so acquired); (xvi) Liens securing Indebtedness under Hedging Obligations; provided that such Liens are only secured by property or assets that secure the Indebtedness subject to the Hedging Obligation; (xvii) Liens to secure Indebtedness permitted by clause (xv) of the second paragraph of Section 4.09 hereof; and (xviii) Liens on the Equity Interests of Unrestricted Subsidiaries securing Obligations of Unrestricted Subsidiaries not otherwise prohibited by this Senior Note Indenture. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest and premium, if any, on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Senior Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Senior Notes on terms at least as favorable to the Holders of Senior Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "Principals" means Lehman Brothers Merchant Banking Partners II L.P., any of its respective Affiliates and executive officers of the Company as of the date of the closing of the Acquisition. "Private Placement Legend" means the legend set forth in Section 2.06(g)(i) to be placed on all Senior Notes issued under this Senior Note Indenture except where otherwise permitted by the provisions of this Senior Note Indenture. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. 14 "Registration Rights Agreement" means the Registration Rights Agreement, dated as of May 18, 1998, by and among the Company and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time and, with respect to any Additional Senior Notes, one or more registration rights agreements between the Company and the other parties thereto, as such agreement(s) may be amended, modified or supplemented from time to time, relating to rights given by the Company to the purchasers of Additional Senior Notes to register such Additional Senior Notes under the Securities Act. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Senior Note" means a Regulation S Temporary Global Senior Note or Regulation S Permanent Global Senior Note, as appropriate. "Regulation S Permanent Global Senior Note" means a permanent global Senior Note in the form of Exhibit A1 hereto bearing the Global Senior Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Senior Note upon expiration of the Restricted Period. "Regulation S Temporary Global Senior Note" means a temporary global Senior Note in the form of Exhibit A2 hereto bearing the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Senior Notes initially sold in reliance on Rule 903 of Regulation S. "Related Party" with respect to any Principal means (A) any controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Principal or (B) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of such Principal and/or such other Persons referred to in the immediately preceding clause (A). "Responsible Officer," when used with respect to the Senior Note Trustee, means any officer within the Corporate Trust Administration of the Senior Note Trustee (or any successor group of the Senior Note Trustee) or any other officer of the Senior Note Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Definitive Senior Note" means a Definitive Senior Note bearing the Private Placement Legend. "Restricted Global Senior Note" means a Global Senior Note bearing the Private Placement Legend. "Restricted Investment" means any Investment other than a Permitted Investment. "Restricted Period" means the 40-day restricted period as defined in Regulation S. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Rule 144" means Rule 144 promulgated under the Securities Act. 15 "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated the Securities Act. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Senior Credit Facilities" means those certain Senior Credit Facilities, dated as of May 14, 1998, by and among the Company, the Senior Note Guarantors, Lehman Commercial Paper Inc., as Arranger, Syndication Agent and the Administrative Agent and the other lenders party thereto, including any related notes, guarantees, collateral documents, letters of credit, instruments and agreements executed in connection therewith (and any appendices, exhibits or schedules to any of the foregoing), and in each case as amended, modified, supplemented, restated, renewed, refunded, replaced, restructured, repaid or refinanced from time to time (whether with the original agents and lenders or other agents and lenders or otherwise, and whether provided under the original credit agreement or other credit agreements or otherwise). "Senior Note Guarantors" means each of (i) the Company's Domestic Subsidiaries at the date of the closing of the Acquisition, other than Citizens Power and the Subsidiaries of Citizens Power at the date of the Senior Note Indenture and (ii) any other subsidiary that executes a Senior Subsidiary Guarantee in accordance with the provisions of this Senior Note Indenture, and their respective successors and assigns. "Senior Note Indenture" means this Senior Note Indenture, as amended or supplemented from time to time. "Senior Notes" has the meaning assigned to it in the preamble to this Senior Note Indenture. "Senior Note Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Senior Note Indenture and thereafter means the successor serving hereunder. "Senior Subordinated Note Indenture" means that certain Senior Subordinated Note Indenture, dated as of the date hereof, between the Company and State Street Bank and Trust Company, as Senior Subordinated Note Trustee, as amended or supplemented from time to time, relating to the Senior Subordinated Notes. "Senior Subordinated Notes" means the Company's 9-5/8% Senior Subordinated Notes due 2008 issued concurrently pursuant to the Senior Subordinated Note Indenture. "Senior Subsidiary Guarantees" mean the guarantees endorsed on the Senior Notes by the Senior Note Guarantors. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Registration Rights Agreement. 16 "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Senior Note Indenture. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subordinated Subsidiary Guarantees" mean the guarantees endorsed on the Senior Subordinated Notes by the Senior Subordinated Note Guarantors. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or Senior Note Trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa- 77bbbb) as in effect on the date on which this Senior Note Indenture is qualified under the TIA. "Total Assets" means the total assets of the Company and its Restricted Subsidiaries on a consolidated basis determined in accordance with GAAP, as shown on the most recently available consolidated balance sheet of the Company and its Restricted Subsidiaries. "Transaction Documents" means the documents related to (i) the Acquisition (including, without limitation, the purchase agreement, the participation agreement and the escrow agreement), (ii) the Senior Credit Facilities and (iii) the offering of the Senior Notes and the Senior Notes. "Treasury Rate" means the yield to maturity at the time of the computation of the United States Treasury securities with a constant maturity (as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519), which has become publicly available at least two Business Days prior to the date fixed for redemption (or if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the then remaining average life to May 15, 2003; provided, however, that if the average life of such Senior Note is not equal to the constant maturity of the United States Treasury security for which weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the average life of such Senior Note is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "Unrestricted Global Senior Note" means a permanent global Senior Note in the form of Exhibit A1 attached hereto that bears the Global Senior Note Legend and that has the "Schedule of Exchanges of Interests in the Global Senior Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Senior Notes that do not bear the Private Placement Legend. 17 "Unrestricted Definitive Senior Note" means one or more Definitive Senior Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Subsidiary" means (i) Citizens Power and any direct or indirect Subsidiary of Citizens Power on the date hereof and (ii) any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent that such Person: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any obligation (x) to subscribe for additional Equity Interests in Unrestricted Subsidiaries (except with respect to Permitted Investments) or (y) to maintain or preserve such Person's net worth; and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries; provided, however, that the Company and its Restricted Subsidiaries may guarantee the performance of Unrestricted Subsidiaries in the ordinary course of business except for guarantees of Obligations in respect of borrowed money. Any such designation by the Board of Directors shall be evidenced to the Senior Note Trustee by filing with the Senior Note Trustee a certified copy of the Board Resolution giving effect to such designation and an Officer's Certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.07 hereof. "U.S. Person" means a U.S. person as defined in Rule 902(o) under the Securities Act. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Warkworth Associates Joint Venture" means Warkworth Coal Sales Ltd., Warkworth Pastoral Co. Pty, Limited and Warkworth Mining Limited, which are the joint venture companies related to the Warkworth mine in New South Wales, Australia. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such Person. 18 Section 1.02.Other Definitions. Defined in Term Section "Affiliate Transaction"..................................4.11 "Asset Sale".............................................4.10 "Asset Sale Offer".......................................3.09 "Authentication Order"...................................2.02 "Bankruptcy Law".........................................4.01 "Change of Control Offer"................................4.15 "Change of Control Payment"..............................4.15 "Change of Control Payment Date".........................4.15 "Covenant Defeasance"....................................8.03 "Event of Default".......................................6.01 "Excess Proceeds"........................................4.10 "incur"..................................................4.09 "Legal Defeasance".......................................8.02 "Offer Amount"...........................................3.09 "Offer Period"...........................................3.09 "Paying Agent"...........................................2.03 "Permitted Debt".........................................4.09 "Purchase Date"..........................................3.09 "Registrar"..............................................2.03 "Restricted Payments"....................................4.07 Section 1.03.Incorporation by Reference of Trust Indenture Act Whenever this Senior Note Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Senior Note Indenture. The following TIA terms used in this Senior Note Indenture have the following meanings: "Indenture securities" means the Senior Notes; "Indenture security Holder" means a Holder of a Senior Note; "Indenture to be qualified" means this Senior Note Indenture; "Indenture Trustee" or "institutional Trustee" means the Senior Note Trustee; and "obligor" on the Senior Notes and the Senior Subsidiary Guarantees means the Company and the Senior Note Guarantors, respectively, and any successor obligor upon the Senior Notes and the Senior Subsidiary Guarantees, respectively. All other terms used in this Senior Note Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. 19 Section 1.04.Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2. THE SENIOR NOTES Section 2.01. Form and Dating. (a) General. The Senior Notes and the Senior Note Trustee's certificate of authentication shall be substantially in the form of Exhibits A1 and A2 hereto. The Senior Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Senior Note shall be dated the date of its authentication. The Senior Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Senior Notes shall constitute, and are hereby expressly made, a part of this Senior Note Indenture and the Company, the Senior Note Guarantors and the Senior Note Trustee, by their execution and delivery of this Senior Note Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Senior Note conflicts with the express provisions of this Senior Note Indenture, the provisions of this Senior Note Indenture shall govern and be controlling. (b) Global Senior Notes. Senior Notes issued in global form shall be substantially in the form of Exhibits A1 or A2 attached hereto (including the Global Senior Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Senior Note" attached thereto). Senior Notes issued in definitive form shall be substantially in the form of Exhibit A1 attached hereto (but without the Global Senior Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Senior Note" attached thereto). Each Global Senior Note shall represent such of the outstanding Senior Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Senior Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Senior Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Senior Note to reflect the amount of any increase or 20 decrease in the aggregate principal amount of outstanding Senior Notes represented thereby shall be made by the Senior Note Trustee or the Custodian, at the direction of the Senior Note Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. (c) Temporary Global Senior Notes. Senior Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Senior Note, which shall be deposited on behalf of the purchasers of the Senior Notes represented thereby with the Senior Note Trustee, at its New York office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed by the Company and authenticated by the Senior Note Trustee as hereinafter provided. The Restricted Period shall be terminated upon the receipt by the Senior Note Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Cedel Bank certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Senior Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Senior Note or an IAI Global Senior Note bearing a Private Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officer's Certificate from the Company. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Senior Note shall be exchanged for beneficial interests in Regulation S Permanent Global Senior Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Senior Notes, the Senior Note Trustee shall cancel the Regulation S Temporary Global Senior Note. The aggregate principal amount of the Regulation S Temporary Global Senior Note and the Regulation S Permanent Global Senior Notes may from time to time be increased or decreased by adjustments made on the records of the Senior Note Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. (d) Euroclear and Cedel Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be applicable to transfers of beneficial interests in the Regulation S Temporary Global Senior Note and the Regulation S Permanent Global Senior Notes that are held by Participants through Euroclear or Cedel Bank. Section 2.02. Execution and Authentication. Two Officers shall sign the Senior Notes for the Company by manual or facsimile signature. If an Officer whose signature is on a Senior Note no longer holds that office at the time a Senior Note is authenticated, the Senior Note shall nevertheless be valid. A Senior Note shall not be valid until authenticated by the manual signature of the Senior Note Trustee. The signature shall be conclusive evidence that the Senior Note has been authenticated under this Senior Note Indenture. The Senior Note Trustee shall, upon a written order of the Company signed by one Officer (an "Authentication Order"), authenticate Senior Notes for original issue up to the aggregate 21 principal amount stated in paragraph 4 of the Senior Notes. The aggregate principal amount of Senior Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. The Senior Note Trustee may appoint an authenticating agent acceptable to the Company to authenticate Senior Notes. An authenticating agent may authenticate Senior Notes whenever the Senior Note Trustee may do so. Each reference in this Senior Note Indenture to authentication by the Senior Note Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. Section 2.03. Registrar and Paying Agent. The Company shall maintain an office or agency where Senior Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Senior Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Senior Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Senior Note Trustee in writing of the name and address of any Agent not a party to this Senior Note Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Senior Note Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Senior Notes. The Company initially appoints the Senior Note Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Senior Notes. Section 2.04. Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent other than the Senior Note Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Senior Note Trustee all money held by the Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest on the Senior Notes, and will notify the Senior Note Trustee of any default by the Company in making any such payment. While any such default continues, the Senior Note Trustee may require a Paying Agent to pay all money held by it to the Senior Note Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Senior Note Trustee. Upon payment over to the Senior Note Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Senior Note Trustee shall serve as Paying Agent for the Senior Notes. Section 2.05. Holder Lists. The Senior Note Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA (S) 312(a). If the Senior Note Trustee is not the Registrar, the Company shall furnish to the Senior Note Trustee at least seven Business Days before each interest payment date and at such other times as the Senior Note Trustee may request in writing, a list in such form and as of such date as the 22 Senior Note Trustee may reasonably require of the names and addresses of the Holders of Senior Notes and the Company shall otherwise comply with TIA (S) 312(a). Section 2.06. Transfer and Exchange. (a) Transfer and Exchange of Global Senior Notes. A Global Senior Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Senior Notes will be exchanged by the Company for Definitive Senior Notes if (i) the Company delivers to the Senior Note Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary or (ii) the Company in its sole discretion determines that the Global Senior Notes (in whole but not in part) should be exchanged for Definitive Senior Notes and delivers a written notice to such effect to the Senior Note Trustee; provided that in no event shall the Regulation S Temporary Global Senior Note be exchanged by the Company for Definitive Senior Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Senior Notes shall be issued in such names as the Depositary shall instruct the Senior Note Trustee. Global Senior Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Senior Note authenticated and delivered in exchange for, or in lieu of, a Global Senior Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Senior Note. A Global Senior Note may not be exchanged for another Senior Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Senior Note may be transferred and exchanged as provided in Section 2.06(b),(c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Senior Notes. The transfer and exchange of beneficial interests in the Global Senior Notes shall be effected through the Depositary, in accordance with the provisions of this Senior Note Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Senior Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Senior Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (i) Transfer of Beneficial Interests in the Same Global Senior Note. Beneficial interests in any Restricted Global Senior Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Senior Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Temporary Regulation S Global Senior Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Senior Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). 23 (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Senior Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Senior Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Senior Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Senior Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Senior Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Senior Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon consummation of an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Senior Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Senior Notes contained in this Senior Note Indenture and the Senior Notes or otherwise applicable under the Securities Act, the Senior Note Trustee shall adjust the principal amount of the relevant Global Senior Note(s) pursuant to Section 2.06(h) hereof. (iii) Transfer of Beneficial Interests to Another Restricted Global Senior Note. A beneficial interest in any Restricted Global Senior Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Senior Note if the transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Senior Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Senior Note or the Regulation S Global Senior Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transferee will take delivery in the form of a beneficial interest in the IAI Global Senior Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications and certificates and Opinion of Counsel required by item (3) thereof, if applicable. (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Senior Note for Beneficial Interests in the Unrestricted Global Senior Note. A beneficial interest in any Restricted Global Senior Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Senior Note or transferred to a Person who takes delivery 24 thereof in the form of a beneficial interest in an Unrestricted Global Senior Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal or via the Depositary's book-entry system that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Senior Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Senior Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Senior Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Senior Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and state "blue sky" laws and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Senior Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Senior Note Trustee shall authenticate one or more Unrestricted Global Senior Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Senior Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Senior Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Senior Notes. 25 (i) Beneficial Interests in Restricted Global Senior Notes to Restricted Definitive Senior Notes. If any holder of a beneficial interest in a Restricted Global Senior Note proposes to exchange such beneficial interest for a Restricted Definitive Senior Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Senior Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Senior Note proposes to exchange such beneficial interest for a Restricted Definitive Senior Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; (F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Senior Note Trustee shall cause the aggregate principal amount of the applicable Global Senior Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Senior Note Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Senior Note in the appropriate principal amount. Any Definitive Senior Note issued in exchange for a beneficial interest in a Restricted Global Senior Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Senior Note Trustee shall deliver such Definitive Senior Notes to the Persons in whose names such Senior Notes are so registered. Any Definitive Senior Note issued in exchange for a beneficial interest in a Restricted Global Senior Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. 26 Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Senior Note may not be exchanged for a Definitive Senior Note or transferred to a Person who takes delivery thereof in the form of a Definitive Senior Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (ii) Beneficial Interests in Restricted Global Senior Notes to Unrestricted Definitive Senior Notes. A holder of a beneficial interest in a Restricted Global Senior Note may exchange such beneficial interest for an Unrestricted Definitive Senior Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Senior Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker- dealer, (2) a Person participating in the distribution of the Exchange Senior Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Senior Note proposes to exchange such beneficial interest for a Definitive Senior Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Senior Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Senior Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and state "blue sky" laws and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) Beneficial Interests in Unrestricted Global Senior Notes to Unrestricted Definitive Senior Notes. If any holder of a beneficial interest in an Unrestricted Global Senior 27 Note proposes to exchange such beneficial interest for a Definitive Senior Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Senior Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Senior Note Trustee shall cause the aggregate principal amount of the applicable Global Senior Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Senior Note Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Senior Note in the appropriate principal amount. Any Definitive Senior Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Senior Note Trustee shall deliver such Definitive Senior Notes to the Persons in whose names such Senior Notes are so registered. Any Definitive Senior Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear the Private Placement Legend. (d) Transfer and Exchange of Definitive Senior Notes for Beneficial Interests. (i) Restricted Definitive Senior Notes to Beneficial Interests in Restricted Global Senior Notes. If any Holder of a Restricted Definitive Senior Note proposes to exchange such Senior Note for a beneficial interest in a Restricted Global Senior Note or to transfer such Restricted Definitive Senior Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Senior Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Senior Note proposes to exchange such Senior Note for a beneficial interest in a Restricted Global Senior Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Senior Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Restricted Definitive Senior Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Restricted Definitive Senior Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such Restricted Definitive Senior Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; 28 (F) if such Restricted Definitive Senior Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such Restricted Definitive Senior Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Senior Note Trustee shall cancel the Restricted Definitive Senior Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Senior Note, in the case of clause (B) above, the 144A Global Senior Note, in the case of clause (c) above, the Regulation S Global Senior Note, and in all other cases, the IAI Global Senior Note. (ii) Restricted Definitive Senior Notes to Beneficial Interests in Unrestricted Global Senior Notes. A Holder of a Restricted Definitive Senior Note may exchange such Senior Note for a beneficial interest in an Unrestricted Global Senior Note or transfer such Restricted Definitive Senior Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Senior Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Senior Notes proposes to exchange such Senior Notes for a beneficial interest in the Unrestricted Global Senior Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the Holder of such Definitive Senior Notes proposes to transfer such Senior Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Senior Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and state "blue sky" laws and 29 that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Senior Note Trustee shall cancel the Definitive Senior Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Senior Note. (iii) Unrestricted Definitive Senior Notes to Beneficial Interests in Unrestricted Global Senior Notes. A Holder of an Unrestricted Definitive Senior Note may exchange such Senior Note for a beneficial interest in an Unrestricted Global Senior Note or transfer such Definitive Senior Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Note at any time. Upon receipt of a request for such an exchange or transfer, the Senior Note Trustee shall cancel the applicable Unrestricted Definitive Senior Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Senior Notes. If any such exchange or transfer from a Definitive Senior Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Senior Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Senior Note Trustee shall authenticate one or more Unrestricted Global Senior Notes in an aggregate principal amount equal to the principal amount of Definitive Senior Notes so transferred. (e) Transfer and Exchange of Definitive Senior Notes for Definitive Senior Notes. Upon request by a Holder of Definitive Senior Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Senior Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Senior Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e). (i) Restricted Definitive Senior Notes to Restricted Definitive Senior Notes. Any Restricted Definitive Senior Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Senior Note if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a 30 certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. (ii) Restricted Definitive Senior Notes to Unrestricted Definitive Senior Notes. Any Restricted Definitive Senior Note may be exchanged by the Holder thereof for an Unrestricted Definitive Senior Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Senior Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Senior Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Senior Notes proposes to exchange such Senior Notes for an Unrestricted Definitive Senior Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (2) if the Holder of such Restricted Definitive Senior Notes proposes to transfer such Senior Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Senior Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and state "blue sky" laws and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) Unrestricted Definitive Senior Notes to Unrestricted Definitive Senior Notes. A Holder of Unrestricted Definitive Senior Notes may transfer such Senior Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Senior Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Senior Notes pursuant to the instructions from the Holder thereof. 31 (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Senior Note Trustee shall authenticate (i) one or more Unrestricted Global Senior Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Senior Notes tendered for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they are not participating in a distribution of the Exchange Senior Notes and (z) they are not affiliates (as defined in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and (ii) Definitive Senior Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Senior Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Senior Notes, the Senior Note Trustee shall cause the aggregate principal amount of the applicable Restricted Global Senior Notes to be reduced accordingly, and the Company shall execute and the Senior Note Trustee shall authenticate and deliver to the Persons designated by the Holders of Definitive Senior Notes so accepted Definitive Senior Notes in the appropriate principal amount. (g) Legends The following legends shall appear on the face of all Global Senior Notes and Definitive Senior Notes issued under this Senior Note Indenture unless specifically stated otherwise in the applicable provisions of this Senior Note Indenture. (i) Private Placement Legend. (A) Except as permitted by subparagraph (B) below, each Global Senior Note and each Definitive Senior Note (and all Senior Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE 32 UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE." (B) Notwithstanding the foregoing, any Global Senior Note or Definitive Senior Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Senior Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Senior Note Legend. Each Global Senior Note shall bear a legend in substantially the following form: "THIS GLOBAL SENIOR NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE SENIOR NOTE INDENTURE GOVERNING THIS SENIOR NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE SENIOR NOTE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE SENIOR NOTE INDENTURE, (II) THIS GLOBAL SENIOR NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE SENIOR NOTE INDENTURE, (III) THIS GLOBAL SENIOR NOTE MAY BE DELIVERED TO THE SENIOR NOTE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE SENIOR NOTE INDENTURE AND (IV) THIS GLOBAL SENIOR NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." (iii) Regulation S Temporary Global Senior Note Legend. The Regulation S Temporary Global Senior Note shall bear a legend in substantially the following form: "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SENIOR NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED SENIOR NOTES, ARE AS SPECIFIED IN THE SENIOR NOTE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL SENIOR NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON." (h) Cancellation and/or Adjustment of Global Senior Notes. At such time as all beneficial interests in a particular Global Senior Note have been exchanged for Definitive Senior Notes or a particular Global Senior Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Senior Note shall be returned to or retained and canceled by the Senior Note Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Senior Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Senior Note or for Definitive Senior Notes, the principal amount of Senior Notes represented by such Global Senior Note shall be reduced accordingly and an endorsement shall be made on such Global Senior Note by the Senior Note Trustee or by the Depositary at the direction of the Senior Note Trustee to reflect such reduction; 33 and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Senior Note, such other Global Senior Note shall be increased accordingly and an endorsement shall be made on such Global Senior Note by the Senior Note Trustee or by the Depositary at the direction of the Senior Note Trustee to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Senior Note Trustee shall authenticate Global Senior Notes and Definitive Senior Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Senior Note or to a Holder of a Definitive Senior Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Senior Note selected for redemption in whole or in part, except the unredeemed portion of any Senior Note being redeemed in part. (iv) All Global Senior Notes and Definitive Senior Notes issued upon any registration of transfer or exchange of Global Senior Notes or Definitive Senior Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Senior Note Indenture, as the Global Senior Notes or Definitive Senior Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Senior Notes during a period beginning at the opening of business 15 days before the day of any selection of Senior Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Senior Note so selected for redemption in whole or in part, except the unredeemed portion of any Senior Note being redeemed in part or (c) to register the transfer of or to exchange a Senior Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Senior Note, the Senior Note Trustee, any Agent and the Company may deem and treat the Person in whose name any Senior Note is registered as the absolute owner of such Senior Note for the purpose of receiving payment of principal of and interest on such Senior Notes and for all other purposes, and none of the Senior Note Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Senior Note Trustee shall authenticate Global Senior Notes and Definitive Senior Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. 34 SECTION 2.07. REPLACEMENT SENIOR NOTES If any mutilated Senior Note is surrendered to the Senior Note Trustee or the Company and the Senior Note Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Senior Note, the Company shall issue and the Senior Note Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Senior Note if the Senior Note Trustee's requirements are met. If required by the Senior Note Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Senior Note Trustee and the Company to protect the Company, the Senior Note Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Senior Note is replaced. The Company may charge for its expenses in replacing a Senior Note. Every replacement Senior Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Senior Note Indenture equally and proportionately with all other Senior Notes duly issued hereunder. SECTION 2.08. OUTSTANDING SENIOR NOTES. The Senior Notes outstanding at any time are all the Senior Notes authenticated by the Senior Note Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Senior Note effected by the Senior Note Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Senior Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Senior Note. If a Senior Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Senior Note Trustee receives proof satisfactory to it that the replaced Senior Note is held by a bona fide purchaser. If the principal amount of any Senior Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Senior Notes payable on that date, then on and after that date such Senior Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. SECTION 2.09. TREASURY SENIOR NOTES. In determining whether the Holders of the required principal amount of Senior Notes have concurred in any direction, waiver or consent, Senior Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Senior Note Trustee shall be protected in relying on any such direction, waiver or consent, only Senior Notes that the Senior Note Trustee knows are so owned shall be so disregarded. SECTION 2.10. TEMPORARY SENIOR NOTES Until certificates representing Senior Notes are ready for delivery, the Company may prepare and the Senior Note Trustee, upon receipt of an Authentication Order, shall authenticate temporary Senior Notes. Temporary Senior Notes shall be substantially in the form of certificated Senior Notes but 35 may have variations that the Company considers appropriate for temporary Senior Notes and as shall be reasonably acceptable to the Senior Note Trustee. Without unreasonable delay, the Company shall prepare and the Senior Note Trustee shall authenticate definitive Senior Notes in exchange for temporary Senior Notes. Holders of temporary Senior Notes shall be entitled to all of the benefits of this Senior Note Indenture. SECTION 2.11. CANCELLATION. The Company at any time may deliver Senior Notes to the Senior Note Trustee for cancellation. The Registrar and Paying Agent shall forward to the Senior Note Trustee any Senior Notes surrendered to them for registration of transfer, exchange or payment. The Senior Note Trustee and no one else shall cancel all Senior Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy canceled Senior Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all canceled Senior Notes shall be delivered to the Company. The Company may not issue new Senior Notes to replace Senior Notes that it has paid or that have been delivered to the Senior Note Trustee for cancellation. SECTION 2.12. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Senior Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Senior Notes and in Section 4.01 hereof. The Company shall notify the Senior Note Trustee in writing of the amount of defaulted interest proposed to be paid on each Senior Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Senior Note Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. SECTION 2.13. CUSIP NUMBERS. The Company in issuing the Senior Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Senior Note Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Senior Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Senior Notes, and any such redemption shall not be affected by any defect in or the omission of such numbers. The Company will promptly notify the Senior Note Trustee of any change in the CUSIP numbers. ARTICLE 3. REDEMPTION AND PREPAYMENT SECTION 3.01. NOTICES TO SENIOR NOTE TRUSTEE. If the Company elects or is required to redeem Senior Notes pursuant to the redemption provisions of Sections 3.07 or 3.10 hereof, respectively, it shall furnish to the Senior Note Trustee, at least 30 days but not more than 60 days before a redemption date, an Officer's Certificate setting forth (i) the 36 clause of this Senior Note Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Senior Notes to be redeemed, (iv) the redemption price and (v) the CUSIP numbers of the Senior Notes to be redeemed. SECTION 3.02. SELECTION OF SENIOR NOTES TO BE REDEEMED. If less than all of the Senior Notes are to be redeemed or purchased in an offer to purchase at any time, the Senior Note Trustee shall select the Senior Notes to be redeemed or purchased among the Holders of the Senior Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Senior Notes are listed or, if the Senior Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Senior Note Trustee considers fair and appropriate. In the event of partial redemption by lot, the particular Senior Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Senior Note Trustee from the outstanding Senior Notes not previously called for redemption. The Senior Note Trustee shall promptly notify the Company in writing of the Senior Notes selected for redemption and, in the case of any Senior Note selected for partial redemption, the principal amount thereof to be redeemed. Senior Notes and portions of Senior Notes selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Senior Notes of a Holder are to be redeemed, the entire outstanding amount of Senior Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Senior Note Indenture that apply to Senior Notes called for redemption also apply to portions of Senior Notes called for redemption. SECTION 3.03. NOTICE OF REDEMPTION Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Senior Notes are to be redeemed at its registered address. The notice shall identify the Senior Notes to be redeemed, including the CUSIP numbers, and shall state: (a) the redemption date; (b) the redemption price; (c) if any Senior Note is being redeemed in part, the portion of the principal amount of such Senior Note to be redeemed and that, after the redemption date upon surrender of such Senior Note, a new Senior Note or Senior Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Senior Note; (d) the name and address of the Paying Agent; (e) that Senior Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Senior Notes called for redemption ceases to accrue on and after the redemption date; 37 (g) the paragraph of the Senior Notes and/or Section of this Senior Note Indenture pursuant to which the Senior Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Senior Notes. At the Company's request, the Senior Note Trustee shall give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have delivered to the Senior Note Trustee, at least 45 days prior to the redemption date, an Officer's Certificate requesting that the Senior Note Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION Once notice of redemption is mailed in accordance with Section 3.03 hereof, Senior Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE One Business Day prior to the redemption date, the Company shall deposit with the Senior Note Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Senior Notes to be redeemed on that date. The Senior Note Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Senior Note Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Senior Notes to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Senior Notes or the portions of Senior Notes called for redemption. If a Senior Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Senior Note was registered at the close of business on such record date. If any Senior Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Senior Notes and in Section 4.01 hereof. SECTION 3.06. SENIOR NOTES REDEEMED IN PART. Upon surrender of a Senior Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Senior Note Trustee shall authenticate for the Holder at the expense of the Company a new Senior Note equal in principal amount to the unredeemed portion of the Senior Note surrendered. SECTION 3.07. OPTIONAL REDEMPTION. (a) The Senior Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice. (b) Prior to May 15, 2003, the Senior Notes will be redeemable at a redemption price equal to 100% of the principal amount thereof plus the applicable Senior Notes Make Whole Premium, 38 plus, to the extent not included in the Senior Notes Make Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption. For purposes of the foregoing, "Senior Notes Make Whole Premium" means, with respect to a Senior Note, an amount equal to the greater of (a) 104.438% of the outstanding principal amount of such Senior Note and (b) the excess of (1) the present value of the remaining interest, premium, if any, and principal payments due on such Senior Note as if such Senior Note were redeemed on May 15, 2003, computed using a discount rate equal to the Treasury Rate plus basis 50 points, over (2) the outstanding principal amount of such Senior Note. (c) On or after May 15, 2003, the Senior Notes are redeemable at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on May 15 of the years indicated below: Year Percentage 2003................................. 104.438% 2004................................. 102.958% 2005................................. 101.479% 2006 and thereafter.................. 100.000% (d) Notwithstanding the provisions of clauses (a), (b) and (c) of this Section 3.07, during the first 36 months after the date of the closing of the Acquisition, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Senior Notes issued under this Senior Note Indenture at a redemption price of 108.875% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the aggregate principal amount of Senior Notes issued remain outstanding immediately after the occurrence of such redemption (excluding Senior Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 120 days of the date of the closing of such Equity Offering. (e) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. SECTION 3.08. MANDATORY REDEMPTION. Except as set forth in Section 3.10 hereof, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Senior Notes. SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS. In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence an offer to all Holders to purchase Senior Notes (an "Asset Sale Offer"), it shall follow the procedures specified below. The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company shall purchase the principal amount of Senior Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has been tendered, all Senior Notes tendered in response to the Asset Sale Offer. Payment for any Senior Notes so purchased shall be made in the same manner as interest payments are made. 39 If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Senior Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Senior Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Senior Note Trustee and each of the Holders. The notice shall contain all instructions and materials necessary to enable such Holders to tender Senior Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; (b) the Offer Amount, the purchase price and the Purchase Date; (c) that any Senior Note not tendered or accepted for payment shall continue to accrete or accrue interest; (d) that, unless the Company defaults in making such payment, any Senior Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or accrue interest after the Purchase Date; (e) that Holders electing to have a Senior Note purchased pursuant to an Asset Sale Offer may only elect to have all of such Senior Note purchased and may not elect to have only a portion of such Senior Note purchased; (f) that Holders electing to have a Senior Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Senior Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (g) that Holders shall be entitled to withdraw their election if the Company, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Senior Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Senior Note purchased; (h) that, if the aggregate principal amount of Senior Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Senior Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Senior Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Senior Notes were purchased only in part shall be issued new Senior Notes equal in principal amount to the unpurchased portion of the Senior Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Senior Notes or portions thereof 40 tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Senior Notes tendered, and shall deliver to the Senior Note Trustee an Officer's Certificate stating that such Senior Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Senior Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Senior Note, and the Senior Note Trustee, upon written request from the Company shall authenticate and mail or deliver such new Senior Note to such Holder, in a principal amount equal to any unpurchased portion of the Senior Note surrendered. Any Senior Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Purchase Date. Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. SECTION 3.10 SPECIAL MANDATORY REDEMPTION. In the event that the Escrow Account is released without the consummation of the Acquisition (or if the Acquisition is not consummated within 30 days of such deposit), the Company shall redeem the Senior Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption. ARTICLE 4. COVENANTS SECTION 4.01. PAYMENT OF SENIOR NOTES. The Company or a Senior Note Guarantor shall pay or cause to be paid the principal of, premium, if any, and interest and Liquidated Damages, if any, on the Senior Notes on the dates and in the manner provided in the Senior Notes. Principal, premium, if any, and interest and Liquidated Damages, if any, shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest and Liquidated Damages, if any, then due. The Company shall pay all Liquidated Damages, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Company or a Senior Note Guarantor shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to the then applicable interest rate on the Senior Notes to the extent lawful; it shall pay interest (including post- petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace period) at the same rate to the extent lawful. SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Senior Note Trustee or an affiliate of the Senior Note Trustee, Registrar or co-registrar) where Senior Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Senior Notes and 41 this Senior Note Indenture may be served. The Company shall give prompt written notice to the Senior Note Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Senior Note Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Senior Note Trustee. The Company may also from time to time designate one or more other offices or agencies where the Senior Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to the Senior Note Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Senior Note Trustee as one such office or agency of the Company in accordance with Section 2.03. SECTION 4.03. REPORTS. (a) Whether or not required by the rules and regulations of the SEC, so long as any Senior Notes are outstanding, the Company shall furnish to the Holders of Senior Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports, in each case, within the time periods specified in the SEC's rules and regulations. In addition, following consummation of the Exchange Offer, whether or not required by the rules and regulations of the SEC, the Company shall file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. The Company shall at all times comply with TIA (S) 314(a). (b) For so long as any Senior Notes remain outstanding, the Company and the Senior Note Guarantors shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. SECTION 4.04. COMPLIANCE CERTIFICATE. (a) The Company and each Senior Note Guarantor (to the extent that such Senior Note Guarantor is so required under the TIA) shall deliver to the Senior Note Trustee, within 90 days after the end of each fiscal year, an Officer's Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Senior Note Indenture, and further stating, as to each such Officer 42 signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Senior Note Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Senior Note Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Senior Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company shall, so long as any of the Senior Notes are outstanding, deliver to the Senior Note Trustee, as soon as possible, but in no event later than five days after any Officer becoming aware of any Default or Event of Default, an Officer's Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. SECTION 4.05. TAXES. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Senior Notes. SECTION 4.06. STAY, EXTENSION AND USURY LAWS. The Company and each of the Senior Note Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Senior Note Indenture; and the Company and each of the Senior Note Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Senior Note Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. SECTION 4.07. RESTRICTED PAYMENTS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests 43 (other than Disqualified Stock) of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Senior Notes or any Senior Subsidiary Guarantee, except a payment of interest or principal at Stated Maturity or Indebtedness permitted under clause (viii) of Section 4.09 hereof or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09 hereof; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Subsidiaries after the date of the closing of the Acquisition (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (v), (ix), (x) and (xii) of the next succeeding paragraph), is less than the sum, without duplication, of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the closing of the Acquisition to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds or the fair market value of property other than cash received by the Company since the date of the closing of the Acquisition as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company), plus (iii) to the extent that either any Existing Citizens Power Investment or any Restricted Investment that reduced the amount available for Restricted Payments under this clause (c) is sold for cash or otherwise liquidated or repaid for cash or any dividend or payment is received by the Company or a Restricted Subsidiary after the date of the closing of the Acquisition in respect of such Investment, 100% of the amount of Net Proceeds or dividends or payments (including the fair market value of property) received in connection therewith, up to the amount of the Existing Citizens Power Investment on the date of the closing of the Acquisition or the Restricted Investment that reduced this clause (c), as the case may be, and thereafter 50% of the amount of Net Proceeds or dividends or payments (including the fair market value of property) received in connection therewith (except that the amount of dividends or payments received in respect of payments of Obligations in respect of such Investments, such as taxes, shall not increase the amounts under this clause (c)), plus (iv) to the extent that any Unrestricted Subsidiary of the Company is redesignated as a Restricted Subsidiary after the date of the closing of the Acquisition, 100% of the fair market value of the Company's Investment in such Subsidiary as of the date of such redesignation up to the amount of the Restricted Investments made in such Subsidiary that reduced this clause (c) and 50% of the excess of the fair market value of the Company's Investment in such Subsidiary as of the date of such redesignation over (1) the amount of the Restricted Investment that reduced this clause (c) and (2) any amounts that increased the amount available as a Permitted Investment; provided, further, that if Citizens Power or any of its Subsidiaries is designated as a Restricted Subsidiary, the amount of the fair market value of the Investment therein on the date hereof shall also be credited to this clause (c); provided, further, that any 44 amounts that increase this clause (c) shall not duplicatively increase amounts available as Permitted Investments. The foregoing provisions will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the this Senior Note Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (c)(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) dividends or distributions by a Restricted Subsidiary of the Company so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities; (v) Investments in Unrestricted Subsidiaries having an aggregate fair market value not to exceed the amount, at the time of such Investment, substantially concurrently contributed in cash or Cash Equivalents to the common equity capital of the Company after the date of the closing of the Acquisition; provided that any such amount contributed shall be excluded from the calculation made pursuant to clause (c) above; (vi) the payment of dividends on the Company's Common Stock, following the first public offering of the Company's Common Stock after the date of the closing of the Acquisition, of up to 6% per annum of the net proceeds received by the Company in such public offering, other than public offerings with respect to the Company's Common Stock registered on Form S- 8; (vii) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any present or former employee or director of the Company (or any of its Restricted Subsidiaries) pursuant to any management equity subscription agreement or stock option agreement or any other management or employee benefit plan in effect as of the date of the closing of the Acquisition; provided that (A) the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $2.0 million in any twelve-month period (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $5.0 million in any calendar year); provided further that such amount in any calendar year may be increased by an amount not to exceed (x) the cash proceeds from the sale of Equity Interests of the Company or a Restricted Subsidiary to members of management and directors of the Company and its Subsidiaries that occurs after the 45 date of the closing of the Acquisition, plus (y) the cash proceeds of key- man life insurance policies received by the Company and its Restricted Subsidiaries after the date of the closing of the Acquisition, less (z) the amount of any Restricted Payments previously made pursuant to clauses (x) and (y) of this subparagraph (vii); and, provided further, that cancellation of Indebtedness owing to the Company from members of management of the Company or any of its Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Company or a Restricted Subsidiary will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of this Senior Note Indenture and (B) no Default or Event of Default shall have occurred and be continuing immediately after such transaction; (viii) repurchases of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options; and (ix) the repurchase, redemption or other acquisition or retirement for value of the Senior Subordinated Notes pursuant to the provisions of Section 3.07 of the Senior Subordinated Note Indenture; provided that the amount of any Equity Offering used to effect such a repurchase, redemption or other acquisition or retirement for value shall be excluded from the calculation made pursuant to clause (c) above; (x) the repurchase, redemption or other acquisition or retirement for value of the Senior Subordinated Notes pursuant to the provisions of Section 3.09, 4.10 and 4.15 of the Senior Subordinated Note Indenture; provided that, as of the date of such repurchase, redemption or other acquisition or retirement for value, no Default or Event of Default shall have occurred and be continuing or, with the passage of time, would occur as a consequence thereof; (xi) the repurchase, redemption or other acquisition or retirement for value of the Senior Subordinated Notes pursuant to the provisions of Section 3.10 of the Senior Subordinated Note Indenture ; provided that the amount of any such repurchase, redemption, acquisition or retirement shall be excluded from the calculation made pursuant to clause (c) above; and (xii) other Restricted Payments not otherwise prohibited by this Section 4.07 in an aggregate amount not to exceed $25.0 million under this clause (xii). As of the date of the closing of the Acquisition, all of the Company's Subsidiaries other than Citizens Power and its Subsidiaries will be Restricted Subsidiaries. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated shall be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this Section 4.07. All such outstanding Investments shall be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. If, at any time, any Unrestricted Subsidiary would fail to meet the requirements in the definition of "Unrestricted Subsidiary" as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Senior Note Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 hereof, the 46 Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any noncash Restricted Payment or any adjustment made pursuant to paragraph (c) of this Section 4.07 shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Senior Note Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $25.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Senior Note Trustee an Officer's Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed. If any Restricted Investment is sold or otherwise liquidated or repaid or any dividend or payment is received by the Company or a Restricted Subsidiary and such amounts may be credited to clause (c) above, then such amounts will be credited only to the extent of amounts not otherwise included in Consolidated Net Income and that do not otherwise increase the amount available as a Permitted Investment. SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary that is not a Senior Note Guarantor to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the foregoing restrictions will not apply to encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of the Senior Note Indenture and/or the closing of the Acquisition, (b) the Senior Credit Facilities as in effect as of the date of the Senior Note Indenture and/or the closing of the Acquisition, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the Senior Credit Facilities as in effect on the date of the Senior Note Indenture and/or the closing of the Acquisition, (c) the Senior Note Indenture, this Senior Note Indenture, the Senior Notes and the Senior Notes, (d) applicable law or any applicable rule, regulation or order, (e) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Senior Note Indenture to be incurred, (f) customary non-assignment provisions in leases and other agreements 47 entered into in the ordinary course of business and consistent with past practices, (g) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (h) any agreement for the sale of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale, (i) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced, (j) secured Indebtedness otherwise permitted to be incurred pursuant to the provisions of Section 4.12 hereof that limits the right of the debtor to dispose of the assets securing such Indebtedness, (k) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business, (l) restrictions on cash or other deposits or net worth imposed by customers or lessors under contracts or leases entered into in the ordinary course of business and (m) any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (l) above, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company's Board of Directors, not materially more restrictive in the aggregate with respect to such dividend and other payment restrictions than those (considered as a whole) contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing. SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and the Company shall issue any Disqualified Stock and shall not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock and the Company's Restricted Subsidiaries may incur Indebtedness or issue Disqualified Stock or preferred stock if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. The provisions of the first paragraph of this Section 4.09 will not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company of term Indebtedness under Credit Facilities (and the Guarantee thereof by the Senior Note Guarantors); provided that the aggregate principal amount of all term Indebtedness outstanding under this clause (i) after giving effect to such incurrence does not exceed an amount equal to $920.0 million; (ii) the incurrence by the Company of revolving credit Indebtedness and letters of credit (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) under Credit Facilities (and the Guarantee thereof by the Senior Note Guarantors); provided that the aggregate principal amount of all revolving credit Indebtedness outstanding under this clause (ii) after giving effect to such incurrence does not exceed an amount equal to $480.0 million; 48 (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company, the Senior Note Guarantors and the Senior Note Guarantors of Indebtedness represented by the Senior Notes, the Senior Notes, the Senior Subsidiary Guarantees and the Senior Subsidiary Guarantees limited in aggregate principal amount, without duplication, to amounts outstanding under the Senior Note Indenture and this Senior Note Indenture as of their respective dates; (v) (A) the guarantee by the Company or any of the Senior Note Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company or (B) the incurrence of Indebtedness of a Restricted Subsidiary to the extent that such Indebtedness is supported by a letter of credit, in each case that was permitted to be incurred by another provision of this covenant; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness (including Capital Lease Obligations) to finance the acquisition (including by direct purchase, by lease or indirectly by the acquisition of the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of such acquisition) or improvement of property (real or personal) in an aggregate principal amount which, when aggregated with the principal amount of all other Indebtedness then outstanding pursuant to this clause (vi) and including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (vi), does not exceed an amount equal to 5% of Total Assets at the time of such incurrence; (vii) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Senior Note Indenture to be incurred under the first paragraph hereof or clauses (iii), (iv) or (vii) of this paragraph; (viii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Senior Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (viii); (ix) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred in the ordinary course of business for the purpose of risk management and not for the purpose of speculation; (x) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (x), and the issuance of preferred stock by Unrestricted Subsidiaries; 49 (xi) the incurrence of Indebtedness solely in respect of performance, surety and similar bonds or completion or performance guarantees (including, without limitation, performance guarantees pursuant to coal supply agreements or equipment leases), to the extent that such incurrence does not result in the incurrence of any obligation for the payment of borrowed money to others; (xii) the incurrence of Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary; provided, however that (i) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (i)) and (ii) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and its Restricted Subsidiaries in connection with such disposition; (xiii) the guarantee by the Company or any of the Senior Note Guarantors of additional Indebtedness relating to Black Beauty Coal Company not to exceed $50.0 million in aggregate principal amount outstanding at any one time under this clause (xiii); (xiv) the incurrence of Indebtedness relating to the Bengalla Joint Venture or the Warkworth Associates Joint Venture in an aggregate amount not to exceed $100.0 million in aggregate principal amount outstanding at any one time under this clause (xiv); and (xv) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (xv), not to exceed $250.0 million. The Company shall not incur, and shall not permit its Restricted Subsidiaries to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Restricted Subsidiary unless such Indebtedness is also contractually subordinated in right of payment to the Senior Notes, or the Senior Subsidiary Guarantees, as the case may be, on substantially identical terms; provided, however, that no Indebtedness of the Company or any Restricted Subsidiary shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company or any Restricted Subsidiary solely by virtue of being unsecured. For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xv) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09, the Company shall, in its sole discretion, classify or reclassify such item of Indebtedness in any manner that complies with this Section 4.09. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. 50 Section 4.10. Asset Sales. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value as determined in good faith by the Company (evidenced by a resolution of the Board of Directors set forth in an Officer's Certificate delivered to the Senior Note Trustee with respect to any Asset Sale determined to have a value greater that $25.0 million) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Subsidiary is in the form of cash, Cash Equivalents or Marketable Securities; provided that the following amounts shall be deemed to be cash: (w) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Senior Notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability, (x) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash within 180 days following the closing of such Asset Sale (to the extent of the cash received), (y) any Designated Noncash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale; provided that the aggregate fair market value (as determined above) of such Designated Noncash Consideration, taken together with the fair market value at the time of receipt of all other Designated Noncash Consideration received pursuant to this clause (y) less the amount of Net Proceeds previously realized in cash from prior Designated Noncash Consideration is less than 5% of Total Assets at the time of the receipt of such Designated Noncash Consideration (with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value) and (z) Additional Assets received in an exchange of assets transaction. Within 360 days after the receipt of any cash Net Proceeds from an Asset Sale, the Company or such Restricted Subsidiary, at its option, may apply such cash Net Proceeds, at its option, (a) to repay Indebtedness of the Company or any Restricted Subsidiary that is not subordinated in right of payment to Indebtedness under a Credit Facility, (b) to the acquisition of a majority of the assets of, or a majority of the Voting Stock of, another Permitted Business, the making of a capital expenditure or the acquisition of other assets or Investments that are used or useful in a Permitted Business or (c) to apply the cash Net Proceeds from such Asset Sale to an Investment in Additional Assets. Any cash Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall be required to make an offer to all Holders of Senior Notes and all holders of other Indebtedness that ranks pari passu with the Senior Notes containing provisions similar to those set forth herein with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Senior Notes and such other Indebtedness that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase, in accordance with the procedures set forth herein and such other Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Senior Note Indenture. If the aggregate principal amount of Senior Notes and such other Indebtedness tendered into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Senior Note Trustee shall select the Senior Notes and such other Indebtedness to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. 51 Section 4.11. Transactions with Affiliates. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction") involving aggregate payments or consideration in excess of $5.0 million, unless (i) such Affiliate Transaction is on terms that are materially no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Senior Note Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of Directors set forth in an Officer's Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the members of the Board of Directors and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. Notwithstanding the foregoing, the following items shall not be deemed to be Affiliate Transactions: (i) any employment agreement or other compensation plan or arrangement for employees entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Restricted Subsidiary; (ii) transactions between or among the Company and/or its Restricted Subsidiaries, (iii) payment of reasonable fees to officers, directors, employees or consultants of the Company; (iv) Restricted Payments that are permitted by, and Investments that are not prohibited by, Section 4.07 hereof; (v) indemnification payments made to officers, directors and employees of the Company or any Restricted Subsidiary pursuant to charter, bylaw, statutory or contractual provisions; (vi) the payment of customary annual management, consulting and advisory fees and related expenses to Lehman Merchant Bank and its Affiliates; (vii) payments by the Company or any of its Restricted Subsidiaries to Lehman Merchant Bank and its Affiliates made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which payments are approved by a majority of the Board of Directors of the Company in good faith; (viii) the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders' agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the date of the closing of the Acquisition and any similar agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the date of the closing of the Acquisition shall only be permitted by this clause (viii) to the extent that the terms of any such amendment or new agreement are not otherwise disadvantageous to the Holders in any material respect; (ix) transactions pursuant to the terms of the Transaction Documents in effect on the date of the closing of the Acquisition; (x) transactions with Unrestricted Subsidiaries, customers, clients, suppliers, joint venture partners or purchasers or sellers of goods or services, in each case in the ordinary course of business (including, without limitation, pursuant to joint venture agreements) and otherwise in compliance with the terms of this Senior Note Indenture which are, in the aggregate (taking into account all the costs and benefits associated with such transactions), materially no less favorable to the Company or its Restricted Subsidiaries than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; (xi) guarantees of 52 performance by the Company and its Restricted Subsidiaries of Unrestricted Subsidiaries in the ordinary course of business, except for guarantees of Obligations in respect of borrowed money; and (xii) pledges of Equity Interests of Unrestricted Subsidiaries for the benefit of lenders of Unrestricted Subsidiaries. Section 4.12. Liens. The Company shall not and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under this Senior Note Indenture and the Senior Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien. Section 4.13. Business activities. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole. Section 4.14. Corporate Existence. Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Senior Notes. Section 4.15. Offer to Repurchase Upon Change of Control. (a) Upon the occurrence of a Change of Control, each Holder of Senior Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Senior Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within ten days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Senior Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required herein and described in such notice. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Senior Notes as a result of a Change of Control. (b) On the Change of Control Payment Date, the Company shall, to the extent lawful, (1) accept for payment all Senior Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in 53 respect of all Senior Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Senior Note Trustee the Senior Notes so accepted together with an Officer's Certificate stating the aggregate principal amount of Senior Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Senior Notes so tendered the Change of Control Payment for such Senior Notes, and, upon receipt of an Authentication Order, the Senior Note Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Senior Note equal in principal amount to any unpurchased portion of the Senior Notes surrendered, if any; provided that each such new Senior Note will be in a principal amount of $1,000 or an integral multiple thereof. Prior to complying with the provisions of this Section 4.15, but in any event within 90 days following a Change of Control, the Company shall either repay all outstanding Senior Debt other than the Senior Notes or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt other than the Senior Notes to permit the repurchase of Senior Notes required by this Section 4.15. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Change of Control provisions described above shall be applicable whether or not any other provisions of this Senior Note Indenture are applicable. (c) Notwithstanding anything to the contrary in this Section 4.15, the Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth herein applicable to a Change of Control Offer made by the Company and purchases all Senior Notes validly tendered and not withdrawn under such Change of Control Offer or if the Company exercises its option to purchase the Senior Notes. Section 4.16. Additional Senior Subsidiary Guarantees. If the Company or any of its Domestic Subsidiaries shall acquire or create another Domestic Subsidiary after the date hereof and such Domestic Subsidiary provides a guarantee of the Senior Credit Facilities, then such newly acquired or created Domestic Subsidiary shall execute a supplemental indenture in form and substance substantially similar to Exhibit F hereto providing that --------- such Domestic Subsidiary shall become a Senior Note Guarantor under this Senior Note Indenture, provided, however, this Section 4.16 shall not apply to any Domestic Subsidiary that has been properly designated as an Unrestricted Subsidiary in accordance with this Senior Note Indenture for so long as it continues to constitute an Unrestricted Subsidiary. Section 4.17. Payments for consents The Company nor any of its Restricted Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Senior Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Senior Note Indenture or the Senior Notes unless such consideration is offered to be paid or is paid to all Holders of the Senior Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. 54 ARTICLE 5. SUCCESSORS Section 5.01. Merger, Consolidation, or Sale of Assets. The Company shall not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Registration Rights Agreement, the Senior Notes and this Senior Note Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Senior Note Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, (A) the entity surviving such consolidation or merger would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 or (B) the Fixed Charge Coverage Ratio for the Company or the entity or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made would, immediately after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, not be less than such Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction. The Company may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. The provisions of this Section 5.01 will not be applicable to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and its Restricted Subsidiaries. Notwithstanding the foregoing clause (iv), (i) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (ii) the Company may merge with an Affiliate that has no significant assets or liabilities and was formed solely for the purpose of changing the jurisdiction of organization of the Company in another State of the United States or the form of organization of the Company so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby and provided that the successor assumes all the obligations of the Company under the Registration Rights Agreement, the Senior Notes and this Senior Note Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Senior Note Trustee. Section 5.02. Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Senior Note Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise 55 every right and power of the Company under this Senior Note Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Senior Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.01 hereof. ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01. Events of Default. An "Event of Default" occurs if: (a) the Company defaults in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Senior Notes and such default continues for a period of 30 days; (b) the Company defaults in the payment when due of principal of or premium, if any, on the Senior Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (c) the Company or any of its Subsidiaries fails to make the offer required or to purchase any of the Senior Notes as required by Sections 4.10 and/or 4.15 hereof; (d) the Company fails to comply for 30 days after notice to the Company by the Senior Note Trustee with any of the provisions of Sections 4.07 or 4.09 hereof; or the Company fails to observe or perform any other covenant, representation, warranty or other agreement in this Senior Note Indenture or the Senior Notes for 60 days after notice to the Company by the Senior Note Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class; (e) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of the Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the date of this Senior Note Indenture, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of such Indebtedness aggregates $50.0 million or more; (f) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments exceeds $50.0 million; (g) the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, 56 (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is not paying its debts as they become due; or (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; (ii) appoints a custodian of the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or (iii) orders the liquidation of the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days; (i) except as permitted by this Senior Note Indenture, any Senior Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Senior Note Guarantor, or any Person acting on behalf of any Senior Note Guarantor, shall deny or disaffirm its obligations under such Senior Note Guarantor's Senior Subsidiary Guarantee; or (j) the Company fails to deposit the required amounts into the Escrow Account pursuant to the Escrow Letter or any failure of the proceeds of the Escrow Account to be applied as required under the Escrow Letter. Section 6.02. Acceleration. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 hereof with respect to the Company, any Significant Subsidiary that is a Restricted Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) occurs and is continuing, the Senior Note Trustee or the Holders of at least 25% in principal amount of the then outstanding Senior Notes may declare all the Senior Notes to be due and payable immediately; provided, that so long as any Indebtedness permitted to be incurred pursuant to the Senior Credit Facilities shall be outstanding, such acceleration shall not be effective until the earlier of (i) an acceleration under any such Indebtedness under the Senior Credit Facilities or (ii) five Business Days after receipt by the Company of written notice of such acceleration of the Senior Notes. Upon any such declaration, the Senior Notes shall become due and payable immediately. Notwithstanding the foregoing, if an Event of 57 Default specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the Company, any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all outstanding Senior Notes shall be due and payable without further action or notice. The Holders of a majority in aggregate principal amount of the then outstanding Senior Notes by written notice to the Senior Note Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived. If an Event of Default occurs on or after May 15, 2003, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Senior Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Senior Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, anything in this Senior Note Indenture or in the Senior Notes to the contrary notwithstanding. If an Event of Default occurs prior to May 15, 2003, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding paying the premium upon redemption of the Senior Notes prior to such date, then, upon acceleration of the Senior Notes, a premium shall also become and be immediately due and payable in an amount, for each of the years beginning on May 15, of the years set forth below, as set forth below (expressed as a percentage of the aggregate principal amount to the date of payment that would otherwise be due but for the provisions of this sentence): Year Percentage 1998 ............................................... 111.833% 1999 ............................................... 110.354% 2000 ............................................... 108.875% 2001 ............................................... 107.396% 2002 ............................................... 105.917% Section 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Senior Note Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest and Liquidated Damages, if any, on the Senior Notes or to enforce the performance of any provision of the Senior Notes or this Senior Note Indenture. The Senior Note Trustee may maintain a proceeding even if it does not possess any of the Senior Notes or does not produce any of them in the proceeding. A delay or omission by the Senior Note Trustee or any Holder of a Senior Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. Section 6.04. Waiver of Past Defaults. Holders of not less than a majority in aggregate principal amount of the then outstanding Senior Notes by notice to the Senior Note Trustee may on behalf of the Holders of all of the Senior Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Senior Notes (including in connection with an offer to purchase) (provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Senior Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such 58 acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Senior Note Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 6.05. Control by Majority. Holders of a majority in principal amount of the then outstanding Senior Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Senior Note Trustee or exercising any trust or power conferred on it. However, the Senior Note Trustee may refuse to follow any direction that conflicts with law or this Senior Note Indenture that the Senior Note Trustee determines may be unduly prejudicial to the rights of other Holders of Senior Notes or that may involve the Senior Note Trustee in personal liability. Section 6.06. Limitation on Suits. A Holder of a Senior Note may pursue a remedy with respect to this Senior Note Indenture or the Senior Notes only if: (a) the Holder of a Senior Note gives to the Senior Note Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the then outstanding Senior Notes make a written request to the Senior Note Trustee to pursue the remedy; (c) such Holder of a Senior Note or Holders of Senior Notes offer and, if requested, provide to the Senior Note Trustee indemnity satisfactory to the Senior Note Trustee against any loss, liability or expense; (d) the Senior Note Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Senior Notes do not give the Senior Note Trustee a direction inconsistent with the request. A Holder of a Senior Note may not use this Senior Note Indenture to prejudice the rights of another Holder of a Senior Note or to obtain a preference or priority over another Holder of a Senior Note. Section 6.07. Rights of Holders of Senior Notes to Receive Payment. Notwithstanding any other provision of this Senior Note Indenture, the right of any Holder of a Senior Note to receive payment of principal, premium and Liquidated Damages, if any, and interest on the Senior Note, on or after the respective due dates expressed in the Senior Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. Section 6.08. Collection Suit by Senior Note Trustee. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Senior Note Trustee is authorized to recover judgment in its own name and as Senior Note Trustee of an 59 express trust against the Company for the whole amount of principal of, premium and Liquidated Damages, if any, and interest remaining unpaid on the Senior Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Senior Note Trustee, its agents and counsel. Section 6.09. Senior Note Trustee May File Proofs of Claim. The Senior Note Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Senior Note Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Senior Note Trustee, its agents and counsel) and the Holders of the Senior Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Senior Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Senior Note Trustee, and in the event that the Senior Note Trustee shall consent to the making of such payments directly to the Holders, to pay to the Senior Note Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Senior Note Trustee, its agents and counsel, and any other amounts due the Senior Note Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Senior Note Trustee, its agents and counsel, and any other amounts due the Senior Note Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Senior Note Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Senior Notes or the rights of any Holder, or to authorize the Senior Note Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10. Priorities. If the Senior Note Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: First: to the Senior Note Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Senior Note Trustee and the costs and expenses of collection; Second: to Holders of Senior Notes for amounts due and unpaid on the Senior Notes for principal, premium and Liquidated Damages, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Senior Notes for principal, premium and Liquidated Damages, if any and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Senior Note Trustee may fix a record date and payment date for any payment to Holders of Senior Notes pursuant to this Section 6.10. 60 Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Senior Note Indenture or in any suit against the Senior Note Trustee for any action taken or omitted by it as a Senior Note Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Senior Note Trustee, a suit by a Holder of a Senior Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Senior Notes. ARTICLE 7. SENIOR NOTE TRUSTEE Section 7.01. Duties of Senior Note Trustee. (a) If an Event of Default has occurred and is continuing, the Senior Note Trustee shall exercise such of the rights and powers vested in it by this Senior Note Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Senior Note Trustee shall be determined solely by the express provisions of this Senior Note Indenture and the Senior Note Trustee need perform only those duties that are specifically set forth in this Senior Note Indenture and no others, and no implied covenants or obligations shall be read into this Senior Note Indenture against the Senior Note Trustee; and (ii) in the absence of bad faith on its part, the Senior Note Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Senior Note Trustee and conforming to the requirements of this Senior Note Indenture. However, the Senior Note Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Senior Note Indenture. (c) The Senior Note Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Senior Note Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Senior Note Trustee was negligent in ascertaining the pertinent facts; and (iii) the Senior Note Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. 61 (d) Whether or not therein expressly so provided, every provision of this Senior Note Indenture that in any way relates to the Senior Note Trustee is subject to paragraphs (a), (b), (c), (e) and (f) of this Section and Section 7.02. (e) No provision of this Senior Note Indenture shall require the Senior Note Trustee to expend or risk its own funds or incur any liability. The Senior Note Trustee shall be under no obligation to exercise any of its rights and powers under this Senior Note Indenture at the request of any Holders, unless such Holder shall have offered to the Senior Note Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Senior Note Trustee shall not be liable for interest on any money received by it except as the Senior Note Trustee may agree in writing with the Company. Money held in trust by the Senior Note Trustee need not be segregated from other funds except to the extent required by law. Section 7.02. Rights of Senior Note Trustee. (a) The Senior Note Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Senior Note Trustee need not investigate any fact or matter stated in the document. (b) Before the Senior Note Trustee acts or refrains from acting, it may require an Officer's Certificate or an Opinion of Counsel or both. The Senior Note Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer's Certificate or Opinion of Counsel. The Senior Note Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Senior Note Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Senior Note Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Senior Note Indenture. (e) Unless otherwise specifically provided in this Senior Note Indenture, any demand, request, direction or notice from the Company or any Senior Note Guarantor shall be sufficient if signed by an Officer of the Company or Senior Note Guarantor issuing such demand, request or notice. (f) The Senior Note Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Senior Note Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Senior Note Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. Section 7.03. Individual Rights of Senior Note Trustee. The Senior Note Trustee in its individual or any other capacity may become the owner or pledgee of Senior Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Senior Note Trustee. However, in the event that the Senior Note Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as Senior Note Trustee or resign. Any Agent may do the same with like rights and duties. The Senior Note Trustee is also subject to Sections 7.10 and 7.11 hereof. 62 Section 7.04. Senior Note Trustee's Disclaimer. The Senior Note Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Senior Note Indenture or the Senior Notes, it shall not be accountable for the Company's use of the proceeds from the Senior Notes or any money paid to the Company or upon the Company's direction under any provision of this Senior Note Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Senior Note Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Senior Notes or any other document in connection with the sale of the Senior Notes or pursuant to this Senior Note Indenture other than its certificate of authentication. Section 7.05. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to the Senior Note Trustee, the Senior Note Trustee shall mail to Holders of Senior Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Senior Note, the Senior Note Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Senior Notes. Section 7.06. Reports by Senior Note Trustee to Holders of the Senior Notes. Within 60 days after each May 15 beginning with the May 15 following the date of this Senior Note Indenture, and for so long as Senior Notes remain outstanding, the Senior Note Trustee shall mail to the Holders of the Senior Notes a brief report dated as of such reporting date that complies with TIA (S) 313(a) (but if no event described in TIA (S) 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Senior Note Trustee also shall comply with TIA (S) 313(b)(2). The Senior Note Trustee shall also transmit by mail all reports as required by TIA (S) 313(c). A copy of each report at the time of its mailing to the Holders of Senior Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Senior Notes are listed in accordance with TIA (S) 313(d). The Company shall promptly notify the Senior Note Trustee when the Senior Notes are listed on any stock exchange. Section 7.07. Compensation and Indemnity. The Company and the Senior Note Guarantors shall pay to the Senior Note Trustee from time to time reasonable compensation for its acceptance of this Senior Note Indenture and services hereunder. The Senior Note Trustee's compensation shall not be limited by any law on compensation of a Senior Note Trustee of an express trust. The Company and the Senior Note Guarantors shall reimburse the Senior Note Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Senior Note Trustee's agents and counsel. The Company and the Senior Note Guarantors shall indemnify the Senior Note Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Senior Note Indenture, including the costs and expenses of enforcing this Senior Note Indenture against the Company and the Senior Note Guarantors (including this Section 7.07) and defending itself against any claim (whether asserted by the Company and the Senior Note Guarantors or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, 63 liability or expense may be attributable to its negligence or bad faith. The Senior Note Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Senior Note Trustee to so notify the Company shall not relieve the Company and the Senior Note Guarantors of its obligations hereunder. The Company shall defend the claim and the Senior Note Trustee shall cooperate in the defense. The Senior Note Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company and the Senior Note Guarantors under this Section 7.07 shall survive the satisfaction and discharge of this Senior Note Indenture. To secure the Company's and the Senior Note Guarantors' payment obligations in this Section, the Senior Note Trustee shall have a Lien prior to the Senior Notes on all money or property held or collected by the Senior Note Trustee, except that held in trust to pay principal and interest on particular Senior Notes. Such Lien shall survive the satisfaction and discharge of this Senior Note Indenture. When the Senior Note Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Senior Note Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the extent applicable. Section 7.08. Replacement of Senior Note Trustee. A resignation or removal of the Senior Note Trustee and appointment of a successor Senior Note Trustee shall become effective only upon the successor Senior Note Trustee's acceptance of appointment as provided in this Section. The Senior Note Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Senior Notes of a majority in principal amount of the then outstanding Senior Notes may remove the Senior Note Trustee by so notifying the Senior Note Trustee and the Company in writing. The Company may remove the Senior Note Trustee if: (a) the Senior Note Trustee fails to comply with Section 7.10 hereof; (b) the Senior Note Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Senior Note Trustee under any Bankruptcy Law; (c) a custodian or public officer takes charge of the Senior Note Trustee or its property; or (d) the Senior Note Trustee becomes incapable of acting. If the Senior Note Trustee resigns or is removed or if a vacancy exists in the office of Senior Note Trustee for any reason, the Company shall promptly appoint a successor Senior Note Trustee. Within one year after the successor Senior Note Trustee takes office, the Holders of a majority in principal 64 amount of the then outstanding Senior Notes may appoint a successor Senior Note Trustee to replace the successor Senior Note Trustee appointed by the Company. If a successor Senior Note Trustee does not take office within 60 days after the retiring Senior Note Trustee resigns or is removed, the retiring Senior Note Trustee, the Company, or the Holders of Senior Notes of at least 10% in principal amount of the then outstanding Senior Notes may petition any court of competent jurisdiction for the appointment of a successor Senior Note Trustee. If the Senior Note Trustee, after written request by any Holder of a Senior Note who has been a Holder of a Senior Note for at least six months, fails to comply with Section 7.10, such Holder of a Senior Note may petition any court of competent jurisdiction for the removal of the Senior Note Trustee and the appointment of a successor Senior Note Trustee. A successor Senior Note Trustee shall deliver a written acceptance of its appointment to the retiring Senior Note Trustee and to the Company. Thereupon, the resignation or removal of the retiring Senior Note Trustee shall become effective, and the successor Senior Note Trustee shall have all the rights, powers and duties of the Senior Note Trustee under this Senior Note Indenture. The successor Senior Note Trustee shall mail a notice of its succession to Holders of the Senior Notes. The retiring Senior Note Trustee shall promptly transfer all property held by it as Senior Note Trustee to the successor Senior Note Trustee, provided all sums owing to the Senior Note Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Senior Note Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Senior Note Trustee. Section 7.09. Successor Senior Note Trustee by Merger, etc. If the Senior Note Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Senior Note Trustee. Section 7.10. Eligibility; Disqualification. There shall at all times be a Senior Note Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate Senior Note Trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100.0 million as set forth in its most recent published annual report of condition. This Senior Note Indenture shall always have a Senior Note Trustee who satisfies the requirements of TIA (S) 310(a)(1), (2) and (5). The Senior Note Trustee is subject to TIA (S) 310(b). Section 7.11. Preferential Collection of Claims Against Company. The Senior Note Trustee is subject to TIA (S) 311(a), excluding any creditor relationship listed in TIA (S) 311(b). A Senior Note Trustee who has resigned or been removed shall be subject to TIA (S) 311(a) to the extent indicated therein. 65 ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officer's Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Senior Notes upon compliance with the conditions set forth below in this Article 8. Section 8.02. Legal Defeasance and Discharge. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Senior Notes and to have each Senior Note Guarantor's obligation discharged with respect to its Senior Subsidiary Guarantee on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Senior Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Senior Note Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Senior Notes and this Senior Note Indenture (and the Senior Note Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Senior Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest and Liquidated Damages, if any, on such Senior Notes when such payments are due, (b) the Company's obligations with respect to such Senior Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Senior Note Trustee hereunder and the Company's obligations in connection therewith and (d) this Article 8. Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. Section 8.03. Covenant Defeasance. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company and each Senior Note Guarantor shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from their obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16 and 4.17 hereof with respect to the outstanding Senior Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Senior Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Senior Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Senior Notes, the Company and each Senior Note Guarantor may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Senior Note Indenture and such Senior Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 66 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not constitute Events of Default. Section 8.04. Conditions to Legal or Covenant Defeasance. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Senior Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Senior Note Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non- callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium and Liquidated Damages, if any, and interest on the outstanding Senior Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Company must specify whether the Senior Notes are being defeased to maturity or to a particular redemption date; (b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Senior Note Trustee an Opinion of Counsel in the United States reasonably acceptable to the Senior Note Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Senior Note Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Senior Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Senior Note Trustee an Opinion of Counsel in the United States reasonably acceptable to the Senior Note Trustee confirming that the Holders of the outstanding Senior Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Senior Notes pursuant to this Article 8 concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period ending on the effective date of such defeasance; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Senior Note Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (f) the Company shall have delivered to the Senior Note Trustee an Opinion of Counsel (which may be subject to customary exceptions) to the effect that on the effective date of such defeasance, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; 67 (g) the Company shall have delivered to the Senior Note Trustee an Officer's Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and (h) the Company shall have delivered to the Senior Note Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Senior Note Trustee (or other qualifying Senior Note Trustee, collectively for purposes of this Section 8.05, the "Senior Note Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Senior Notes shall be held in trust and applied by the Senior Note Trustee, in accordance with the provisions of such Senior Notes and this Senior Note Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Senior Note Trustee may determine, to the Holders of such Senior Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company and the Senior Note Guarantors shall pay and indemnify the Senior Note Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Senior Notes. Anything in this Article 8 to the contrary notwithstanding, the Senior Note Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Senior Note Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. Section 8.06. Repayment to Company. Any money deposited with the Senior Note Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Senior Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Senior Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Senior Note Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as Senior Note Trustee thereof, shall thereupon cease; provided, however, that the Senior Note Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. 68 Section 8.07. Reinstatement. If the Senior Note Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Senior Note Indenture and the Senior Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Senior Note Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Senior Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Senior Notes to receive such payment from the money held by the Senior Note Trustee or Paying Agent. ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01. Without Consent of Holders of Senior Notes. Notwithstanding Section 9.02 of this Senior Note Indenture, the Company, the Senior Note Guarantors and the Senior Note Trustee may amend or supplement this Senior Note Indenture, the Senior Subsidiary Guarantees or the Senior Notes without the consent of any Holder of a Senior Note: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Senior Notes in addition to or in place of certificated Senior Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; (c) to provide for the assumption of the Company's or a Senior Note Guarantor's obligations to the Holders of the Senior Notes by a successor to the Company or a Senior Note Guarantor pursuant to Article 5 or Article 10 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Senior Notes or that does not adversely affect the legal rights hereunder of any Holder of the Senior Note; (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Senior Note Indenture under the TIA; (f) to provide for the issuance of Additional Senior Notes in accordance with the limitations set forth in this Senior Note Indenture as of the date hereof; or (g) to allow any Senior Note Guarantor to execute a supplemental Senior Note Indenture and/or a Senior Subsidiary Guarantee with respect to the Senior Notes. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Senior Note Indenture, and upon receipt by the Senior Note Trustee of the documents described in Section 7.02 hereof, the Senior Note Trustee shall join with the Company and the Senior Note Guarantors in the execution of any amended or supplemental Senior Note Indenture authorized or permitted by the terms of this Senior Note Indenture 69 and to make any further appropriate agreements and stipulations that may be therein contained, but the Senior Note Trustee shall not be obligated to enter into such amended or supplemental Senior Note Indenture that affects its own rights, duties or immunities under this Senior Note Indenture or otherwise. Section 9.02. With Consent of Holders of Senior Notes. Except as provided below in this Section 9.02, the Company and the Senior Note Trustee may amend or supplement this Senior Note Indenture (including Sections 3.09, 3.10, 4.10 and 4.15 hereof), the Senior Subsidiary Guarantees and the Senior Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Senior Notes (including Additional Senior Notes, if any) then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Senior Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Senior Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Senior Note Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Notes (including Additional Senior Notes, if any) voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Senior Notes). Section 2.08 hereof shall determine which Senior Notes are considered to be "outstanding" for purposes of this Section 9.02. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Senior Note Indenture, and upon the filing with the Senior Note Trustee of evidence satisfactory to the Senior Note Trustee of the consent of the Holders of Senior Notes as aforesaid, and upon receipt by the Senior Note Trustee of the documents described in Section 7.02 hereof, the Senior Note Trustee shall join with the Company in the execution of such amended or supplemental Senior Note Indenture unless such amended or supplemental Senior Note Indenture directly affects the Senior Note Trustee's own rights, duties or immunities under this Senior Note Indenture or otherwise, in which case the Senior Note Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Senior Note Indenture. It shall not be necessary for the consent of the Holders of Senior Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Senior Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Senior Note Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Senior Notes (including Additional Senior Notes, if any) then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Senior Note Indenture or the Senior Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Senior Notes held by a non-consenting Holder): (a) reduce the principal amount of Senior Notes whose Holders must consent to an amendment, supplement or waiver; 70 (b) reduce the principal of or change the fixed maturity of any Senior Note or alter or waive any of the provisions with respect to the redemption of the Senior Notes except as provided above with respect to Sections 3.09, 3.10, 4.10 and 4.15 hereof; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Senior Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest or Liquidated Damages, if any, on the Senior Notes (except a rescission of acceleration of the Senior Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Senior Notes (including Additional Senior Notes, if any) and a waiver of the payment default that resulted from such acceleration; (e) make any Senior Note payable in money other than that stated in the Senior Notes; (f) make any change in the provisions of this Senior Note Indenture relating to waivers of past Defaults or the rights of Holders of Senior Notes to receive payments of principal of or premium, interest or Liquidated Damages, if any, on the Senior Notes; (g) waive a redemption payment with respect to any Senior Note (other than a payment required pursuant to Section 4.10 or 4.15); (h) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions; or (i) release any Senior Note Guarantor from any of its obligations under its Senior Subsidiary Guarantee or this Senior Note Indenture, except in accordance with the terms of this Senior Note Indenture. Section 9.03. Compliance with Trust Indenture Act. Every amendment or supplement to this Senior Note Indenture or the Senior Notes shall be set forth in a amended or supplemental Senior Note Indenture that complies with the TIA as then in effect. Section 9.04. Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Senior Note is a continuing consent by the Holder of a Senior Note and every subsequent Holder of a Senior Note or portion of a Senior Note that evidences the same debt as the consenting Holder's Senior Note, even if notation of the consent is not made on any Senior Note. However, any such Holder of a Senior Note or subsequent Holder of a Senior Note may revoke the consent as to its Senior Note if the Senior Note Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. Section 9.05. Notation on or Exchange of Senior Notes. The Senior Note Trustee may place an appropriate notation about an amendment, supplement or waiver on any Senior Note thereafter authenticated. The Company in exchange for all 71 Senior Notes may issue and the Senior Note Trustee shall, upon receipt of an Authentication Order, authenticate new Senior Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Senior Note shall not affect the validity and effect of such amendment, supplement or waiver. Section 9.06. Senior Note Trustee to Sign Amendments, etc. The Senior Note Trustee shall sign any amended or supplemental Senior Note Indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Senior Note Trustee. The Company may not sign an amendment or supplemental Senior Note Indenture until the Board of Directors approves it. In executing any amended or supplemental Senior Note Indenture, the Senior Note Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 12.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental Senior Note Indenture is authorized or permitted by this Senior Note Indenture. ARTICLE 10. SENIOR SUBSIDIARY GUARANTEES Section 10.01. Guarantee. Subject to this Article 10, each of the Senior Note Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Senior Note authenticated and delivered by the Senior Note Trustee and to the Senior Note Trustee and its successors and assigns, irrespective of the validity and enforceability of this Senior Note Indenture, the Senior Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Senior Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Senior Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Senior Note Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Senior Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Senior Note Guarantors shall be jointly and severally obligated to pay the same immediately. Each Senior Note Guarantor agrees that this is a guarantee of payment and not a guarantee of collection. The Senior Note Guarantors hereby agree that their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Senior Notes or this Senior Note Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Senior Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Senior Note Guarantor. Each Senior Note Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Senior Subsidiary Guarantee shall not be discharged except by complete performance of the obligations contained in the Senior Notes and this Senior Note Indenture. 72 If any Holder or the Senior Note Trustee is required by any court or otherwise to return to the Company, the Senior Note Guarantors or any custodian, Senior Note Trustee, liquidator or other similar official acting in relation to either the Company or the Senior Note Guarantors, any amount paid by either to the Senior Note Trustee or such Holder, this Senior Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Senior Note Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Senior Note Guarantor further agrees that, as between the Senior Note Guarantors, on the one hand, and the Holders and the Senior Note Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Senior Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Senior Note Guarantors for the purpose of this Senior Subsidiary Guarantee. The Senior Note Guarantors shall have the right to seek contribution from any non-paying Senior Note Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Senior Subsidiary Guarantee. Section 10.02. Limitation on Senior Note Guarantor Liability. Each Senior Note Guarantor, and by its acceptance of Senior Notes, each Holder, hereby confirms that it is the intention of all such parties that the Senior Subsidiary Guarantee of such Senior Note Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Senior Subsidiary Guarantee. To effectuate the foregoing intention, the Senior Note Trustee, the Holders and the Senior Note Guarantors hereby irrevocably agree that the obligations of such Senior Note Guarantor under its Senior Subsidiary Guarantee and this Article 10 shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Senior Note Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Senior Note Guarantor in respect of the obligations of such other Senior Note Guarantor under this Article 10, result in the obligations of such Senior Note Guarantor under its Senior Subsidiary Guarantee not constituting a fraudulent transfer or conveyance. Section 10.03. Execution and Delivery of Senior Subsidiary Guarantee. To evidence its Senior Subsidiary Guarantee set forth in Section 10.01, each Senior Note Guarantor hereby agrees that a notation of such Senior Subsidiary Guarantee substantially in the form included in Exhibit E shall be endorsed by an Officer of such Senior Note Guarantor on each Senior Note authenticated and delivered by the Senior Note Trustee and that this Senior Note Indenture shall be executed on behalf of such Senior Note Guarantor by its President or one of its Vice Presidents. Each Senior Note Guarantor hereby agrees that its Senior Subsidiary Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding any failure to endorse on each Senior Note a notation of such Senior Subsidiary Guarantee. If an Officer whose signature is on this Senior Note Indenture or on the Senior Subsidiary Guarantee no longer holds that office at the time the Senior Note Trustee authenticates the Senior Note on which a Senior Subsidiary Guarantee is endorsed, the Senior Subsidiary Guarantee shall be valid nevertheless. 73 The delivery of any Senior Note by the Senior Note Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Senior Subsidiary Guarantee set forth in this Senior Note Indenture on behalf of the Senior Note Guarantors. In the event that the Company creates or acquires any new Subsidiaries subsequent to the date of this Senior Note Indenture, if required by Section 4.16 hereof, the Company shall cause such Subsidiaries to execute supplemental Senior Note Indentures to this Senior Note Indenture and Senior Subsidiary Guarantees in accordance with Section 4.16 hereof and this Article 10, to the extent applicable. Section 10.04. Senior Note Guarantors May Consolidate, etc., on Certain Terms. No Senior Note Guarantor may consolidate with or merge with or into (whether or not such Senior Note Guarantor is the surviving Person) another Person whether or not affiliated with such Senior Note Guarantor unless: (a) subject to Section 10.04 hereof, the Person formed by or surviving any such consolidation or merger (if other than a Senior Note Guarantor or the Company) unconditionally assumes all the obligations of such Senior Note Guarantor, pursuant to a supplemental Senior Note Indenture in form and substance reasonably satisfactory to the Senior Note Trustee, under the Senior Notes, this Senior Note Indenture, the Registration Rights Agreement and the Senior Subsidiary Guarantee on the terms set forth herein or therein; (b) immediately after giving effect to such transaction, no Default or Event of Default exists; and (c) the Company would be permitted, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof. In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental Senior Note Indenture, executed and delivered to the Senior Note Trustee and satisfactory in form to the Senior Note Trustee, of the Senior Subsidiary Guarantee endorsed upon the Senior Notes and the due and punctual performance of all of the covenants and conditions of this Senior Note Indenture to be performed by the Senior Note Guarantor, such successor Person shall succeed to and be substituted for the Senior Note Guarantor with the same effect as if it had been named herein as a Senior Note Guarantor. Such successor Person thereupon may cause to be signed any or all of the Senior Subsidiary Guarantees to be endorsed upon all of the Senior Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Senior Note Trustee. All the Senior Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under this Senior Note Indenture as the Senior Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of this Senior Note Indenture as though all of such Senior Subsidiary Guarantees had been issued at the date of the execution hereof. Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses (a) and (b) above, nothing contained in this Senior Note Indenture or in any of the Senior Notes shall prevent any consolidation or merger of a Senior Note Guarantor with or into the Company or another Senior Note Guarantor, or shall prevent any sale or conveyance of the property of a Senior Note Guarantor as an entirety or substantially as an entirety to the Company or another Senior Note Guarantor. 74 Section 10.05. Releases Following Sale of Assets. In the event of (a) a sale or other disposition of all of the assets of any Senior Note Guarantor, by way of merger, consolidation or otherwise, (b) a sale or other disposition of all of the capital stock of any Senior Note Guarantor or (c) the designation of a Senior Note Guarantor as an Unrestricted Subsidiary in accordance with the terms of the Senior Note Indenture, then such Senior Note Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Senior Note Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Senior Note Guarantor) will be released and relieved of any obligations under its Senior Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Senior Note Indenture, including without limitation Section 4.10 hereof. Upon delivery by the Company to the Senior Note Trustee of an Officer's Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the applicable provisions of this Senior Note Indenture, including without limitation Section 4.10 hereof, the Senior Note Trustee shall execute any documents reasonably required in order to evidence the release of any Senior Note Guarantor from its obligations under its Senior Subsidiary Guarantee. Any Senior Note Guarantor not released from its obligations under its Senior Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Senior Notes and for the other obligations of any Senior Note Guarantor under this Senior Note Indenture as provided in this Article 10. ARTICLE 11. MISCELLANEOUS Section 11.01. Trust Indenture Act Controls. If any provision of this Senior Note Indenture limits, qualifies or conflicts with the duties imposed by TIA (S) 318(c), the imposed duties shall control. Section 11.02. Notices. Any notice or communication by the Company, any Senior Note Guarantor or the Senior Note Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address. If to the Company and/or any Senior Note Guarantor: P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri 63101-1826 Telecopier No.: (314) 342-3419 Attention: Chief Legal Officer With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017-3954 75 Telecopier No. (212) 455-2502 Attention: Rise B. Norman If to the Senior Note Trustee: State Street Bank and Trust Company Goodwin Square 225 Asylum Street Hartford, Connecticut 06103 Telecopier No.: (860) 244-1897 Attention: Philip Kane The Company, any Senior Note Guarantor or the Senior Note Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA (S) 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Senior Note Trustee and each Agent at the same time. Section 11.03. Communication by Holders of Senior Notes with Other Holders of Senior Notes. Holders may communicate pursuant to TIA (S) 312(b) with other Holders with respect to their rights under this Senior Note Indenture or the Senior Notes. The Company, the Senior Note Trustee, the Registrar and anyone else shall have the protection of TIA (S) 312(c). Section 11.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Senior Note Trustee to take any action under this Senior Note Indenture, the Company shall furnish to the Senior Note Trustee: (a) an Officer's Certificate in form and substance reasonably satisfactory to the Senior Note Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Senior Note Indenture relating to the proposed action have been satisfied; and 76 (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Senior Note Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. Section 11.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Senior Note Indenture (other than a certificate provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S) 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. Section 11.06. Rules by Senior Note Trustee and Agents. The Senior Note Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator or stockholder of the Company or any Senior Note Guarantor, as such, shall have any liability for any obligations of the Company or such Senior Note Guarantor under the Senior Notes, the Senior Subsidiary Guarantees, this Senior Note Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Senior Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Senior Notes. Section 11.08. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SENIOR NOTE INDENTURE, THE SENIOR NOTES AND THE SENIOR SUBSIDIARY GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 77 Section 11.09. No Adverse Interpretation of Other Agreements. This Senior Note Indenture may not be used to interpret any other Senior Note Indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such Senior Note Indenture, loan or debt agreement may not be used to interpret this Senior Note Indenture. Section 11.10. Successors. All agreements of the Company in this Senior Note Indenture and the Senior Notes shall bind its successors. All agreements of the Senior Note Trustee in this Senior Note Indenture shall bind its successors. Section 11.11. Severability. In case any provision in this Senior Note Indenture or in the Senior Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 11.12. Counterpart Originals. The parties may sign any number of copies of this Senior Note Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Section 11.13. Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Senior Note Indenture have been inserted for convenience of reference only, are not to be considered a part of this Senior Note Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] 78 SIGNATURES Dated as of May 18, 1998 P&L Coal Holdings Corporation By:/s/ Felix Herlihy ----------------------------- Name: Felix Herlihy Title: Vice President, Treasurer and Assistant Secretary State Street Bank and Trust Company By:/s/ Philip G. Kane, Jr. ----------------------------- Name: Philip G. Kane, Jr. Title: Vice President Indenture signature page(s) EXHIBIT A1 (Face of Senior Note) ================================================================================ [Insert the Global Senior Note Legend, if applicable pursuant to the provisions of the Senior Note Indenture] [Insert the Private Placement Legend, if applicable pursuant to the provisions of the Senior Note Indenture] CUSIP/CINS 8-7/8% [Series A] [Series B] Senior Notes due 2008 No.___ $_______ P&L Coal Holdings Corporation promises to pay to ____________ or registered assigns, the principal sum of ________________________ Dollars on ________ __,2008. Interest Payment Dates: ________ __, and ________ __ Record Dates: ________ __ and ________ __ Dated: ________ __, 1998 P&L Coal Holdings Corporation By: -------------------------- Name: Title: By: -------------------------- Name: Title: This is one of the [Global] Senior Notes referred to in the within-mentioned Senior Note Indenture: State Street Bank and Trust Company, as Senior Note Trustee By: ------------------- ================================================================================ A1-1 (Back of Senior Note) 8-7/8% [Series A] [Series B] Senior Notes due 2008 Capitalized terms used herein shall have the meanings assigned to them in the Senior Note Indenture referred to below unless otherwise indicated. 1. Interest. P&L Coal Holdings Corporation, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Senior Note at 8-7/8% per annum from May 18, 1998 until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages semi-annually on May 15 and November 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Senior Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Senior Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be November 15, 1998. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on the Senior Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Senior Notes at the close of business on the May 1 or November 1 next preceding the Interest Payment Date, even if such Senior Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Senior Note Indenture with respect to defaulted interest. The Senior Notes will be payable as to principal, premium and Liquidated Damages, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Senior Notes and all other Senior Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. Paying Agent and Registrar. Initially, State Street Bank and Trust Company, the Senior Note Trustee under the Senior Note Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. Senior Note Indenture. The Company issued the Senior Notes under an Senior Note Indenture dated as of May 18, 1998 ("Senior Note Indenture") between the Company and the Senior Note Trustee. The terms of the Senior Notes include those stated in the Senior Note Indenture and those made part of the Senior Note Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Senior Notes are subject to all such terms, and Holders are referred to the Senior Note Indenture and such Act for a statement of such terms. To the extent any provision of this Senior Note conflicts with the express provisions of the Senior Note Indenture, the provisions of the A1-2 Senior Note Indenture shall govern and be controlling. The Senior Notes are obligations of the Company limited to $550.0 million in aggregate principal amount. 5. Optional Redemption. (a) The Senior Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice. (b) Prior to May 15, 2003, the Senior Notes will be redeemable at a redemption price equal to 100% of the principal amount thereof plus the applicable Senior Notes Make Whole Premium, plus, to the extent not included in the Senior Notes Make Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption. For purposes of the foregoing, "Senior Notes Make Whole Premium" means, with respect to a Senior Note, an amount equal to the greater of (a) 104.438% of the outstanding principal amount of such Senior Note and (b) the excess of (1) the present value of the remaining interest, premium, if any, and principal payments due on such Senior Note as if such Senior Note were redeemed on May 15, 2003, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (2) the outstanding principal amount of such Senior Note. (c) On or after May 15, 2003, the Senior Notes are redeemable at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on May 15 of the years indicated below: Year Percentage 2003.............................. 104.438% 2004.............................. 102.958% 2005.............................. 101.479% 2006 and thereafter............... 100.000% (d) Notwithstanding the provisions of clauses (a), (b) and (c) of this Paragraph 5, during the first 36 months after the date of the closing of the Acquisition, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Senior Notes issued under this Senior Note Indenture at a redemption price of 108.875% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the aggregate principal amount of Senior Notes issued remain outstanding immediately after the occurrence of such redemption (excluding Senior Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 120 days of the date of the closing of such Equity Offering. (e) Any redemption pursuant to this Paragraph 5 shall be made pursuant to the provisions of Article 3 of the Senior Note Indenture. 6. Mandatory Redemption. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Senior Notes. 7. Special Mandatory Redemption. In the event that the Escrow Account is released without the consummation of the Acquisition (or if the Acquisition is not consummated within 30 days of such deposit), the Company shall A1-3 redeem the Senior Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption. 8. Repurchase at Option of Holder. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Senior Note Indenture. (b) If the Company or a Subsidiary consummates any Asset Sales, within five days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall commence an offer to all Holders of Senior Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Senior Note Indenture to purchase the maximum principal amount of Senior Notes (including any Additional Senior Notes) that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Senior Note Indenture. To the extent that the aggregate amount of Senior Notes (including any Additional Senior Notes) tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for general corporate purposes. If the aggregate principal amount of Senior Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Senior Note Trustee shall select the Senior Notes to be purchased on a pro rata basis. Holders of Senior Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Senior Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Notes. 9. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Notes are to be redeemed at its registered address. Senior Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Senior Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Senior Notes or portions thereof called for redemption. 10. Denominations, Transfer, Exchange. The Senior Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Senior Notes may be registered and Senior Notes may be exchanged as provided in the Senior Note Indenture. The Registrar and the Senior Note Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Senior Note Indenture. The Company need not exchange or register the transfer of any Senior Note or portion of a Senior Note selected for redemption, except for the unredeemed portion of any Senior Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Senior Notes for a period of 15 days before a selection of Senior Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 11. Persons Deemed Owners. The registered Holder of a Senior Note may be treated as its owner for all purposes. A1-4 12. Amendment, Supplement and Waiver. Subject to certain exceptions, the Senior Note Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Senior Notes and Additional Senior Notes, if any, voting as a single class, and any existing default or compliance with any provision of the Senior Note Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Notes and Additional Senior Notes, if any, voting as a single class. Without the consent of any Holder of a Senior Note, the Senior Note Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Notes in addition to or in place of certificated Senior Notes, to provide for the assumption of the Company's or Senior Note Guarantor's obligations to Holders of the Senior Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Senior Notes or that does not adversely affect the legal rights under the Senior Note Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Senior Note Indenture under the Trust Indenture Act, to provide for the Issuance of Additional Senior Notes in accordance with the limitations set forth in the Senior Note Indenture, or to allow any Senior Note Guarantor to execute a supplemental Senior Note Indenture to the Senior Note Indenture and/or a Senior Subsidiary Guarantee with respect to the Senior Notes. 13. Defaults and Remedies. An "Event of Default" occurs if: (i) the Company defaults in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Senior Notes and such default continues for a period of 30 days; (ii) the Company defaults in the payment when due of principal of or premium, if any, on the Senior Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (iii) the Company or any of its Subsidiaries fails to make the offer required or to purchase any of the Senior Notes as required by Sections 4.10 and/or 4.15 of the Senior Note Indenture; (iv) the Company fails to comply for 30 days after notice to the Company by the Senior Note Trustee with any of the provisions of Sections 4.07 or 4.09 of the Senior Note Indenture; or the Company fails to observe or perform any other covenant, representation, warranty or other agreement in the Senior Note Indenture or the Senior Notes for 60 days after notice to the Company by the Senior Note Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class; (v) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the date of the Senior Note Indenture, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of such Indebtedness aggregates $50.0 million or more; (vi) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments exceeds $50.0 million; (vii) certain events of bankruptcy or insolvency occur with respect to the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law; (viii) except as permitted by the Senior Note Indenture, any Senior Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Senior Note Guarantor, or any Person acting on behalf of any Senior Note Guarantor, shall deny or disaffirm its obligations under such Senior Note Guarantor's Senior Subsidiary Guarantee; or (ix) the Company fails to deposit the required amounts into the Escrow Account pursuant to the Escrow Letter or any failure of the proceeds of the Escrow Account to be applied as required under the Escrow Letter. A1-5 If any Event of Default occurs and is continuing, the Senior Note Trustee or the Holders of at least 25% in principal amount of the then outstanding Senior Notes may declare all the Senior Notes to be due and payable; provided, that so long as any Indebtedness permitted to be incurred pursuant to the Senior Credit Facilities shall be outstanding, such acceleration shall not be effective until the earlier of (i) an acceleration under any such Indebtedness under the Senior Credit Facilities or (ii) five Business Days after receipt by the Company of written notice of such acceleration of the Senior Notes. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Senior Notes will become due and payable without further action or notice. Holders may not enforce the Senior Note Indenture or the Senior Notes except as provided in the Senior Note Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Senior Notes may direct the Senior Note Trustee in its exercise of any trust or power. The Senior Note Trustee may withhold from Holders of the Senior Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Senior Notes then outstanding by notice to the Senior Note Trustee may on behalf of the Holders of all of the Senior Notes waive any existing Default or Event of Default and its consequences under the Senior Note Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Senior Notes. The Company is required to deliver to the Senior Note Trustee annually a statement regarding compliance with the Senior Note Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Senior Note Trustee a statement specifying such Default or Event of Default. 14. Senior Note Trustee Dealings with Company. The Senior Note Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Senior Note Trustee. 15. No Recourse Against Others. A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Senior Notes or the Senior Note Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Senior Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Senior Notes. 16. Authentication. This Senior Note shall not be valid until authenticated by the manual signature of the Senior Note Trustee or an authenticating agent. 17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 18. Additional Rights of Holders of Restricted Global Senior Notes and Restricted Definitive Senior Notes. In addition to the rights provided to Holders of Senior Notes under the Senior Note Indenture, Holders of Restricted Global Senior Notes and Restricted Definitive Senior Notes shall have all the rights set forth in the A/B Exchange Registration Rights Agreement dated as of May 18, 1998, between the Company and the parties named on the signature pages thereof or, in the case of Additional Senior Notes, Holders of Restricted Global Senior Notes and Restricted Definitive Senior Notes shall have the rights set forth in one or more registration rights agreements, if any, between the Company and the other parties thereto, relating to rights given by the Company to the purchasers of any Additional Senior Notes (collectively, the "Registration Rights Agreement"). A1-6 19. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Senior Notes and the Senior Note Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Senior Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Senior Note Indenture and/or the Registration Rights Agreement. Requests may be made to: P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri 63101-1826 Attention: Chief Legal Officer A1-7 Assignment Form To assign this Senior Note, fill in the form below: (I) or (we) assign and transfer this Senior Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint____________________________________________________ to transfer this Senior Note on the books of the Company. The agent may substitute another to act for him. Date: ------------------- Your Signature: ------------------------- (Sign exactly as your name appears on the face of this Senior Note) Tax Identification No: ------------------ SIGNATURE GUARANTEE: ----------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A1-8 Option of Holder to Elect Purchase If you want to elect to have this Senior Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Senior Note Indenture, check the box below: [_] Section 4.10 [_] Section 4.15 If you want to elect to have only part of the Senior Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Senior Note Indenture, state the amount you elect to have purchased: $________ Date: ------------------- Your Signature: -------------------------- (Sign exactly as your name appears on the face of this Senior Note) Tax Identification No: ------------------- SIGNATURE GUARANTEE: ------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A1-9 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SENIOR NOTE/1/ The following exchanges of a part of this Global Senior Note for an interest in another Global Senior Note or for a Definitive Senior Note, or exchanges of a part of another Global Senior Note or Definitive Senior Note for an interest in this Global Senior Note, have been made: Principal Amount of Amount of Amount of Signature of decrease in increase in this Global authorized Principal Principal Senior Note officer of Amount of Amount of following Senior Note this Global this Global such decrease Trustee or Date of Exchange Senior Note Senior Note (or increase) Custodian - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- /1/ This should be included only if the Senior Note is issued in global form. A1-10 EXHIBIT A2 (Face of Regulation S Temporary Global Senior Note) ================================================================================ THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SENIOR NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED SENIOR NOTES, ARE AS SPECIFIED IN THE SENIOR NOTE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL SENIOR NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR NOTES IN DEFINITIVE FORM, THIS SENIOR NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. A2-1 8-7/8% Series A Senior Notes due 2008 No.___ $____________ P&L Coal Holdings Corporation promises to pay to ____________ or registered assigns, the principal sum of ________________________ Dollars on ________ __,2008. Interest Payment Dates: ________ __, and ________ __ Record Dates: ________ __ and ________ __ Dated: ________ __, 1998 P&L Coal Holdings Corporation By:--------------------------- Name: Title: By:--------------------------- Name: Title: This is one of the [Global] Senior Notes referred to in the within-mentioned Senior Note Indenture: State Street Bank and Trust Company, as Senior Note Trustee By: ================================================================================ A2-2 (Back of Regulation S Temporary Global Senior Note) 8-7/8% Series A Senior Notes due 2008 Capitalized terms used herein shall have the meanings assigned to them in the Senior Note Indenture referred to below unless otherwise indicated. 1. Interest. P&L Coal Holdings Corporation, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Senior Note at 8-7/8% per annum from May 18, 1998 until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages semi-annually on May 15 and November 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Senior Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Senior Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be November 15, 1998. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Until this Regulation S Temporary Global Senior Note is exchanged for one or more Regulation S Permanent Global Senior Notes, the Holder hereof shall not be entitled to receive payments of interest hereon; until so exchanged in full, this Regulation S Temporary Global Senior Note shall in all other respects be entitled to the same benefits as other Senior Notes under the Senior Note Indenture. 2. Method of Payment. The Company will pay interest on the Senior Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Senior Notes at the close of business on the May 1 or November 1 next preceding the Interest Payment Date, even if such Senior Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Senior Note Indenture with respect to defaulted interest. The Senior Notes will be payable as to principal, premium, interest and Liquidated Damages at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Senior Notes and all other Senior Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. Paying Agent and Registrar. Initially, State Street Bank and Trust Company, the Senior Note Trustee under the Senior Note Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. A2-3 4. Senior Note Indenture. The Company issued the Senior Notes under an Senior Note Indenture dated as of May 18, 1998 ("Senior Note Indenture") between the Company and the Senior Note Trustee. The terms of the Senior Notes include those stated in the Senior Note Indenture and those made part of the Senior Note Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Senior Notes are subject to all such terms, and Holders are referred to the Senior Note Indenture and such Act for a statement of such terms. The Senior Notes are secured obligations of the Company limited to $550.0 million in aggregate principal amount. 5. Optional Redemption. (a) The Senior Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice. (b) Prior to May 15, 2003, the Senior Notes will be redeemable at a redemption price equal to 100% of the principal amount thereof plus the applicable Senior Notes Make Whole Premium, plus, to the extent not included in the Senior Notes Make Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption. For purposes of the foregoing, "Senior Notes Make Whole Premium" means, with respect to a Senior Note, an amount equal to the greater of (a) 104.438% of the outstanding principal amount of such Senior Note and (b) the excess of (1) the present value of the remaining interest, premium, if any, and principal payments due on such Senior Note as if such Senior Note were redeemed on May 15, 2003, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (2) the outstanding principal amount of such Senior Note. (c) On or after May 15, 2003, the Senior Notes are redeemable at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on May 15 of the years indicated below: Year Percentage 2003 ................................... 104.438% 2004 ................................... 102.958% 2005 ................................... 101.479% 2006 and thereafter..................... 100.000% (d) Notwithstanding the provisions of clauses (a), (b) and (c) of this Paragraph 5, during the first 36 months after the date of the closing of the Acquisition, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Senior Notes issued under this Senior Note Indenture at a redemption price of 108.875% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the aggregate principal amount of Senior Notes issued remain outstanding immediately after the occurrence of such redemption (excluding Senior Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 120 days of the date of the closing of such Equity Offering. (e) Any redemption pursuant to this Paragraph 5 shall be made pursuant to the provisions of Article 3 of the Senior Note Indenture. 6. Mandatory Redemption. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Senior Notes. A2-4 7. Special Mandatory Redemption. In the event that the Escrow Account is released without the consummation of the Acquisition (or if the Acquisition is not consummated within 30 days of such deposit), the Company shall redeem the Senior Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption. 8. Repurchase at Option of Holder. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Senior Note Indenture. (b) If the Company or a Subsidiary consummates any Asset Sales, within five days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall commence an offer to all Holders of Senior Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Senior Note Indenture to purchase the maximum principal amount of Senior Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Senior Note Indenture. To the extent that the aggregate amount of Senior Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for general corporate purposes. If the aggregate principal amount of Senior Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Senior Note Trustee shall select the Senior Notes to be purchased on a pro rata basis. Holders of Senior Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Senior Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Notes. 9. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Notes are to be redeemed at its registered address. Senior Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Senior Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Senior Notes or portions thereof called for redemption. 10. Denominations, Transfer, Exchange. The Senior Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Senior Notes may be registered and Senior Notes may be exchanged as provided in the Senior Note Indenture. The Registrar and the Senior Note Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Senior Note Indenture. The Company need not exchange or register the transfer of any Senior Note or portion of a Senior Note selected for redemption, except for the unredeemed portion of any Senior Note being redeemed in part. Also, it need not exchange or register the transfer of any Senior Notes for a period of 15 days before a selection of Senior Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. A2-5 This Regulation S Temporary Global Senior Note is exchangeable in whole or in part for one or more Global Senior Notes only (i) on or after the termination of the 40-day restricted period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) required by Article 2 of the Senior Note Indenture. Upon exchange of this Regulation S Temporary Global Senior Note for one or more Global Senior Notes, the Senior Note Trustee shall cancel this Regulation S Temporary Global Senior Note. 11. Persons Deemed Owners. The registered Holder of a Senior Note may be treated as its owner for all purposes. 12. Amendment, Supplement and Waiver. Subject to certain exceptions, the Senior Note Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Senior Notes and Additional Senior Notes, if any, voting as a single class, and any existing default or compliance with any provision of the Senior Note Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Notes and Additional Senior Notes, if any, voting as a single class. Without the consent of any Holder of a Senior Note, the Senior Note Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Notes in addition to or in place of certificated Senior Notes, to provide for the assumption of the Company's or Senior Note Guarantor's obligations to Holders of the Senior Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Senior Notes or that does not adversely affect the legal rights under the Senior Note Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Senior Note Indenture under the Trust Indenture Act, to provide for the Issuance of Additional Senior Notes in accordance with the limitations set forth in the Senior Note Indenture, or to allow any Senior Note Guarantor to execute a supplemental Senior Note Indenture to the Senior Note Indenture and/or a Senior Subsidiary Guarantee with respect to the Senior Notes. 13. Defaults and Remedies. An "Event of Default" occurs if: (i) the Company defaults in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Senior Notes and such default continues for a period of 30 days; (ii) the Company defaults in the payment when due of principal of or premium, if any, on the Senior Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (iii) the Company or any of its Subsidiaries fails to make the offer required or to purchase any of the Senior Notes as required by Sections 4.10 and/or 4.15 of the Senior Note Indenture; (iv) the Company fails to comply for 30 days after notice to the Company by the Senior Note Trustee with any of the provisions of Sections 4.07 or 4.09 of the Senior Note Indenture; or the Company fails to observe or perform any other covenant, representation, warranty or other agreement in the Senior Note Indenture or the Senior Notes for 60 days after notice to the Company by the Senior Note Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class; (v) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the date of the Senior Note Indenture, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of such Indebtedness aggregates $50.0 million or more; (vi) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided A2-6 that the aggregate of all such undischarged judgments exceeds $50.0 million; (vii) certain events of bankruptcy or insolvency occur with respect to the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law; (viii) except as permitted by the Senior Note Indenture, any Senior Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Senior Note Guarantor, or any Person acting on behalf of any Senior Note Guarantor, shall deny or disaffirm its obligations under such Senior Note Guarantor's Senior Subsidiary Guarantee; or (ix) the Company fails to deposit the required amounts into the Escrow Account pursuant to the Escrow Letter or any failure of the proceeds of the Escrow Account to be applied as required under the Escrow Letter. If any Event of Default occurs and is continuing, the Senior Note Trustee or the Holders of at least 25% in principal amount of the then outstanding Senior Notes may declare all the Senior Notes to be due and payable; provided, that so long as any Indebtedness permitted to be incurred pursuant to the Senior Credit Facilities shall be outstanding, such acceleration shall not be effective until the earlier of (i) an acceleration under any such Indebtedness under the Senior Credit Facilities or (ii) five Business Days after receipt by the Company of written notice of such acceleration of the Senior Notes. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Senior Notes will become due and payable without further action or notice. Holders may not enforce the Senior Note Indenture or the Senior Notes except as provided in the Senior Note Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Senior Notes may direct the Senior Note Trustee in its exercise of any trust or power. The Senior Note Trustee may withhold from Holders of the Senior Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Senior Notes then outstanding by notice to the Senior Note Trustee may on behalf of the Holders of all of the Senior Notes waive any existing Default or Event of Default and its consequences under the Senior Note Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Senior Notes. The Company is required to deliver to the Senior Note Trustee annually a statement regarding compliance with the Senior Note Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Senior Note Trustee a statement specifying such Default or Event of Default. 14. Senior Note Trustee Dealings with Company. The Senior Note Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Senior Note Trustee. 15. No Recourse Against Others. A director, officer, employee, incorporator or stockholder, of the Company or any of the Senior Note Guarantors, as such, shall not have any liability for any obligations of the Company or such Senior Note Guarantor under the Senior Notes, the Senior Subsidiary Guarantees or the Senior Note Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Senior Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Senior Notes. 16. Authentication. This Senior Note shall not be valid until authenticated by the manual signature of the Senior Note Trustee or an authenticating agent. 17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT A2-7 TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 18. Additional Rights of Holders of Restricted Global Senior Notes and Restricted Definitive Senior Notes. In addition to the rights provided to Holders of Senior Notes under the Senior Note Indenture, Holders of Restricted Global Senior Notes and Restricted Definitive Senior Notes shall have all the rights set forth in the A/B Exchange Registration Rights Agreement dated as of May 18, 1998, between the Company and the parties named on the signature pages thereof or, in the case of Additional Senior Notes, Holders of Restricted Global Senior Notes and Restricted Definitive Senior Notes shall have the rights set forth in one or more registration rights agreements, if any, between the Company and the other parties thereto, relating to rights given by the Company to the purchasers of any Additional Senior Notes (collectively, the "Registration Rights Agreement"). 19. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Senior Notes and the Senior Note Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Senior Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Senior Note Indenture and/or the Registration Rights Agreement. Requests may be made to: P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri 63101-1826 Attention: Chief Legal Officer A2-8 Assignment Form To assign this Senior Note, fill in the form below: (I) or (we) assign and transfer this Senior Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________________________ _____ to transfer this Senior Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date:___________ Your Signature:------------------------------------- (Sign exactly as your name appears on the face of this Senior Note) Tax Identification No:------------------------------ SIGNATURE GUARANTEE: ----------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A2-9 Option of Holder to Elect Purchase If you want to elect to have this Senior Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Senior Note Indenture, check the appropriate box below: [_] Section 4.10 [_] Section 4.15 If you want to elect to have only part of the Senior Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Senior Note Indenture, stat e the amount you elect to have purchased: $___________ - -------------------------------------------------------------------------------- Date:_____________ Your Signature:----------------------------------------------- (Sign exactly as your name appears on the face of this Senior Note) Tax Identification No:---------------------------------------- SIGNATURE GUARANTEE: ---------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A2-10 SCHEDULE OF EXCHANGES OF INTERESTS IN THE REGULATION S TEMPORARY GLOBAL SENIOR NOTE The following exchanges of a part of this Regulation S Temporary Global Senior Note for an interest in another Global Senior Note, or of other Restricted Global Senior Notes for an interest in this Regulation S Temporary Global Senior Note, have been made:
Principal Amount Amount of of this Global Signature of decrease in Amount of increase Senior Note authorized officer Principal Amount in Principal following such of Senior Note of this Global Amount of this decrease (or Trustee or Date of Exchange Senior Note Global Senior Note increase) Custodian - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------
A2-11 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri 63101-1826 State Street Bank and Trust Company Goodwin Square 225 Asylum Street Hartford, Connecticut Re: 8-7/8% Senior Notes due 2008 ---------------------------- (CUSIP __________) Reference is hereby made to the Senior Note Indenture, dated as of May 18, 1998 (the "Senior Note Indenture"), between P&L Coal Holdings Corporation, as issuer (the "Company"), and State Street Bank and Trust Company, as Senior Note Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Senior Note Indenture. ______________, (the "Transferor") owns and proposes to transfer the Senior Note[s] or interest in such Senior Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Senior Note[s] or interests (the "Transfer"), to __________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. [_] Check if Transferee will take delivery of a beneficial interest in the ---------------------------------------------------------------------- 144A Global Senior Note or a Definitive Senior Note Pursuant to Rule 144A. The - ------------------------------------------------------------------------- Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Senior Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Senior Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Senior Note Indenture, the transferred beneficial interest or Definitive Senior Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Senior Note and/or the Definitive Senior Note and in the Senior Note Indenture and the Securities Act. 2. [_] Check if Transferee will take delivery of a beneficial interest in the ---------------------------------------------------------------------- Temporary Regulation S Global Senior Note, the Regulation S Global Senior Note - ------------------------------------------------------------------------------ or a Definitive Senior Note pursuant to Regulation S. The Transfer is being - ---------------------------------------------------- effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act and, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Senior Note Indenture, the transferred beneficial interest or Definitive Senior Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Senior Note, the Temporary Regulation S Global Senior Note and/or the Definitive Senior Note and in the Senior Note Indenture and the Securities Act. 3. [_] Check and complete if Transferee will take delivery of a beneficial ------------------------------------------------------------------- interest in the IAI Global Senior Note or a Definitive Senior Note pursuant to - ------------------------------------------------------------------------------ any provision of the Securities Act other than Rule 144A or Regulation S. The - ------------------------------------------------------------------------ Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Senior Notes and Restricted Definitive Senior Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) [_] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) [_] such Transfer is being effected to the Company or a subsidiary thereof; or (c) [_] such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or (d) [_] such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Senior Note or Restricted Definitive Senior Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Senior Note Indenture and (2) if such Transfer is in respect of a principal amount of Senior Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Senior Note Indenture, the transferred beneficial interest or Definitive Senior Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Senior Note and/or the Definitive Senior Notes and in the Senior Note Indenture and the Securities Act. B-2 4. [_] Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Senior Note or of an Unrestricted Definitive Senior Note. (a) [_] Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Senior Note Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Senior Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Senior Note Indenture, the transferred beneficial interest or Definitive Senior Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Senior Notes, on Restricted Definitive Senior Notes and in the Senior Note Indenture. (b) [_] Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Senior Note Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Senior Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Senior Note Indenture, the transferred beneficial interest or Definitive Senior Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Senior Notes, on Restricted Definitive Senior Notes and in the Senior Note Indenture. (c) [_] Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Senior Note Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Senior Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Senior Note Indenture, the transferred beneficial interest or Definitive Senior Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Senior Notes or Restricted Definitive Senior Notes and in the Senior Note Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. -------------------------------------- [Insert Name of Transferor] By: ------------------------------- Name: Title: Dated: ________ __, ____ B-3 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) [_] a beneficial interest in the: (i) [_] 144A Global Senior Note (CUSIP _________), or (ii) [_] Regulation S Global Senior Note (CUSIP _________), or (iii) [_] IAI Global Senior Note (CUSIP ________); or (b) [_] a Restricted Definitive Senior Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) [_] a beneficial interest in the: (i) [_] 144A Global Senior Note (CUSIP ________), or (ii) [_] Regulation S Global Senior Note (CUSIP ________), or (iii) [_] IAI Global Senior Note (CUSIP ________); or (iv) [_] Unrestricted Global Senior Note (CUSIP ________); or (b) [_] a Restricted Definitive Senior Note; or (c) [_] an Unrestricted Definitive Senior Note, in accordance with the terms of the Senior Note Indenture. B-4 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri 63101-1826 State Street Bank and Trust Company Goodwin Square 225 Asylum Street Hartford, Connecticut Re: 8-7/8% Senior Notes due 2008 ---------------------------- (CUSIP __________) Reference is hereby made to the Senior Note Indenture, dated as of May 18, 1998 (the "Senior Note Indenture"), between P&L Coal Holdings Corporation, as issuer (the "Company"), and State Street Bank and Trust Company, as Senior Note Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Senior Note Indenture. ____________, (the "Owner") owns and proposes to exchange the Senior Note[s] or interest in such Senior Note[s] specified herein, in the principal amount of $____________ in such Senior Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. Exchange of Restricted Definitive Senior Notes or Beneficial Interests in a Restricted Global Senior Note for Unrestricted Definitive Senior Notes or Beneficial Interests in an Unrestricted Global Senior Note (a) [_] Check if Exchange is from beneficial interest in a Restricted ------------------------------------------------------------- Global Senior Note to beneficial interest in an Unrestricted Global Senior Note. - ------------------------------------------------------------------------------- In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Senior Note for a beneficial interest in an Unrestricted Global Senior Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Senior Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Senior Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Senior Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) [_] Check if Exchange is from beneficial interest in a Restricted ------------------------------------------------------------- Global Senior Note to Unrestricted Definitive Senior Note. In connection with - --------------------------------------------------------- the Exchange of the Owner's beneficial interest in a Restricted Global Senior Note for an Unrestricted Definitive Senior Note, the Owner hereby certifies (i) the Definitive Senior Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Senior Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Senior Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Senior Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) [_] Check if Exchange is from Restricted Definitive Senior Note to -------------------------------------------------------------- beneficial interest in an Unrestricted Global Senior Note. In connection with - --------------------------------------------------------- the Owner's Exchange of a Restricted Definitive Senior Note for a beneficial interest in an Unrestricted Global Senior Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Senior Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Senior Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) [_] Check if Exchange is from Restricted Definitive Senior Note to -------------------------------------------------------------- Unrestricted Definitive Senior Note. In connection with the Owner's Exchange of - ----------------------------------- a Restricted Definitive Senior Note for an Unrestricted Definitive Senior Note, the Owner hereby certifies (i) the Unrestricted Definitive Senior Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Senior Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Senior Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Senior Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. Exchange of Restricted Definitive Senior Notes or Beneficial Interests in Restricted Global Senior Notes for Restricted Definitive Senior Notes or Beneficial Interests in Restricted Global Senior Notes (a) [_] Check if Exchange is from beneficial interest in a Restricted ------------------------------------------------------------- Global Senior Note to Restricted Definitive Senior Note. In connection with the - ------------------------------------------------------- Exchange of the Owner's beneficial interest in a Restricted Global Senior Note for a Restricted Definitive Senior Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Senior Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Senior Note Indenture, the Restricted Definitive Senior Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Senior Note and in the Senior Note Indenture and the Securities Act. (b) [_] Check if Exchange is from Restricted Definitive Senior Note to -------------------------------------------------------------- beneficial interest in a Restricted Global Senior Note. In connection with the - ------------------------------------------------------ Exchange of the Owner's Restricted Definitive Senior Note for a beneficial interest in the [CHECK ONE] [_] 144A Global Senior Note, [_] Regulation S Global Senior Note, [_] IAI Global Senior Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Senior Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Senior Note Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Senior Note and in the Senior Note Indenture and the Securities Act. C-2 This certificate and the statements contained herein are made for your benefit and the benefit of the Company. -------------------------------------- [Insert Name of Owner] By: ----------------------------------- Name: Title: Dated: ________________, ____ C-3 EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri 63101-1826 State Street Bank and Trust Company Goodwin Square 225 Asylum Street Hartford, Connecticut Re: 8-7/8% Senior Notes due 2008 ---------------------------- (CUSIP __________) Reference is hereby made to the Senior Note Indenture, dated as of May 18, 1998 (the "Senior Note Indenture"), between P&L Coal Holdings Corporation, as issuer (the "Company"), and State Street Bank and Trust Company, as Senior Note Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Senior Note Indenture. In connection with our proposed purchase of $____________ aggregate principal amount of: (a) [_] a beneficial interest in a Global Senior Note, or (b) [_] a Definitive Senior Note, we confirm that: 1. We understand that any subsequent transfer of the Senior Notes or any interest therein is subject to certain restrictions and conditions set forth in the Senior Note Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Senior Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the "Securities Act"). 2. We understand that the offer and sale of the Senior Notes have not been registered under the Securities Act, and that the Senior Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Senior Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (c) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Senior Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Senior Note or beneficial interest in a Global Senior Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein. 3. We understand that, on any proposed resale of the Senior Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Senior Notes purchased by us will bear a legend to the foregoing effect. We further understand that any subsequent transfer by us of the Senior Notes or beneficial interest therein acquired by us must be effected through one of the Placement Agents. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Senior Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Senior Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. ------------------------------------------ [Insert Name of Accredited Investor] By: ------------------------------------ Name: Title: Dated: __________________, ____ D-2 EXHIBIT E FORM OF NOTATION OF SENIOR SUBSIDIARY GUARANTEE For value received, each Senior Note Guarantor (which term includes any successor Person under the Senior Note Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the Senior Note Indenture and subject to the provisions in the Senior Note Indenture dated as of May 18, 1998 (the "Senior Note Indenture") among P&L Coal Holdings Corporation, the Senior Note Guarantors listed on Schedule I thereto and State Street Bank and Trust Company, as Senior Note Trustee (the "Senior Note Trustee"), (a) the due and punctual payment of the principal of, premium, if any, and interest on the Senior Notes (as defined in the Senior Note Indenture), whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal and premium, and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Company to the Holders or the Senior Note Trustee all in accordance with the terms of the Senior Note Indenture and (b) in case of any extension of time of payment or renewal of any Senior Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Senior Note Guarantors to the Holders of Senior Notes and to the Senior Note Trustee pursuant to the Senior Subsidiary Guarantee and the Senior Note Indenture are expressly set forth in Article 10 of the Senior Note Indenture and reference is hereby made to the Senior Note Indenture for the precise terms of the Senior Subsidiary Guarantee. Each Holder of a Senior Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Senior Note Trustee, on behalf of such Holder, to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Senior Note Indenture and (c) appoints the Senior Note Trustee attorney-in-fact of such Holder for such purpose; provided, however, that the Indebtedness evidenced by this Senior Subsidiary Guarantee shall cease to be so subordinated and subject in right of payment upon any defeasance of this Senior Note in accordance with the provisions of the Senior Note Indenture. [Name of Senior Note Guarantor(s)] By: --------------------------------- Name: Title: EXHIBIT F FORM OF SUPPLEMENTAL SENIOR NOTE INDENTURE TO BE DELIVERED BY SUBSEQUENT SENIOR NOTE GUARANTORS Supplemental Senior Note Indenture (this "Supplemental Senior Note Indenture"), dated as of ________________, among __________________ (the "Guaranteeing Subsidiary"), a subsidiary of P&L Coal Holdings Corporation (or its permitted successor), a Delaware corporation (the "Company"), the Company, the other Senior Note Guarantors (as defined in the Senior Note Indenture referred to herein) and State Street Bank and Trust Company, as Senior Note Trustee under the Senior Note Indenture referred to below (the "Senior Note Trustee"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Senior Note Trustee an Senior Note Indenture (the "Senior Note Indenture"), dated as of May 18, 1998 providing for the issuance of an aggregate principal amount of up to $550.0 million of 8-7/8% Senior Notes due 2008 (the "Senior Notes"); WHEREAS, the Senior Note Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Senior Note Trustee a supplemental Senior Note Indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company's Obligations under the Senior Notes and the Senior Note Indenture on the terms and conditions set forth herein (the "Senior Subsidiary Guarantee"); and WHEREAS, pursuant to Section 9.01 of the Senior Note Indenture, the Senior Note Trustee is authorized to execute and deliver this Supplemental Senior Note Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Senior Note Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Senior Notes as follows: 1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Senior Note Indenture. 2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees as follows: (a) Along with all Senior Note Guarantors named in the Senior Note Indenture, to jointly and severally Guarantee to each Holder of a Senior Note authenticated and delivered by the Senior Note Trustee and to the Senior Note Trustee and its successors and assigns, irrespective of the validity and enforceability of the Senior Note Indenture, the Senior Notes or the obligations of the Company hereunder or thereunder, that: (i) the principal of and interest on the Senior Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Senior Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Senior Note Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Senior Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Senior Note Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Senior Notes or the Senior Note Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Senior Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Senior Note Guarantor. (c) The following is hereby waived: diligence presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever. (d) This Senior Subsidiary Guarantee shall not be discharged except by complete performance of the obligations contained in the Senior Notes and the Senior Note Indenture. (e) If any Holder or the Senior Note Trustee is required by any court or otherwise to return to the Company, the Senior Note Guarantors, or any custodian, Senior Note Trustee, liquidator or other similar official acting in relation to either the Company or the Senior Note Guarantors, any amount paid by either to the Senior Note Trustee or such Holder, this Senior Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Senior Note Guarantors, on the one hand, and the Holders and the Senior Note Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Senior Note Indenture for the purposes of this Senior Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Senior Note Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Senior Note Guarantors for the purpose of this Senior Subsidiary Guarantee. F-2 (h) The Senior Note Guarantors shall have the right to seek contribution from any non-paying Senior Note Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Senior Subsidiary Guarantee. (i) Pursuant to Section 10.04 of the Senior Note Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Senior Note Guarantor in respect of the obligations of such other Senior Note Guarantor under Article 10 of the Senior Note Indenture shall result in the obligations of such Senior Note Guarantor under its Senior Subsidiary Guarantee not constituting a fraudulent transfer or conveyance. 3. Execution and Delivery. Each Guaranteeing Subsidiary agrees that the Senior Subsidiary Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Senior Note a notation of such Senior Subsidiary Guarantee. 4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms. (a) The Guaranteeing Subsidiary may not consolidate with or merge with or into (whether or not such Senior Note Guarantor is the surviving Person) another corporation, Person or entity whether or not affiliated with such Senior Note Guarantor unless: (i) subject to Section 10.04 of the Senior Note Indenture, the Person formed by or surviving any such consolidation or merger (if other than a Senior Note Guarantor or the Company) unconditionally assumes all the obligations of such Senior Note Guarantor, pursuant to a supplemental Senior Note Indenture in form and substance reasonably satisfactory to the Senior Note Trustee, under the Senior Notes, the Senior Note Indenture and the Senior Subsidiary Guarantee on the terms set forth herein or therein; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental Senior Note Indenture, executed and delivered to the Senior Note Trustee and satisfactory in form to the Senior Note Trustee, of the Senior Subsidiary Guarantee endorsed upon the Senior Notes and the due and punctual performance of all of the covenants and conditions of the Senior Note Indenture to be performed by the Senior Note Guarantor, such successor corporation shall succeed to and be substituted for the Senior Note Guarantor with the same effect as if it had been named herein as a Senior Note Guarantor. Such successor corporation thereupon may cause to be signed any or all of the Senior Subsidiary Guarantees to be endorsed upon all of the Senior Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Senior Note Trustee. All the Senior Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under the Senior Note Indenture as the Senior Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of the Senior Note Indenture as though all of such Senior Subsidiary Guarantees had been issued at the date of the execution hereof. F-3 (c) Except as set forth in Articles 4 and 5 of the Senior Note Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Senior Note Indenture or in any of the Senior Notes shall prevent any consolidation or merger of a Senior Note Guarantor with or into the Company or another Senior Note Guarantor, or shall prevent any sale or conveyance of the property of a Senior Note Guarantor as an entirety or substantially as an entirety to the Company or another Senior Note Guarantor. 5. Releases. (a) In the event of a sale or other disposition of all of the assets of any Senior Note Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all to the capital stock of any Senior Note Guarantor, then such Senior Note Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Senior Note Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Senior Note Guarantor) will be released and relieved of any obligations under its Senior Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Senior Note Indenture, including without limitation Section 4.10 of the Senior Note Indenture. Upon delivery by the Company to the Senior Note Trustee of an Officer's Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of the Senior Note Indenture, including without limitation Section 4.10 of the Senior Note Indenture, the Senior Note Trustee shall execute any documents reasonably required in order to evidence the release of any Senior Note Guarantor from its obligations under its Senior Subsidiary Guarantee. (b) Any Senior Note Guarantor not released from its obligations under its Senior Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Senior Notes and for the other obligations of any Senior Note Guarantor under the Senior Note Indenture as provided in Article 10 of the Senior Note Indenture. 6. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Senior Notes, any Senior Subsidiary Guarantees, the Senior Note Indenture or this Supplemental Senior Note Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Senior Notes by accepting a Senior Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Senior Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL SENIOR NOTE INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. Counterparts The parties may sign any number of copies of this Supplemental Senior Note Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. F-4 9. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. The Senior Note Trustee. The Senior Note Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Senior Note Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. F-5 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Senior Note Indenture to be duly executed and attested, all as of the date first above written. Dated: ________ __, ____ [Guaranteeing Subsidiary] By: -------------------------------- Name: Title: P&L Coal Holdings Corporation By: -------------------------------- Name: Title: [EXISTING SENIOR NOTE GUARANTORS] By: -------------------------------- Name: Title: State Street Bank and Trust Company as Senior Note Trustee By: -------------------------------- Name: Title: F-6 Schedule I SCHEDULE OF SENIOR NOTE GUARANTORS The following schedule lists each Senior Note Guarantor under the Senior Note Indenture as of the Issue Date: 1. Arid Operations Inc., a Delaware corporation. 2. Darius Gold Mine, Inc., a Delaware corporation. 3. Gold Fields Chile, S.A., a Delaware corporation. 4. Gold Fields Mining Corporation, a Delaware corporation. 5. Gold Fields Operating Co. - Ortiz, a Delaware corporation. 6. Peabody America, Inc., a Delaware corporation. 7. Peabody Holding Company, Inc., a New York corporation. 8. Affinity Mining Company, a West Virginia corporation. 9. Big Sky Coal Company, a Delaware corporation. 10. Blackrock First Capital Corporation, a West Virginia corporation. 11. Bluegrass Coal Company, a Delaware corporation. 12. Caballo Coal Company, a Delaware corporation. 13. Charles Coal Company, a Delaware corporation. 14. Coal Properties Corp., a Delaware corporation. 15. Cook Mountain Coal Company, a Delaware corporation. 16. Cottonwood Land Company, a Delaware corporation. 17. EACC Camps, Inc., a West Virginia corporation. 18. Eastern Associated Coal Corp, a West Virginia corporation. 19. Eastern Royalty Corp., a Delaware corporation. 20. Grand Eagle Mining, Inc., a Kentucky corporation. 21. Hayden Gulch Terminal, Inc., a Delaware corporation. 22. Independence Material Handling Company, a Delaware corporation. 23. Interior Holdings Corp., a Delaware corporation. 24. James River Coal Terminal Company, a Delaware corporation. 25. Juniper Coal Company, a Delaware corporation. 26. Kayenta Mobile Home Park, Inc., a Delaware corporation. 27. Martinka Coal Company, a Delaware corporation. 28. Midco Supply and Equipment Corporation, an Illinois corporation. 29. Midwest Coal Resources, Inc., a Delaware corporation. 30. Mountain View Coal Company, a Delaware corporation. 31. North Page Coal Corp., a West Virginia corporation. 32. Ohio County Coal Company, a Kentucky corporation. 33. Patriot Coal Company, L.P., a Delaware limited partnership. 34. Peabody COALSALES Company, a Delaware corporation. 35. Peabody COALTRADE, Inc., a Delaware corporation. 36. Peabody Coal Company, a Delaware corporation. 37. Peabody Development Company, a Delaware corporation. 38. Peabody Energy Solutions, Inc., a Delaware corporation. 39. Peabody Natural Resources Company, a Delaware general partnership. 40. Peabody Terminals, Inc., a Delaware corporation. 41. Peabody Venezuela Coal Corp., a Delaware corporation. 42. Peabody Western Coal Company, a Delaware corporation. 43. Pine Ridge Coal Company, a Delaware corporation. 44. Powder River Coal Company, a Delaware corporation. 45. Rio Escondido Coal Corp., a Delaware corporation. 46. Seneca Coal Company, a Delaware corporation. 47. Sentry Mining Company, a Delaware corporation. 48. Snowberry Land Company, a Delaware corporation. 49. Sterling Smokeless Coal Company, a West Virginia corporation. 50. Thoroughbred, L.L.C., a Delaware limited liability company. 51. Colony Bay Coal Company, a West Virginia partnership. EX-4.2 106 SENIOR SUBORDINATED NOTE INDEN DATED 5/18/98 BET EXHIBIT 4.2 Execution Copy ================================================================================ P&L Coal Holdings Corporation SERIES A AND SERIES B 9-5/8% SENIOR SUBORDINATED NOTES DUE 2008 SENIOR SUBORDINATED NOTE INDENTURE Dated as of May 18, 1998 State Street Bank and Trust Company Senior Subordinated Note Trustee ================================================================================ CROSS-REFERENCE TABLE* Trust Indenture Act Section Senior Subordinated Note Indenture Section 310 (a)(1)............................................................. 7.10 (a)(2)................................................................. 7.10 (a)(3)................................................................. N.A. (a)(4)................................................................. N.A. (a)(5)................................................................. 7.10 (i)(b)................................................................. 7.10 (ii)(c)................................................................ N.A. 311(a)................................................................. 7.11 (b).................................................................... 7.11 (iii)(c)............................................................... N.A. 312(a)................................................................. 2.05 (b).................................................................... 12.03 (iv)(c)................................................................ 12.03 313(a)................................................................. 7.06 (b)(2)................................................................. 7.07 (v)(c)................................................................. 7.06; 12.02 (vi)(d)................................................................ 7.06 314(a)................................................................. 4.03; 12.02 (c)(1)................................................................. 12.04 (c)(2)................................................................. 12.04 (c)(3)................................................................. N.A. (vii)(e)............................................................... 12.05 (f).................................................................... NA 315(a)................................................................. 7.01 (b).................................................................... 7.05, 12.02 (A)(c)................................................................. 7.01 (d).................................................................... 7.01 (e).................................................................... 6.11 316(a)(last sentence).................................................. 2.09 (a)(1)(A).............................................................. 6.05 (a)(1)(B).............................................................. 6.04 (a)(2)................................................................. N.A. (b).................................................................... 6.07 (B)(c)................................................................. 2.12 317(a)(1).............................................................. 6.08 (a)(2)................................................................. 6.09 (b).................................................................... 2.04 318(a)................................................................. 12.01 (b).................................................................... N.A. (c).................................................................... 12.01 N.A. means not applicable. *This Cross-Reference Table is not part of the Senior Subordinated Note Indenture. TABLE OF CONTENTS Page ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE................ 1 Section 1.01. Definitions............................................... 1 Section 1.02. Other Definitions......................................... 18 Section 1.03. Incorporation by Reference of Trust Indenture Act......... 19 Section 1.04. Rules of Construction..................................... 19 ARTICLE 2. THE SENIOR SUBORDINATED NOTES...................... 20 Section 2.01. Form and Dating........................................... 20 Section 2.02. Execution and Authentication.............................. 21 Section 2.03. Registrar and Paying Agent................................ 22 Section 2.04. Paying Agent to Hold Money in Trust....................... 22 Section 2.05. Holder Lists.............................................. 23 Section 2.06. Transfer and Exchange..................................... 23 Section 2.07. Replacement Senior Subordinated Notes..................... 36 Section 2.08. Outstanding Senior Subordinated Notes..................... 37 Section 2.09. Treasury Senior Subordinated Notes........................ 37 Section 2.10. Temporary Senior Subordinated Notes....................... 37 Section 2.11. Cancellation.............................................. 38 Section 2.12. Defaulted Interest........................................ 38 Section 2.13. CUSIP Numbers............................................. 38 ARTICLE 3. REDEMPTION AND PREPAYMENT........................ 39 Section 3.01. Notices to Senior Subordinated Note Trustee............... 39 Section 3.02. Selection of Senior Subordinated Notes to Be Redeemed..... 39 Section 3.03. Notice of Redemption...................................... 39 Section 3.04. Effect of Notice of Redemption............................ 40 Section 3.05. Deposit of Redemption Price............................... 40 Section 3.06. Senior Subordinated Notes Redeemed in Part................ 41 Section 3.07. Optional Redemption....................................... 41 Section 3.08. Mandatory Redemption...................................... 42 Section 3.09. Offer to Purchase by Application of Excess Proceeds....... 42 Section 3.10. Special Mandatory Redemption.............................. 44 ARTICLE 4. COVENANTS................................ 44 Section 4.01. Payment of Senior Subordinated Notes...................... 44 Section 4.02. Maintenance of Office or Agency........................... 44 Section 4.03. Reports................................................... 45 Section 4.04. Compliance Certificate.................................... 45 Section 4.05. Taxes..................................................... 46 Section 4.06. Stay, Extension and Usury Laws............................ 46 Section 4.07. Restricted Payments....................................... 46 i Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.............................................. 50 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock 51 Section 4.10. Asset Sales............................................... 54 Section 4.11. Transactions with Affiliates.............................. 55 Section 4.12. Liens..................................................... 56 Section 4.13. Business activities....................................... 56 Section 4.14. Corporate Existence....................................... 56 Section 4.15. Offer to Repurchase Upon Change of Control................ 56 Section 4.16. No Senior Subordinated Debt............................... 57 Section 4.17. Additional Subordinated Subsidiary Guarantees............. 58 Section 4.18. Payments for consents..................................... 58 ARTICLE 5. SUCCESSORS................................ 58 Section 5.01. Merger, Consolidation, or Sale of Assets.................. 58 Section 5.02. Successor Corporation Substituted......................... 59 ARTICLE 6. DEFAULTS AND REMEDIES.......................... 59 Section 6.01. Events of Default......................................... 59 Section 6.02. Acceleration.............................................. 61 Section 6.03. Other Remedies............................................ 62 Section 6.04. Waiver of Past Defaults................................... 62 Section 6.05. Control by Majority....................................... 63 Section 6.06. Limitation on Suits....................................... 63 Section 6.07. Rights of Holders of Senior Subordinated Notes to Receive Payment................................................... 63 Section 6.08. Collection Suit by Senior Subordinated Note Trustee....... 64 Section 6.09. Senior Subordinated Note Trustee May File Proofs of Claim. 64 Section 6.10. Priorities................................................ 64 Section 6.11. Undertaking for Costs..................................... 65 ARTICLE 7. SENIOR SUBORDINATED NOTE TRUSTEE..................... 65 Section 7.01. Duties of Senior Subordinated Note Trustee................ 65 Section 7.02. Rights of Senior Subordinated Note Trustee................ 66 Section 7.03. Individual Rights of Senior Subordinated Note Trustee..... 67 Section 7.04. Senior Subordinated Note Trustee's Disclaimer............. 67 Section 7.05. Notice of Defaults........................................ 67 Section 7.06. Reports by Senior Subordinated Note Trustee to Holders of the Senior Subordinated Notes............................. 67 Section 7.07. Compensation and Indemnity................................ 68 Section 7.08. Replacement of Senior Subordinated Note Trustee........... 69 Section 7.09. Successor Senior Subordinated Note Trustee by Merger, etc. 70 Section 7.10. Eligibility; Disqualification............................. 70 Section 7.11. Preferential Collection of Claims Against Company......... 70 ii ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE................. 70 Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.. 70 Section 8.02. Legal Defeasance and Discharge............................ 71 Section 8.03. Covenant Defeasance....................................... 71 Section 8.04. Conditions to Legal or Covenant Defeasance................ 72 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions..................... 73 Section 8.06. Repayment to Company...................................... 73 Section 8.07. Reinstatement............................................. 74 ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER..................... 74 Section 9.01. Without Consent of Holders of Senior Subordinated Notes... 74 Section 9.02. With Consent of Holders of Senior Subordinated Notes...... 75 Section 9.03. Compliance with Trust Indenture Act....................... 77 Section 9.04. Revocation and Effect of Consents......................... 77 Section 9.05. Notation on or Exchange of Senior Subordinated Notes...... 77 Section 9.06. Senior Subordinated Note Trustee to Sign Amendments, etc.. 78 ARTICLE 10. SUBORDINATION.............................. 78 Section 10.01. Agreement to Subordinate.................................. 78 Section 10.02. Certain Definitions....................................... 78 Section 10.03. Liquidation; Dissolution; Bankruptcy...................... 79 Section 10.04. Default on Designated Senior Debt......................... 79 Section 10.05. Acceleration of Senior Subordinated Notes................. 80 Section 10.06. When Distribution Must Be Paid Over....................... 80 Section 10.07. Notice by Company......................................... 81 Section 10.08. Subrogation............................................... 81 Section 10.09. Relative Rights........................................... 81 Section 10.10. Subordination May Not Be Impaired by Company.............. 81 Section 10.11. Distribution or Notice to Representative.................. 82 Section 10.12. Rights of Senior Subordinated Note Trustee and Paying Agent..................................................... 82 Section 10.13. Authorization to Effect Subordination..................... 82 Section 10.14. Amendments................................................ 82 ARTICLE 11. SUBORDINATED SUBSIDIARY GUARANTEES.................... 83 Section 11.01. Guarantee................................................. 83 Section 11.02. Subordination of Subordinated Subsidiary Guarantee........ 84 Section 11.03. Limitation on Senior Subordinated Note Guarantor Liability 84 Section 11.04. Execution and Delivery of Subordinated Subsidiary Guarantee................................................. 84 Section 11.05. Senior Subordinated Note Guarantors May Consolidate, etc., on Certain Terms.......................................... 85 Section 11.06. Releases Following Sale of Assets......................... 86 iii ARTICLE 12. MISCELLANEOUS............................... 86 Section 12.01. Trust Indenture Act Controls.............................. 86 Section 12.02. Notices................................................... 87 Section 12.03. Communication by Holders of Senior Subordinated Notes with Other Holders of Senior Subordinated Notes................ 88 Section 12.04. Certificate and Opinion as to Conditions Precedent........ 88 Section 12.05. Statements Required in Certificate or Opinion............. 88 Section 12.06. Rules by Senior Subordinated Note Trustee and Agents...... 89 Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders.......................................... 89 Section 12.08. Governing Law............................................. 89 Section 12.09. No Adverse Interpretation of Other Agreements............. 89 Section 12.10. Successors................................................ 89 Section 12.11. Severability.............................................. 89 Section 12.12. Counterpart Originals..................................... 89 Section 12.13. Table of Contents, Headings, etc.......................... 90 EXHIBITS Exhibit A1 FORM OF SENIOR SUBORDINATED NOTE Exhibit A2 FORM OF TEMPORARY REGULATION S SENIOR SUBORDINATED NOTE Exhibit B FORM OF CERTIFICATE OF TRANSFER Exhibit C FORM OF CERTIFICATE OF EXCHANGE Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Exhibit E FORM OF SUBORDINATED SUBSIDIARY GUARANTEE Exhibit F FORM OF SUPPLEMENTAL SENIOR SUBORDINATED NOTE INDENTURE SCHEDULES Schedule I Schedule of Senior Subordinated Note Guarantors iv SENIOR SUBORDINATED NOTE INDENTURE dated as of May 18, 1998 between P&L Coal Holdings Corporation, a Delaware corporation (the "Company"), and State Street Bank and Trust Company, as Senior Subordinated Note Trustee (the "Senior Subordinated Note Trustee"). The Company and the Senior Subordinated Note Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 9-5/8% Series A Senior Subordinated Notes due 2008 (the "Series A Senior Subordinated Notes") and the 9-5/8% Series B Senior Subordinated Notes due 2008 (the "Series B Senior Subordinated Notes" and, together with the Series A Senior Subordinated Notes, the "Senior Subordinated Notes"): ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions. "144A Global Senior Subordinated Note" means a global note in the form of Exhibit A1 hereto bearing the Global Senior Subordinated Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Senior Subordinated Notes sold in reliance on Rule 144A. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Acquisition" means the acquisition by the Company of: (i) all of the common stock of Peabody Holding Company, (ii) all of the common stock of Gold Fields Mining Corp., (iii) all of the membership interests of Citizens Power LLC, (iv) the 1% interests in CL Hartford, L.L.C., a Delaware limited liability company, and Citizens Power Sales, a Delaware general partnership, both subsidiaries of Citizens Power LLC, (v) all of the shares of Darex Capital, Inc., a company incorporated in the Republic of Panama, and (vi) all of the ordinary shares of Peabody Australia , LTD., which together with Darex Capital, Inc. owns Peabody Resources Limited. "Additional Assets" means (i) any property or assets (other than Capital Stock, Indebtedness or rights to receive payments over a period greater than 180 days, other than with respect to coal supply contract restructurings) that is usable by the Company or a Restricted Subsidiary in a Permitted Business or (ii) the Capital Stock of a Person that is at the time, or becomes, a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary. "Additional Senior Subordinated Notes" means up to $150.0 million in aggregate principal amount of Senior Subordinated Notes (other than the Initial Senior Subordinated Notes) issued under this Senior Subordinated Note Indenture in accordance with Sections 2.02 and 4.09 hereof. "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Senior Subordinated Note, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business consistent with past practices (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of Section 4.15 and/or Section 5.01 hereof and not by the provisions of Section 4.10 hereof), and (ii) the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company's Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $5.0 million or (b) for Net Proceeds in excess of $5.0 million. Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (iii) a Restricted Payment that is permitted by, or an Investment that is not prohibited by Section 4.07 hereof, (iv) a disposition of Cash Equivalents or obsolete equipment, (v) foreclosures on assets, (vi) the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof and (vii) the factoring of accounts receivable arising in the ordinary course of business pursuant to arrangements customary in the industry. "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Bengalla Joint Venture" means Bengalla Mining Co. Pty Limited, Bengalla Agricultural Co. Pty Limited and Bengalla Coal Sales Co. Pty Ltd., which are the joint venture companies related to the Bengalla mine in New South Wales, Australia. "Black Beauty Coal Company" means the Indiana general partnership among Thoroughbred, L.L.C., Black Beauty Resources, Inc. and Pittsburg and Midway Coal Mining Co., and any Person collectively owned by those three partners including, but not limited to, Eagle Coal Company and Falcon Coal Company. "Board of Directors" means the Board of Directors of the Company, or any authorized committee of the Board of Directors. "Business Day" means any day other than a Legal Holiday. 2 "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (a) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed or insured by the U.S. Government or any agency thereof, (b) certificates of deposit and time deposits with maturities of one year or less from the date of acquisition and overnight bank deposits of any lender under the Senior Credit Facilities or of any commercial bank having capital and surplus in excess of $500.0 million, (c) repurchase obligations of any lender under the Senior Credit Facilities or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 90 days with respect to securities issued or fully guaranteed or insured by the U.S. Government, (d) commercial paper of a domestic issuer rated at least A-2 by Standard & Poor's Rating Group or P-2 by Moody's Investor Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency if both of Standard & Poor's Rating Group and Moody's Investor Service, Inc. cease publishing ratings of investments, (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by Standard & Poor's Rating Group or A by Moody's Investor Service, Inc., (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any lender under the Senior Credit Facilities or any commercial bank satisfying the requirements of clause (b) of this definition or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Cedel" means Cedel Bank, SA. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than a Principal or a Related Party of a Principal (as defined below), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of more than 50% of the Voting Stock of the Company (measured by voting power rather than number of shares) or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. 3 "Company" means P&L Coal Holdings Corporation, and any and all successors thereto. "Citizens Power" means Citizens Power LLC, a Delaware limited liability company and its direct and indirect Subsidiaries. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (ii) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs, deferred financing fees and original issue discount, noncash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iii) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Consolidated Net Income), plus (iv) depreciation, depletion, amortization (including amortization of goodwill and other intangibles) and other noncash expenses (including, without limitation, writedowns and impairment of property, plant and equipment and intangibles and other long-lived assets) (excluding any such noncash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, depletion, amortization and other noncash expenses were deducted in computing such Consolidated Net Income, minus (v) noncash items increasing such Consolidated Net Income for such period (other than accruals in accordance with GAAP), plus (vi) without duplication for amounts otherwise included in Consolidated Cash Flow, the amount of the Company's and its Restricted Subsidiaries' proportionate share of the Consolidated Cash Flow of Black Beauty Coal Company and its Subsidiaries for such period (calculated in proportion to the Company's and its Restricted Subsidiaries' common equity ownership), in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation, depletion and amortization and other noncash expenses of, a Restricted Subsidiary that is not a Senior Subordinated Note Guarantor shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary that is not a Senior Subordinated Note Guarantor shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms 4 of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded, and (v) the Net Income (or loss) of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Restricted Subsidiaries. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of the closing of the Acquisition or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office of the Senior Subordinated Note Trustee" shall be at the address of the Senior Subordinated Note Trustee specified in Section 12.02 hereof or such other address as to which the Senior Subordinated Note Trustee may give notice to the Company. "Credit Facilities" means, with respect to the Company or any of its Restricted Subsidiaries, one or more debt facilities (including, without limitation, the Senior Credit Facilities) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. Indebtedness under Credit Facilities outstanding on the date on which Senior Subordinated Notes are first issued and authenticated under this Senior Subordinated Note Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of the definition of Permitted Indebtedness. "Custodian" means the Senior Subordinated Note Trustee, as custodian with respect to the Senior Subordinated Notes in global form, or any successor entity thereto. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Definitive Senior Subordinated Note" means a certificated Senior Subordinated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in the form of Exhibit A1 hereto except that such Senior Subordinated Note shall not bear the Global Senior Subordinated Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Senior Subordinated Note" attached thereto. "Depositary" means, with respect to the Senior Subordinated Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Senior Subordinated Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Senior Subordinated Note Indenture. "Designated Noncash Consideration" means the fair market value of noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officer's Certificate, setting 5 forth the basis of such valuation, executed by the principal executive officer and the principal financial officer of the Company, less the amount of cash or Cash Equivalents received in connection with a sale of such Designated Noncash Consideration. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Senior Subordinated Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07 hereof. "Domestic Subsidiary" means a Subsidiary that is (i) formed under the laws of the United States of America or a state or territory thereof or (ii) as of the date of determination, treated as a domestic entity or a partnership or a division of a domestic entity for United States federal income tax purposes. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means any public or private sale of equity securities (excluding Disqualified Stock) of the Company, other than any private sales to an Affiliate of the Company. "Escrow Account" means the escrow account maintained pursuant to the Escrow Letter. "Escrow Letter" means that certain escrow letter dated March 2, 1998, by and among Lazard Brothers & Co., Limited, The Energy Group PLC, Peabody Investments Inc. and P&L Coal Holdings Corporation. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Exchange Senior Subordinated Notes" means the Senior Subordinated Notes issued in the Exchange Offer pursuant to Section 2.06(f) hereof. "Existing Citizens Power Investment" means the Investments in Citizens Power by the Company and its Restricted Subsidiaries as of the date of the closing of the Acquisition. 6 "Existing Indebtedness" means up to $292.5 million in aggregate principal amount of Indebtedness of the Company and its Restricted Subsidiaries (other than Indebtedness under the Senior Credit Facilities, the Senior Notes, the Senior Subordinated Notes and related Guarantees) in existence on the date of the closing of the Acquisition, until such amounts are repaid. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of original issue discount, noncash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letters of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations, but excluding amortization of debt issuance costs) and (ii) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on the portion of Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the effective combined federal, state and local tax rate of such Person for such period, expressed as a decimal, in each case, for the Company and its Restricted Subsidiaries on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person and its Restricted Subsidiaries for any period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to the Fixed Charges of such Person and its Restricted Subsidiaries for such period. In the event that the referrent Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions and including pro forma cost savings permitted by Article 11 of Regulation S-X, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. 7 "Foreign Subsidiaries" means Subsidiaries of the Company that are not Domestic Subsidiaries. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date hereof. "Global Senior Subordinated Note Legend" means the legend set forth in Section 2.06(g)(ii), which is required to be placed on all Global Senior Subordinated Notes issued under this Senior Subordinated Note Indenture. "Global Senior Subordinated Notes" means, individually and collectively, each of the Restricted Global Senior Subordinated Notes and the Unrestricted Global Senior Subordinated Notes, in the form of Exhibits A1 and A2 hereto issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or commodity prices, in each case for the purpose of risk management and not for speculation. "Holder" means a Person in whose name a Senior Subordinated Note is registered. "IAI Global Senior Subordinated Note" means the global Senior Subordinated Note in the form of Exhibit A1 hereto bearing the Global Senior Subordinated Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Senior Subordinated Notes sold to Institutional Accredited Investors. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, if and to the extent any of the foregoing (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all Indebtedness of others secured by a Lien 8 on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person, but excluding from the definition of "Indebtedness," any of the foregoing that constitutes (1) an accrued expense, (2) trade payables and (3) Obligations in respect of reclamation, workers' compensation, including black lung, pensions and retiree health care, in each case to the extent not overdue for more than 90 days. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Indirect Participant" means a Person who holds a beneficial interest in a Global Senior Subordinated Note through a Participant. "Initial Senior Subordinated Notes" means $500.0 million in aggregate principal amount of Senior Subordinated Notes issued under this Senior Subordinated Note Indenture on the date hereof. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who are not also QIBs. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of direct or indirect loans (including guarantees, other than performance guarantees provided for the benefit of Citizens Power, of any portion of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in Section 4.07 hereof. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York, the city in which the principal office of the Trustee is located or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Senior Subordinated Notes for use by such Holders in connection with the Exchange Offer. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). 9 "Liquidated Damages" means all liquidated damages then owing pursuant to Section 5 of the Registration Rights Agreement. "Marketable Securities" means, with respect to any Asset Sale, any readily marketable equity securities that are (i) traded on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market; and (ii) issued by a corporation having a total equity market capitalization of not less than $250.0 million; provided that the excess of (A) the aggregate amount of securities of any one such corporation held by the Company and any Restricted Subsidiary over (B) ten times the average daily trading volume of such securities during the 20 immediately preceding trading days shall be deemed not to be Marketable Securities; as determined on the date of the contract relating to such Asset Sale. "Net Income" means, with respect to any Person, the net income or loss of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain or loss, together with any related provision for taxes on such extraordinary or nonrecurring gain or loss. "Net Proceeds" means the aggregate proceeds (cash or property) received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any noncash consideration received in any Asset Sale) or the sale or disposition of any Investment, net of the direct costs relating to such Asset Sale, sale or disposition, (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "Non-Guarantor Subsidiaries" means (i) Citizens Power and its direct and indirect Subsidiaries, (ii) the Company's future Unrestricted Subsidiaries and (iii) the Company's current and future Foreign Subsidiaries. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) other than a pledge of the Equity Interests of any Unrestricted Subsidiaries, (b) is directly or indirectly liable (as a guarantor or otherwise) other than by virtue of a pledge of the Equity Interests of any Unrestricted Subsidiaries, or (c) constitutes the lender; and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness (other than the Senior Subordinated Notes being offered hereby) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity. "Non-U.S. Person" means a Person who is not a U.S. Person. 10 "Obligations" means any principal, premium (if any), interest, penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, Guarantees and other liabilities and amounts payable under the documentation governing any Indebtedness or in respect thereto. "Offering" means the offering of the Senior Subordinated Notes by the Company. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officer's Certificate" means a certificate signed on behalf of the Company by an Officer of the Company who must be a vice-president, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Sections 12.04 and 12.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Senior Subordinated Note Trustee, that meets the requirements of Sections 12.04 and 12.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Senior Subordinated Note Trustee. "Participant" means, with respect to the Depositary, Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel, respectively (and, with respect to The Depository Trust Company, shall include Euroclear and Cedel). "Participating Broker-Dealer" has the meaning set forth in the Registration Rights Agreement. "Permitted Business" means coal production, coal mining, coal brokering, coal transportation, mine development, power marketing, electricity generation, power/energy sales and trading, energy transactions/asset restructurings, risk management products associated with energy, fuel/power integration and other energy related businesses, ash disposal, environmental remediation, coal, natural gas, petroleum or other fossil fuel exploration, production, marketing, transportation and distribution and other related businesses, and activities of the Company and its Subsidiaries as of the date of the closing of the Acquisition and any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto. "Permitted Investments" means (a) any Investment in the Company or in a Restricted Subsidiary of the Company; (b) any Investment in Cash Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Restricted Subsidiary of the Company or (ii) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (d) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (e) any Investment existing on the date of the closing of the Acquisition (an "Existing Investment") and any Investment that replaces, refinances or refunds an Existing Investment, provided that the new Investment is in an amount that does not exceed the amount replaced, refinanced or refunded and is made in the same Person as the Investment replaced, refinanced or refunded, (f) advances to employees not in excess of $10.0 million outstanding at any one time; (g) Hedging Obligations permitted under clause (ix) of Section 4.09 hereof; (h) loans and advances to officers, directors 11 and employees for business-related travel expenses, moving expenses and other similar expenses, in each case incurred in the ordinary course of business; (i) any Investment in a Permitted Business (whether or not an Investment in an Unrestricted Subsidiary) having an aggregate fair market value, when taken together with all other Investments made pursuant to this clause (i), does not exceed in aggregate amount the sum of (1) 10% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value) plus (2) 100% of the Net Proceeds from the sale or disposition of any Investment previously made pursuant to this clause (i) or 100% of the amount of any dividend, distribution or payment from any such Investment, net of income taxes paid or payable in respect thereof, in each case up to the amount of the Investment that was made pursuant to this clause (i) and 50% of the amount of such Net Proceeds or 50% of such dividends, distributions or payments, in each case received in excess of the amount of the Investments made pursuant to this clause (i); (j) guarantees (including Guarantees) of Indebtedness permitted by Section 4.09 hereof; (k) any Investment acquired by the Company or any of its Restricted Subsidiaries (A) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (B) as a result of the transfer of title with respect to any secured Investment in default as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to such secured Investment; (l) any Investment in Black Beauty Coal Company having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (l), that are at the time outstanding not to exceed $50.0 million (with any write-down or write-off of any such Investment deemed to remain outstanding); (m) Investments in Citizens Power having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (m), that are at that time outstanding not to exceed $50.0 million at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (n) any Investment in the Bengalla Joint Venture and the Warkworth Associates Joint Venture having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (n), that are at the time outstanding, not to exceed $25.0 million (with any write-down or write-off of any such Investment deemed to remain outstanding); (o) that portion of any Investment by the Company or a Restricted Subsidiary in a Permitted Business to the extent that the Company or such Restricted Subsidiary will receive in a substantially concurrent transaction an amount in cash equal to the amount of such Investment (or the fair market value of such Investment), net of any obligation to pay taxes or other amounts in respect of the receipt of such cash; provided that the receipt of such cash does not carry any obligation by the Company or such Restricted Subsidiary to repay or return such cash; and (p) the forgiveness or cancellation of any payable due from Citizens Power and its direct and indirect Subsidiaries outstanding on the date of the closing of the Acquisition; provided, however, that with respect to any Investment, the Company may, in its sole discretion, allocate all or any portion of any Investment to one or more of the above clauses so that the entire Investment would be a Permitted Investment. "Permitted Liens" means (i) Liens securing Indebtedness under Credit Facilities that were permitted by the terms of this Senior Subordinated Note Indenture to be incurred; (ii) Liens in favor of the Company; (iii) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (v) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or 12 other obligations of a like nature incurred in the ordinary course of business; (vi) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance or other kinds of social security; (vii) Liens existing on the date of the closing of the Acquisition; (viii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (ix) Liens on assets of Senior Subordinated Note Guarantors to secure Senior Debt of such Senior Subordinated Note Guarantors that was permitted by this Senior Subordinated Note Indenture to be incurred; (x) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Restricted Subsidiary; (xi) Liens on assets of Foreign Subsidiaries to secure Indebtedness that was permitted by this Senior Subordinated Note Indenture to be incurred; (xii) statutory liens of landlords, mechanics, suppliers, vendors, warehousemen, carriers or other like Liens arising in the ordinary course of business; (xiii) judgment Liens not giving rise to an Event of Default so long as any appropriate legal proceeding that may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such legal proceeding may be initiated shall not have expired; (xiv) easements, rights-of-way, zoning and similar restrictions and other similar encumbrances or title defects incurred or imposed, as applicable, in the ordinary course of business and consistent with industry practices which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto (as such property is used by the Company or its Subsidiaries) or interfere with the ordinary conduct of the business of the Company or such Subsidiaries; provided, however, that any such Liens are not incurred in connection with any borrowing of money or any commitment to loan any money or to extend any credit; (xv) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (vi) of the second paragraph of Section 4.09 hereof and other purchase money Liens to finance property or assets of the Company or any Restricted Subsidiary acquired in the ordinary course of business; provided that such Liens are only secured by such property or assets so acquired or improved (including, in the case of the acquisition of Capital Stock of a Person who becomes a Restricted Subsidiary, Liens on the assets of the Person whose Capital Stock was so acquired); (xvi) Liens securing Indebtedness under Hedging Obligations; provided that such Liens are only secured by property or assets that secure the Indebtedness subject to the Hedging Obligation; (xvii) Liens to secure Indebtedness permitted by clause (xv) of the second paragraph of Section 4.09 hereof; and (xviii) Liens on the Equity Interests of Unrestricted Subsidiaries securing Obligations of Unrestricted Subsidiaries not otherwise prohibited by this Senior Subordinated Note Indenture.. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest and premium, if any, on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or 13 refunded is subordinated in right of payment to the Senior Subordinated Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Senior Subordinated Notes on terms at least as favorable to the Holders of Senior Subordinated Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "Principals" means Lehman Brothers Merchant Banking Partners II L.P., any of its respective Affiliates and executive officers of the Company as of the date of the closing of the Acquisition. "Private Placement Legend" means the legend set forth in Section 2.06(g)(i) to be placed on all Senior Subordinated Notes issued under this Senior Subordinated Note Indenture except where otherwise permitted by the provisions of this Senior Subordinated Note Indenture. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of May 18, 1998, by and among the Company and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time and, with respect to any Additional Senior Subordinated Notes, one or more registration rights agreements between the Company and the other parties thereto, as such agreement(s) may be amended, modified or supplemented from time to time, relating to rights given by the Company to the purchasers of Additional Senior Subordinated Notes to register such Additional Senior Subordinated Notes under the Securities Act. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Senior Subordinated Note" means a Regulation S Temporary Global Senior Subordinated Note or Regulation S Permanent Global Senior Subordinated Note, as appropriate. "Regulation S Permanent Global Senior Subordinated Note" means a permanent global Senior Subordinated Note in the form of Exhibit A1 hereto bearing the Global Senior Subordinated Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Senior Subordinated Note upon expiration of the Restricted Period. "Regulation S Temporary Global Senior Subordinated Note" means a temporary global Senior Subordinated Note in the form of Exhibit A2 hereto bearing the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Senior Subordinated Notes initially sold in reliance on Rule 903 of Regulation S. 14 "Related Party" with respect to any Principal means (A) any controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Principal or (B) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of such Principal and/or such other Persons referred to in the immediately preceding clause (A). "Responsible Officer" when used with respect to the Senior Subordinated Note Trustee, means any officer within the Corporate Trust Administration of the Senior Subordinated Note Trustee (or any successor group of the Senior Subordinated Note Trustee) or any other officer of the Senior Subordinated Note Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Definitive Senior Subordinated Note" means a Definitive Senior Subordinated Note bearing the Private Placement Legend. "Restricted Global Senior Subordinated Note" means a Global Senior Subordinated Note bearing the Private Placement Legend. "Restricted Investment" means any Investment other than a Permitted Investment. "Restricted Period" means the 40-day restricted period as defined in Regulation S. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated the Securities Act. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Senior Credit Facilities" means those certain Senior Credit Facilities, dated as of May 14, 1998 by and among the Company, the Senior Note Guarantors, Lehman Commercial Paper Inc., as Arranger, Syndication Agent and the Administrative Agent and the other lenders party thereto, including any related notes, guarantees, collateral documents, letters of credit, instruments and agreements executed in connection therewith (and any appendices, exhibits or schedules to any of the foregoing), and in each case as amended, modified, supplemented, restated, renewed, refunded, replaced, restructured, repaid or refinanced from time to time (whether with the original agents and lenders or other agents and lenders or otherwise, and whether provided under the original credit agreement or other credit agreements or otherwise). 15 "Senior Note Indenture" means that certain Senior Note Indenture, dated as of the date hereof, between the Company and State Street Bank and Trust Company, as Senior Note Trustee, as amended or supplemented from time to time, relating to the Senior Notes. "Senior Notes" means the Company's 8-7/8% Senior Notes due 2008 issued concurrently pursuant to the Senior Note Indenture. "Senior Subordinated Note Guarantors" means each of (i) the Company's Domestic Subsidiaries at the date of the closing of the Acquisition, other than Citizens Power and the Subsidiaries of Citizens Power at the date of the Senior Subordinated Note Indenture and (ii) any other subsidiary that executes a Subordinated Subsidiary Guarantee in accordance with the provisions of this Senior Subordinated Note Indenture, and their respective successors and assigns. "Senior Subordinated Note Indenture" means this Senior Subordinated Note Indenture, as amended or supplemented from time to time. "Senior Subordinated Note Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Senior Subordinated Note Indenture and thereafter means the successor serving hereunder. "Senior Subordinated Notes" has the meaning assigned to it in the preamble to this Senior Subordinated Note Indenture. "Senior Subsidiary Guarantees" mean the guarantees endorsed on the Senior Notes by the Senior Note Guarantors. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Registration Rights Agreement. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Senior Subordinated Note Indenture. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subordinated Subsidiary Guarantees" mean the guarantees endorsed on the Senior Subordinated Notes by the Senior Subordinated Note Guarantors. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or Senior Subordinated Note Trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or 16 a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa- 77bbbb) as in effect on the date on which this Senior Subordinated Note Indenture is qualified under the TIA. "Total Assets" means the total assets of the Company and its Restricted Subsidiaries on a consolidated basis determined in accordance with GAAP, as shown on the most recently available consolidated balance sheet of the Company and its Restricted Subsidiaries. "Transaction Documents" means the documents related to (i) the Acquisition (including, without limitation, the purchase agreement, the participation agreement and the escrow agreement), (ii) the Senior Credit Facilities and (iii) the offering of the Senior Notes and the Senior Subordinated Notes. "Treasury Rate" means the yield to maturity at the time of the computation of the United States Treasury securities with a constant maturity (as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519), which has become publicly available at least two Business Days prior to the date fixed for redemption (or if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the then remaining average life to May 15, 2003; provided, however, that if the average life of such Senior Subordinated Note is not equal to the constant maturity of the United States Treasury security for which weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the average life of such Senior Subordinated Note is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "Unrestricted Global Senior Subordinated Note" means a permanent global Senior Subordinated Note in the form of Exhibit A1 attached hereto that bears the Global Senior Subordinated Note Legend and that has the "Schedule of Exchanges of Interests in the Global Senior Subordinated Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Senior Subordinated Notes that do not bear the Private Placement Legend. "Unrestricted Definitive Senior Subordinated Note" means one or more Definitive Senior Subordinated Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Subsidiary" means (i) Citizens Power and any direct or indirect Subsidiary of Citizens Power on the date hereof and (ii) any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent that such Person: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any obligation (x) to subscribe for additional Equity Interests in Unrestricted Subsidiaries (except with respect to Permitted Investments) or (y) to maintain or preserve such Person's net worth; and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any 17 Indebtedness of the Company or any of its Restricted Subsidiaries; provided, however, that the Company and its Restricted Subsidiaries may guarantee the performance of Unrestricted Subsidiaries in the ordinary course of business except for guarantees of Obligations in respect of borrowed money. Any such designation by the Board of Directors shall be evidenced to the Senior Subordinated Note Trustee by filing with the Senior Subordinated Note Trustee a certified copy of the Board Resolution giving effect to such designation and an Officer's Certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.07 hereof. "U.S. Person" means a U.S. person as defined in Rule 902(o) under the Securities Act . "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Warkworth Associates Joint Venture" means Warkworth Coal Sales Ltd., Warkworth Pastoral Co. Pty, Limited and Warkworth Mining Limited, which are the joint venture companies related to the Warkworth mine in New South Wales, Australia. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such Person. Section 1.02. OTHER DEFINITIONS. Defined in Term Section "Affiliate Transaction"................................... 4.11 "Asset Sale".............................................. 4.10 "Asset Sale Offer"........................................ 3.09 "Authentication Order".................................... 2.02 "Bankruptcy Law".......................................... 4.01 "Change of Control Offer"................................. 4.15 "Change of Control Payment"............................... 4.15 "Change of Control Payment Date".......................... 4.15 "Covenant Defeasance"..................................... 8.03 18 "Event of Default"........................................ 6.01 "Excess Proceeds"......................................... 4.10 "incur"................................................... 4.09 "Legal Defeasance"........................................ 8.02 "Offer Amount"............................................ 3.09 "Offer Period"............................................ 3.09 "Paying Agent"............................................ 2.03 "Permitted Debt".......................................... 4.09 "Purchase Date"........................................... 3.09 "Registrar"............................................... 2.03 "Restricted Payments"..................................... 4.07 Section 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT Whenever this Senior Subordinated Note Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Senior Subordinated Note Indenture. The following TIA terms used in this Senior Subordinated Note Indenture have the following meanings: "Indenture securities" means the Senior Subordinated Notes; "Indenture security Holder" means a Holder of a Senior Subordinated Note; "Indenture to be qualified" means this Senior Subordinated Note Indenture; "Indenture Trustee" or "institutional Trustee" means the Senior Subordinated Note Trustee; and "obligor" on the Senior Subordinated Notes and the Subordinated Subsidiary Guarantees means the Company and the Senior Subordinated Note Guarantors, respectively, and any successor obligor upon the Senior Subordinated Notes and the Subordinated Subsidiary Guarantees, respectively. All other terms used in this Senior Subordinated Note Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. Section 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; 19 (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2. THE SENIOR SUBORDINATED NOTES Section 2.01. FORM AND DATING. (a) General. The Senior Subordinated Notes and the Senior Subordinated Note Trustee's certificate of authentication shall be substantially in the form of Exhibits A1 and A2 hereto. The Senior Subordinated Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Senior Subordinated Note shall be dated the date of its authentication. The Senior Subordinated Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Senior Subordinated Notes shall constitute, and are hereby expressly made, a part of this Senior Subordinated Note Indenture and the Company, the Senior Subordinated Note Guarantors and the Senior Subordinated Note Trustee, by their execution and delivery of this Senior Subordinated Note Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Senior Subordinated Note conflicts with the express provisions of this Senior Subordinated Note Indenture, the provisions of this Senior Subordinated Note Indenture shall govern and be controlling. (b) Global Senior Subordinated Notes. Senior Subordinated Notes issued in global form shall be substantially in the form of Exhibits A1 or A2 attached hereto (including the Global Senior Subordinated Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Senior Subordinated Note" attached thereto). Senior Subordinated Notes issued in definitive form shall be substantially in the form of Exhibit A1 attached hereto (but without the Global Senior Subordinated Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Senior Subordinated Note" attached thereto). Each Global Senior Subordinated Note shall represent such of the outstanding Senior Subordinated Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Senior Subordinated Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Senior Subordinated Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Senior Subordinated Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Senior Subordinated Notes represented thereby shall be made by the Senior Subordinated Note Trustee or the Custodian, at the direction of the Senior Subordinated Note Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. 20 (c) Temporary Global Senior Subordinated Notes. Senior Subordinated Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Senior Subordinated Note, which shall be deposited on behalf of the purchasers of the Senior Subordinated Notes represented thereby with the Senior Subordinated Note Trustee, at its New York office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed by the Company and authenticated by the Senior Subordinated Note Trustee as hereinafter provided. The Restricted Period shall be terminated upon the receipt by the Senior Subordinated Note Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Cedel Bank certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Senior Subordinated Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Senior Subordinated Note or an IAI Global Senior Subordinated Note bearing a Private Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officer's Certificate from the Company. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Senior Subordinated Note shall be exchanged for beneficial interests in Regulation S Permanent Global Senior Subordinated Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Senior Subordinated Notes, the Senior Subordinated Note Trustee shall cancel the Regulation S Temporary Global Senior Subordinated Note. The aggregate principal amount of the Regulation S Temporary Global Senior Subordinated Note and the Regulation S Permanent Global Senior Subordinated Notes may from time to time be increased or decreased by adjustments made on the records of the Senior Subordinated Note Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. (d) Euroclear and Cedel Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be applicable to transfers of beneficial interests in the Regulation S Temporary Global Senior Subordinated Note and the Regulation S Permanent Global Senior Subordinated Notes that are held by Participants through Euroclear or Cedel Bank. Section 2.02. EXECUTION AND AUTHENTICATION. One Officer shall sign the Senior Subordinated Notes for the Company by manual or facsimile signature. If an Officer whose signature is on a Senior Subordinated Note no longer holds that office at the time a Senior Subordinated Note is authenticated, the Senior Subordinated Note shall nevertheless be valid. A Senior Subordinated Note shall not be valid until authenticated by the manual signature of the Senior Subordinated Note Trustee. The signature shall be conclusive evidence that the Senior Subordinated Note has been authenticated under this Senior Subordinated Note Indenture. 21 The Senior Subordinated Note Trustee shall, upon a written order of the Company signed by one Officer (an "Authentication Order"), authenticate Senior Subordinated Notes for original issue up to the aggregate principal amount stated in paragraph 4 of the Senior Subordinated Notes. The aggregate principal amount of Senior Subordinated Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. The Senior Subordinated Note Trustee may appoint an authenticating agent acceptable to the Company to authenticate Senior Subordinated Notes. An authenticating agent may authenticate Senior Subordinated Notes whenever the Senior Subordinated Note Trustee may do so. Each reference in this Senior Subordinated Note Indenture to authentication by the Senior Subordinated Note Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. Section 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency where Senior Subordinated Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Senior Subordinated Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Senior Subordinated Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Senior Subordinated Note Trustee in writing of the name and address of any Agent not a party to this Senior Subordinated Note Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Senior Subordinated Note Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Senior Subordinated Notes. The Company initially appoints the Senior Subordinated Note Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Senior Subordinated Notes. Section 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require each Paying Agent other than the Senior Subordinated Note Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Senior Subordinated Note Trustee all money held by the Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest on the Senior Subordinated Notes, and will notify the Senior Subordinated Note Trustee of any default by the Company in making any such payment. While any such default continues, the Senior Subordinated Note Trustee may require a Paying Agent to pay all money held by it to the Senior Subordinated Note Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Senior Subordinated Note Trustee. Upon payment over to the Senior Subordinated Note Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Senior Subordinated Note Trustee shall serve as Paying Agent for the Senior Subordinated Notes. 22 Section 2.05. HOLDER LISTS. The Senior Subordinated Note Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA (S) 312(a). If the Senior Subordinated Note Trustee is not the Registrar, the Company shall furnish to the Senior Subordinated Note Trustee at least seven Business Days before each interest payment date and at such other times as the Senior Subordinated Note Trustee may request in writing, a list in such form and as of such date as the Senior Subordinated Note Trustee may reasonably require of the names and addresses of the Holders of Senior Subordinated Notes and the Company shall otherwise comply with TIA (S) 312(a). Section 2.06. TRANSFER AND EXCHANGE. (a) Transfer and Exchange of Global Senior Subordinated Notes. A Global Senior Subordinated Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Senior Subordinated Notes will be exchanged by the Company for Definitive Senior Subordinated Notes if (i) the Company delivers to the Senior Subordinated Note Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary or (ii) the Company in its sole discretion determines that the Global Senior Subordinated Notes (in whole but not in part) should be exchanged for Definitive Senior Subordinated Notes and delivers a written notice to such effect to the Senior Subordinated Note Trustee; provided that in no event shall the Regulation S Temporary Global Senior Subordinated Note be exchanged by the Company for Definitive Senior Subordinated Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Senior Subordinated Notes shall be issued in such names as the Depositary shall instruct the Senior Subordinated Note Trustee. Global Senior Subordinated Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Senior Subordinated Note authenticated and delivered in exchange for, or in lieu of, a Global Senior Subordinated Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Senior Subordinated Note. A Global Senior Subordinated Note may not be exchanged for another Senior Subordinated Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Senior Subordinated Note may be transferred and exchanged as provided in Section 2.06(b),(c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Senior Subordinated Notes. The transfer and exchange of beneficial interests in the Global Senior Subordinated Notes shall be effected through the Depositary, in accordance with the provisions of this Senior Subordinated Note Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Senior Subordinated Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Senior Subordinated 23 Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (i) Transfer of Beneficial Interests in the Same Global Senior Subordinated Note. Beneficial interests in any Restricted Global Senior Subordinated Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Senior Subordinated Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Temporary Regulation S Global Senior Subordinated Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Senior Subordinated Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Subordinated Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Senior Subordinated Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Senior Subordinated Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Senior Subordinated Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Senior Subordinated Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Senior Subordinated Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Senior Subordinated Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon consummation of an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Senior Subordinated Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Senior Subordinated Notes contained in this Senior Subordinated Note Indenture and the Senior Subordinated Notes or otherwise applicable under the Securities Act, the Senior Subordinated Note Trustee shall adjust the principal amount of the relevant Global Senior Subordinated Note(s) pursuant to Section 2.06(h) hereof. (iii) Transfer of Beneficial Interests to Another Restricted Global Senior Subordinated Note. A beneficial interest in any Restricted Global Senior Subordinated Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Senior Subordinated Note if the transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following: 24 (A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Senior Subordinated Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Senior Subordinated Note or the Regulation S Global Senior Subordinated Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transferee will take delivery in the form of a beneficial interest in the IAI Global Senior Subordinated Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications and certificates and Opinion of Counsel required by item (3) thereof, if applicable. (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Senior Subordinated Note for Beneficial Interests in the Unrestricted Global Senior Subordinated Note. A beneficial interest in any Restricted Global Senior Subordinated Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Senior Subordinated Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Subordinated Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal or via the Depositary's book-entry system that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Senior Subordinated Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Senior Subordinated Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Senior Subordinated Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Senior Subordinated Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an 25 Unrestricted Global Senior Subordinated Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and state "blue sky" laws and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Senior Subordinated Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Senior Subordinated Note Trustee shall authenticate one or more Unrestricted Global Senior Subordinated Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Senior Subordinated Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Senior Subordinated Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Senior Subordinated Notes. (i) Beneficial Interests in Restricted Global Senior Subordinated Notes to Restricted Definitive Senior Subordinated Notes. If any holder of a beneficial interest in a Restricted Global Senior Subordinated Note proposes to exchange such beneficial interest for a Restricted Definitive Senior Subordinated Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Senior Subordinated Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Senior Subordinated Note proposes to exchange such beneficial interest for a Restricted Definitive Senior Subordinated Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; 26 (E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; (F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Senior Subordinated Note Trustee shall cause the aggregate principal amount of the applicable Global Senior Subordinated Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Senior Subordinated Note Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Senior Subordinated Note in the appropriate principal amount. Any Definitive Senior Subordinated Note issued in exchange for a beneficial interest in a Restricted Global Senior Subordinated Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Senior Subordinated Note Trustee shall deliver such Definitive Senior Subordinated Notes to the Persons in whose names such Senior Subordinated Notes are so registered. Any Definitive Senior Subordinated Note issued in exchange for a beneficial interest in a Restricted Global Senior Subordinated Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Senior Subordinated Note may not be exchanged for a Definitive Senior Subordinated Note or transferred to a Person who takes delivery thereof in the form of a Definitive Senior Subordinated Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (ii) Beneficial Interests in Restricted Global Senior Subordinated Notes to Unrestricted Definitive Senior Subordinated Notes. A holder of a beneficial interest in a Restricted Global Senior Subordinated Note may exchange such beneficial interest for an Unrestricted Definitive Senior Subordinated Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Senior Subordinated Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker- dealer, (2) a 27 Person participating in the distribution of the Exchange Senior Subordinated Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Senior Subordinated Note proposes to exchange such beneficial interest for a Definitive Senior Subordinated Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Senior Subordinated Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Senior Subordinated Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and state "blue sky" laws and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) Beneficial Interests in Unrestricted Global Senior Subordinated Notes to Unrestricted Definitive Senior Subordinated Notes. If any holder of a beneficial interest in an Unrestricted Global Senior Subordinated Note proposes to exchange such beneficial interest for a Definitive Senior Subordinated Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Senior Subordinated Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Senior Subordinated Note Trustee shall cause the aggregate principal amount of the applicable Global Senior Subordinated Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Senior Subordinated Note Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Senior Subordinated Note in the appropriate principal amount. Any Definitive Senior Subordinated Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Senior Subordinated Note Trustee shall deliver such Definitive Senior Subordinated Notes to the Persons 28 in whose names such Senior Subordinated Notes are so registered. Any Definitive Senior Subordinated Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear the Private Placement Legend. (d) Transfer and Exchange of Definitive Senior Subordinated Notes for Beneficial Interests. (i) Restricted Definitive Senior Subordinated Notes to Beneficial Interests in Restricted Global Senior Subordinated Notes. If any Holder of a Restricted Definitive Senior Subordinated Note proposes to exchange such Senior Subordinated Note for a beneficial interest in a Restricted Global Senior Subordinated Note or to transfer such Restricted Definitive Senior Subordinated Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Senior Subordinated Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Senior Subordinated Note proposes to exchange such Senior Subordinated Note for a beneficial interest in a Restricted Global Senior Subordinated Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Senior Subordinated Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Restricted Definitive Senior Subordinated Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Restricted Definitive Senior Subordinated Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such Restricted Definitive Senior Subordinated Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; (F) if such Restricted Definitive Senior Subordinated Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such Restricted Definitive Senior Subordinated Note is being transferred pursuant to an effective registration statement under the Securities Act, a 29 certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Senior Subordinated Note Trustee shall cancel the Restricted Definitive Senior Subordinated Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Senior Subordinated Note, in the case of clause (B) above, the 144A Global Senior Subordinated Note, in the case of clause (c) above, the Regulation S Global Senior Subordinated Note, and in all other cases, the IAI Global Senior Subordinated Note. (ii) Restricted Definitive Senior Subordinated Notes to Beneficial Interests in Unrestricted Global Senior Subordinated Notes. A Holder of a Restricted Definitive Senior Subordinated Note may exchange such Senior Subordinated Note for a beneficial interest in an Unrestricted Global Senior Subordinated Note or transfer such Restricted Definitive Senior Subordinated Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Subordinated Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Senior Subordinated Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Senior Subordinated Notes proposes to exchange such Senior Subordinated Notes for a beneficial interest in the Unrestricted Global Senior Subordinated Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the Holder of such Definitive Senior Subordinated Notes proposes to transfer such Senior Subordinated Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Senior Subordinated Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and state "blue sky" laws and 30 that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Senior Subordinated Note Trustee shall cancel the Definitive Senior Subordinated Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Senior Subordinated Note. (iii) Unrestricted Definitive Senior Subordinated Notes to Beneficial Interests in Unrestricted Global Senior Subordinated Notes. A Holder of an Unrestricted Definitive Senior Subordinated Note may exchange such Senior Subordinated Note for a beneficial interest in an Unrestricted Global Senior Subordinated Note or transfer such Definitive Senior Subordinated Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Subordinated Note at any time. Upon receipt of a request for such an exchange or transfer, the Senior Subordinated Note Trustee shall cancel the applicable Unrestricted Definitive Senior Subordinated Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Senior Subordinated Notes. If any such exchange or transfer from a Definitive Senior Subordinated Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Senior Subordinated Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Senior Subordinated Note Trustee shall authenticate one or more Unrestricted Global Senior Subordinated Notes in an aggregate principal amount equal to the principal amount of Definitive Senior Subordinated Notes so transferred. (e) Transfer and Exchange of Definitive Senior Subordinated Notes for Definitive Senior Subordinated Notes. Upon request by a Holder of Definitive Senior Subordinated Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Senior Subordinated Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Senior Subordinated Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e). (i) Restricted Definitive Senior Subordinated Notes to Restricted Definitive Senior Subordinated Notes. Any Restricted Definitive Senior Subordinated Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Senior Subordinated Note if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; 31 (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. (ii) Restricted Definitive Senior Subordinated Notes to Unrestricted Definitive Senior Subordinated Notes. Any Restricted Definitive Senior Subordinated Note may be exchanged by the Holder thereof for an Unrestricted Definitive Senior Subordinated Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Senior Subordinated Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Senior Subordinated Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Senior Subordinated Notes proposes to exchange such Senior Subordinated Notes for an Unrestricted Definitive Senior Subordinated Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (2) if the Holder of such Restricted Definitive Senior Subordinated Notes proposes to transfer such Senior Subordinated Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Senior Subordinated Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and state "blue sky" laws and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. 32 (iii) Unrestricted Definitive Senior Subordinated Notes to Unrestricted Definitive Senior Subordinated Notes. A Holder of Unrestricted Definitive Senior Subordinated Notes may transfer such Senior Subordinated Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Senior Subordinated Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Senior Subordinated Notes pursuant to the instructions from the Holder thereof. (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Senior Subordinated Note Trustee shall authenticate (i) one or more Unrestricted Global Senior Subordinated Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Senior Subordinated Notes tendered for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they are not participating in a distribution of the Exchange Senior Subordinated Notes and (z) they are not affiliates (as defined in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and (ii) Definitive Senior Subordinated Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Senior Subordinated Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Senior Subordinated Notes, the Senior Subordinated Note Trustee shall cause the aggregate principal amount of the applicable Restricted Global Senior Subordinated Notes to be reduced accordingly, and the Company shall execute and the Senior Subordinated Note Trustee shall authenticate and deliver to the Persons designated by the Holders of Definitive Senior Subordinated Notes so accepted Definitive Senior Subordinated Notes in the appropriate principal amount. (g) Legends The following legends shall appear on the face of all Global Senior Subordinated Notes and Definitive Senior Subordinated Notes issued under this Senior Subordinated Note Indenture unless specifically stated otherwise in the applicable provisions of this Senior Subordinated Note Indenture. (i) Private Placement Legend. (A) Except as permitted by subparagraph (B) below, each Global Senior Subordinated Note and each Definitive Senior Subordinated Note (and all Senior Subordinated Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE 33 HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE." (B) Notwithstanding the foregoing, any Global Senior Subordinated Note or Definitive Senior Subordinated Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Senior Subordinated Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Senior Subordinated Note Legend. Each Global Senior Subordinated Note shall bear a legend in substantially the following form: "THIS GLOBAL SENIOR SUBORDINATED NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE SENIOR SUBORDINATED NOTE INDENTURE GOVERNING THIS SENIOR SUBORDINATED NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE SENIOR SUBORDINATED NOTE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE SENIOR SUBORDINATED NOTE INDENTURE, (II) THIS GLOBAL SENIOR SUBORDINATED NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE SENIOR SUBORDINATED NOTE INDENTURE, (III) THIS GLOBAL SENIOR SUBORDINATED NOTE MAY BE DELIVERED TO THE SENIOR SUBORDINATED NOTE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE SENIOR SUBORDINATED NOTE INDENTURE AND (IV) THIS GLOBAL SENIOR SUBORDINATED NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." 34 (iii) Regulation S Temporary Global Senior Subordinated Note Legend. The Regulation S Temporary Global Senior Subordinated Note shall bear a legend in substantially the following form: "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SENIOR SUBORDINATED NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED SENIOR SUBORDINATED NOTES, ARE AS SPECIFIED IN THE SENIOR SUBORDINATED NOTE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL SENIOR SUBORDINATED NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON." (h) Cancellation and/or Adjustment of Global Senior Subordinated Notes. At such time as all beneficial interests in a particular Global Senior Subordinated Note have been exchanged for Definitive Senior Subordinated Notes or a particular Global Senior Subordinated Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Senior Subordinated Note shall be returned to or retained and canceled by the Senior Subordinated Note Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Senior Subordinated Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Senior Subordinated Note or for Definitive Senior Subordinated Notes, the principal amount of Senior Subordinated Notes represented by such Global Senior Subordinated Note shall be reduced accordingly and an endorsement shall be made on such Global Senior Subordinated Note by the Senior Subordinated Note Trustee or by the Depositary at the direction of the Senior Subordinated Note Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Senior Subordinated Note, such other Global Senior Subordinated Note shall be increased accordingly and an endorsement shall be made on such Global Senior Subordinated Note by the Senior Subordinated Note Trustee or by the Depositary at the direction of the Senior Subordinated Note Trustee to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Senior Subordinated Note Trustee shall authenticate Global Senior Subordinated Notes and Definitive Senior Subordinated Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Senior Subordinated Note or to a Holder of a Definitive Senior Subordinated Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof). 35 (iii) The Registrar shall not be required to register the transfer of or exchange any Senior Subordinated Note selected for redemption in whole or in part, except the unredeemed portion of any Senior Subordinated Note being redeemed in part. (iv) All Global Senior Subordinated Notes and Definitive Senior Subordinated Notes issued upon any registration of transfer or exchange of Global Senior Subordinated Notes or Definitive Senior Subordinated Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Senior Subordinated Note Indenture, as the Global Senior Subordinated Notes or Definitive Senior Subordinated Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Senior Subordinated Notes during a period beginning at the opening of business 15 days before the day of any selection of Senior Subordinated Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Senior Subordinated Note so selected for redemption in whole or in part, except the unredeemed portion of any Senior Subordinated Note being redeemed in part or (c) to register the transfer of or to exchange a Senior Subordinated Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Senior Subordinated Note, the Senior Subordinated Note Trustee, any Agent and the Company may deem and treat the Person in whose name any Senior Subordinated Note is registered as the absolute owner of such Senior Subordinated Note for the purpose of receiving payment of principal of and interest on such Senior Subordinated Notes and for all other purposes, and none of the Senior Subordinated Note Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Senior Subordinated Note Trustee shall authenticate Global Senior Subordinated Notes and Definitive Senior Subordinated Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. Section 2.07. Replacement Senior Subordinated Notes If any mutilated Senior Subordinated Note is surrendered to the Senior Subordinated Note Trustee or the Company and the Senior Subordinated Note Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Senior Subordinated Note, the Company shall issue and the Senior Subordinated Note Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Senior Subordinated Note if the Senior Subordinated Note Trustee's requirements are met. If required by the Senior Subordinated Note Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Senior Subordinated Note Trustee and the Company to protect the Company, the Senior Subordinated Note Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Senior Subordinated Note is replaced. The Company may charge for its expenses in replacing a Senior Subordinated Note. 36 Every replacement Senior Subordinated Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Senior Subordinated Note Indenture equally and proportionately with all other Senior Subordinated Notes duly issued hereunder. Section 2.08. Outstanding Senior Subordinated Notes. The Senior Subordinated Notes outstanding at any time are all the Senior Subordinated Notes authenticated by the Senior Subordinated Note Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Senior Subordinated Note effected by the Senior Subordinated Note Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Senior Subordinated Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Senior Subordinated Note. If a Senior Subordinated Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Senior Subordinated Note Trustee receives proof satisfactory to it that the replaced Senior Subordinated Note is held by a bona fide purchaser. If the principal amount of any Senior Subordinated Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Senior Subordinated Notes payable on that date, then on and after that date such Senior Subordinated Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. Section 2.09. Treasury Senior Subordinated Notes. In determining whether the Holders of the required principal amount of Senior Subordinated Notes have concurred in any direction, waiver or consent, Senior Subordinated Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Senior Subordinated Note Trustee shall be protected in relying on any such direction, waiver or consent, only Senior Subordinated Notes that the Senior Subordinated Note Trustee knows are so owned shall be so disregarded. Section 2.10. Temporary Senior Subordinated Notes Until certificates representing Senior Subordinated Notes are ready for delivery, the Company may prepare and the Senior Subordinated Note Trustee, upon receipt of an Authentication Order, shall authenticate temporary Senior Subordinated Notes. Temporary Senior Subordinated Notes shall be substantially in the form of certificated Senior Subordinated Notes but may have variations that the Company considers appropriate for temporary Senior Subordinated Notes and as shall be reasonably acceptable to the Senior Subordinated Note Trustee. Without unreasonable delay, the Company shall prepare and the Senior Subordinated Note Trustee shall authenticate definitive Senior Subordinated Notes in exchange for temporary Senior Subordinated Notes. 37 Holders of temporary Senior Subordinated Notes shall be entitled to all of the benefits of this Senior Subordinated Note Indenture. Section 2.11. Cancellation. The Company at any time may deliver Senior Subordinated Notes to the Senior Subordinated Note Trustee for cancellation. The Registrar and Paying Agent shall forward to the Senior Subordinated Note Trustee any Senior Subordinated Notes surrendered to them for registration of transfer, exchange or payment. The Senior Subordinated Note Trustee and no one else shall cancel all Senior Subordinated Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy canceled Senior Subordinated Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all canceled Senior Subordinated Notes shall be delivered to the Company. The Company may not issue new Senior Subordinated Notes to replace Senior Subordinated Notes that it has paid or that have been delivered to the Senior Subordinated Note Trustee for cancellation. Section 2.12. Defaulted Interest. If the Company defaults in a payment of interest on the Senior Subordinated Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Senior Subordinated Notes and in Section 4.01 hereof. The Company shall notify the Senior Subordinated Note Trustee in writing of the amount of defaulted interest proposed to be paid on each Senior Subordinated Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Senior Subordinated Note Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. Section 2.13. CUSIP Numbers. The Company in issuing the Senior Subordinated Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Senior Subordinated Note Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Senior Subordinated Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Senior Subordinated Notes, and any such redemption shall not be affected by any defect in or the omission of such numbers. The Company will promptly notify the Senior Subordinated Note Trustee of any change in the CUSIP numbers. 38 ARTICLE 3. REDEMPTION AND PREPAYMENT Section 3.01. Notices to Senior Subordinated Note Trustee. If the Company elects or is required to redeem Senior Subordinated Notes pursuant to the redemption provisions of Sections 3.07 or 3.10 hereof, respectively, it shall furnish to the Senior Subordinated Note Trustee, at least 30 days but not more than 60 days before a redemption date, an Officer's Certificate setting forth (i) the clause of this Senior Subordinated Note Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Senior Subordinated Notes to be redeemed, (iv) the redemption price and (v) the CUSIP numbers of the Senior Subordinated Notes to be redeemed. Section 3.02. Selection of Senior Subordinated Notes to Be Redeemed If less than all of the Senior Subordinated Notes are to be redeemed or purchased in an offer to purchase at any time, the Senior Subordinated Note Trustee shall select the Senior Subordinated Notes to be redeemed or purchased among the Holders of the Senior Subordinated Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Senior Subordinated Notes are listed or, if the Senior Subordinated Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Senior Subordinated Note Trustee considers fair and appropriate. In the event of partial redemption by lot, the particular Senior Subordinated Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Senior Subordinated Note Trustee from the outstanding Senior Subordinated Notes not previously called for redemption. The Senior Subordinated Note Trustee shall promptly notify the Company in writing of the Senior Subordinated Notes selected for redemption and, in the case of any Senior Subordinated Note selected for partial redemption, the principal amount thereof to be redeemed. Senior Subordinated Notes and portions of Senior Subordinated Notes selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Senior Subordinated Notes of a Holder are to be redeemed, the entire outstanding amount of Senior Subordinated Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Senior Subordinated Note Indenture that apply to Senior Subordinated Notes called for redemption also apply to portions of Senior Subordinated Notes called for redemption. Section 3.03. Notice of Redemption Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Senior Subordinated Notes are to be redeemed at its registered address. The notice shall identify the Senior Subordinated Notes to be redeemed, including the CUSIP numbers, and shall state: (a) the redemption date; 39 (b) the redemption price; (c) if any Senior Subordinated Note is being redeemed in part, the portion of the principal amount of such Senior Subordinated Note to be redeemed and that, after the redemption date upon surrender of such Senior Subordinated Note, a new Senior Subordinated Note or Senior Subordinated Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Senior Subordinated Note; (d) the name and address of the Paying Agent; (e) that Senior Subordinated Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Senior Subordinated Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Senior Subordinated Notes and/or Section of this Senior Subordinated Note Indenture pursuant to which the Senior Subordinated Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Senior Subordinated Notes. At the Company's request, the Senior Subordinated Note Trustee shall give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have delivered to the Senior Subordinated Note Trustee, at least 45 days prior to the redemption date, an Officer's Certificate requesting that the Senior Subordinated Note Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Section 3.04. Effect of Notice of Redemption Once notice of redemption is mailed in accordance with Section 3.03 hereof, Senior Subordinated Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. Section 3.05. Deposit of Redemption Price One Business Day prior to the redemption date, the Company shall deposit with the Senior Subordinated Note Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Senior Subordinated Notes to be redeemed on that date. The Senior Subordinated Note Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Senior Subordinated Note Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Senior Subordinated Notes to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Senior Subordinated Notes or the portions of 40 Senior Subordinated Notes called for redemption. If a Senior Subordinated Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Senior Subordinated Note was registered at the close of business on such record date. If any Senior Subordinated Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Senior Subordinated Notes and in Section 4.01 hereof. Section 3.06. Senior Subordinated Notes Redeemed in Part. Upon surrender of a Senior Subordinated Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Senior Subordinated Note Trustee shall authenticate for the Holder at the expense of the Company a new Senior Subordinated Note equal in principal amount to the unredeemed portion of the Senior Subordinated Note surrendered. Section 3.07. Optional Redemption. (a) The Senior Subordinated Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice. (b) Prior to May 15, 2003, the Senior Subordinated Notes will be redeemable at a redemption price equal to 100% of the principal amount thereof plus the applicable Senior Subordinated Notes Make Whole Premium, plus, to the extent not included in the Senior Subordinated Notes Make Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption. For purposes of the foregoing, "Senior Subordinated Notes Make Whole Premium" means, with respect to a Senior Subordinated Note, an amount equal to the greater of (a) 104.813% of the outstanding principal amount of such Senior Subordinated Note and (b) the excess of (1) the present value of the remaining interest, premium, if any, and principal payments due on such Senior Subordinated Note as if such Senior Subordinated Note were redeemed on May 15, 2003, computed using a discount rate equal to the Treasury Rate plus basis 50 points, over (2) the outstanding principal amount of such Senior Subordinated Note. (c) On or after May 15, 2003, the Senior Subordinated Notes are redeemable at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on May 15 of the years indicated below: Year Percentage 2003............................................ 104.813% 2004............................................ 103.208% 2005............................................ 101.604% 2006 and thereafter............................. 100.000% (d) Notwithstanding the provisions of clauses (a), (b) and (c) of this Section 3.07, during the first 36 months after the date of the closing of the Acquisition, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Senior Subordinated Notes issued under this Senior Subordinated Note Indenture at a redemption price of 109.625% of the principal 41 amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the aggregate principal amount of Senior Subordinated Notes issued remain outstanding immediately after the occurrence of such redemption (excluding Senior Subordinated Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 120 days of the date of the closing of such Equity Offering. (e) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. Section 3.08. Mandatory Redemption. Except as set forth in Section 3.10 hereof, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Senior Subordinated Notes. Section 3.09. Offer to Purchase by Application of Excess Proceeds. In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence an offer to all Holders to purchase Senior Subordinated Notes (an "Asset Sale Offer"), it shall follow the procedures specified below. The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company shall purchase the principal amount of Senior Subordinated Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has been tendered, all Senior Subordinated Notes tendered in response to the Asset Sale Offer. Payment for any Senior Subordinated Notes so purchased shall be made in the same manner as interest payments are made. If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Senior Subordinated Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Senior Subordinated Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Senior Subordinated Note Trustee and each of the Holders. The notice shall contain all instructions and materials necessary to enable such Holders to tender Senior Subordinated Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; (b) the Offer Amount, the purchase price and the Purchase Date; (c) that any Senior Subordinated Note not tendered or accepted for payment shall continue to accrete or accrue interest; 42 (d) that, unless the Company defaults in making such payment, any Senior Subordinated Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or accrue interest after the Purchase Date; (e) that Holders electing to have a Senior Subordinated Note purchased pursuant to an Asset Sale Offer may only elect to have all of such Senior Subordinated Note purchased and may not elect to have only a portion of such Senior Subordinated Note purchased; (f) that Holders electing to have a Senior Subordinated Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Senior Subordinated Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Subordinated Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (g) that Holders shall be entitled to withdraw their election if the Company, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Senior Subordinated Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Senior Subordinated Note purchased; (h) that, if the aggregate principal amount of Senior Subordinated Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Senior Subordinated Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Senior Subordinated Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Senior Subordinated Notes were purchased only in part shall be issued new Senior Subordinated Notes equal in principal amount to the unpurchased portion of the Senior Subordinated Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Senior Subordinated Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Senior Subordinated Notes tendered, and shall deliver to the Senior Subordinated Note Trustee an Officer's Certificate stating that such Senior Subordinated Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Senior Subordinated Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Senior Subordinated Note, and the Senior Subordinated Note Trustee, upon written request from the Company shall authenticate and mail or deliver such new Senior Subordinated Note to such Holder, in a principal amount equal to any unpurchased portion of the Senior Subordinated Note surrendered. Any Senior Subordinated Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Purchase Date. 43 Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. Section 3.10. Special Mandatory Redemption. In the event that the Escrow Account is released without the consummation of the Acquisition (or if the Acquisition is not consummated within 30 days of such deposit), the Company shall redeem the Senior Subordinated Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption. ARTICLE 4. COVENANTS Section 4.01. Payment of Senior Subordinated Notes. The Company or a Senior Subordinated Note Guarantor shall pay or cause to be paid the principal of, premium, if any, and interest and Liquidated Damages, if any, on the Senior Subordinated Notes on the dates and in the manner provided in the Senior Subordinated Notes. Principal, premium, if any, and interest and Liquidated Damages, if any, shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest and Liquidated Damages, if any, then due. The Company shall pay all Liquidated Damages, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Company or a Senior Subordinated Note Guarantor shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to the then applicable interest rate on the Senior Subordinated Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace period) at the same rate to the extent lawful. Section 4.02. Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Senior Subordinated Note Trustee or an affiliate of the Senior Subordinated Note Trustee, Registrar or co-registrar) where Senior Subordinated Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Senior Subordinated Notes and this Senior Subordinated Note Indenture may be served. The Company shall give prompt written notice to the Senior Subordinated Note Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Senior Subordinated Note Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Senior Subordinated Note Trustee. The Company may also from time to time designate one or more other offices or agencies where the Senior Subordinated Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission 44 shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to the Senior Subordinated Note Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Senior Subordinated Note Trustee as one such office or agency of the Company in accordance with Section 2.03. Section 4.03. Reports. (a) Whether or not required by the rules and regulations of the SEC, so long as any Senior Subordinated Notes are outstanding, the Company shall furnish to the Holders of Senior Subordinated Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports, in each case, within the time periods specified in the SEC's rules and regulations. In addition, following consummation of the Exchange Offer, whether or not required by the rules and regulations of the SEC, the Company shall file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. The Company shall at all times comply with TIA (S) 314(a). (b) For so long as any Senior Subordinated Notes remain outstanding, the Company and the Senior Subordinated Note Guarantors shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Section 4.04. Compliance Certificate. (a) The Company and each Senior Subordinated Note Guarantor (to the extent that such Senior Subordinated Note Guarantor is so required under the TIA) shall deliver to the Senior Subordinated Note Trustee, within 90 days after the end of each fiscal year, an Officer's Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Senior Subordinated Note Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Senior Subordinated Note Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Senior Subordinated Note Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have 45 knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Senior Subordinated Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company shall, so long as any of the Senior Subordinated Notes are outstanding, deliver to the Senior Subordinated Note Trustee, as soon as possible, but in no event later than five days after any Officer becoming aware of any Default or Event of Default, an Officer's Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. Section 4.05. Taxes. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Senior Subordinated Notes. Section 4.06. Stay, Extension and Usury Laws. The Company and each of the Senior Subordinated Note Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Senior Subordinated Note Indenture; and the Company and each of the Senior Subordinated Note Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Senior Subordinated Note Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. Section 4.07. Restricted Payments. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' 46 Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Senior Subordinated Notes or any Subordinated Subsidiary Guarantee, except a payment of interest or principal at Stated Maturity or Indebtedness permitted under clause (viii) of Section 4.09 hereof or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09 hereof; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Subsidiaries after the date of the closing of the Acquisition (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (v), and (ix) of the next succeeding paragraph), is less than the sum, without duplication, of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the closing of the Acquisition to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds or the fair market value of property other than cash received by the Company since the date of the closing of the Acquisition as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company), plus (iii) to the extent that either any Existing Citizens Power Investment or any Restricted Investment that reduced the amount available for Restricted Payments under this clause (c) is sold for cash or otherwise liquidated or repaid for cash or any dividend or payment is received by the Company or a Restricted Subsidiary after the date of the closing of the Acquisition in respect of such Investment, 100% of the amount of Net Proceeds or dividends or payments (including the fair market value of property) received in connection therewith, up to the amount of the Existing Citizens Power Investment on the date of the closing of the Acquisition or the Restricted Investment that reduced this clause (c), as the case may be, and thereafter 50% of the amount of Net Proceeds or dividends or payments (including the fair market value of property) received in connection therewith (except that the amount of dividends or payments received in respect of payments of Obligations in respect of such Investments, such as taxes, shall not increase the amounts under this clause (c)), plus (iv) to the extent that any Unrestricted Subsidiary of the Company is redesignated as a Restricted Subsidiary after the date of the closing of the Acquisition, 100% of the fair market value of the Company's Investment in such Subsidiary as of the date of such redesignation up to the amount of the Restricted Investments made in such Subsidiary that reduced this clause (c) and 50% of the excess of the fair market value of the Company's Investment in such Subsidiary as of the date of such redesignation 47 over (1) the amount of the Restricted Investment that reduced this clause (c) and (2) any amounts that increased the amount available as a Permitted Investment; provided, further, that if Citizens Power or any of its Subsidiaries is designated as a Restricted Subsidiary, the amount of the fair market value of the Investment therein on the date hereof shall also be credited to this clause (c); provided, further, that any amounts that increase this clause (c) shall not duplicatively increase amounts available as Permitted Investments. The foregoing provisions will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the this Senior Subordinated Note Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (c)(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) dividends or distributions by a Restricted Subsidiary of the Company so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities; (v) Investments in Unrestricted Subsidiaries having an aggregate fair market value not to exceed the amount, at the time of such Investment, substantially concurrently contributed in cash or Cash Equivalents to the common equity capital of the Company after the date of the closing of the Acquisition; provided that any such amount contributed shall be excluded from the calculation made pursuant to clause (c) above; (vi) the payment of dividends on the Company's Common Stock, following the first public offering of the Company's Common Stock after the date of the closing of the Acquisition, of up to 6% per annum of the net proceeds received by the Company in such public offering, other than public offerings with respect to the Company's Common Stock registered on Form S- 8; (vii) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any present or former employee or director of the Company (or any of its Restricted Subsidiaries) pursuant to any management equity subscription agreement or stock option agreement or any other management or employee benefit plan in effect as of the date of the closing of the Acquisition; 48 provided that (A) the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $2.0 million in any twelve-month period (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $5.0 million in any calendar year); provided further that such amount in any calendar year may be increased by an amount not to exceed (x) the cash proceeds from the sale of Equity Interests of the Company or a Restricted Subsidiary to members of management and directors of the Company and its Subsidiaries that occurs after the date of the closing of the Acquisition, plus (y) the cash proceeds of key-man life insurance policies received by the Company and its Restricted Subsidiaries after the date of the closing of the Acquisition, less (z) the amount of any Restricted Payments previously made pursuant to clauses (x) and (y) of this subparagraph (vii); and, provided further, that cancellation of Indebtedness owing to the Company from members of management of the Company or any of its Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Company or a Restricted Subsidiary will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of this Senior Subordinated Note Indenture and (B) no Default or Event of Default shall have occurred and be continuing immediately after such transaction; (viii) repurchases of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options; and (ix) other Restricted Payments not otherwise prohibited by this Section 4.07 in an aggregate amount not to exceed $25.0 million under this clause (ix). As of the date of the closing of the Acquisition, all of the Company's Subsidiaries other than Citizen's Power and its Subsidiaries will be Restricted Subsidiaries. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated shall be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this Section 4.07. All such outstanding Investments shall be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. If, at any time, any Unrestricted Subsidiary would fail to meet the requirements in the definition of "Unrestricted Subsidiary" as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Senior Subordinated Note Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 hereof, the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. 49 The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any noncash Restricted Payment or any adjustment made pursuant to paragraph (c) of this Section 4.07 shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Senior Subordinated Note Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $25.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Senior Subordinated Note Trustee an Officer's Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed. If any Restricted Investment is sold or otherwise liquidated or repaid or any dividend or payment is received by the Company or a Restricted Subsidiary and such amounts may be credited to clause (c) above, then such amounts will be credited only to the extent of amounts not otherwise included in Consolidated Net Income and that do not otherwise increase the amount available as a Permitted Investment. Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary that is not a Senior Subordinated Note Guarantor to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the foregoing restrictions will not apply to encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of the Senior Subordinated Note Indenture and/or the closing of the Acquisition, (b) the Senior Credit Facilities as in effect as of the date of the Senior Subordinated Note Indenture and/or the closing of the Acquisition, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the Senior Credit Facilities as in effect on the date of the Senior Subordinated Note Indenture and/or the closing of the Acquisition, (c) the Senior Note Indenture, this Senior Subordinated Note Indenture, the Senior Notes and the Senior Subordinated Notes, (d) applicable law or any applicable rule, regulation or order, (e) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Senior Subordinated Note Indenture to be incurred, (f) customary non-assignment provisions in leases and other agreements entered into in the ordinary course of business and consistent with past practices, (g) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (h) any agreement for the sale of a 50 Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale, (i) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced, (j) secured Indebtedness otherwise permitted to be incurred pursuant to the provisions of Section 4.12 hereof that limits the right of the debtor to dispose of the assets securing such Indebtedness, (k) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business, (l) restrictions on cash or other deposits or net worth imposed by customers or lessors under contracts or leases entered into in the ordinary course of business and (m) any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (l) above, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company's Board of Directors, not materially more restrictive in the aggregate with respect to such dividend and other payment restrictions than those (considered as a whole) contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing. Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and the Company shall issue any Disqualified Stock and shall not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock and the Company's Restricted Subsidiaries may incur Indebtedness or issue Disqualified Stock or preferred stock if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. The provisions of the first paragraph of this Section 4.09 will not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company of term Indebtedness under Credit Facilities (and the Guarantee thereof by the Senior Subordinated Note Guarantors); provided that the aggregate principal amount of all term Indebtedness outstanding under this clause (i) after giving effect to such incurrence does not exceed an amount equal to $920.0 million; (ii) the incurrence by the Company of revolving credit Indebtedness and letters of credit (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) under Credit Facilities (and the Guarantee thereof by the Senior Subordinated Note Guarantors); provided that the aggregate principal amount of all revolving credit Indebtedness outstanding under this clause (ii) after giving effect to such incurrence does not exceed an amount equal to $480.0 million; 51 (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company, the Senior Subordinated Note Guarantors and the Senior Note Guarantors of Indebtedness represented by the Senior Notes, the Senior Subordinated Notes, the Senior Subsidiary Guarantees and the Subordinated Subsidiary Guarantees limited in aggregate principal amount, without duplication, to amounts outstanding under the Senior Note Indenture and this Senior Subordinated Note Indenture as of their respective dates; (v) (A) the guarantee by the Company or any of the Senior Subordinated Note Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company or (B) the incurrence of Indebtedness of a Restricted Subsidiary to the extent that such Indebtedness is supported by a letter of credit, in each case that was permitted to be incurred by another provision of this covenant; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness (including Capital Lease Obligations) to finance the acquisition (including by direct purchase, by lease or indirectly by the acquisition of the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of such acquisition) or improvement of property (real or personal) in an aggregate principal amount which, when aggregated with the principal amount of all other Indebtedness then outstanding pursuant to this clause (vi) and including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (vi), does not exceed an amount equal to 5% of Total Assets at the time of such incurrence; (vii) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Senior Subordinated Note Indenture to be incurred under the first paragraph hereof or clauses (iii), (iv) or (vii) of this paragraph; (viii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Senior Subordinated Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (viii); (ix) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred in the ordinary course of business for the purpose of risk management and not for the purpose of speculation; (x) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt 52 of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (x), and the issuance of preferred stock by Unrestricted Subsidiaries; (xi) the incurrence of Indebtedness solely in respect of performance, surety and similar bonds or completion or performance guarantees (including, without limitation, performance guarantees pursuant to coal supply agreements or equipment leases), to the extent that such incurrence does not result in the incurrence of any obligation for the payment of borrowed money to others; (xii) the incurrence of Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary; provided, however that (i) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (i)) and (ii) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and its Restricted Subsidiaries in connection with such disposition; (xiii) the guarantee by the Company or any of the Senior Subordinated Note Guarantors of additional Indebtedness relating to Black Beauty Coal Company not to exceed $50.0 million in aggregate principal amount outstanding at any one time under this clause (xiii); (xiv) the incurrence of Indebtedness relating to the Bengalla Joint Venture or the Warkworth Associates Joint Venture in an aggregate amount not to exceed $100.0 million in aggregate principal amount outstanding at any one time under this clause (xiv); and (xv) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (xv), not to exceed $250.0 million. For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xv) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09, the Company shall, in its sole discretion, classify or reclassify such item of Indebtedness in any manner that complies with this Section 4.09. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. 53 Section 4.10. Asset Sales. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value as determined in good faith by the Company (evidenced by a resolution of the Board of Directors set forth in an Officer's Certificate delivered to the Senior Subordinated Note Trustee with respect to any Asset Sale determined to have a value greater that $25.0 million) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Subsidiary is in the form of cash, Cash Equivalents or Marketable Securities; provided that the following amounts shall be deemed to be cash: (w) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Senior Subordinated Notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability, (x) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash within 180 days following the closing of such Asset Sale (to the extent of the cash received), (y) any Designated Noncash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale; provided that the aggregate fair market value (as determined above) of such Designated Noncash Consideration, taken together with the fair market value at the time of receipt of all other Designated Noncash Consideration received pursuant to this clause (y) less the amount of Net Proceeds previously realized in cash from prior Designated Noncash Consideration is less than 5% of Total Assets at the time of the receipt of such Designated Noncash Consideration (with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value) and (z) Additional Assets received in an exchange of assets transaction. Within 360 days after the receipt of any cash Net Proceeds from an Asset Sale, the Company or such Restricted Subsidiary, at its option, may apply such cash Net Proceeds, at its option, (a) to repay Senior Debt of the Company or any Restricted Subsidiary including, without limitation, Indebtedness under a Credit Facility and the Senior Notes, (b) to the acquisition of a majority of the assets of, or a majority of the Voting Stock of, another Permitted Business, the making of a capital expenditure or the acquisition of other assets or Investments that are used or useful in a Permitted Business or (c) to apply the cash Net Proceeds from such Asset Sale to an Investment in Additional Assets. Any cash Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall be required to make an offer to all Holders of Senior Subordinated Notes and all holders of other Indebtedness that is not Senior Debt containing provisions similar to those set forth herein with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Senior Subordinated Notes and such other Indebtedness that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase, in accordance with the procedures set forth herein and such other Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Senior Subordinated Note Indenture. If the aggregate principal amount of Senior Subordinated Notes and such other Indebtedness tendered into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Senior Subordinated Note Trustee shall select 54 the Senior Subordinated Notes and such other Indebtedness to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. Section 4.11. Transactions with Affiliates. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction") involving aggregate payments or consideration in excess of $5.0 million, unless (i) such Affiliate Transaction is on terms that are materially no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Senior Subordinated Note Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of Directors set forth in an Officer's Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the members of the Board of Directors and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. Notwithstanding the foregoing, the following items shall not be deemed to be Affiliate Transactions: (i) any employment agreement or other compensation plan or arrangement for employees entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Restricted Subsidiary; (ii) transactions between or among the Company and/or its Restricted Subsidiaries, (iii) payment of reasonable fees to officers, directors, employees or consultants of the Company; (iv) Restricted Payments that are permitted by, and Investments that are not prohibited by, Section 4.07 hereof; (v) indemnification payments made to officers, directors and employees of the Company or any Restricted Subsidiary pursuant to charter, bylaw, statutory or contractual provisions; (vi) the payment of customary annual management, consulting and advisory fees and related expenses to Lehman Merchant Bank and its Affiliates; (vii) payments by the Company or any of its Restricted Subsidiaries to Lehman Merchant Bank and its Affiliates made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which payments are approved by a majority of the Board of Directors of the Company in good faith; (viii) the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders' agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the date of the closing of the Acquisition and any similar agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the date of the closing of the Acquisition shall only be permitted by this clause (viii) to the extent that the terms of any such amendment or new agreement are not otherwise disadvantageous to the Holders in any material respect; (ix) transactions pursuant to the terms of the Transaction Documents in effect on the date of the closing of the Acquisition; (x) transactions with Unrestricted Subsidiaries, customers, clients, suppliers, joint venture partners or purchasers or sellers of goods or services, in each case in the ordinary course of business (including, without limitation, pursuant to joint venture agreements) and otherwise in compliance 55 with the terms of this Senior Subordinated Note Indenture which are, in the aggregate (taking into account all the costs and benefits associated with such transactions), materially no less favorable to the Company or its Restricted Subsidiaries than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; (xi) guarantees of performance by the Company and its Restricted Subsidiaries of Unrestricted Subsidiaries in the ordinary course of business, except for guarantees of Obligations in respect of borrowed money; and (xii) pledges of Equity Interests of Unrestricted Subsidiaries for the benefit of lenders of Unrestricted Subsidiaries. Section 4.12. Liens. The Company shall not and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Indebtedness or trade payables (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under this Senior Subordinated Note Indenture and the Senior Subordinated Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien. Section 4.13. Business activities. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole. Section 4.14. Corporate Existence. Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Senior Subordinated Notes. Section 4.15. Offer to Repurchase Upon Change of Control. (a) Upon the occurrence of a Change of Control, each Holder of Senior Subordinated Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Senior Subordinated Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within ten days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Senior Subordinated Notes on the date specified in such notice, which 56 date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required herein and described in such notice. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Senior Subordinated Notes as a result of a Change of Control. (b) On the Change of Control Payment Date, the Company shall, to the extent lawful, (1) accept for payment all Senior Subordinated Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Senior Subordinated Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Senior Subordinated Note Trustee the Senior Subordinated Notes so accepted together with an Officer's Certificate stating the aggregate principal amount of Senior Subordinated Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Senior Subordinated Notes so tendered the Change of Control Payment for such Senior Subordinated Notes, and, upon receipt of an Authentication Order, the Senior Subordinated Note Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Senior Subordinated Note equal in principal amount to any unpurchased portion of the Senior Subordinated Notes surrendered, if any; provided that each such new Senior Subordinated Note will be in a principal amount of $1,000 or an integral multiple thereof. Prior to complying with the provisions of this Section 4.15, but in any event within 90 days following a Change of Control, the Company shall either repay all outstanding Senior Debt other than the Senior Notes or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt other than the Senior Notes to permit the repurchase of Senior Subordinated Notes required by this Section 4.15. With respect to the Senior Subordinated Notes, the Company may effect a Change of Control hereunder pursuant to the terms of this Senior Subordinated Note Indenture; provided that the Company complies with the provisions of the Senior Note Indenture pursuant to Section 4.15 thereunder. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Change of Control provisions described above shall be applicable whether or not any other provisions of this Senior Subordinated Note Indenture are applicable. (c) Notwithstanding anything to the contrary in this Section 4.15, the Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth herein applicable to a Change of Control Offer made by the Company and purchases all Senior Subordinated Notes validly tendered and not withdrawn under such Change of Control Offer or if the Company exercises its option to purchase the Senior Subordinated Notes. Section 4.16. No Senior Subordinated Debt. (i) The Company shall not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Debt and senior in any respect in right of payment to the Senior Subordinated Notes, and (ii) no Senior Subordinated Note Guarantor shall incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to the Senior Subsidiary Guarantees and senior in any respect in right of payment to the Subordinated Subsidiary Guarantees. 57 Section 4.17. Additional Subordinated Subsidiary Guarantees. If the Company or any of its Domestic Subsidiaries shall acquire or create another Domestic Subsidiary after the date hereof and such Domestic Subsidiary provides a guarantee of the Senior Credit Facilities, then such newly acquired or created Domestic Subsidiary shall execute a supplemental indenture in form and substance substantially similar to Exhibit F hereto providing that --------- such Domestic Subsidiary shall become a Senior Subordinated Note Guarantor under this Senior Subordinated Note Indenture, provided, however, this Section 4.17 shall not apply to any Domestic Subsidiary that has been properly designated as an Unrestricted Subsidiary in accordance with this Senior Subordinated Note Indenture for so long as it continues to constitute an Unrestricted Subsidiary. Section 4.18. Payments for consents The Company nor any of its Restricted Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Senior Subordinated Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Senior Subordinated Note Indenture or the Senior Subordinated Notes unless such consideration is offered to be paid or is paid to all Holders of the Senior Subordinated Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. ARTICLE 5. SUCCESSORS Section 5.01. Merger, Consolidation, or Sale of Assets. The Company shall not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Registration Rights Agreement, the Senior Subordinated Notes and this Senior Subordinated Note Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Senior Subordinated Note Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, (A) the entity surviving such consolidation or merger would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 or (B) the Fixed Charge Coverage Ratio for the Company or the entity or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made would, immediately after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, not be less than such Fixed Charge 58 Coverage Ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction. The Company may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. The provisions of this Section 5.01 will not be applicable to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and its Restricted Subsidiaries. Notwithstanding the foregoing clause (iv), (i) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (ii) the Company may merge with an Affiliate that has no significant assets or liabilities and was formed solely for the purpose of changing the jurisdiction of organization of the Company in another State of the United States or the form of organization of the Company so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby and provided that the successor assumes all the obligations of the Company under the Registration Rights Agreement, the Senior Subordinated Notes and this Senior Subordinated Note Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Senior Subordinated Note Trustee. Section 5.02. Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Senior Subordinated Note Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Senior Subordinated Note Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Senior Subordinated Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.01 hereof. ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01. Events of Default. An "Event of Default" occurs if: (a) the Company defaults in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Senior Subordinated Notes and such default continues for a period of 30 days (whether or not prohibited by the subordination provisions of Article 10); (b) the Company defaults in the payment when due of principal of or premium, if any, on the Senior Subordinated Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise (whether or not prohibited by the subordination provisions of Article 10); 59 (c) the Company or any of its Subsidiaries fails to make the offer required or to purchase any of the Senior Subordinated Notes as required by Sections 4.10 and/or 4.15 hereof; (d) the Company fails to comply for 30 days after notice to the Company by the Senior Subordinated Note Trustee with any of the provisions of Sections 4.07 or 4.09 hereof; or the Company fails to observe or perform any other covenant, representation, warranty or other agreement in this Senior Subordinated Note Indenture or the Senior Subordinated Notes for 60 days after notice to the Company by the Senior Subordinated Note Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class; (e) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the date of this Senior Subordinated Note Indenture, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of such Indebtedness aggregates $50.0 million or more; (f) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments exceeds $50.0 million; (g) the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is not paying its debts as they become due; or (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; 60 (ii) appoints a custodian of the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or (iii) orders the liquidation of the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days; (i) except as permitted by this Senior Subordinated Note Indenture, any Subordinated Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Senior Subordinated Note Guarantor, or any Person acting on behalf of any Senior Subordinated Note Guarantor, shall deny or disaffirm its obligations under such Senior Subordinated Note Guarantor's Subordinated Subsidiary Guarantee; or (j) the Company fails to deposit the required amounts into the Escrow Account pursuant to the Escrow Letter or any failure of the proceeds of the Escrow Account to be applied as required under the Escrow Letter. Section 6.02. Acceleration. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 hereof with respect to the Company, any Significant Subsidiary that is a Restricted Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) occurs and is continuing, the Senior Subordinated Note Trustee or the Holders of at least 25% in principal amount of the then outstanding Senior Subordinated Notes may declare all the Senior Subordinated Notes to be due and payable immediately; provided, that so long as any Designated Senior Debt is outstanding, such acceleration shall not be effective until the earlier of (i) an acceleration under any Designated Senior Debt or (ii) five Business Days after receipt by the Company and the Representative of the Designated Senior Debt of written notice of such acceleration of the Senior Subordinated Notes. Upon any such declaration, the Senior Subordinated Notes shall become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the Company, any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all outstanding Senior Subordinated Notes shall be due and payable without further action or notice. The Holders of a majority in aggregate principal amount of the then outstanding Senior Subordinated Notes by written notice to the Senior Subordinated Note Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived. If an Event of Default occurs on or after May 15, 2003, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Senior Subordinated Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Senior 61 Subordinated Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, anything in this Senior Subordinated Note Indenture or in the Senior Subordinated Notes to the contrary notwithstanding. If an Event of Default occurs prior to May 15, 2003, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding paying the premium upon redemption of the Senior Subordinated Notes prior to such date, then, upon acceleration of the Senior Subordinated Notes, a premium shall also become and be immediately due and payable in an amount, for each of the years beginning on May 15 of the years set forth below, as set forth below (expressed as a percentage of the aggregate principal amount to the date of payment that would otherwise be due but for the provisions of this sentence): Year Percentage 1998............................... 112.833% 1999............................... 111.229% 2000............................... 109.625% 2001............................... 108.021% 2002............................... 106.417% Section 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Senior Subordinated Note Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest and Liquidated Damages, if any, on the Senior Subordinated Notes or to enforce the performance of any provision of the Senior Subordinated Notes or this Senior Subordinated Note Indenture. The Senior Subordinated Note Trustee may maintain a proceeding even if it does not possess any of the Senior Subordinated Notes or does not produce any of them in the proceeding. A delay or omission by the Senior Subordinated Note Trustee or any Holder of a Senior Subordinated Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. Section 6.04. Waiver of Past Defaults. Holders of not less than a majority in aggregate principal amount of the then outstanding Senior Subordinated Notes by notice to the Senior Subordinated Note Trustee may on behalf of the Holders of all of the Senior Subordinated Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Senior Subordinated Notes (including in connection with an offer to purchase) (provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Senior Subordinated Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Senior Subordinated Note Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. 62 Section 6.05. Control by Majority. Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Senior Subordinated Note Trustee or exercising any trust or power conferred on it. However, the Senior Subordinated Note Trustee may refuse to follow any direction that conflicts with law or this Senior Subordinated Note Indenture that the Senior Subordinated Note Trustee determines may be unduly prejudicial to the rights of other Holders of Senior Subordinated Notes or that may involve the Senior Subordinated Note Trustee in personal liability. Section 6.06. Limitation on Suits. A Holder of a Senior Subordinated Note may pursue a remedy with respect to this Senior Subordinated Note Indenture or the Senior Subordinated Notes only if: (a) the Holder of a Senior Subordinated Note gives to the Senior Subordinated Note Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the then outstanding Senior Subordinated Notes make a written request to the Senior Subordinated Note Trustee to pursue the remedy; (c) such Holder of a Senior Subordinated Note or Holders of Senior Subordinated Notes offer and, if requested, provide to the Senior Subordinated Note Trustee indemnity satisfactory to the Senior Subordinated Note Trustee against any loss, liability or expense; (d) the Senior Subordinated Note Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes do not give the Senior Subordinated Note Trustee a direction inconsistent with the request. A Holder of a Senior Subordinated Note may not use this Senior Subordinated Note Indenture to prejudice the rights of another Holder of a Senior Subordinated Note or to obtain a preference or priority over another Holder of a Senior Subordinated Note. Section 6.07. Rights of Holders of Senior Subordinated Notes to Receive Payment. Notwithstanding any other provision of this Senior Subordinated Note Indenture, the right of any Holder of a Senior Subordinated Note to receive payment of principal, premium and Liquidated Damages, if any, and interest on the Senior Subordinated Note, on or after the respective due dates expressed in the Senior Subordinated Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. 63 Section 6.08. Collection Suit by Senior Subordinated Note Trustee. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Senior Subordinated Note Trustee is authorized to recover judgment in its own name and as Senior Subordinated Note Trustee of an express trust against the Company for the whole amount of principal of, premium and Liquidated Damages, if any, and interest remaining unpaid on the Senior Subordinated Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Senior Subordinated Note Trustee, its agents and counsel. Section 6.09. Senior Subordinated Note Trustee May File Proofs of Claim. The Senior Subordinated Note Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Senior Subordinated Note Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Senior Subordinated Note Trustee, its agents and counsel) and the Holders of the Senior Subordinated Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Senior Subordinated Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Senior Subordinated Note Trustee, and in the event that the Senior Subordinated Note Trustee shall consent to the making of such payments directly to the Holders, to pay to the Senior Subordinated Note Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Senior Subordinated Note Trustee, its agents and counsel, and any other amounts due the Senior Subordinated Note Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Senior Subordinated Note Trustee, its agents and counsel, and any other amounts due the Senior Subordinated Note Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Senior Subordinated Note Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Senior Subordinated Notes or the rights of any Holder, or to authorize the Senior Subordinated Note Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10. Priorities. If the Senior Subordinated Note Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: First: to the Senior Subordinated Note Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Senior Subordinated Note Trustee and the costs and expenses of collection; Second: to Holders of Senior Subordinated Notes for amounts due and unpaid on the Senior Subordinated Notes for principal, premium and Liquidated Damages, if any, and interest, ratably, 64 without preference or priority of any kind, according to the amounts due and payable on the Senior Subordinated Notes for principal, premium and Liquidated Damages, if any and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Senior Subordinated Note Trustee may fix a record date and payment date for any payment to Holders of Senior Subordinated Notes pursuant to this Section 6.10. Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Senior Subordinated Note Indenture or in any suit against the Senior Subordinated Note Trustee for any action taken or omitted by it as a Senior Subordinated Note Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Senior Subordinated Note Trustee, a suit by a Holder of a Senior Subordinated Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Senior Subordinated Notes. ARTICLE 7. SENIOR SUBORDINATED NOTE TRUSTEE Section 7.01. Duties of Senior Subordinated Note Trustee. (a) If an Event of Default has occurred and is continuing, the Senior Subordinated Note Trustee shall exercise such of the rights and powers vested in it by this Senior Subordinated Note Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Senior Subordinated Note Trustee shall be determined solely by the express provisions of this Senior Subordinated Note Indenture and the Senior Subordinated Note Trustee need perform only those duties that are specifically set forth in this Senior Subordinated Note Indenture and no others, and no implied covenants or obligations shall be read into this Senior Subordinated Note Indenture against the Senior Subordinated Note Trustee; and (ii) in the absence of bad faith on its part, the Senior Subordinated Note Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Senior Subordinated Note Trustee and conforming to the requirements of this Senior Subordinated Note Indenture. However, the Senior Subordinated Note Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Senior Subordinated Note Indenture. (c) The Senior Subordinated Note Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: 65 (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Senior Subordinated Note Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Senior Subordinated Note Trustee was negligent in ascertaining the pertinent facts; and (iii) the Senior Subordinated Note Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Senior Subordinated Note Indenture that in any way relates to the Senior Subordinated Note Trustee is subject to paragraphs (a), (b), (c), (e) and (f) of this Section and Section 7.02. (e) No provision of this Senior Subordinated Note Indenture shall require the Senior Subordinated Note Trustee to expend or risk its own funds or incur any liability. The Senior Subordinated Note Trustee shall be under no obligation to exercise any of its rights and powers under this Senior Subordinated Note Indenture at the request of any Holders, unless such Holder shall have offered to the Senior Subordinated Note Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Senior Subordinated Note Trustee shall not be liable for interest on any money received by it except as the Senior Subordinated Note Trustee may agree in writing with the Company. Money held in trust by the Senior Subordinated Note Trustee need not be segregated from other funds except to the extent required by law. Section 7.02. Rights of Senior Subordinated Note Trustee. (a) The Senior Subordinated Note Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Senior Subordinated Note Trustee need not investigate any fact or matter stated in the document. (b) Before the Senior Subordinated Note Trustee acts or refrains from acting, it may require an Officer's Certificate or an Opinion of Counsel or both. The Senior Subordinated Note Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer's Certificate or Opinion of Counsel. The Senior Subordinated Note Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Senior Subordinated Note Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Senior Subordinated Note Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Senior Subordinated Note Indenture. 66 (e) Unless otherwise specifically provided in this Senior Subordinated Note Indenture, any demand, request, direction or notice from the Company or any Senior Subordinated Note Guarantor shall be sufficient if signed by an Officer of the Company or Senior Subordinated Note Guarantor issuing such demand, request or notice. (f) The Senior Subordinated Note Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Senior Subordinated Note Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Senior Subordinated Note Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. Section 7.03. Individual Rights of Senior Subordinated Note Trustee. The Senior Subordinated Note Trustee in its individual or any other capacity may become the owner or pledgee of Senior Subordinated Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Senior Subordinated Note Trustee. However, in the event that the Senior Subordinated Note Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as Senior Subordinated Note Trustee or resign. Any Agent may do the same with like rights and duties. The Senior Subordinated Note Trustee is also subject to Sections 7.10 and 7.11 hereof. Section 7.04. Senior Subordinated Note Trustee's Disclaimer. The Senior Subordinated Note Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Senior Subordinated Note Indenture or the Senior Subordinated Notes, it shall not be accountable for the Company's use of the proceeds from the Senior Subordinated Notes or any money paid to the Company or upon the Company's direction under any provision of this Senior Subordinated Note Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Senior Subordinated Note Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Senior Subordinated Notes or any other document in connection with the sale of the Senior Subordinated Notes or pursuant to this Senior Subordinated Note Indenture other than its certificate of authentication. Section 7.05. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to the Senior Subordinated Note Trustee, the Senior Subordinated Note Trustee shall mail to Holders of Senior Subordinated Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Senior Subordinated Note, the Senior Subordinated Note Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Senior Subordinated Notes. Section 7.06. Reports by Senior Subordinated Note Trustee to Holders of the Senior Subordinated Notes. Within 60 days after each May 15 beginning with the May 15 following the date of this Senior Subordinated Note Indenture, and for so long as Senior Subordinated Notes remain outstanding, 67 the Senior Subordinated Note Trustee shall mail to the Holders of the Senior Subordinated Notes a brief report dated as of such reporting date that complies with TIA (S) 313(a) (but if no event described in TIA (S) 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Senior Subordinated Note Trustee also shall comply with TIA (S) 313(b)(2). The Senior Subordinated Note Trustee shall also transmit by mail all reports as required by TIA (S) 313(c). A copy of each report at the time of its mailing to the Holders of Senior Subordinated Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Senior Subordinated Notes are listed in accordance with TIA (S) 313(d). The Company shall promptly notify the Senior Subordinated Note Trustee when the Senior Subordinated Notes are listed on any stock exchange. Section 7.07. Compensation and Indemnity. The Company and the Senior Subordinated Note Guarantors shall pay to the Senior Subordinated Note Trustee from time to time reasonable compensation for its acceptance of this Senior Subordinated Note Indenture and services hereunder. The Senior Subordinated Note Trustee's compensation shall not be limited by any law on compensation of a Senior Subordinated Note Trustee of an express trust. The Company and the Senior Subordinated Note Guarantors shall reimburse the Senior Subordinated Note Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Senior Subordinated Note Trustee's agents and counsel. The Company and the Senior Subordinated Note Guarantors shall indemnify the Senior Subordinated Note Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Senior Subordinated Note Indenture, including the costs and expenses of enforcing this Senior Subordinated Note Indenture against the Company and the Senior Subordinated Note Guarantors (including this Section 7.07) and defending itself against any claim (whether asserted by the Company and the Senior Subordinated Note Guarantors or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Senior Subordinated Note Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Senior Subordinated Note Trustee to so notify the Company shall not relieve the Company and the Senior Subordinated Note Guarantors of its obligations hereunder. The Company shall defend the claim and the Senior Subordinated Note Trustee shall cooperate in the defense. The Senior Subordinated Note Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company and the Senior Subordinated Note Guarantors under this Section 7.07 shall survive the satisfaction and discharge of this Senior Subordinated Note Indenture. To secure the Company's and the Senior Subordinated Note Guarantors' payment obligations in this Section, the Senior Subordinated Note Trustee shall have a Lien prior to the Senior Subordinated Notes on all money or property held or collected by the Senior Subordinated Note Trustee, except that held in trust to pay principal and interest on particular Senior Subordinated Notes. Such Lien shall survive the satisfaction and discharge of this Senior Subordinated Note Indenture. 68 When the Senior Subordinated Note Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Senior Subordinated Note Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the extent applicable. Section 7.08. Replacement of Senior Subordinated Note Trustee. A resignation or removal of the Senior Subordinated Note Trustee and appointment of a successor Senior Subordinated Note Trustee shall become effective only upon the successor Senior Subordinated Note Trustee's acceptance of appointment as provided in this Section. The Senior Subordinated Note Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Senior Subordinated Notes of a majority in principal amount of the then outstanding Senior Subordinated Notes may remove the Senior Subordinated Note Trustee by so notifying the Senior Subordinated Note Trustee and the Company in writing. The Company may remove the Senior Subordinated Note Trustee if: (a) the Senior Subordinated Note Trustee fails to comply with Section 7.10 hereof; (b) the Senior Subordinated Note Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Senior Subordinated Note Trustee under any Bankruptcy Law; (c) a custodian or public officer takes charge of the Senior Subordinated Note Trustee or its property; or (d) the Senior Subordinated Note Trustee becomes incapable of acting. If the Senior Subordinated Note Trustee resigns or is removed or if a vacancy exists in the office of Senior Subordinated Note Trustee for any reason, the Company shall promptly appoint a successor Senior Subordinated Note Trustee. Within one year after the successor Senior Subordinated Note Trustee takes office, the Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes may appoint a successor Senior Subordinated Note Trustee to replace the successor Senior Subordinated Note Trustee appointed by the Company. If a successor Senior Subordinated Note Trustee does not take office within 60 days after the retiring Senior Subordinated Note Trustee resigns or is removed, the retiring Senior Subordinated Note Trustee, the Company, or the Holders of Senior Subordinated Notes of at least 10% in principal amount of the then outstanding Senior Subordinated Notes may petition any court of competent jurisdiction for the appointment of a successor Senior Subordinated Note Trustee. If the Senior Subordinated Note Trustee, after written request by any Holder of a Senior Subordinated Note who has been a Holder of a Senior Subordinated Note for at least six months, fails to comply with Section 7.10, such Holder of a Senior Subordinated Note may petition any court of competent 69 jurisdiction for the removal of the Senior Subordinated Note Trustee and the appointment of a successor Senior Subordinated Note Trustee. A successor Senior Subordinated Note Trustee shall deliver a written acceptance of its appointment to the retiring Senior Subordinated Note Trustee and to the Company. Thereupon, the resignation or removal of the retiring Senior Subordinated Note Trustee shall become effective, and the successor Senior Subordinated Note Trustee shall have all the rights, powers and duties of the Senior Subordinated Note Trustee under this Senior Subordinated Note Indenture. The successor Senior Subordinated Note Trustee shall mail a notice of its succession to Holders of the Senior Subordinated Notes. The retiring Senior Subordinated Note Trustee shall promptly transfer all property held by it as Senior Subordinated Note Trustee to the successor Senior Subordinated Note Trustee, provided all sums owing to the Senior Subordinated Note Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Senior Subordinated Note Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Senior Subordinated Note Trustee. Section 7.09. Successor Senior Subordinated Note Trustee by Merger, etc. If the Senior Subordinated Note Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Senior Subordinated Note Trustee. Section 7.10. Eligibility; Disqualification. There shall at all times be a Senior Subordinated Note Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate Senior Subordinated Note Trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100.0 million as set forth in its most recent published annual report of condition. This Senior Subordinated Note Indenture shall always have a Senior Subordinated Note Trustee who satisfies the requirements of TIA (S) 310(a)(1), (2) and (5). The Senior Subordinated Note Trustee is subject to TIA (S) 310(b). Section 7.11. Preferential Collection of Claims Against Company. The Senior Subordinated Note Trustee is subject to TIA (S) 311(a), excluding any creditor relationship listed in TIA (S) 311(b). A Senior Subordinated Note Trustee who has resigned or been removed shall be subject to TIA (S) 311(a) to the extent indicated therein. ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officer's Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied 70 to all outstanding Senior Subordinated Notes upon compliance with the conditions set forth below in this Article 8. Section 8.02. Legal Defeasance and Discharge. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Senior Subordinated Notes and to have each Senior Subordinated Note Guarantor's obligation discharged with respect to its Subordinated Subsidiary Guarantee on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Senior Subordinated Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Senior Subordinated Note Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Senior Subordinated Notes and this Senior Subordinated Note Indenture (and the Senior Subordinated Note Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Senior Subordinated Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest and Liquidated Damages, if any, on such Senior Subordinated Notes when such payments are due, (b) the Company's obligations with respect to such Senior Subordinated Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Senior Subordinated Note Trustee hereunder and the Company's obligations in connection therewith and (d) this Article 8. Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. Section 8.03. Covenant Defeasance. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company and each Senior Subordinated Note Guarantor shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from their obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17 and 4.18 hereof with respect to the outstanding Senior Subordinated Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Senior Subordinated Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Senior Subordinated Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Senior Subordinated Notes, the Company and each Senior Subordinated Note Guarantor may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Senior Subordinated Note Indenture and such Senior Subordinated Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to 71 this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not constitute Events of Default. Section 8.04. Conditions to Legal or Covenant Defeasance. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Senior Subordinated Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Senior Subordinated Note Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium and Liquidated Damages, if any, and interest on the outstanding Senior Subordinated Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Company must specify whether the Senior Subordinated Notes are being defeased to maturity or to a particular redemption date; (b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Senior Subordinated Note Trustee an Opinion of Counsel in the United States reasonably acceptable to the Senior Subordinated Note Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Senior Subordinated Note Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Senior Subordinated Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Senior Subordinated Note Trustee an Opinion of Counsel in the United States reasonably acceptable to the Senior Subordinated Note Trustee confirming that the Holders of the outstanding Senior Subordinated Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Senior Subordinated Notes pursuant to this Article 8 concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period ending on the effective date of such defeasance; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Senior Subordinated Note Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; 72 (f) the Company shall have delivered to the Senior Subordinated Note Trustee an Opinion of Counsel (which may be subject to customary exceptions) to the effect that on the effective date of such defeasance, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Company shall have delivered to the Senior Subordinated Note Trustee an Officer's Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and (h) the Company shall have delivered to the Senior Subordinated Note Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Senior Subordinated Note Trustee (or other qualifying Senior Subordinated Note Trustee, collectively for purposes of this Section 8.05, the "Senior Subordinated Note Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Senior Subordinated Notes shall be held in trust and applied by the Senior Subordinated Note Trustee, in accordance with the provisions of such Senior Subordinated Notes and this Senior Subordinated Note Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Senior Subordinated Note Trustee may determine, to the Holders of such Senior Subordinated Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company and the Senior Subordinated Note Guarantors shall pay and indemnify the Senior Subordinated Note Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Senior Subordinated Notes. Anything in this Article 8 to the contrary notwithstanding, the Senior Subordinated Note Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Senior Subordinated Note Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. Section 8.06. Repayment to Company. Any money deposited with the Senior Subordinated Note Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Senior Subordinated Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held 73 by the Company) shall be discharged from such trust; and the Holder of such Senior Subordinated Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Senior Subordinated Note Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as Senior Subordinated Note Trustee thereof, shall thereupon cease; provided, however, that the Senior Subordinated Note Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 8.07. Reinstatement. If the Senior Subordinated Note Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Senior Subordinated Note Indenture and the Senior Subordinated Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Senior Subordinated Note Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Senior Subordinated Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Senior Subordinated Notes to receive such payment from the money held by the Senior Subordinated Note Trustee or Paying Agent. ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01. Without Consent of Holders of Senior Subordinated Notes. Notwithstanding Section 9.02 of this Senior Subordinated Note Indenture, the Company, the Senior Subordinated Note Guarantors and the Senior Subordinated Note Trustee may amend or supplement this Senior Subordinated Note Indenture, the Subordinated Subsidiary Guarantees or the Senior Subordinated Notes without the consent of any Holder of a Senior Subordinated Note: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Senior Subordinated Notes in addition to or in place of certificated Senior Subordinated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; (c) to provide for the assumption of the Company's or a Senior Subordinated Note Guarantor's obligations to the Holders of the Senior Subordinated Notes by a successor to the Company or a Senior Subordinated Note Guarantor pursuant to Article 5 or Article 11 hereof; 74 (d) to make any change that would provide any additional rights or benefits to the Holders of the Senior Subordinated Notes or that does not adversely affect the legal rights hereunder of any Holder of the Senior Subordinated Note; (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Senior Subordinated Note Indenture under the TIA; (f) to provide for the issuance of Additional Senior Subordinated Notes in accordance with the limitations set forth in this Senior Subordinated Note Indenture as of the date hereof; or (g) to allow any Senior Subordinated Note Guarantor to execute a supplemental Senior Subordinated Note Indenture and/or a Subordinated Subsidiary Guarantee with respect to the Senior Subordinated Notes. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Senior Subordinated Note Indenture, and upon receipt by the Senior Subordinated Note Trustee of the documents described in Section 7.02 hereof, the Senior Subordinated Note Trustee shall join with the Company and the Senior Subordinated Note Guarantors in the execution of any amended or supplemental Senior Subordinated Note Indenture authorized or permitted by the terms of this Senior Subordinated Note Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Senior Subordinated Note Trustee shall not be obligated to enter into such amended or supplemental Senior Subordinated Note Indenture that affects its own rights, duties or immunities under this Senior Subordinated Note Indenture or otherwise. Section 9.02. WITH CONSENT OF HOLDERS OF SENIOR SUBORDINATED NOTES. Except as provided below in this Section 9.02, the Company and the Senior Subordinated Note Trustee may amend or supplement this Senior Subordinated Note Indenture (including Sections 3.09, 3.10, 4.10 and 4.15 hereof), the Subordinated Subsidiary Guarantees and the Senior Subordinated Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Senior Subordinated Notes (including Additional Senior Subordinated Notes, if any) then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Senior Subordinated Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Senior Subordinated Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Senior Subordinated Note Indenture, the Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes (including Additional Senior Subordinated Notes, if any) voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Senior Subordinated Notes). Without the consent of at least 75% in principal amount of the Senior Subordinated Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Senior Subordinated Notes), no waiver or amendment to this Senior Subordinated Note Indenture may make any change in the provisions of Article 10 hereof that adversely affects the rights of any Holder of Senior Subordinated Notes. Section 2.08 hereof shall 75 determine which Senior Subordinated Notes are considered to be "outstanding" for purposes of this Section 9.02. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Senior Subordinated Note Indenture, and upon the filing with the Senior Subordinated Note Trustee of evidence satisfactory to the Senior Subordinated Note Trustee of the consent of the Holders of Senior Subordinated Notes as aforesaid, and upon receipt by the Senior Subordinated Note Trustee of the documents described in Section 7.02 hereof, the Senior Subordinated Note Trustee shall join with the Company in the execution of such amended or supplemental Senior Subordinated Note Indenture unless such amended or supplemental Senior Subordinated Note Indenture directly affects the Senior Subordinated Note Trustee's own rights, duties or immunities under this Senior Subordinated Note Indenture or otherwise, in which case the Senior Subordinated Note Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Senior Subordinated Note Indenture. It shall not be necessary for the consent of the Holders of Senior Subordinated Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Senior Subordinated Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Senior Subordinated Note Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Senior Subordinated Notes (including Additional Senior Subordinated Notes, if any) then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Senior Subordinated Note Indenture or the Senior Subordinated Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Senior Subordinated Notes held by a non-consenting Holder): (a) reduce the principal amount of Senior Subordinated Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Senior Subordinated Note or alter or waive any of the provisions with respect to the redemption of the Senior Subordinated Notes except as provided above with respect to Sections 3.09, 3.10, 4.10 and 4.15 hereof; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Senior Subordinated Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest or Liquidated Damages, if any, on the Senior Subordinated Notes (except a rescission of acceleration of the Senior Subordinated Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Senior Subordinated Notes (including Additional Senior Subordinated Notes, if any) and a waiver of the payment default that resulted from such acceleration; 76 (e) make any Senior Subordinated Note payable in money other than that stated in the Senior Subordinated Notes; (f) make any change in the provisions of this Senior Subordinated Note Indenture relating to waivers of past Defaults or the rights of Holders of Senior Subordinated Notes to receive payments of principal of or premium, interest or Liquidated Damages, if any, on the Senior Subordinated Notes; (g) waive a redemption payment with respect to any Senior Subordinated Note (other than a payment required by Sections 4.10 or 4.15); (h) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions; or (i) release any Senior Subordinated Note Guarantor from any of its obligations under its Subordinated Subsidiary Guarantee or this Senior Subordinated Note Indenture, except in accordance with the terms of this Senior Subordinated Note Indenture. Section 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment or supplement to this Senior Subordinated Note Indenture or the Senior Subordinated Notes shall be set forth in a amended or supplemental Senior Subordinated Note Indenture that complies with the TIA as then in effect. Section 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Senior Subordinated Note is a continuing consent by the Holder of a Senior Subordinated Note and every subsequent Holder of a Senior Subordinated Note or portion of a Senior Subordinated Note that evidences the same debt as the consenting Holder's Senior Subordinated Note, even if notation of the consent is not made on any Senior Subordinated Note. However, any such Holder of a Senior Subordinated Note or subsequent Holder of a Senior Subordinated Note may revoke the consent as to its Senior Subordinated Note if the Senior Subordinated Note Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. Section 9.05. NOTATION ON OR EXCHANGE OF SENIOR SUBORDINATED NOTES. The Senior Subordinated Note Trustee may place an appropriate notation about an amendment, supplement or waiver on any Senior Subordinated Note thereafter authenticated. The Company in exchange for all Senior Subordinated Notes may issue and the Senior Subordinated Note Trustee shall, upon receipt of an Authentication Order, authenticate new Senior Subordinated Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Senior Subordinated Note shall not affect the validity and effect of such amendment, supplement or waiver. 77 Section 9.06. SENIOR SUBORDINATED NOTE TRUSTEE TO SIGN AMENDMENTS, ETC. The Senior Subordinated Note Trustee shall sign any amended or supplemental Senior Subordinated Note Indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Senior Subordinated Note Trustee. The Company may not sign an amendment or supplemental Senior Subordinated Note Indenture until the Board of Directors approves it. In executing any amended or supplemental Senior Subordinated Note Indenture, the Senior Subordinated Note Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 12.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental Senior Subordinated Note Indenture is authorized or permitted by this Senior Subordinated Note Indenture. ARTICLE 10. SUBORDINATION Section 10.01. AGREEMENT TO SUBORDINATE. The Company and the Senior Subordinated Note Guarantors agree, and each Holder by accepting a Senior Subordinated Note agrees, that the Indebtedness evidenced by the Senior Subordinated Notes is subordinated in right of payment, to the extent and in the manner provided in this Article 10, to the prior payment in full in cash of all Senior Debt (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt. Section 10.02. CERTAIN DEFINITIONS. "Designated Senior Debt" means (i) any Indebtedness of the Company or any of its Restricted Subsidiaries outstanding under Credit Facilities, (ii) any Indebtedness outstanding under the Senior Note Indenture and (iii) any other Senior Debt permitted under this Senior Subordinated Note Indenture the principal amount of which is $25.0 million or more and that has been designated by the Company as "Designated Senior Debt." "Permitted Junior Securities" means Equity Interests in the Company or any Senior Subordinated Note Guarantor or debt securities that are subordinated to all Senior Debt (and any debt securities issued in exchange for Senior Debt) to substantially the same extent as, or to a greater extent than, the Senior Subordinated Notes and the Subordinated Subsidiary Guarantees are subordinated to Senior Debt pursuant to Article 10 of this Senior Subordinated Note Indenture. "Representative" means the Senior Subordinated Note Trustee or other trustee, agent or representative for any Senior Debt. "Senior Debt" means (i) all Indebtedness of the Company or any of its Restricted Subsidiaries outstanding under Credit Facilities and all Hedging Obligations with respect thereto, (ii) any other Indebtedness permitted to be incurred by the Company or any of its Restricted Subsidiaries under the terms of this Senior Subordinated Note Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Senior Subordinated Notes or any Guarantee of the Senior Subordinated Notes and (iii) all Obligations with 78 respect to the foregoing. Notwithstanding anything to the contrary in the foregoing, Senior Debt will not include (w) any liability for federal, state, local or other taxes owed or owing by the Company or any Subsidiary, (x) any Indebtedness of the Company or any Subsidiary to any Subsidiaries of the Company or to the Company, (y) any trade payables or (z) any Indebtedness that is incurred in violation of this Senior Subordinated Note Indenture. A distribution may consist of cash, securities or other property, by set-off or otherwise. Section 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, in an assignment for the benefit of creditors or any marshaling of the Company's assets and liabilities: (1) holders of Senior Debt shall be entitled to receive payment in full in cash of all Obligations due in respect of such Senior Debt (including interest after the commencement of any such proceeding at the rate specified in the agreement or instrument governing the applicable Senior Debt, whether or not an allowable claim in such proceeding) before Holders of the Senior Subordinated Notes shall be entitled to receive any payment with respect to the Senior Subordinated Notes (except that Holders may receive and retain (i) Permitted Junior Securities and (ii) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof); and (2) until all Obligations with respect to Senior Debt (as provided in subsection (1) above) are paid in full in cash, any distribution to which Holders would be entitled but for this Article 10 shall be made to holders of Senior Debt (except that Holders of Senior Subordinated Notes may receive (i) Permitted Junior Securities and (ii) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof), as their interests may appear. Section 10.04. DEFAULT ON DESIGNATED SENIOR DEBT. The Company may not make any payment or distribution to the Senior Subordinated Note Trustee or any Holder in respect of Obligations upon or in respect of the Senior Subordinated Notes and may not acquire from the Senior Subordinated Note Trustee or any Holder any Senior Subordinated Notes for cash or property (other than (i) in Permitted Junior Securities and (ii) from payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof) until all principal and other Obligations with respect to the Senior Debt have been paid in full in cash if: (i) a default in the payment of any principal or other Obligations with respect to Designated Senior Debt occurs and is continuing; or (ii) any other default occurs and is continuing with respect to Designated Senior Debt that permits holders of the Designated Senior Debt as to which such default relates to accelerate its maturity (or that would permit such holders to accelerate with the giving of notice or the passage of time or both) and the Senior Subordinated Note Trustee receives a notice of the default (a "Payment Blockage Notice") from a Person who may give it pursuant to Section 10.12 hereof. If the Senior Subordinated Note Trustee receives any such Payment Blockage Notice, no subsequent Payment Blockage Notice shall be effective for purposes of this Section unless and 79 until (i) at least 360 days shall have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (ii) all scheduled payments of principal, premium, if any, and interest and Liquidated Damages, if any, on the Senior Subordinated Notes that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Senior Subordinated Note Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been waived for a period of not less than 90 days. The Company may and shall resume payments on and distributions in respect of the Senior Subordinated Notes and may acquire them upon the earlier of: (1) the date upon which the default is cured or waived, or (2) in the case of a default referred to in Section 10.04(ii) hereof, 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Designated Senior Debt has been accelerated, if this Article 10 otherwise permits the payment, distribution or acquisition at the time of such payment or acquisition. Section 10.05. ACCELERATION OF SENIOR SUBORDINATED NOTES. If payment of the Senior Subordinated Notes is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Debt of such acceleration. Section 10.06. WHEN DISTRIBUTION MUST BE PAID OVER. In the event that the Senior Subordinated Note Trustee or any Holder receives any payment of any Obligations with respect to the Senior Subordinated Notes at a time when the Senior Subordinated Note Trustee or such Holder, as applicable, has actual knowledge that such payment is prohibited by Article 10 hereof, such payment shall be held by the Senior Subordinated Note Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to, the holders of Senior Debt as their interests may appear or their Representative under the Senior Subordinated Note Indenture or other agreement (if any) pursuant to which Senior Debt may have been issued, as their respective interests may appear, for application to the payment of all Obligations with respect to Senior Debt remaining unpaid to the extent necessary to pay such Obligations in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt. With respect to the holders of Senior Debt, the Senior Subordinated Note Trustee undertakes to perform only such obligations on the part of the Senior Subordinated Note Trustee as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Senior Subordinated Note Indenture against the Senior Subordinated Note Trustee. The Senior Subordinated Note Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and shall not be liable to any such holders if the Senior Subordinated Note Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Debt shall be entitled by virtue of this Article 10, except if such 80 payment is made as a result of the willful misconduct or gross negligence of the Senior Subordinated Note Trustee. Section 10.07. NOTICE BY COMPANY. The Company shall promptly notify the Senior Subordinated Note Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any Obligations with respect to the Senior Subordinated Notes to violate this Article 10, but failure to give such notice shall not affect the subordination of the Senior Subordinated Notes to the Senior Debt as provided in this Article 10. Section 10.08. SUBROGATION. After all Senior Debt is paid in full in cash and until the Senior Subordinated Notes are paid in full, Holders of Senior Subordinated Notes shall be subrogated (equally and ratably with all other Indebtedness pari passu with the Senior Subordinated Notes) to the rights of holders of Senior Debt to receive distributions applicable to Senior Debt to the extent that distributions otherwise payable to the Holders of Senior Subordinated Notes have been applied to the payment of Senior Debt. A distribution made under this Article 10 to holders of Senior Debt that otherwise would have been made to Holders of Senior Subordinated Notes is not, as between the Company and Holders, a payment by the Company on the Senior Subordinated Notes. Section 10.09. RELATIVE RIGHTS. This Article 10 defines the relative rights of Holders of Senior Subordinated Notes and holders of Senior Debt. Nothing in this Senior Subordinated Note Indenture shall: (1) impair, as between the Company and Holders of Senior Subordinated Notes, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on the Senior Subordinated Notes in accordance with their terms; (2) affect the relative rights of Holders of Senior Subordinated Notes and creditors of the Company other than their rights in relation to holders of Senior Debt; or (3) prevent the Senior Subordinated Note Trustee or any Holder of Senior Subordinated Notes from exercising its available remedies upon a Default or Event of Default, subject to (i) the rights of holders and owners of Senior Debt to receive distributions and payments otherwise payable to Holders of Senior Subordinated Notes and (ii) the notice provisions of Section 6.02 hereof. If the Company fails because of this Article 10 to pay principal of or interest on a Senior Subordinated Note on the due date, the failure is still a Default or Event of Default. Section 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right of any holder of Senior Debt to enforce the subordination of the Indebtedness evidenced by the Senior Subordinated Notes shall be impaired by any act or failure to act by the Company or any Holder or by the failure of the Company or any Holder to comply with this Senior Subordinated Note Indenture. 81 Section 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a distribution is to be made or a notice given to holders of Senior Debt, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of the Company referred to in this Article 10, the Senior Subordinated Note Trustee and the Holders of Senior Subordinated Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating Senior Subordinated Note Trustee or agent or other Person making any distribution to the Senior Subordinated Note Trustee or to the Holders of Senior Subordinated Notes for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. Section 10.12. RIGHTS OF SENIOR SUBORDINATED NOTE TRUSTEE AND PAYING AGENT. Notwithstanding the provisions of this Article 10 or any other provision of this Senior Subordinated Note Indenture, the Senior Subordinated Note Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Senior Subordinated Note Trustee, and the Senior Subordinated Note Trustee and the Paying Agent may continue to make payments on the Senior Subordinated Notes, unless the Senior Subordinated Note Trustee shall have received at its Corporate Trust Office at least five Business Days prior to the date of such payment written notice of facts that would cause the payment of any Obligations with respect to the Senior Subordinated Notes to violate this Article 10. Only the Company or a Representative may give the notice. Nothing in this Article 10 shall impair the claims of, or payments to, the Senior Subordinated Note Trustee under or pursuant to Section 7.07 hereof. The Senior Subordinated Note Trustee in its individual or any other capacity may hold Senior Debt with the same rights it would have if it were not Senior Subordinated Note Trustee. Any Agent may do the same with like rights. Section 10.13. AUTHORIZATION TO EFFECT SUBORDINATION. Each Holder of Senior Subordinated Notes, by the Holder's acceptance thereof, authorizes and directs the Senior Subordinated Note Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 10, and appoints the Senior Subordinated Note Trustee to act as such Holder's attorney-in-fact for any and all such purposes. If the Senior Subordinated Note Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the credit agents are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Senior Subordinated Notes. Section 10.14. AMENDMENTS. The provisions of this Article 10 shall not be amended or modified without the written consent of the holders of all Senior Debt. 82 ARTICLE 11. SUBORDINATED SUBSIDIARY GUARANTEES Section 11.01. GUARANTEE. Subject to this Article 11, each of the Senior Subordinated Note Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Senior Subordinated Note authenticated and delivered by the Senior Subordinated Note Trustee and to the Senior Subordinated Note Trustee and its successors and assigns, irrespective of the validity and enforceability of this Senior Subordinated Note Indenture, the Senior Subordinated Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Senior Subordinated Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Senior Subordinated Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Senior Subordinated Note Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Senior Subordinated Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Senior Subordinated Note Guarantors shall be jointly and severally obligated to pay the same immediately. Each Senior Subordinated Note Guarantor agrees that this is a guarantee of payment and not a guarantee of collection. The Senior Subordinated Note Guarantors hereby agree that their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Senior Subordinated Notes or this Senior Subordinated Note Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Senior Subordinated Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Senior Subordinated Note Guarantor. Each Senior Subordinated Note Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Subordinated Subsidiary Guarantee shall not be discharged except by complete performance of the obligations contained in the Senior Subordinated Notes and this Senior Subordinated Note Indenture. If any Holder or the Senior Subordinated Note Trustee is required by any court or otherwise to return to the Company, the Senior Subordinated Note Guarantors or any custodian, Senior Subordinated Note Trustee, liquidator or other similar official acting in relation to either the Company or the Senior Subordinated Note Guarantors, any amount paid by either to the Senior Subordinated Note Trustee or such Holder, this Subordinated Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Senior Subordinated Note Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Senior Subordinated Note Guarantor further agrees that, as between the Senior Subordinated Note Guarantors, on the one hand, and the Holders and the Senior Subordinated Note Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Subordinated Subsidiary Guarantee, 83 notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Senior Subordinated Note Guarantors for the purpose of this Subordinated Subsidiary Guarantee. The Senior Subordinated Note Guarantors shall have the right to seek contribution from any non-paying Senior Subordinated Note Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subordinated Subsidiary Guarantee. Section 11.02. Subordination of Subordinated Subsidiary Guarantee. The Obligations of each Senior Subordinated Note Guarantor under its Subordinated Subsidiary Guarantee pursuant to this Article 11 shall be junior and subordinated to the Senior Debt of such Senior Subordinated Note Guarantor on the same basis as the Senior Subordinated Notes are junior and subordinated to Senior Debt of the Company. For the purposes of the foregoing sentence, the Senior Subordinated Note Trustee and the Holders shall have the right to receive and/or retain payments by any of the Senior Subordinated Note Guarantors only at such times as they may receive and/or retain payments in respect of the Senior Subordinated Notes pursuant to this Senior Subordinated Note Indenture, including Article 11 hereof. Section 11.03. Limitation on Senior Subordinated Note Guarantor Liability. Each Senior Subordinated Note Guarantor, and by its acceptance of Senior Subordinated Notes, each Holder, hereby confirms that it is the intention of all such parties that the Subordinated Subsidiary Guarantee of such Senior Subordinated Note Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Subordinated Subsidiary Guarantee. To effectuate the foregoing intention, the Senior Subordinated Note Trustee, the Holders and the Senior Subordinated Note Guarantors hereby irrevocably agree that the obligations of such Senior Subordinated Note Guarantor under its Subordinated Subsidiary Guarantee and this Article 11 shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Senior Subordinated Note Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Senior Subordinated Note Guarantor in respect of the obligations of such other Senior Subordinated Note Guarantor under this Article 11, result in the obligations of such Senior Subordinated Note Guarantor under its Subordinated Subsidiary Guarantee not constituting a fraudulent transfer or conveyance. Section 11.04. Execution and Delivery of Subordinated Subsidiary Guarantee. To evidence its Subordinated Subsidiary Guarantee set forth in Section 11.01, each Senior Subordinated Note Guarantor hereby agrees that a notation of such Subordinated Subsidiary Guarantee substantially in the form included in Exhibit E shall be endorsed by an Officer of such Senior Subordinated Note Guarantor on each Senior Subordinated Note authenticated and delivered by the Senior Subordinated Note Trustee and that this Senior Subordinated Note Indenture shall be executed on behalf of such Senior Subordinated Note Guarantor by its President or one of its Vice Presidents. 84 Each Senior Subordinated Note Guarantor hereby agrees that its Subordinated Subsidiary Guarantee set forth in Section 11.01 shall remain in full force and effect notwithstanding any failure to endorse on each Senior Subordinated Note a notation of such Subordinated Subsidiary Guarantee. If an Officer whose signature is on this Senior Subordinated Note Indenture or on the Subordinated Subsidiary Guarantee no longer holds that office at the time the Senior Subordinated Note Trustee authenticates the Senior Subordinated Note on which a Subordinated Subsidiary Guarantee is endorsed, the Subordinated Subsidiary Guarantee shall be valid nevertheless. The delivery of any Senior Subordinated Note by the Senior Subordinated Note Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subordinated Subsidiary Guarantee set forth in this Senior Subordinated Note Indenture on behalf of the Senior Subordinated Note Guarantors. In the event that the Company creates or acquires any new Subsidiaries subsequent to the date of this Senior Subordinated Note Indenture, if required by Section 4.17 hereof, the Company shall cause such Subsidiaries to execute supplemental Senior Subordinated Note Indentures to this Senior Subordinated Note Indenture and Subordinated Subsidiary Guarantees in accordance with Section 4.17 hereof and this Article 11, to the extent applicable. Section 11.05. Senior Subordinated Note Guarantors May Consolidate, etc., on Certain Terms. No Senior Subordinated Note Guarantor may consolidate with or merge with or into (whether or not such Senior Subordinated Note Guarantor is the surviving Person) another Person whether or not affiliated with such Senior Subordinated Note Guarantor unless: (a) subject to Section 11.05 hereof, the Person formed by or surviving any such consolidation or merger (if other than a Senior Subordinated Note Guarantor or the Company) unconditionally assumes all the obligations of such Senior Subordinated Note Guarantor, pursuant to a supplemental Senior Subordinated Note Indenture in form and substance reasonably satisfactory to the Senior Subordinated Note Trustee, under the Senior Subordinated Notes, this Senior Subordinated Note Indenture, the Registration Rights Agreement and the Subordinated Subsidiary Guarantee on the terms set forth herein or therein; (b) immediately after giving effect to such transaction, no Default or Event of Default exists; and (c) the Company would be permitted, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof. In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental Senior Subordinated Note Indenture, executed and delivered to the Senior Subordinated Note Trustee and satisfactory in form to the Senior Subordinated Note Trustee, of the Subordinated Subsidiary Guarantee endorsed upon the Senior Subordinated Notes and the due and punctual performance of all of the covenants and conditions of this Senior Subordinated Note Indenture to be performed by the Senior Subordinated Note Guarantor, such successor Person shall succeed to and be substituted for the Senior Subordinated Note Guarantor with the same effect as if it had been named 85 herein as a Senior Subordinated Note Guarantor. Such successor Person thereupon may cause to be signed any or all of the Subordinated Subsidiary Guarantees to be endorsed upon all of the Senior Subordinated Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Senior Subordinated Note Trustee. All the Subordinated Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under this Senior Subordinated Note Indenture as the Subordinated Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of this Senior Subordinated Note Indenture as though all of such Subordinated Subsidiary Guarantees had been issued at the date of the execution hereof. Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses (a) and (b) above, nothing contained in this Senior Subordinated Note Indenture or in any of the Senior Subordinated Notes shall prevent any consolidation or merger of a Senior Subordinated Note Guarantor with or into the Company or another Senior Subordinated Note Guarantor, or shall prevent any sale or conveyance of the property of a Senior Subordinated Note Guarantor as an entirety or substantially as an entirety to the Company or another Senior Subordinated Note Guarantor. Section 11.06. Releases Following Sale of Assets. In the event of (a) a sale or other disposition of all of the assets of any Senior Subordinated Note Guarantor, by way of merger, consolidation or otherwise, (b) a sale or other disposition of all of the capital stock of any Senior Subordinated Note Guarantor or (c) the designation of a Senior Subordinated Note Guarantor as an Unrestricted Subsidiary in accordance with the terms of the Senior subordinated Note Indenture, then such Senior Subordinated Note Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Senior Subordinated Note Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Senior Subordinated Note Guarantor) will be released and relieved of any obligations under its Subordinated Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Senior Subordinated Note Indenture, including without limitation Section 4.10 hereof. Upon delivery by the Company to the Senior Subordinated Note Trustee of an Officer's Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the applicable provisions of this Senior Subordinated Note Indenture, including without limitation Section 4.10 hereof, the Senior Subordinated Note Trustee shall execute any documents reasonably required in order to evidence the release of any Senior Subordinated Note Guarantor from its obligations under its Subordinated Subsidiary Guarantee. Any Senior Subordinated Note Guarantor not released from its obligations under its Subordinated Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Senior Subordinated Notes and for the other obligations of any Senior Subordinated Note Guarantor under this Senior Subordinated Note Indenture as provided in this Article 11. ARTICLE 12. MISCELLANEOUS Section 12.01. Trust Indenture Act Controls. If any provision of this Senior Subordinated Note Indenture limits, qualifies or conflicts with the duties imposed by TIA (S) 318(c), the imposed duties shall control. 86 Section 12.02. Notices. Any notice or communication by the Company, any Senior Subordinated Note Guarantor or the Senior Subordinated Note Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address. If to the Company and/or any Senior Subordinated Note Guarantor: P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri 63101-1826 Telecopier No.: (314) 342-3419 Attention: Chief Legal Officer With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017-3954 Telecopier No. (212) 455-2502 Attention: Rise Norman If to the Senior Subordinated Note Trustee: State Street Bank and Trust Company Goodwin Square 225 Asylum Street Hartford, Connecticut 06103 Telecopier No.: (860) 244-1897 Attention: Philip Kane The Company, any Senior Subordinated Note Guarantor or the Senior Subordinated Note Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA (S) 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. 87 If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Senior Subordinated Note Trustee and each Agent at the same time. Section 12.03. Communication by Holders of Senior Subordinated Notes with Other Holders of Senior Subordinated Notes. Holders may communicate pursuant to TIA (S) 312(b) with other Holders with respect to their rights under this Senior Subordinated Note Indenture or the Senior Subordinated Notes. The Company, the Senior Subordinated Note Trustee, the Registrar and anyone else shall have the protection of TIA (S) 312(c). Section 12.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Senior Subordinated Note Trustee to take any action under this Senior Subordinated Note Indenture, the Company shall furnish to the Senior Subordinated Note Trustee: (a) an Officer's Certificate in form and substance reasonably satisfactory to the Senior Subordinated Note Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Senior Subordinated Note Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Senior Subordinated Note Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. Section 12.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Senior Subordinated Note Indenture (other than a certificate provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S) 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. 88 Section 12.06. Rules by Senior Subordinated Note Trustee and Agents. The Senior Subordinated Note Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator or stockholder of the Company or any Senior Subordinated Note Guarantor, as such, shall have any liability for any obligations of the Company or such Senior Subordinated Note Guarantor under the Senior Subordinated Notes, the Subordinated Subsidiary Guarantees, this Senior Subordinated Note Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Senior Subordinated Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Senior Subordinated Notes. Section 12.08. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SENIOR SUBORDINATED NOTE INDENTURE, THE SENIOR SUBORDINATED NOTES AND THE SUBORDINATED SUBSIDIARY GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Section 12.09. No Adverse Interpretation of Other Agreements. This Senior Subordinated Note Indenture may not be used to interpret any other Senior Subordinated Note Indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such Senior Subordinated Note Indenture, loan or debt agreement may not be used to interpret this Senior Subordinated Note Indenture. Section 12.10. Successors. All agreements of the Company in this Senior Subordinated Note Indenture and the Senior Subordinated Notes shall bind its successors. All agreements of the Senior Subordinated Note Trustee in this Senior Subordinated Note Indenture shall bind its successors. Section 12.11. Severability. In case any provision in this Senior Subordinated Note Indenture or in the Senior Subordinated Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 12.12. Counterpart Originals. The parties may sign any number of copies of this Senior Subordinated Note Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 89 Section 12.13. Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Senior Subordinated Note Indenture have been inserted for convenience of reference only, are not to be considered a part of this Senior Subordinated Note Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] 90 SIGNATURES Dated as of May 18, 1998 P&L Coal Holdings Corporation By:/s/ Felix Herlihy ____________________________ Name: Felix Herlihy Title: Vice President, Treasurer and Assistant Secretary State Street Bank and Trust Company By:/s/ Philip G. Kane, Jr. ____________________________ Name: Philip G. Kane, Jr. Title: Vice President EXHIBIT A1 (Face of Senior Subordinated Note) ================================================================================ [Insert the Global Senior Subordinated Note Legend, if applicable pursuant to the provisions of the Senior Subordinated Note Indenture] [Insert the Private Placement Legend, if applicable pursuant to the provisions of the Senior Subordinated Note Indenture] CUSIP/CINS 9-5/8% [Series A] [Series B] Senior Subordinated Notes due 2008 No. $ --------- ----------- P&L Coal Holdings Corporation promises to pay to ____________ or registered assigns, the principal sum of ________________________ Dollars on ________ __,2008. Interest Payment Dates: ________ __, and ________ __ Record Dates: ________ __ and ________ __ Dated: ________ __, 1998 P&L Coal Holdings Corporation By: ------------------------------ Name: Title: By: ------------------------------ Name: Title: This is one of the [Global] Senior Subordinated Notes referred to in the within-mentioned Senior Subordinated Note Indenture: State Street Bank and Trust Company, as Senior Subordinated Note Trustee By: ------------------------------------ ================================================================================ A1-1 (Back of Senior Subordinated Note) 9-5/8% [Series A] [Series B] Senior Subordinated Notes due 2008 Capitalized terms used herein shall have the meanings assigned to them in the Senior Subordinated Note Indenture referred to below unless otherwise indicated. 1. INTEREST. P&L Coal Holdings Corporation, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Senior Subordinated Note at 9-5/8% per annum from May 18, 1998 until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages semi-annually on May 15 and November 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Senior Subordinated Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Senior Subordinated Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be November 15, 1998. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Company will pay interest on the Senior Subordinated Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Senior Subordinated Notes at the close of business on the May 1 or November 1 next preceding the Interest Payment Date, even if such Senior Subordinated Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Senior Subordinated Note Indenture with respect to defaulted interest. The Senior Subordinated Notes will be payable as to principal, premium and Liquidated Damages, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Senior Subordinated Notes and all other Senior Subordinated Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust Company, the Senior Subordinated Note Trustee under the Senior Subordinated Note Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. SENIOR SUBORDINATED NOTE INDENTURE. The Company issued the Senior Subordinated Notes under an Senior Subordinated Note Indenture dated as of May 18, 1998 ("Senior Subordinated Note Indenture") between the Company and the Senior Subordinated Note Trustee. The A1-2 terms of the Senior Subordinated Notes include those stated in the Senior Subordinated Note Indenture and those made part of the Senior Subordinated Note Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Senior Subordinated Notes are subject to all such terms, and Holders are referred to the Senior Subordinated Note Indenture and such Act for a statement of such terms. To the extent any provision of this Senior Subordinated Note conflicts with the express provisions of the Senior Subordinated Note Indenture, the provisions of the Senior Subordinated Note Indenture shall govern and be controlling. The Senior Subordinated Notes are obligations of the Company limited to $650.0 million in aggregate principal amount. 5. OPTIONAL REDEMPTION. (a) The Senior Subordinated Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice. (b) Prior to May 15, 2003, the Senior Subordinated Notes will be redeemable at a redemption price equal to 100% of the principal amount thereof plus the applicable Senior Subordinated Notes Make Whole Premium, plus, to the extent not included in the Senior Subordinated Notes Make Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption. For purposes of the foregoing, "Senior Subordinated Notes Make Whole Premium" means, with respect to a Senior Subordinated Note, an amount equal to the greater of (a) 104.813% of the outstanding principal amount of such Senior Subordinated Note and (b) the excess of (1) the present value of the remaining interest, premium, if any, and principal payments due on such Senior Subordinated Note as if such Senior Subordinated Note were redeemed on May 15, 2003, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (2) the outstanding principal amount of such Senior Subordinated Note. (c) On or after May 15, 2003, the Senior Subordinated Notes are redeemable at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on May 15 of the years indicated below: Year Percentage 2003........................ 104.813% 2004........................ 103.208% 2005........................ 101.604% 2006 and thereafter......... 100.000% (d) Notwithstanding the provisions of clauses (a), (b) and (c) of this Paragraph 5, during the first 36 months after the date of the closing of the Acquisition, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Senior Subordinated Notes issued under this Senior Subordinated Note Indenture at a redemption price of 109.625% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the aggregate principal amount of Senior Subordinated Notes issued remain outstanding immediately after the occurrence of such redemption (excluding Senior Subordinated Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 120 days of the date of the closing of such Equity Offering. A1-3 (e) Any redemption pursuant to this Paragraph 5 shall be made pursuant to the provisions of Article 3 of the Senior Subordinated Note Indenture. 6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Senior Subordinated Notes. 7. SPECIAL MANDATORY REDEMPTION. In the event that the Escrow Account is released without the consummation of the Acquisition (or if the Acquisition is not consummated within 30 days of such deposit), the Company shall redeem the Senior Subordinated Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption. 8. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Senior Subordinated Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Senior Subordinated Note Indenture. (b) If the Company or a Subsidiary consummates any Asset Sales, within five days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall commence an offer to all Holders of Senior Subordinated Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Senior Subordinated Note Indenture to purchase the maximum principal amount of Senior Subordinated Notes (including any Additional Senior Subordinated Notes) that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Senior Subordinated Note Indenture. To the extent that the aggregate amount of Senior Subordinated Notes (including any Additional Senior Subordinated Notes) tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for general corporate purposes. If the aggregate principal amount of Senior Subordinated Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Senior Subordinated Note Trustee shall select the Senior Subordinated Notes to be purchased on a pro rata basis. Holders of Senior Subordinated Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Senior Subordinated Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Subordinated Notes. 9. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Subordinated Notes are to be redeemed at its registered address. Senior Subordinated Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Senior A1-4 Subordinated Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Senior Subordinated Notes or portions thereof called for redemption. 10. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Senior Subordinated Notes may be registered and Senior Subordinated Notes may be exchanged as provided in the Senior Subordinated Note Indenture. The Registrar and the Senior Subordinated Note Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Senior Subordinated Note Indenture. The Company need not exchange or register the transfer of any Senior Subordinated Note or portion of a Senior Subordinated Note selected for redemption, except for the unredeemed portion of any Senior Subordinated Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Senior Subordinated Notes for a period of 15 days before a selection of Senior Subordinated Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 11. PERSONS DEEMED OWNERS. The registered Holder of a Senior Subordinated Note may be treated as its owner for all purposes. 12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Senior Subordinated Note Indenture, the Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Senior Subordinated Notes and Additional Senior Subordinated Notes, if any, voting as a single class, and any existing default or compliance with any provision of the Senior Subordinated Note Indenture, the Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes and Additional Senior Subordinated Notes, if any, voting as a single class. Without the consent of any Holder of a Senior Subordinated Note, the Senior Subordinated Note Indenture, the Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Subordinated Notes in addition to or in place of certificated Senior Subordinated Notes, to provide for the assumption of the Company's or Senior Subordinated Note Guarantor's obligations to Holders of the Senior Subordinated Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Senior Subordinated Notes or that does not adversely affect the legal rights under the Senior Subordinated Note Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Senior Subordinated Note Indenture under the Trust Indenture Act, to provide for the Issuance of Additional Senior Subordinated Notes in accordance with the limitations set forth in the Senior Subordinated Note Indenture, or to allow any Senior Subordinated Note Guarantor to execute a supplemental Senior Subordinated Note Indenture to the Senior Subordinated Note Indenture and/or a Subordinated Subsidiary Guarantee with respect to the Senior Subordinated Notes. Without the consent of at least 75% in principal amount of the Senior Subordinated Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Senior Subordinated Notes), no waiver or amendment to the Senior Subordinated Note Indenture may make any change in the provisions of Article 10 of the Senior Subordinated Note Indenture that adversely affects the rights of any Holder of Senior Subordinated Notes. 13. DEFAULTS AND REMEDIES. An "Event of Default" occurs if: (i) the Company defaults in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Senior A1-5 Subordinated Notes and such default continues for a period of 30 days (whether or not prohibited by the subordination provisions of Article 10 of the Senior Subordinated Note Indenture); (ii) the Company defaults in the payment when due of principal of or premium, if any, on the Senior Subordinated Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise (whether or not prohibited by the subordination provisions of Article 10 of the Senior Subordinated Note Indenture); (iii) the Company or any of its Subsidiaries fails to make the offer required or to purchase any of the Senior Subordinated Notes as required by Sections 4.10 and/or 4.15 of the Senior Subordinated Note Indenture; (iv) the Company fails to comply for 30 days after notice to the Company by the Senior Subordinated Note Trustee with any of the provisions of Sections 4.07 or 4.09 of the Senior Subordinated Note Indenture; or the Company fails to observe or perform any other covenant, representation, warranty or other agreement in the Senior Subordinated Note Indenture or the Senior Subordinated Notes for 60 days after notice to the Company by the Senior Subordinated Note Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class; (v) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the date of the Senior Subordinated Note Indenture, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of such Indebtedness aggregates $50.0 million or more; (vi) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments exceeds $50.0 million; (vii) certain events of bankruptcy or insolvency occur with respect to the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law; (viii) except as permitted by the Senior Subordinated Note Indenture, any Subordinated Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Senior Subordinated Note Guarantor, or any Person acting on behalf of any Senior Subordinated Note Guarantor, shall deny or disaffirm its obligations under such Senior Subordinated Note Guarantor's Subordinated Subsidiary Guarantee; or (ix) the Company fails to deposit the required amounts into the Escrow Account pursuant to the Escrow Letter or any failure of the proceeds of the Escrow Account to be applied as required under the Escrow Letter. If any Event of Default occurs and is continuing, the Senior Subordinated Note Trustee or the Holders of at least 25% in principal amount of the then outstanding Senior Subordinated Notes may declare all the Senior Subordinated Notes to be due and payable; provided, that so long as any Designated Senior Debt is outstanding, such acceleration shall not be effective until the earlier of (i) an acceleration under any Designated Senior Debt or (ii) five Business Days after receipt by the Company and the Representative of the Designated Senior Debt of written notice of such acceleration of the Senior Subordinated Notes. Upon any such declaration, the Senior Subordinated Notes shall become due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Senior Subordinated Notes will become due and payable without further action or notice. Holders may not enforce the Senior Subordinated Note Indenture or the Senior Subordinated Notes except as provided in the Senior Subordinated Note Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Senior A1-6 Subordinated Notes may direct the Senior Subordinated Note Trustee in its exercise of any trust or power. The Senior Subordinated Note Trustee may withhold from Holders of the Senior Subordinated Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Senior Subordinated Notes then outstanding by notice to the Senior Subordinated Note Trustee may on behalf of the Holders of all of the Senior Subordinated Notes waive any existing Default or Event of Default and its consequences under the Senior Subordinated Note Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Senior Subordinated Notes. The Company is required to deliver to the Senior Subordinated Note Trustee annually a statement regarding compliance with the Senior Subordinated Note Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Senior Subordinated Note Trustee a statement specifying such Default or Event of Default. 14. SENIOR SUBORDINATED NOTE TRUSTEE DEALINGS WITH COMPANY. The Senior Subordinated Note Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Senior Subordinated Note Trustee. 15. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Senior Subordinated Notes or the Senior Subordinated Note Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Senior Subordinated Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Senior Subordinated Notes. 16. AUTHENTICATION. This Senior Subordinated Note shall not be valid until authenticated by the manual signature of the Senior Subordinated Note Trustee or an authenticating agent. 17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL SENIOR SUBORDINATED NOTES AND RESTRICTED DEFINITIVE SENIOR SUBORDINATED NOTES. In addition to the rights provided to Holders of Senior Subordinated Notes under the Senior Subordinated Note Indenture, Holders of Restricted Global Senior Subordinated Notes and Restricted Definitive Senior Subordinated Notes shall have all the rights set forth in the A/B Exchange Registration Rights Agreement dated as of May 18, 1998, between the Company and the parties named on the signature pages thereof or, in the case of Additional Senior Subordinated Notes, Holders of Restricted Global Senior Subordinated Notes and Restricted Definitive Senior Subordinated Notes shall have the rights set forth in one or more registration rights agreements, if any, between the Company and the other parties thereto, relating to rights given by the Company to the purchasers of any Additional Senior Subordinated Notes (collectively, the "Registration Rights Agreement"). 19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Senior Subordinated Notes and the Senior Subordinated Note Trustee may use CUSIP numbers in A1-7 notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Senior Subordinated Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Senior Subordinated Note Indenture and/or the Registration Rights Agreement. Requests may be made to: P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri 63101-1826 Attention: Chief Legal Officer A1-8 Assignment Form To assign this Senior Subordinated Note, fill in the form below: (I) or (we) assign and transfer this Senior Subordinated Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint _______________________________________________________ to transfer this Senior Subordinated Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: ----------- Your Signature: ----------------------------------- ______ (Sign exactly as your name appears on the face of this Senior Subordinated Note) Tax Identification No: ---------------------------- SIGNATURE GUARANTEE: ---------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A1-9 Option of Holder to Elect Purchase If you want to elect to have this Senior Subordinated Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Senior Subordinated Note Indenture, check the box below: [_] Section 4.10 [_] Section 4.15 If you want to elect to have only part of the Senior Subordinated Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Senior Subordinated Note Indenture, state the amount you elect to have purchased: $________ Date: -------------- Your Signature: ---------------------------------- ______ (Sign exactly as your name appears on the face of this Senior Subordinated Note) Tax Identification No: --------------------------- SIGNATURE GUARANTEE: ---------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A1-10 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SENIOR SUBORDINATED NOTE/1/ The following exchanges of a part of this Global Senior Subordinated Note for an interest in another Global Senior Subordinated Note or for a Definitive Senior Subordinated Note, or exchanges of a part of another Global Senior Subordinated Note or Definitive Senior Subordinated Note for an interest in this Global Senior Subordinated Note, have been made:
Principal Amount Amount of Amount of of this Global Signature of decrease in increase Senior authorized officer Principal Amount in Principal Subordinated Note of Senior of this Global Amount of this following such Subordinated Senior Global Senior decrease (or Note Trustee or Date of Exchange Subordinated Note Subordinated Note increase) Custodian - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------
- ------------------------ /1/ THIS SHOULD BE INCLUDED ONLY IF THE SENIOR SUBORDINATED NOTE IS ISSUED IN GLOBAL FORM. A1-11 EXHIBIT A2 (Face of Regulation S Temporary Global Senior Subordinated Note) ================================================================================ EXHIBIT A2 THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SENIOR SUBORDINATED NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED SENIOR SUBORDINATED NOTES, ARE AS SPECIFIED IN THE SENIOR SUBORDINATED NOTE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL SENIOR SUBORDINATED NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR SUBORDINATED NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES A2-1 LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. CUSIP/CINS 9-5/8% Series A Senior Subordinated Notes due 2008 No.____ $_______ P&L Coal Holdings Corporation promises to pay to ____________ or registered assigns, the principal sum of ________________________ Dollars on ________,2008. Interest Payment Dates: ________ __, and ________ __ Record Dates: ________ __ and ________ __ Dated: ________ __, 1998 P&L Coal Holdings Corporation By: ----------------------------------- Name: Title: By: ----------------------------------- Name: Title: This is one of the [Global] Senior Subordinated Notes referred to in the within-mentioned Senior Subordinated Note Indenture: State Street Bank and Trust Company, as Senior Subordinated Note Trustee By: ---------------------------------- ================================================================================ A2-2 (Back of Regulation S Temporary Global Senior Subordinated Note) 9-5/8% Series A Senior Subordinated Notes due 2008 Capitalized terms used herein shall have the meanings assigned to them in the Senior Subordinated Note Indenture referred to below unless otherwise indicated. 1. INTEREST. P&L Coal Holdings Corporation, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Senior Subordinated Note at 9-5/8% per annum from May 18, 1998 until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages semi-annually on May 15 and November 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Senior Subordinated Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Senior Subordinated Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be November 15, 1998. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Until this Regulation S Temporary Global Senior Subordinated Note is exchanged for one or more Regulation S Permanent Global Senior Subordinated Notes, the Holder hereof shall not be entitled to receive payments of interest hereon; until so exchanged in full, this Regulation S Temporary Global Senior Subordinated Note shall in all other respects be entitled to the same benefits as other Senior Subordinated Notes under the Senior Subordinated Note Indenture. 2. METHOD OF PAYMENT. The Company will pay interest on the Senior Subordinated Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Senior Subordinated Notes at the close of business on the May 1 or November 1 next preceding the Interest Payment Date, even if such Senior Subordinated Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Senior Subordinated Note Indenture with respect to defaulted interest. The Senior Subordinated Notes will be payable as to principal, premium, interest and Liquidated Damages at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Senior Subordinated Notes and all other Senior Subordinated Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. A2-3 3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust Company, the Senior Subordinated Note Trustee under the Senior Subordinated Note Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. SENIOR SUBORDINATED NOTE INDENTURE. The Company issued the Senior Subordinated Notes under an Senior Subordinated Note Indenture dated as of May 18, 1998 ("Senior Subordinated Note Indenture") between the Company and the Senior Subordinated Note Trustee. The terms of the Senior Subordinated Notes include those stated in the Senior Subordinated Note Indenture and those made part of the Senior Subordinated Note Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Senior Subordinated Notes are subject to all such terms, and Holders are referred to the Senior Subordinated Note Indenture and such Act for a statement of such terms. The Senior Subordinated Notes are secured obligations of the Company limited to $650.0 million in aggregate principal amount. 5. OPTIONAL REDEMPTION. (a) The Senior Subordinated Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice. (b) Prior to May 15, 2003, the Senior Subordinated Notes will be redeemable at a redemption price equal to 100% of the principal amount thereof plus the applicable Senior Subordinated Notes Make Whole Premium, plus, to the extent not included in the Senior Subordinated Notes Make Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption. For purposes of the foregoing, "Senior Subordinated Notes Make Whole Premium" means, with respect to a Senior Subordinated Note, an amount equal to the greater of (a) 104.813% of the outstanding principal amount of such Senior Subordinated Note and (b) the excess of (1) the present value of the remaining interest, premium, if any, and principal payments due on such Senior Subordinated Note as if such Senior Subordinated Note were redeemed on May 15, 2003, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (2) the outstanding principal amount of such Senior Subordinated Note. (c) On or after May 15, 2003, the Senior Subordinated Notes are redeemable at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on May 15 of the years indicated below: Year Percentage 2003.......................................... 104.813% 2004.......................................... 103.208% 2005.......................................... 101.604% 2006 and thereafter........................... 100.000% (d) Notwithstanding the provisions of clauses (a), (b) and (c) of this Paragraph 5, during the first 36 months after the date of the closing of the Acquisition, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Senior Subordinated Notes issued under this Senior Subordinated Note Indenture at a redemption price of 109.625% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the A2-4 redemption date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the aggregate principal amount of Senior Subordinated Notes issued remain outstanding immediately after the occurrence of such redemption (excluding Senior Subordinated Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 120 days of the date of the closing of such Equity Offering. (e) Any redemption pursuant to this Paragraph 5 shall be made pursuant to the provisions of Article 3 of the Senior Subordinated Note Indenture. 6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Senior Subordinated Notes. 7. SPECIAL MANDATORY REDEMPTION. In the event that the Escrow Account is released without the consummation of the Acquisition (or if the Acquisition is not consummated within 30 days of such deposit), the Company shall redeem the Senior Subordinated Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption. 8. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Senior Subordinated Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Senior Subordinated Note Indenture. (b) If the Company or a Subsidiary consummates any Asset Sales, within five days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall commence an offer to all Holders of Senior Subordinated Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Senior Subordinated Note Indenture to purchase the maximum principal amount of Senior Subordinated Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Senior Subordinated Note Indenture. To the extent that the aggregate amount of Senior Subordinated Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for general corporate purposes. If the aggregate principal amount of Senior Subordinated Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Senior Subordinated Note Trustee shall select the Senior Subordinated Notes to be purchased on a pro rata basis. Holders of Senior Subordinated Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Senior Subordinated Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Subordinated Notes. A2-5 9. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Subordinated Notes are to be redeemed at its registered address. Senior Subordinated Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Senior Subordinated Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Senior Subordinated Notes or portions thereof called for redemption. 10. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Senior Subordinated Notes may be registered and Senior Subordinated Notes may be exchanged as provided in the Senior Subordinated Note Indenture. The Registrar and the Senior Subordinated Note Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Senior Subordinated Note Indenture. The Company need not exchange or register the transfer of any Senior Subordinated Note or portion of a Senior Subordinated Note selected for redemption, except for the unredeemed portion of any Senior Subordinated Note being redeemed in part. Also, it need not exchange or register the transfer of any Senior Subordinated Notes for a period of 15 days before a selection of Senior Subordinated Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. This Regulation S Temporary Global Senior Subordinated Note is exchangeable in whole or in part for one or more Global Senior Subordinated Notes only (i) on or after the termination of the 40-day restricted period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) required by Article 2 of the Senior Subordinated Note Indenture. Upon exchange of this Regulation S Temporary Global Senior Subordinated Note for one or more Global Senior Subordinated Notes, the Senior Subordinated Note Trustee shall cancel this Regulation S Temporary Global Senior Subordinated Note. 11. PERSONS DEEMED OWNERS. The registered Holder of a Senior Subordinated Note may be treated as its owner for all purposes. 12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Senior Subordinated Note Indenture, the Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Senior Subordinated Notes and Additional Senior Subordinated Notes, if any, voting as a single class, and any existing default or compliance with any provision of the Senior Subordinated Note Indenture, the Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes and Additional Senior Subordinated Notes, if any, voting as a single class. Without the consent of any Holder of a Senior Subordinated Note, the Senior Subordinated Note Indenture, the Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Subordinated Notes in addition to or in place of certificated Senior Subordinated Notes, to provide for the assumption of the Company's or Senior Subordinated Note Guarantor's obligations to Holders of the Senior Subordinated Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Senior Subordinated Notes or that does not adversely affect the legal rights under the Senior Subordinated Note Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Senior Subordinated A2-6 Note Indenture under the Trust Indenture Act, to provide for the Issuance of Additional Senior Subordinated Notes in accordance with the limitations set forth in the Senior Subordinated Note Indenture, or to allow any Senior Subordinated Note Guarantor to execute a supplemental Senior Subordinated Note Indenture to the Senior Subordinated Note Indenture and/or a Subordinated Subsidiary Guarantee with respect to the Senior Subordinated Notes. Without the consent of at least 75% in principal amount of the Senior Subordinated Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Senior Subordinated Notes), no waiver or amendment to the Senior Subordinated Note Indenture may make any change in the provisions of Article 10 of the Senior Subordinated Note Indenture that adversely affects the rights of any Holder of Senior Subordinated Notes. 13. DEFAULTS AND REMEDIES. An "Event of Default" occurs if: (i) the Company defaults in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Senior Subordinated Notes and such default continues for a period of 30 days (whether or not prohibited by the subordination provisions of Article 10 of the Senior Subordinated Note Indenture); (ii) the Company defaults in the payment when due of principal of or premium, if any, on the Senior Subordinated Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise (whether or not prohibited by the subordination provisions of Article 10 of the Senior Subordinated Note Indenture); (iii) the Company or any of its Subsidiaries fails to make the offer required or to purchase any of the Senior Subordinated Notes as required by Sections 4.10 and/or 4.15 of the Senior Subordinated Note Indenture; (iv) the Company fails to comply for 30 days after notice to the Company by the Senior Subordinated Note Trustee with any of the provisions of Sections 4.07 or 4.09 of the Senior Subordinated Note Indenture; or the Company fails to observe or perform any other covenant, representation, warranty or other agreement in the Senior Subordinated Note Indenture or the Senior Subordinated Notes for 60 days after notice to the Company by the Senior Subordinated Note Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class; (v) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the date of the Senior Subordinated Note Indenture, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of such Indebtedness aggregates $50.0 million or more; (vi) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments exceeds $50.0 million; (vii) certain events of bankruptcy or insolvency occur with respect to the Company or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law; (viii) except as permitted by the Senior Subordinated Note Indenture, any Subordinated Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Senior Subordinated Note Guarantor, or any Person acting on behalf of any Senior Subordinated Note Guarantor, shall deny or disaffirm its obligations under such Senior Subordinated Note Guarantor's Subordinated Subsidiary Guarantee; or (ix) the Company fails to deposit the required amounts into the Escrow Account pursuant to the Escrow Letter or any failure of the proceeds of the Escrow Account to be applied as required under the Escrow Letter. A2-7 If any Event of Default occurs and is continuing, the Senior Subordinated Note Trustee or the Holders of at least 25% in principal amount of the then outstanding Senior Subordinated Notes may declare all the Senior Subordinated Notes to be due and payable; provided, that so long as any Designated Senior Debt is outstanding, such acceleration shall not be effective until the earlier of (i) an acceleration under any Designated Senior Debt or (ii) five Business Days after receipt by the Company and the Representative of the Designated Senior Debt of written notice of such acceleration of the Senior Subordinated Notes. Upon any such declaration, the Senior Subordinated Notes shall become due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Senior Subordinated Notes will become due and payable without further action or notice. Holders may not enforce the Senior Subordinated Note Indenture or the Senior Subordinated Notes except as provided in the Senior Subordinated Note Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes may direct the Senior Subordinated Note Trustee in its exercise of any trust or power. The Senior Subordinated Note Trustee may withhold from Holders of the Senior Subordinated Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Senior Subordinated Notes then outstanding by notice to the Senior Subordinated Note Trustee may on behalf of the Holders of all of the Senior Subordinated Notes waive any existing Default or Event of Default and its consequences under the Senior Subordinated Note Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Senior Subordinated Notes. The Company is required to deliver to the Senior Subordinated Note Trustee annually a statement regarding compliance with the Senior Subordinated Note Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Senior Subordinated Note Trustee a statement specifying such Default or Event of Default. 14. SENIOR SUBORDINATED NOTE TRUSTEE DEALINGS WITH COMPANY. The Senior Subordinated Note Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Senior Subordinated Note Trustee. 15. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder, of the Company or any of the Senior Subordinated Note Guarantors, as such, shall not have any liability for any obligations of the Company or such Senior Subordinated Note Guarantor under the Senior Subordinated Notes, the Subordinated Subsidiary Guarantees or the Senior Subordinated Note Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Senior Subordinated Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Senior Subordinated Notes. 16. AUTHENTICATION. This Senior Subordinated Note shall not be valid until authenticated by the manual signature of the Senior Subordinated Note Trustee or an authenticating agent. 17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL SENIOR SUBORDINATED NOTES AND RESTRICTED DEFINITIVE SENIOR SUBORDINATED NOTES. In addition to the rights provided to A2-8 Holders of Senior Subordinated Notes under the Senior Subordinated Note Indenture, Holders of Restricted Global Senior Subordinated Notes and Restricted Definitive Senior Subordinated Notes shall have all the rights set forth in the A/B Exchange Registration Rights Agreement dated as of May 18, 1998, between the Company and the parties named on the signature pages thereof or, in the case of Additional Senior Subordinated Notes, Holders of Restricted Global Senior Subordinated Notes and Restricted Definitive Senior Subordinated Notes shall have the rights set forth in one or more registration rights agreements, if any, between the Company and the other parties thereto, relating to rights given by the Company to the purchasers of any Additional Senior Subordinated Notes (collectively, the "Registration Rights Agreement"). 19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Senior Subordinated Notes and the Senior Subordinated Note Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Senior Subordinated Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. A2-9 The Company will furnish to any Holder upon written request and without charge a copy of the Senior Subordinated Note Indenture and/or the Registration Rights Agreement. Requests may be made to: P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri 63101-1826 Attention: Chief Legal Officer A2-10 Assignment Form To assign this Senior Subordinated Note, fill in the form below: (I) or (we) assign and transfer this Senior Subordinated Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ___________________________________________________ ________________ to transfer this Senior Subordinated Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: ------------ Your Signature: ----------------------------------- --------- (Sign exactly as your name appears on the face of this Senior Subordinated Note) Tax Identification No: ---------------------------- SIGNATURE GUARANTEE: --------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A2-11 Option of Holder to Elect Purchase If you want to elect to have this Senior Subordinated Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Senior Subordinated Note Indenture, check the appropriate box below: [_]Section 4.10 [_]Section 4.15 If you want to elect to have only part of the Senior Subordinated Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Senior Subordinated Note Indenture, state the amount you elect to have purchased: $___________ - -------------------------------------------------------------------------------- Date: -------------- Your Signature: ----------------------------------- --------- (Sign exactly as your name appears on the face of this Senior Subordinated Note) Tax Identification No: ---------------------------- SIGNATURE GUARANTEE: --------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A2-12 SCHEDULE OF EXCHANGES OF INTERESTS IN THE REGULATION S TEMPORARY GLOBAL SENIOR SUBORDINATED NOTE The following exchanges of a part of this Regulation S Temporary Global Senior Subordinated Note for an interest in another Global Senior Subordinated Note, or of other Restricted Global Senior Subordinated Notes for an interest in this Regulation S Temporary Global Senior Subordinated Note, have been made:
Principal Amount Amount of Amount of of this Global Signature of decrease in increase Senior authorized officer Principal Amount in Principal Subordinated Note of Senior of this Global Amount of this following such Subordinated Senior Global Senior decrease (or Note Trustee or Date of Exchange Subordinated Note Subordinated Note increase) Custodian - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------
A2-13 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri 63101-1826 State Street Bank and Trust Company Goodwin Square 225 Asylum Street Hartford, Connecticut Re: 9-5/8% Senior Subordinated Notes due 2008 ----------------------------------------- (CUSIP __________) Reference is hereby made to the Senior Subordinated Note Indenture, dated as of May 18, 1998 (the "Senior Subordinated Note Indenture"), between P&L Coal Holdings Corporation, as issuer (the "Company"), and State Street Bank and Trust Company, as Senior Subordinated Note Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Senior Subordinated Note Indenture. ______________, (the "Transferor") owns and proposes to transfer the Senior Subordinated Note[s] or interest in such Senior Subordinated Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Senior Subordinated Note[s] or interests (the "Transfer"), to __________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. [_] Check if Transferee will take delivery of a beneficial interest in the ---------------------------------------------------------------------- 144A Global Senior Subordinated Note or a Definitive Senior Subordinated Note - ----------------------------------------------------------------------------- Pursuant to Rule 144A. The Transfer is being effected pursuant to and in - --------------------- accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Senior Subordinated Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Senior Subordinated Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Senior Subordinated Note Indenture, the transferred beneficial interest or Definitive Senior Subordinated Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Senior Subordinated Note and/or the Definitive Senior Subordinated Note and in the Senior Subordinated Note Indenture and the Securities Act. 2. [_] Check if Transferee will take delivery of a beneficial interest in the ---------------------------------------------------------------------- Temporary Regulation S Global Senior Subordinated Note, the Regulation S Global - ------------------------------------------------------------------------------- Senior Subordinated Note or a Definitive Senior Subordinated Note pursuant to - ----------------------------------------------------------------------------- Regulation S. The Transfer is being effected pursuant to and in accordance with - ------------ Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act and, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Senior Subordinated Note Indenture, the transferred beneficial interest or Definitive Senior Subordinated Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Senior Subordinated Note, the Temporary Regulation S Global Senior Subordinated Note and/or the Definitive Senior Subordinated Note and in the Senior Subordinated Note Indenture and the Securities Act. 3. [_] Check and complete if Transferee will take delivery of a beneficial ------------------------------------------------------------------- interest in the IAI Global Senior Subordinated Note or a Definitive Senior - -------------------------------------------------------------------------- Subordinated Note pursuant to any provision of the Securities Act other than - ---------------------------------------------------------------------------- Rule 144A or Regulation S. The Transfer is being effected in compliance with - ------------------------- the transfer restrictions applicable to beneficial interests in Restricted Global Senior Subordinated Notes and Restricted Definitive Senior Subordinated Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) [_] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) [_] such Transfer is being effected to the Company or a subsidiary thereof; or (c) [_] such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or (d) [_] such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Senior Subordinated Note or Restricted Definitive Senior Subordinated Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Senior Subordinated Note Indenture and (2) if such Transfer is in respect of a principal amount of Senior Subordinated Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Senior Subordinated Note Indenture, the transferred beneficial interest or Definitive Senior Subordinated Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Senior Subordinated Note and/or the Definitive Senior Subordinated Notes and in the Senior Subordinated Note Indenture and the Securities Act. B-2 4. [_] Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Senior Subordinated Note or of an Unrestricted Definitive Senior Subordinated Note. (a) [_] Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Senior Subordinated Note Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Senior Subordinated Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Senior Subordinated Note Indenture, the transferred beneficial interest or Definitive Senior Subordinated Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Senior Subordinated Notes, on Restricted Definitive Senior Subordinated Notes and in the Senior Subordinated Note Indenture. (b) [_] Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Senior Subordinated Note Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Senior Subordinated Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Senior Subordinated Note Indenture, the transferred beneficial interest or Definitive Senior Subordinated Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Senior Subordinated Notes, on Restricted Definitive Senior Subordinated Notes and in the Senior Subordinated Note Indenture. (c) [_] Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Senior Subordinated Note Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Senior Subordinated Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Senior Subordinated Note Indenture, the transferred beneficial interest or Definitive Senior Subordinated Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Senior Subordinated Notes or Restricted Definitive Senior Subordinated Notes and in the Senior Subordinated Note Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. ---------------------------------------- [Insert Name of Transferor] By: ----------------------------------- Name: Title: Dated: ________ __, ____ B-3 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) [_] a beneficial interest in the: (i) [_] 144A Global Senior Subordinated Note (CUSIP _________), or (ii) [_] Regulation S Global Senior Subordinated Note (CUSIP_______), or (iii) [_] IAI Global Senior Subordinated Note (CUSIP ________); or (b) [_] a Restricted Definitive Senior Subordinated Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) [_] a beneficial interest in the: (i) [_] 144A Global Senior Subordinated Note (CUSIP _____), or (ii) [_] Regulation S Global Senior Subordinated Note (CUSIP ___), or (iii) [_] IAI Global Senior Subordinated Note (CUSIP _______); or (iv) [_] Unrestricted Global Senior Subordinated Note (CUSIP____); or (b) [_] a Restricted Definitive Senior Subordinated Note; or (c) [_] an Unrestricted Definitive Senior Subordinated Note, in accordance with the terms of the Senior Subordinated Note Indenture. B-4 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri 63101-1826 State Street Bank and Trust Company Goodwin Square 225 Asylum Street Hartford, Connecticut Re: 9-5/8% Senior Subordinated Notes due 2008 ----------------------------------------- (CUSIP __________) Reference is hereby made to the Senior Subordinated Note Indenture, dated as of May 18, 1998 (the "Senior Subordinated Note Indenture"), between P&L Coal Holdings Corporation, as issuer (the "Company"), and State Street Bank and Trust Company, as Senior Subordinated Note Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Senior Subordinated Note Indenture. ____________, (the "Owner") owns and proposes to exchange the Senior Subordinated Note[s] or interest in such Senior Subordinated Note[s] specified herein, in the principal amount of $____________ in such Senior Subordinated Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. Exchange of Restricted Definitive Senior Subordinated Notes or Beneficial Interests in a Restricted Global Senior Subordinated Note for Unrestricted Definitive Senior Subordinated Notes or Beneficial Interests in an Unrestricted Global Senior Subordinated Note (a) [_] Check if Exchange is from beneficial interest in a -------------------------------------------------- Restricted Global Senior Subordinated Note to beneficial interest in an - ----------------------------------------------------------------------- Unrestricted Global Senior Subordinated Note. In connection with the Exchange of - -------------------------------------------- the Owner's beneficial interest in a Restricted Global Senior Subordinated Note for a beneficial interest in an Unrestricted Global Senior Subordinated Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Senior Subordinated Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Senior Subordinated Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Senior Subordinated Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) [_] Check if Exchange is from beneficial interest in a -------------------------------------------------- Restricted Global Senior Subordinated Note to Unrestricted Definitive Senior - ---------------------------------------------------------------------------- Subordinated Note. In connection with the Exchange of the Owner's beneficial - ----------------- interest in a Restricted Global Senior Subordinated Note for an Unrestricted Definitive Senior Subordinated Note, the Owner hereby certifies (i) the Definitive Senior Subordinated Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Senior Subordinated Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Senior Subordinated Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Senior Subordinated Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) [_] Check if Exchange is from Restricted Definitive Senior ------------------------------------------------------ Subordinated Note to beneficial interest in an Unrestricted Global Senior - ------------------------------------------------------------------------- Subordinated Note. In connection with the Owner's Exchange of a Restricted - ----------------- Definitive Senior Subordinated Note for a beneficial interest in an Unrestricted Global Senior Subordinated Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Senior Subordinated Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Senior Subordinated Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) [_] Check if Exchange is from Restricted Definitive Senior ------------------------------------------------------ Subordinated Note to Unrestricted Definitive Senior Subordinated Note. In - --------------------------------------------------------------------- connection with the Owner's Exchange of a Restricted Definitive Senior Subordinated Note for an Unrestricted Definitive Senior Subordinated Note, the Owner hereby certifies (i) the Unrestricted Definitive Senior Subordinated Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Senior Subordinated Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Senior Subordinated Note Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Senior Subordinated Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. Exchange of Restricted Definitive Senior Subordinated Notes or Beneficial Interests in Restricted Global Senior Subordinated Notes for Restricted Definitive Senior Subordinated Notes or Beneficial Interests in Restricted Global Senior Subordinated Notes (a) [_] Check if Exchange is from beneficial interest in a -------------------------------------------------- Restricted Global Senior Subordinated Note to Restricted Definitive Senior - -------------------------------------------------------------------------- Subordinated Note. In connection with the Exchange of the Owner's beneficial - ----------------- interest in a Restricted Global Senior Subordinated Note for a Restricted Definitive Senior Subordinated Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Senior Subordinated Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Senior Subordinated Note Indenture, the Restricted Definitive Senior Subordinated Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Senior Subordinated Note and in the Senior Subordinated Note Indenture and the Securities Act. (b) [_] Check if Exchange is from Restricted Definitive Senior ------------------------------------------------------ Subordinated Note to beneficial interest in a Restricted Global Senior - ---------------------------------------------------------------------- Subordinated Note. In connection with the Exchange of the Owner's Restricted - ----------------- Definitive Senior Subordinated Note for a beneficial interest in the [CHECK ONE] [_] 144A Global Senior Subordinated Note, [_] Regulation S Global Senior Subordinated Note, [_] IAI Global Senior Subordinated Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global C-2 Senior Subordinated Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Senior Subordinated Note Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Senior Subordinated Note and in the Senior Subordinated Note Indenture and the Securities Act. C-3 This certificate and the statements contained herein are made for your benefit and the benefit of the Company. --------------------------------- [Insert Name of Owner] By: --------------------------- Name: Title: Dated: ________________, ____ C-4 EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri 63101-1826 State Street Bank and Trust Company Goodwin Square 225 Asylum Street Hartford, Connecticut Re: 9-5/8% Senior Subordinated Notes due 2008 ----------------------------------------- (CUSIP __________) Reference is hereby made to the Senior Subordinated Note Indenture, dated as of May 18, 1998 (the "Senior Subordinated Note Indenture"), between P&L Coal Holdings Corporation, as issuer (the "Company"), and State Street Bank and Trust Company, as Senior Subordinated Note Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Senior Subordinated Note Indenture. In connection with our proposed purchase of $____________ aggregate principal amount of: (a) [_] a beneficial interest in a Global Senior Subordinated Note, or (b) [_] a Definitive Senior Subordinated Note, we confirm that: 1. We understand that any subsequent transfer of the Senior Subordinated Notes or any interest therein is subject to certain restrictions and conditions set forth in the Senior Subordinated Note Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Senior Subordinated Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the "Securities Act"). 2. We understand that the offer and sale of the Senior Subordinated Notes have not been registered under the Securities Act, and that the Senior Subordinated Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Senior Subordinated Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (c) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Senior Subordinated Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Senior Subordinated Note or beneficial interest in a Global Senior Subordinated Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein. 3. We understand that, on any proposed resale of the Senior Subordinated Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Senior Subordinated Notes purchased by us will bear a legend to the foregoing effect. We further understand that any subsequent transfer by us of the Senior Subordinated Notes or beneficial interest therein acquired by us must be effected through one of the Placement Agents. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Senior Subordinated Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Senior Subordinated Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. -------------------------------------------- [Insert Name of Accredited Investor] By: ------------------------------- Name: Title: Dated: __________________, ____ D-2 EXHIBIT E FORM OF NOTATION OF SUBORDINATED SUBSIDIARY GUARANTEE For value received, each Senior Subordinated Note Guarantor (which term includes any successor Person under the Senior Subordinated Note Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the Senior Subordinated Note Indenture and subject to the provisions in the Senior Subordinated Note Indenture dated as of May 18, 1998 (the "Senior Subordinated Note Indenture") among P&L Coal Holdings Corporation, the Senior Subordinated Note Guarantors listed on Schedule I thereto and State Street Bank and Trust Company, as Senior Subordinated Note Trustee (the "Senior Subordinated Note Trustee"), (a) the due and punctual payment of the principal of, premium, if any, and interest on the Senior Subordinated Notes (as defined in the Senior Subordinated Note Indenture), whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal and premium, and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Company to the Holders or the Senior Subordinated Note Trustee all in accordance with the terms of the Senior Subordinated Note Indenture and (b) in case of any extension of time of payment or renewal of any Senior Subordinated Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Senior Subordinated Note Guarantors to the Holders of Senior Subordinated Notes and to the Senior Subordinated Note Trustee pursuant to the Subordinated Subsidiary Guarantee and the Senior Subordinated Note Indenture are expressly set forth in Article 11 of the Senior Subordinated Note Indenture and reference is hereby made to the Senior Subordinated Note Indenture for the precise terms of the Subordinated Subsidiary Guarantee. Each Holder of a Senior Subordinated Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Senior Subordinated Note Trustee, on behalf of such Holder, to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Senior Subordinated Note Indenture and (c) appoints the Senior Subordinated Note Trustee attorney-in-fact of such Holder for such purpose; provided, however, that the Indebtedness evidenced by this Subordinated Subsidiary Guarantee shall cease to be so subordinated and subject in right of payment upon any defeasance of this Senior Subordinated Note in accordance with the provisions of the Senior Subordinated Note Indenture. [Name of Senior Subordinated Note Guarantor(s)] By: -------------------------------- Name: Title: EXHIBIT F FORM OF SUPPLEMENTAL SENIOR SUBORDINATED NOTE INDENTURE TO BE DELIVERED BY SUBSEQUENT SENIOR SUBORDINATED NOTE GUARANTORS Supplemental Senior Subordinated Note Indenture (this "Supplemental Senior Subordinated Note Indenture"), dated as of ________________, among __________________ (the "Guaranteeing Subsidiary"), a subsidiary of P&L Coal Holdings Corporation (or its permitted successor), a Delaware corporation (the "Company"), the Company, the other Senior Subordinated Note Guarantors (as defined in the Senior Subordinated Note Indenture referred to herein) and State Street Bank and Trust Company, as Senior Subordinated Note Trustee under the Senior Subordinated Note Indenture referred to below (the "Senior Subordinated Note Trustee"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Senior Subordinated Note Trustee an Senior Subordinated Note Indenture (the "Senior Subordinated Note Indenture"), dated as of May 18, 1998 providing for the issuance of an aggregate principal amount of up to $650.0 million of 9-5/8% Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes"); WHEREAS, the Senior Subordinated Note Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Senior Subordinated Note Trustee a supplemental Senior Subordinated Note Indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company's Obligations under the Senior Subordinated Notes and the Senior Subordinated Note Indenture on the terms and conditions set forth herein (the "Subordinated Subsidiary Guarantee"); and WHEREAS, pursuant to Section 9.01 of the Senior Subordinated Note Indenture, the Senior Subordinated Note Trustee is authorized to execute and deliver this Supplemental Senior Subordinated Note Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Senior Subordinated Note Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Senior Subordinated Notes as follows: 1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Senior Subordinated Note Indenture. 2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees as follows: (a) Along with all Senior Subordinated Note Guarantors named in the Senior Subordinated Note Indenture, to jointly and severally Guarantee to each Holder of a Senior Subordinated Note authenticated and delivered by the Senior Subordinated Note Trustee and to the Senior Subordinated Note Trustee and its successors and assigns, irrespective of the validity and enforceability of the Senior Subordinated Note Indenture, the Senior Subordinated Notes or the obligations of the Company hereunder or thereunder, that: (i) the principal of and interest on the Senior Subordinated Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Senior Subordinated Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Senior Subordinated Note Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Senior Subordinated Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Senior Subordinated Note Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Senior Subordinated Notes or the Senior Subordinated Note Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Senior Subordinated Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Senior Subordinated Note Guarantor. (c) The following is hereby waived: diligence presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever. (d) This Subordinated Subsidiary Guarantee shall not be discharged except by complete performance of the obligations contained in the Senior Subordinated Notes and the Senior Subordinated Note Indenture. (e) If any Holder or the Senior Subordinated Note Trustee is required by any court or otherwise to return to the Company, the Senior Subordinated Note Guarantors, or any custodian, Senior Subordinated Note Trustee, liquidator or other similar official acting in relation to either the Company or the Senior Subordinated Note Guarantors, any amount paid by either to the Senior Subordinated Note Trustee or such Holder, this Subordinated Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. F-2 (g) As between the Senior Subordinated Note Guarantors, on the one hand, and the Holders and the Senior Subordinated Note Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Senior Subordinated Note Indenture for the purposes of this Subordinated Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Senior Subordinated Note Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Senior Subordinated Note Guarantors for the purpose of this Subordinated Subsidiary Guarantee. (h) The Senior Subordinated Note Guarantors shall have the right to seek contribution from any non-paying Senior Subordinated Note Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subordinated Subsidiary Guarantee. (i) Pursuant to Section 11.02 of the Senior Subordinated Note Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Senior Subordinated Note Guarantor in respect of the obligations of such other Senior Subordinated Note Guarantor under Article 11 of the Senior Subordinated Note Indenture shall result in the obligations of such Senior Subordinated Note Guarantor under its Subordinated Subsidiary Guarantee not constituting a fraudulent transfer or conveyance. 3. Execution and Delivery. Each Guaranteeing Subsidiary agrees that the Subordinated Subsidiary Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Senior Subordinated Note a notation of such Subordinated Subsidiary Guarantee. 4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms. (a) The Guaranteeing Subsidiary may not consolidate with or merge with or into (whether or not such Senior Subordinated Note Guarantor is the surviving Person) another corporation, Person or entity whether or not affiliated with such Senior Subordinated Note Guarantor unless: (i) subject to Section 11.05 of the Senior Subordinated Note Indenture, the Person formed by or surviving any such consolidation or merger (if other than a Senior Subordinated Note Guarantor or the Company) unconditionally assumes all the obligations of such Senior Subordinated Note Guarantor, pursuant to a supplemental Senior Subordinated Note Indenture in form and substance reasonably satisfactory to the Senior Subordinated Note Trustee, under the Senior Subordinated Notes, the Senior Subordinated Note Indenture and the Subordinated Subsidiary Guarantee on the terms set forth herein or therein; and F-3 (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental Senior Subordinated Note Indenture, executed and delivered to the Senior Subordinated Note Trustee and satisfactory in form to the Senior Subordinated Note Trustee, of the Subordinated Subsidiary Guarantee endorsed upon the Senior Subordinated Notes and the due and punctual performance of all of the covenants and conditions of the Senior Subordinated Note Indenture to be performed by the Senior Subordinated Note Guarantor, such successor corporation shall succeed to and be substituted for the Senior Subordinated Note Guarantor with the same effect as if it had been named herein as a Senior Subordinated Note Guarantor. Such successor corporation thereupon may cause to be signed any or all of the Subordinated Subsidiary Guarantees to be endorsed upon all of the Senior Subordinated Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Senior Subordinated Note Trustee. All the Subordinated Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under the Senior Subordinated Note Indenture as the Subordinated Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of the Senior Subordinated Note Indenture as though all of such Subordinated Subsidiary Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Senior Subordinated Note Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Senior Subordinated Note Indenture or in any of the Senior Subordinated Notes shall prevent any consolidation or merger of a Senior Subordinated Note Guarantor with or into the Company or another Senior Subordinated Note Guarantor, or shall prevent any sale or conveyance of the property of a Senior Subordinated Note Guarantor as an entirety or substantially as an entirety to the Company or another Senior Subordinated Note Guarantor. 5. Releases. (a) In the event of a sale or other disposition of all of the assets of any Senior Subordinated Note Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all to the capital stock of any Senior Subordinated Note Guarantor, then such Senior Subordinated Note Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Senior Subordinated Note Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Senior Subordinated Note Guarantor) will be released and relieved of any obligations under its Subordinated Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Senior Subordinated Note Indenture, including without limitation Section 4.10 of the Senior Subordinated Note Indenture. Upon delivery by the Company to the Senior Subordinated Note Trustee of an Officer's Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of the Senior Subordinated Note Indenture, including without limitation Section 4.10 of the Senior Subordinated Note Indenture, the Senior Subordinated Note Trustee shall execute any documents reasonably required in order to evidence the release of any Senior F-4 Subordinated Note Guarantor from its obligations under its Subordinated Subsidiary Guarantee. (b) Any Senior Subordinated Note Guarantor not released from its obligations under its Subordinated Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Senior Subordinated Notes and for the other obligations of any Senior Subordinated Note Guarantor under the Senior Subordinated Note Indenture as provided in Article 11 of the Senior Subordinated Note Indenture. 6. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Senior Subordinated Notes, any Subordinated Subsidiary Guarantees, the Senior Subordinated Note Indenture or this Supplemental Senior Subordinated Note Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Senior Subordinated Notes by accepting a Senior Subordinated Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Senior Subordinated Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL SENIOR SUBORDINATED NOTE INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. Counterparts The parties may sign any number of copies of this Supplemental Senior Subordinated Note Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. The Senior Subordinated Note Trustee. The Senior Subordinated Note Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Senior Subordinated Note Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. F-5 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Senior Subordinated Note Indenture to be duly executed and attested, all as of the date first above written. Dated: ________ __, ____ [Guaranteeing Subsidiary] By: -------------------------------- Name: Title: P&L Coal Holdings Corporation By: -------------------------------- Name: Title: [EXISTING SENIOR SUBORDINATED NOTE GUARANTORS] By: -------------------------------- Name: Title: State Street Bank and Trust Company as Senior Subordinated Note Trustee By: -------------------------------- Name: Title: F-6 Schedule I SCHEDULE OF SENIOR SUBORDINATED NOTE GUARANTORS The following schedule lists each Senior Subordinated Note Guarantor under the Senior Subordinated Note Indenture as of the Issue Date: 1. Arid Operations Inc., a Delaware corporation. 2. Darius Gold Mine, Inc., a Delaware corporation. 3. Gold Fields Chile, S.A., a Delaware corporation. 4. Gold Fields Mining Corporation, a Delaware corporation. 5. Gold Fields Operating Co. - Ortiz, a Delaware corporation. 6. Peabody America, Inc., a Delaware corporation. 7. Peabody Holding Company, Inc., a New York corporation. 8. Affinity Mining Company, a West Virginia corporation. 9. Big Sky Coal Company, a Delaware corporation. 10. Blackrock First Capital Corporation, a West Virginia corporation. 11. Bluegrass Coal Company, a Delaware corporation. 12. Caballo Coal Company, a Delaware corporation. 13. Charles Coal Company, a Delaware corporation. 14. Coal Properties Corp., a Delaware corporation. 15. Cook Mountain Coal Company, a Delaware corporation. 16. Cottonwood Land Company, a Delaware corporation. 17. EACC Camps, Inc., a West Virginia corporation. 18. Eastern Associated Coal Corp, a West Virginia corporation. 19. Eastern Royalty Corp., a Delaware corporation. 20. Grand Eagle Mining, Inc., a Kentucky corporation. 21. Hayden Gulch Terminal, Inc., a Delaware corporation. 22. Independence Material Handling Company, a Delaware corporation. 23. Interior Holdings Corp., a Delaware corporation. 24. James River Coal Terminal Company, a Delaware corporation. 25. Juniper Coal Company, a Delaware corporation. 26. Kayenta Mobile Home Park, Inc., a Delaware corporation. 27. Martinka Coal Company, a Delaware corporation. 28. Midco Supply and Equipment Corporation, an Illinois corporation. 29. Midwest Coal Resources, Inc., a Delaware corporation. 30. Mountain View Coal Company, a Delaware corporation. 31. North Page Coal Corp., a West Virginia corporation. 32. Ohio County Coal Company, a Kentucky corporation. 33. Patriot Coal Company, L.P., a Delaware limited partnership. 34. Peabody COALSALES Company, a Delaware corporation. 35. Peabody COALTRADE, Inc., a Delaware corporation. 36. Peabody Coal Company, a Delaware corporation. 37. Peabody Development Company, a Delaware corporation. 38. Peabody Energy Solutions, Inc., a Delaware corporation. 39. Peabody Natural Resources Company, a Delaware general partnership. 40. Peabody Terminals, Inc., a Delaware corporation. 41. Peabody Venezuela Coal Corp., a Delaware corporation. 42. Peabody Western Coal Company, a Delaware corporation. 43. Pine Ridge Coal Company, a Delaware corporation. 44. Powder River Coal Company, a Delaware corporation. 45. Rio Escondido Coal Corp., a Delaware corporation. 46. Seneca Coal Company, a Delaware corporation. 47. Sentry Mining Company, a Delaware corporation. 48. Snowberry Land Company, a Delaware corporation. 49. Sterling Smokeless Coal Company, a West Virginia corporation. 50. Thoroughbred, L.L.C., a Delaware limited liability company. 51. Colony Bay Coal Company, a West Virginia partnership. EX-4.3 107 1ST SUPP SENIOR NOTE INDEN DTD 5/19/98 AMONG GND EXHIBIT 4.3 FIRST SUPPLEMENTAL SENIOR NOTE INDENTURE FIRST SUPPLEMENTAL SENIOR NOTE INDENTURE (this "SUPPLEMENTAL SENIOR NOTE INDENTURE"), dated as of May 19, 1998, among Arid Operations Inc., a Delaware corporation, Darius Gold Mine, Inc., a Delaware corporation, Colony Bay Coal Company, a West Virginia Partnership, Gold Fields Chile, S.A., a Delaware corporation, Gold Fields Mining Corporation, a Delaware corporation, Gold Fields Operating Co. - Ortiz, a Delaware corporation, Peabody America, Inc., a Delaware corporation, Peabody America, Inc., a Delaware corporation, Peabody Holding Company, Inc., a New York corporation, Affinity Mining Company, a West Virginia corporation, Big Sky Coal Company, a Delaware corporation, Blackrock First Capital Corporation, a West Virginia corporation, Bluegrass Coal Company, a Delaware corporation, Caballo Coal Company, a Delaware corporation, Charles Coal Company, a Delaware corporation, Coal Properties Corp., a Delaware corporation, Cook Mountain Coal Company, a Delaware corporation, Cottonwood Land Company, a Delaware corporation, EACC Camps, Inc., a West Virginia corporation, Eastern Associated Coal Corp., a West Virginia corporation, Eastern Royalty Corp., a Delaware corporation, Grand Eagle Mining, Inc., a Kentucky corporation, Hayden Gulch Terminal, Inc., a Delaware corporation, Independence Material Handling Company, a Delaware corporation, Interior Holdings Corp., a Delaware corporation, James River Coal Terminal Company, a Delaware corporation, Juniper Coal Company, a Delaware corporation, Kayenta Mobile Home Park, Inc., a Delaware corporation, Martinka Coal Company, a Delaware corporation, Midco Supply and Equipment Corporation, an Illinois corporation, Midwest Coal Resources, Inc., a Delaware corporation, Mountain View Coal Company, a Delaware corporation, North Page Coal Corp., a West Virginia corporation, Ohio County Coal Company, a Kentucky corporation, Patriot Coal Company, L.P., a Delaware limited partnership, Peabody COALSALES Company, a Delaware corporation, Peabody COALTRADE, Inc., a Delaware corporation, Peabody Coal Company, a Delaware corporation, Peabody Development Company, a Delaware corporation, Peabody Energy Solutions, Inc., a Delaware corporation, Peabody Natural Resources Company, a Delaware general partnership, Peabody Terminals, Inc., a Delaware corporation, Peabody Venezuela Coal Corp., a Delaware corporation, Peabody Western Coal Company, a Delaware corporation, Pine Ridge Coal Company, a Delaware corporation, Powder River Coal Company, a Delaware corporation, Rio Escondido Coal Corp., a Delaware corporation, Seneca Coal Company, a Delaware corporation, Sentry Mining Company, a Delaware corporation, Snowberry Land Company, a Delaware corporation, Sterling Smokeless Coal Company, a West Virginia corporation, and Thoroughbred, L.L.C., a Delaware limited liability company (the "GUARANTEEING SUBSIDIARY"), a subsidiary of P&L Coal Holdings Corporation (or its permitted successor), a Delaware corporation (the "COMPANY"), the Company, the other Senior Note Guarantors (as defined in the Senior Note Indenture referred to herein) and State Street Bank and Trust Company, as Senior Note Trustee under the Senior Note Indenture referred to below (the "SENIOR NOTE TRUSTEE"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Senior Note Trustee an Senior Note Indenture (the "SENIOR NOTE INDENTURE"), dated as of May 18, 1998 providing for the issuance of an aggregate principal amount of up to $550.0 million of 8-7/8% Senior Notes due 2008 (the "SENIOR NOTES"); WHEREAS, the Senior Note Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Senior Note Trustee a supplemental Senior Note Indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company's Obligations under the Senior Notes and the Senior Note Indenture on the terms and conditions set forth herein (the "SENIOR SUBSIDIARY GUARANTEE"); and WHEREAS, pursuant to Section 9.01 of the Senior Note Indenture, the Senior Note Trustee is authorized to execute and deliver this Supplemental Senior Note Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Senior Note Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Senior Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Senior Note Indenture. 2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as follows: (a) Along with all Senior Note Guarantors named in the Senior Note Indenture, to jointly and severally Guarantee to each Holder of a Senior Note authenticated and delivered by the Senior Note Trustee and to the Senior Note Trustee and its successors and assigns, irrespective of the validity and enforceability of the Senior Note Indenture, the Senior Notes or the obligations of the Company hereunder or thereunder, that: (i) the principal of and interest on the Senior Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Senior Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Senior Note Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Senior Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Senior Note Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Senior Notes or the Senior Note Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Senior Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Senior Note Guarantor. (c) The following is hereby waived: diligence presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever. (d) This Senior Subsidiary Guarantee shall not be discharged except by complete performance of the obligations contained in the Senior Notes and the Senior Note Indenture. (e) If any Holder or the Senior Note Trustee is required by any court or otherwise to return to the Company, the Senior Note Guarantors, or any custodian, Senior Note Trustee, liquidator or other similar official acting in relation to either the Company or the Senior Note Guarantors, any amount paid by either to the Senior Note Trustee or such Holder, this Senior Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Senior Note Guarantors, on the one hand, and the Holders and the Senior Note Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Senior Note Indenture for the purposes of this Senior Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Senior Note Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Senior Note Guarantors for the purpose of this Senior Subsidiary Guarantee. (h) The Senior Note Guarantors shall have the right to seek contribution from any non-paying Senior Note Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Senior Subsidiary Guarantee. (i) Pursuant to Section 10.04 of the Senior Note Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Senior Note Guarantor in respect of the obligations of such other Senior Note Guarantor under Article 10 of the Senior Note Indenture shall result in the obligations of such Senior Note Guarantor under its Senior Subsidiary Guarantee not constituting a fraudulent transfer or conveyance. 3 EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the Senior Subsidiary Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Senior Note a notation of such Senior Subsidiary Guarantee. 4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. (a) The Guaranteeing Subsidiary may not consolidate with or merge with or into (whether or not such Senior Note Guarantor is the surviving Person) another corporation, Person or entity whether or not affiliated with such Senior Note Guarantor unless: (i) subject to Section 10.04 of the Senior Note Indenture, the Person formed by or surviving any such consolidation or merger (if other than a Senior Note Guarantor or the Company) unconditionally assumes all the obligations of such Senior Note Guarantor, pursuant to a supplemental Senior Note Indenture in form and substance reasonably satisfactory to the Senior Note Trustee, under the Senior Notes, the Senior Note Indenture and the Senior Subsidiary Guarantee on the terms set forth herein or therein; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental Senior Note Indenture, executed and delivered to the Senior Note Trustee and satisfactory in form to the Senior Note Trustee, of the Senior Subsidiary Guarantee endorsed upon the Senior Notes and the due and punctual performance of all of the covenants and conditions of the Senior Note Indenture to be performed by the Senior Note Guarantor, such successor corporation shall succeed to and be substituted for the Senior Note Guarantor with the same effect as if it had been named herein as a Senior Note Guarantor. Such successor corporation thereupon may cause to be signed any or all of the Senior Subsidiary Guarantees to be endorsed upon all of the Senior Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Senior Note Trustee. All the Senior Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under the Senior Note Indenture as the Senior Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of the Senior Note Indenture as though all of such Senior Subsidiary Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Senior Note Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Senior Note Indenture or in any of the Senior Notes shall prevent any consolidation or merger of a Senior Note Guarantor with or into the Company or another Senior Note Guarantor, or shall prevent any sale or conveyance of the property of a Senior Note Guarantor as an entirety or substantially as an entirety to the Company or another Senior Note Guarantor. 5. Releases. (a) In the event of a sale or other disposition of all of the assets of any Senior Note Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all to the capital stock of any Senior Note Guarantor, then such Senior Note Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Senior Note Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Senior Note Guarantor) will be released and relieved of any obligations under its Senior Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Senior Note Indenture, including without limitation Section 4.10 of the Senior Note Indenture. Upon delivery by the Company to the Senior Note Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of the Senior Note Indenture, including without limitation Section 4.10 of the Senior Note Indenture, the Senior Note Trustee shall execute any documents reasonably required in order to evidence the release of any Senior Note Guarantor from its obligations under its Senior Subsidiary Guarantee. (b) Any Senior Note Guarantor not released from its obligations under its Senior Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Senior Notes and for the other obligations of any Senior Note Guarantor under the Senior Note Indenture as provided in Article 10 of the Senior Note Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Senior Notes, any Senior Subsidiary Guarantees, the Senior Note Indenture or this Supplemental Senior Note Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Senior Notes by accepting a Senior Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Senior Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL SENIOR NOTE INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS The parties may sign any number of copies of this Supplemental Senior Note Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10 THE SENIOR NOTE TRUSTEE. The Senior Note Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Senior Note Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Senior Note Indenture to be duly executed and attested, all as of the date first above written. Dated: May 19, 1998 ARID OPERATIONS, INC. By: /s/ Christopher G. Farrand ----------------------------------- Name: Christopher G. Farrand Title: Vice President DARIUS GOLD MINE, INC. By: /s/ Christopher G. Farrand ----------------------------------- Name: Christopher G. Farrand Title: Vice President COLONY BAY COAL COMPANY By: Charles Coal Company By: /s/ Christopher G. Farrand ----------------------------------- Name: Christopher G. Farrand Title: Vice President GOLD FIELDS CHILE, S.A. By: /s/ Christopher G. Farrand ----------------------------------- Name: Christopher G. Farrand Title: Vice President GOLD FIELDS MINING CORPORATION By: /s/ Christopher G. Farrand ----------------------------------- Name: Christopher G. Farrand Title: Vice President GOLD FIELDS OPERATING CO.-ORTIZ By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY AMERICA, INC. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY HOLDING COMPANY, INC. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President AFFINITY MINING COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President BIG SKY COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President BLACKROCK FIRST CAPITAL CORPORATION By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President BLUEGRASS COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President CABALLO COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President CHARLES COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President COAL PROPERTIES CORP. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President COOK MOUNTAIN COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President COTTONWOOD LAND COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President EACC CAMPS, INC. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President EASTERN ASSOCIATED COAL CORP By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President EASTERN ROYALTY CORP. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President GRAND EAGLE MINING, INC. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President HAYDEN GULCH TERMINAL, INC. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President INDEPENDENCE MATERIAL HANDLING COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President INTERIOR HOLDINGS CORP. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President JAMES RIVER COAL TERMINAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President JUNIPER COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President KAYENTA MOBILE HOME PARK, INC. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President MARTINKA COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President MIDCO SUPPLY AND EQUIPMENT CORPORATION By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President MIDWEST COAL RESOURCES, INC. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President MOUNTAIN VIEW COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President NORTH PAGE COAL CORP. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President OHIO COUNTY COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PATRIOT COAL COMPANY L.P. By: Bluegrass Coal Company By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY COALSALES COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY COALTRADE, INC. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY DEVELOPMENT COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY ENERGY SOLUTIONS, INC. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY NATURAL RESOURCES COMPANY By: Gold Fields Mining Corp. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY TERMINALS, INC. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY VENEZUELA COAL CORP. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY WESTERN COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PINE RIDGE COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President POWDER RIVER COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President RIO ESCONDIDO COAL CORP. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President SENECA COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President SENTRY MINING COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President SNOWBERRY LAND COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President STERLING SMOKELESS COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President THOROUGHBRED, L.L.C. By: Peabody Holding Company By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President P&L COAL HOLDINGS CORPORATION By: /s/ Felix Herlihy ---------------------------------- Name: Felix Herlihy Title: Vice President, Treasurer and Assistant Secretary STATE STREET BANK AND TRUST COMPANY as Senior Note Trustee By: /s/ Philip G. Kane Jr. ---------------------------------- Name: Philip G. Kane Jr. Title: Vice President SCHEDULE I SCHEDULE OF SENIOR NOTE GUARANTORS The following schedule lists each Senior Note Guarantor under the Senior Note Indenture as of May 19, 1998: Arid Operations Inc., a Delaware corporation. Darius Gold Mine, Inc., a Delaware corporation. 1. Gold Fields Chile, S.A., a Delaware corporation. Gold Fields Mining Corporation, a Delaware corporation. 2. Gold Fields Operating Co.- Ortiz, a Delaware corporation. 3. Peabody America, Inc., a Delaware corporation. 4. Peabody Holding Company, Inc., a New York corporation. 5. Affinity Mining Company, a West Virginia corporation. 6. Big Sky Coal Company, a Delaware corporation. 7. Blackrock First Capital Corporation, a West Virginia corporation. 8. Bluegrass Coal Company, a Delaware corporation. 9. Caballo Coal Company, a Delaware corporation. 10.Charles Coal Company, a Delaware corporation. 11.Coal Properties Corp., a Delaware corporation. 12.Cook Mountain Coal Company, a Delaware corporation. 13.Cottonwood Land Company, a Delaware corporation. 14.EACC Camps, Inc., a West Virginia corporation. 15.Eastern Associated Coal Corp, a West Virginia corporation. 16.Eastern Royalty Corp., a Delaware corporation. 17.Grand Eagle Mining, Inc., a Kentucky corporation. 18.Hayden Gulch Terminal, Inc., a Delaware corporation. 19.Independence Material Handling Company, a Delaware corporation. 20.Interior Holdings Corp., a Delaware corporation. 21.James River Coal Terminal Company, a Delaware corporation. 22.Juniper Coal Company, a Delaware corporation. 23.Kayenta Mobile Home Park, Inc., a Delaware corporation. 24.Martinka Coal Company, a Delaware corporation. 25.Midco Supply and Equipment Corporation, an Illinois corporation. 26.Midwest Coal Resources, Inc., a Delaware corporation. 27.Mountain View Coal Company, a Delaware corporation. 28.North Page Coal Corp., a West Virginia corporation. 29.Ohio County Coal Company, a Kentucky corporation. 30.Patriot Coal Company, L.P., a Delaware limited partnership. 31.Peabody COALSALES Company, a Delaware corporation. 32.Peabody COALTRADE, Inc., a Delaware corporation. 33.Peabody Coal Company, a Delaware corporation. 34.Peabody Development Company, a Delaware corporation. 35.Peabody Energy Solutions, Inc., a Delaware corporation. 36.Peabody Natural Resources Company, a Delaware general partnership. 37.Peabody Terminals, Inc., a Delaware corporation. 38.Peabody Venezuela Coal Corp., a Delaware corporation. 39.Peabody Western Coal Company, a Delaware corporation. 40.Pine Ridge Coal Company, a Delaware corporation. 41.Powder River Coal Company, a Delaware corporation. 42.Rio Escondido Coal Corp., a Delaware corporation. 43.Seneca Coal Company, a Delaware corporation. 44.Sentry Mining Company, a Delaware corporation. 45.Snowberry Land Company, a Delaware corporation. 46.Sterling Smokeless Coal Company, a West Virginia corporation. 47.Thoroughbred, L.L.C., a Delaware limited liability company. 48.Colony Bay Coal Company, a West Virginia partnership EX-4.4 108 1ST SUPP SENIOR SUBORDINATED NOTE INDEN 5/19/98 EXHIBIT 4.4 FIRST SUPPLEMENTAL SENIOR SUBORDINATED NOTE INDENTURE FIRST SUPPLEMENTAL SENIOR SUBORDINATED NOTE INDENTURE (this "SUPPLEMENTAL SENIOR SUBORDINATED NOTE INDENTURE"), dated as of May 19, 1998, among Arid Operations Inc., a Delaware corporation, Darius Gold Mine, Inc., a Delaware corporation, Colony Bay Coal Company, a West Virginia partnership, Gold Fields Chile, S.A., a Delaware corporation, Gold Fields Mining Corporation, a Delaware corporation, Gold Fields Operating Co. - Ortiz, a Delaware corporation, Peabody America, Inc., a Delaware corporation, Peabody America, Inc., a Delaware corporation, Peabody Holding Company, Inc., a New York corporation, Affinity Mining Company, a West Virginia corporation, Big Sky Coal Company, a Delaware corporation, Blackrock First Capital Corporation, a West Virginia corporation, Bluegrass Coal Company, a Delaware corporation, Caballo Coal Company, a Delaware corporation, Charles Coal Company, a Delaware corporation, Coal Properties Corp., a Delaware corporation, Cook Mountain Coal Company, a Delaware corporation, Cottonwood Land Company, a Delaware corporation, EACC Camps, Inc., a West Virginia corporation, Eastern Associated Coal Corp., a West Virginia corporation, Eastern Royalty Corp., a Delaware corporation, Grand Eagle Mining, Inc., a Kentucky corporation, Hayden Gulch Terminal, Inc., a Delaware corporation, Independence Material Handling Company, a Delaware corporation, Interior Holdings Corp., a Delaware corporation, James River Coal Terminal Company, a Delaware corporation, Juniper Coal Company, a Delaware corporation, Kayenta Mobile Home Park, Inc., a Delaware corporation, Martinka Coal Company, a Delaware corporation, Midco Supply and Equipment Corporation, an Illinois corporation, Midwest Coal Resources, Inc., a Delaware corporation, Mountain View Coal Company, a Delaware corporation, North Page Coal Corp., a West Virginia corporation, Ohio County Coal Company, a Kentucky corporation, Patriot Coal Company, L.P., a Delaware limited partnership, Peabody COALSALES Company, a Delaware corporation, Peabody COALTRADE, Inc., a Delaware corporation, Peabody Coal Company, a Delaware corporation, Peabody Development Company, a Delaware corporation, Peabody Energy Solutions, Inc., a Delaware corporation, Peabody Natural Resources Company, a Delaware general partnership, Peabody Terminals, Inc., a Delaware corporation, Peabody Venezuela Coal Corp., a Delaware corporation, Peabody Western Coal Company, a Delaware corporation, Pine Ridge Coal Company, a Delaware corporation, Powder River Coal Company, a Delaware corporation, Rio Escondido Coal Corp., a Delaware corporation, Seneca Coal Company, a Delaware corporation, Sentry Mining Company, a Delaware corporation, Snowberry Land Company, a Delaware corporation, Sterling Smokeless Coal Company, a West Virginia corporation, and Thoroughbred, L.L.C., a Delaware limited liability company (the "GUARANTEEING SUBSIDIARY"), a subsidiary of P&L Coal Holdings Corporation (or its permitted successor), a Delaware corporation (the "COMPANY"), the Company, the other Senior Subordinated Note Guarantors (as defined in the Senior Subordinated Note Indenture referred to herein) and State Street Bank and Trust Company, as Senior Subordinated Note Trustee under the Senior Subordinated Note Indenture referred to below (the "SENIOR SUBORDINATED NOTE TRUSTEE"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Senior Subordinated Note Trustee an Senior Subordinated Note Indenture (the "SENIOR SUBORDINATED NOTE INDENTURE"), dated as of May 18, 1998 providing for the issuance of an aggregate principal amount of up to $650.0 million of 9-5/8% Senior Subordinated Notes due 2008 (the "SENIOR SUBORDINATED NOTES"); WHEREAS, the Senior Subordinated Note Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Senior Subordinated Note Trustee a supplemental Senior Subordinated Note Indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company's Obligations under the Senior Subordinated Notes and the Senior Subordinated Note Indenture on the terms and conditions set forth herein (the "SUBORDINATED SUBSIDIARY GUARANTEE"); and WHEREAS, pursuant to Section 9.01 of the Senior Subordinated Note Indenture, the Senior Subordinated Note Trustee is authorized to execute and deliver this Supplemental Senior Subordinated Note Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Senior Subordinated Note Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Senior Subordinated Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Senior Subordinated Note Indenture. 2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as follows: (a) Along with all Senior Subordinated Note Guarantors named in the Senior Subordinated Note Indenture, to jointly and severally Guarantee to each Holder of a Senior Subordinated Note authenticated and delivered by the Senior Subordinated Note Trustee and to the Senior Subordinated Note Trustee and its successors and assigns, irrespective of the validity and enforceability of the Senior Subordinated Note Indenture, the Senior Subordinated Notes or the obligations of the Company hereunder or thereunder, that: (i) the principal of and interest on the Senior Subordinated Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Senior Subordinated Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Senior Subordinated Note Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Senior Subordinated Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Senior Subordinated Note Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Senior Subordinated Notes or the Senior Subordinated Note Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Senior Subordinated Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Senior Subordinated Note Guarantor. (c) The following is hereby waived: diligence presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever. (d) This Subordinated Subsidiary Guarantee shall not be discharged except by complete performance of the obligations contained in the Senior Subordinated Notes and the Senior Subordinated Note Indenture. (e) If any Holder or the Senior Subordinated Note Trustee is required by any court or otherwise to return to the Company, the Senior Subordinated Note Guarantors, or any custodian, Senior Subordinated Note Trustee, liquidator or other similar official acting in relation to either the Company or the Senior Subordinated Note Guarantors, any amount paid by either to the Senior Subordinated Note Trustee or such Holder, this Subordinated Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Senior Subordinated Note Guarantors, on the one hand, and the Holders and the Senior Subordinated Note Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Senior Subordinated Note Indenture for the purposes of this Subordinated Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Senior Subordinated Note Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Senior Subordinated Note Guarantors for the purpose of this Subordinated Subsidiary Guarantee. (h) The Senior Subordinated Note Guarantors shall have the right to seek contribution from any non-paying Senior Subordinated Note Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subordinated Subsidiary Guarantee. (i) Pursuant to Section 11.02 of the Senior Subordinated Note Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Senior Subordinated Note Guarantor in respect of the obligations of such other Senior Subordinated Note Guarantor under Article 11 of the Senior Subordinated Note Indenture shall result in the obligations of such Senior Subordinated Note Guarantor under its Subordinated Subsidiary Guarantee not constituting a fraudulent transfer or conveyance. 3 EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the Subordinated Subsidiary Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Senior Subordinated Note a notation of such Subordinated Subsidiary Guarantee. 4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. (a) The Guaranteeing Subsidiary may not consolidate with or merge with or into (whether or not such Senior Subordinated Note Guarantor is the surviving Person) another corporation, Person or entity whether or not affiliated with such Senior Subordinated Note Guarantor unless: (i) subject to Section 11.05 of the Senior Subordinated Note Indenture, the Person formed by or surviving any such consolidation or merger (if other than a Senior Subordinated Note Guarantor or the Company) unconditionally assumes all the obligations of such Senior Subordinated Note Guarantor, pursuant to a supplemental Senior Subordinated Note Indenture in form and substance reasonably satisfactory to the Senior Subordinated Note Trustee, under the Senior Subordinated Notes, the Senior Subordinated Note Indenture and the Subordinated Subsidiary Guarantee on the terms set forth herein or therein; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental Senior Subordinated Note Indenture, executed and delivered to the Senior Subordinated Note Trustee and satisfactory in form to the Senior Subordinated Note Trustee, of the Subordinated Subsidiary Guarantee endorsed upon the Senior Subordinated Notes and the due and punctual performance of all of the covenants and conditions of the Senior Subordinated Note Indenture to be performed by the Senior Subordinated Note Guarantor, such successor corporation shall succeed to and be substituted for the Senior Subordinated Note Guarantor with the same effect as if it had been named herein as a Senior Subordinated Note Guarantor. Such successor corporation thereupon may cause to be signed any or all of the Subordinated Subsidiary Guarantees to be endorsed upon all of the Senior Subordinated Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Senior Subordinated Note Trustee. All the Subordinated Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under the Senior Subordinated Note Indenture as the Subordinated Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of the Senior Subordinated Note Indenture as though all of such Subordinated Subsidiary Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Senior Subordinated Note Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Senior Subordinated Note Indenture or in any of the Senior Subordinated Notes shall prevent any consolidation or merger of a Senior Subordinated Note Guarantor with or into the Company or another Senior Subordinated Note Guarantor, or shall prevent any sale or conveyance of the property of a Senior Subordinated Note Guarantor as an entirety or substantially as an entirety to the Company or another Senior Subordinated Note Guarantor. 5. Releases. (a) In the event of a sale or other disposition of all of the assets of any Senior Subordinated Note Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all to the capital stock of any Senior Subordinated Note Guarantor, then such Senior Subordinated Note Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Senior Subordinated Note Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Senior Subordinated Note Guarantor) will be released and relieved of any obligations under its Subordinated Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Senior Subordinated Note Indenture, including without limitation Section 4.10 of the Senior Subordinated Note Indenture. Upon delivery by the Company to the Senior Subordinated Note Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of the Senior Subordinated Note Indenture, including without limitation Section 4.10 of the Senior Subordinated Note Indenture, the Senior Subordinated Note Trustee shall execute any documents reasonably required in order to evidence the release of any Senior Subordinated Note Guarantor from its obligations under its Subordinated Subsidiary Guarantee. (b) Any Senior Subordinated Note Guarantor not released from its obligations under its Subordinated Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Senior Subordinated Notes and for the other obligations of any Senior Subordinated Note Guarantor under the Senior Subordinated Note Indenture as provided in Article 11 of the Senior Subordinated Note Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Senior Subordinated Notes, any Subordinated Subsidiary Guarantees, the Senior Subordinated Note Indenture or this Supplemental Senior Subordinated Note Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Senior Subordinated Notes by accepting a Senior Subordinated Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Senior Subordinated Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL SENIOR SUBORDINATED NOTE INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS The parties may sign any number of copies of this Supplemental Senior Subordinated Note Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10 THE SENIOR SUBORDINATED NOTE TRUSTEE. The Senior Subordinated Note Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Senior Subordinated Note Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Senior Subordinated Note Indenture to be duly executed and attested, all as of the date first above written. Dated: May 19, 1998 ARID OPERATIONS, INC. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President DARIUS GOLD MINE, INC. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President COLONY BAY COAL COMPANY By: Charles Coal Company By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President GOLD FIELDS CHILE, S.A. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President GOLD FIELDS MINING CORPORATION By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President GOLD FIELDS OPERATING CO.-ORTIZ By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President PEABODY AMERICA, INC. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President PEABODY HOLDING COMPANY, INC. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President AFFINITY MINING COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President BIG SKY COAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President BLACKROCK FIRST CAPITAL CORPORATION By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President BLUEGRASS COAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President CABALLO COAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President CHARLES COAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President COAL PROPERTIES CORP. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President COOK MOUNTAIN COAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President COTTONWOOD LAND COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President EACC CAMPS, INC. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President EASTERN ASSOCIATED COAL CORP By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President EASTERN ROYALTY CORP. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President GRAND EAGLE MINING, INC. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President HAYDEN GULCH TERMINAL, INC. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President INDEPENDENCE MATERIAL HANDLING COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President INTERIOR HOLDINGS CORP. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President JAMES RIVER COAL TERMINAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President JUNIPER COAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President KAYENTA MOBILE HOME PARK, INC. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President MARTINKA COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President MIDCO SUPPLY AND EQUIPMENT CORPORATION By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President MIDWEST COAL RESOURCES, INC. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President MOUNTAIN VIEW COAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President NORTH PAGE COAL CORP. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President OHIO COUNTY COAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President PATRIOT COAL COMPANY L.P. By: Bluegrass Coal Company By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY COALSALES COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY COALTRADE, INC. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President PEABODY COAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President PEABODY DEVELOPMENT COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President PEABODY ENERGY SOLUTIONS, INC. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President PEABODY NATURAL RESOURCES COMPANY By: Gold Fields Mining Corp. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY TERMINALS, INC. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President PEABODY VENEZUELA COAL CORP. By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President PEABODY WESTERN COAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President PINE RIDGE COAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President POWDER RIVER COAL COMPANY By: /s/ Christopher G. Farrand --------------------------------------- Name: Christopher G. Farrand Title: Vice President RIO ESCONDIDO COAL CORP. By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President SENECA COAL COMPANY By: /s/ Christopher G. Farrand ------------------------------------ Name: Christopher G. Farrand Title: Vice President SENTRY MINING COMPANY By: /s/ James C. Sevem ------------------------------------ Name: James C. Sevem Title: Vice President SNOWBERRY LAND COMPANY By: /s/ James C. Sevem ------------------------------------ Name: James C. Sevem Title: Vice President STERLING SMOKELESS COAL COMPANY By: /s/ James C. Sevem ------------------------------------ Name: James C. Sevem Title: Vice President THOROUGHBRED, L.L.C. By: Peabody Holding Company By: /s/ James C. Sevem ------------------------------------ Name: James C. Sevem Title: Vice President P&L COAL HOLDINGS CORPORATION By: /s/ Felix Herlihy ------------------------------------ Name: Felix Herlihy Title: Vice President, Treasurer and Assistant Secretary STATE STREET BANK AND TRUST COMPANY as Senior Subordinated Note Trustee By: /s/ Philip G. Kane, Jr. ------------------------------------ Name: Philip G. Kane, Jr. Title: Vice President SCHEDULE I SCHEDULE OF SENIOR NOTE GUARANTORS The following schedule lists each Senior Note Guarantor under the Senior Note Indenture as of May 19, 1998: Arid Operations Inc., a Delaware corporation. Darius Gold Mine, Inc., a Delaware corporation. 1. Gold Fields Chile, S.A., a Delaware corporation. Gold Fields Mining Corporation, a Delaware corporation. 2. Gold Fields Operating Co.- Ortiz, a Delaware corporation. 3. Peabody America, Inc., a Delaware corporation. 4. Peabody Holding Company, Inc., a New York corporation. 5. Affinity Mining Company, a West Virginia corporation. 6. Big Sky Coal Company, a Delaware corporation. 7. Blackrock First Capital Corporation, a West Virginia corporation. 8. Bluegrass Coal Company, a Delaware corporation. 9. Caballo Coal Company, a Delaware corporation. 10.Charles Coal Company, a Delaware corporation. 11.Coal Properties Corp., a Delaware corporation. 12.Cook Mountain Coal Company, a Delaware corporation. 13.Cottonwood Land Company, a Delaware corporation. 14.EACC Camps, Inc., a West Virginia corporation. 15.Eastern Associated Coal Corp, a West Virginia corporation. 16.Eastern Royalty Corp., a Delaware corporation. 17.Grand Eagle Mining, Inc., a Kentucky corporation. 18.Hayden Gulch Terminal, Inc., a Delaware corporation. 19.Independence Material Handling Company, a Delaware corporation. 20.Interior Holdings Corp., a Delaware corporation. 21.James River Coal Terminal Company, a Delaware corporation. 22.Juniper Coal Company, a Delaware corporation. 23.Kayenta Mobile Home Park, Inc., a Delaware corporation. 24.Martinka Coal Company, a Delaware corporation. 25.Midco Supply and Equipment Corporation, an Illinois corporation. 26.Midwest Coal Resources, Inc., a Delaware corporation. 27.Mountain View Coal Company, a Delaware corporation. 28.North Page Coal Corp., a West Virginia corporation. 29.Ohio County Coal Company, a Kentucky corporation. 30.Patriot Coal Company, L.P., a Delaware limited partnership. 31.Peabody COALSALES Company, a Delaware corporation. 32.Peabody COALTRADE, Inc., a Delaware corporation. 33.Peabody Coal Company, a Delaware corporation. 34.Peabody Development Company, a Delaware corporation. 35.Peabody Energy Solutions, Inc., a Delaware corporation. 36.Peabody Natural Resources Company, a Delaware general partnership. 37.Peabody Terminals, Inc., a Delaware corporation. 38.Peabody Venezuela Coal Corp., a Delaware corporation. 39.Peabody Western Coal Company, a Delaware corporation. 40.Pine Ridge Coal Company, a Delaware corporation. 41.Powder River Coal Company, a Delaware corporation. 42.Rio Escondido Coal Corp., a Delaware corporation. 43.Seneca Coal Company, a Delaware corporation. 44.Sentry Mining Company, a Delaware corporation. 45.Snowberry Land Company, a Delaware corporation. 46.Sterling Smokeless Coal Company, a West Virginia corporation. 47.Thoroughbred, L.L.C., a Delaware limited liability company. 48.Colony Bay Coal Company, a West Virginia partnership EX-4.5 109 NOTATION OF SENIOR SUBSIDIARY GUARANTEE 5/19/98 EXHIBIT 4.5 NOTATION OF SENIOR SUBSIDIARY GUARANTEE For value received, each Senior Note Guarantor (which term includes any successor Person under the Senior Note Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the Senior Note Indenture and subject to the provisions in the Senior Note Indenture dated as of May 19, 1998 (the "SUPPLEMENTAL SENIOR NOTE INDENTURE") among P&L Coal Holdings Corporation, the Senior Note Guarantors listed on Schedule I thereto and State Street Bank and Trust Company, as Senior Note Trustee (the "SENIOR NOTE TRUSTEE"), (a) the due and punctual payment of the principal of, premium, if any, and interest on the Senior Notes (as defined in the Senior Note Indenture), whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal and premium, and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Company to the Holders or the Senior Note Trustee all in accordance with the terms of the Senior Note Indenture and (b) in case of any extension of time of payment or renewal of any Senior Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Senior Note Guarantors to the Holders of Senior Notes and to the Senior Note Trustee pursuant to the Senior Subsidiary Guarantee and the Senior Note Indenture are expressly set forth in Article 10 of the Senior Note Indenture and reference is hereby made to the Senior Note Indenture for the precise terms of the Senior Subsidiary Guarantee. Each Holder of a Senior Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Senior Note Trustee, on behalf of such Holder, to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Senior Note Indenture and (c) appoints the Senior Note Trustee attorney-in-fact of such Holder for such purpose; provided, however, that the Indebtedness evidenced by this Senior Subsidiary Guarantee shall cease to be so subordinated and subject in right of payment upon any defeasance of this Senior Note in accordance with the provisions of the Senior Note Indenture. (Signatures on following page) ARID OPERATIONS, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President DARIUS GOLD MINE, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President COLONY BAY COAL COMPANY By: Charles Coal Company By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President GOLD FIELDS CHILE, S.A. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President GOLD FIELDS MINING CORPORATION By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President GOLD FIELDS OPERATING CO.-ORTIZ By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY AMERICA, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY HOLDING COMPANY, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President AFFINITY MINING COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President BIG SKY COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President BLACKROCK FIRST CAPITAL CORPORATION By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President BLUEGRASS COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President CABALLO COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President CHARLES COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President COAL PROPERTIES CORP. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President COOK MOUNTAIN COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President COTTONWOOD LAND COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President EACC CAMPS, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President EASTERN ASSOCIATED COAL CORP By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President EASTERN ROYALTY CORP. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President GRAND EAGLE MINING, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President HAYDEN GULCH TERMINAL, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President INDEPENDENCE MATERIAL HANDLING COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President INTERIOR HOLDINGS CORP. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President JAMES RIVER COAL TERMINAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President JUNIPER COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President KAYENTA MOBILE HOME PARK, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President MARTINKA COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President MIDCO SUPPLY AND EQUIPMENT CORPORATION By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President MIDWEST COAL RESOURCES, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President MOUNTAIN VIEW COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President NORTH PAGE COAL CORP. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President OHIO COUNTY COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PATRIOT COAL COMPANY L.P. By: Bluegrass Coal Company By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY COALSALES COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY COALTRADE, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY DEVELOPMENT COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY ENERGY SOLUTIONS, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY NATURAL RESOURCES COMPANY By: Gold Fields Mining Corp. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY TERMINALS, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY VENEZUELA COAL CORP. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY WESTERN COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PINE RIDGE COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President POWDER RIVER COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President RIO ESCONDIDO COAL CORP. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President SENECA COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President SENTRY MINING COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President SNOWBERRY LAND COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President STERLING SMOKELESS COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President THOROUGHBRED, L.L.C. By: Peabody Holding Company By: /s/ Christopher G. Farrand --------------------------------- Name: Christopher G. Farrand Title: Vice President P & L COAL HOLDINGS CORPORATION By: /s/ Felix Herlihy --------------------------------- Name: Felix Herlihy Title: Vice President, Treasurer and Assistant Secretary STATE STREET BANK AND TRUST COMPANY as Senior Note Trustee By: /s/ Philip G. Kane, Jr. --------------------------------- Name: Philip G. Kane, Jr. Title: Vice President SCHEDULE I SCHEDULE OF SENIOR NOTE GUARANTORS The following schedule lists each Senior Note Guarantor under the Senior Note Indenture as of May 19, 1998: Arid Operations Inc., a Delaware corporation. Darius Gold Mine, Inc., a Delaware corporation. 1. Gold Fields Chile, S.A., a Delaware corporation. Gold Fields Mining Corporation, a Delaware corporation. 2. Gold Fields Operating Co.- Ortiz, a Delaware corporation. 3. Peabody America, Inc., a Delaware corporation. 4. Peabody Holding Company, Inc., a New York corporation. 5. Affinity Mining Company, a West Virginia corporation. 6. Big Sky Coal Company, a Delaware corporation. 7. Blackrock First Capital Corporation, a West Virginia corporation. 8. Bluegrass Coal Company, a Delaware corporation. 9. Caballo Coal Company, a Delaware corporation. 10.Charles Coal Company, a Delaware corporation. 11.Coal Properties Corp., a Delaware corporation. 12.Cook Mountain Coal Company, a Delaware corporation. 13.Cottonwood Land Company, a Delaware corporation. 14.EACC Camps, Inc., a West Virginia corporation. 15.Eastern Associated Coal Corp, a West Virginia corporation. 16.Eastern Royalty Corp., a Delaware corporation. 17.Grand Eagle Mining, Inc., a Kentucky corporation. 18.Hayden Gulch Terminal, Inc., a Delaware corporation. 19.Independence Material Handling Company, a Delaware corporation. 20.Interior Holdings Corp., a Delaware corporation. 21.James River Coal Terminal Company, a Delaware corporation. 22.Juniper Coal Company, a Delaware corporation. 23.Kayenta Mobile Home Park, Inc., a Delaware corporation. 24.Martinka Coal Company, a Delaware corporation. 25.Midco Supply and Equipment Corporation, an Illinois corporation. 26.Midwest Coal Resources, Inc., a Delaware corporation. 27.Mountain View Coal Company, a Delaware corporation. 28.North Page Coal Corp., a West Virginia corporation. 29.Ohio County Coal Company, a Kentucky corporation. 30.Patriot Coal Company, L.P., a Delaware limited partnership. 31.Peabody COALSALES Company, a Delaware corporation. 32.Peabody COALTRADE, Inc., a Delaware corporation. 33.Peabody Coal Company, a Delaware corporation. 34.Peabody Development Company, a Delaware corporation. 35.Peabody Energy Solutions, Inc., a Delaware corporation. 36.Peabody Natural Resources Company, a Delaware general partnership. 37.Peabody Terminals, Inc., a Delaware corporation. 38.Peabody Venezuela Coal Corp., a Delaware corporation. 39.Peabody Western Coal Company, a Delaware corporation. 40.Pine Ridge Coal Company, a Delaware corporation. 41.Powder River Coal Company, a Delaware corporation. 42.Rio Escondido Coal Corp., a Delaware corporation. 43.Seneca Coal Company, a Delaware corporation. 44.Sentry Mining Company, a Delaware corporation. 45.Snowberry Land Company, a Delaware corporation. 46.Sterling Smokeless Coal Company, a West Virginia corporation. 47.Thoroughbred, L.L.C., a Delaware limited liability company. 48.Colony Bay Coal Company, a West Virginia partnership EX-4.6 110 NOTATION SUBORDINATED SUBSIDIARY GUARANTEE 5/19 EXHIBIT 4.6 NOTATION OF SUBORDINATED SUBSIDIARY GUARANTEE For value received, each Senior Subordinated Note Guarantor (which term includes any successor Person under the Senior Subordinated Note Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the Senior Subordinated Note Indenture and subject to the provisions in the Senior Subordinated Note Indenture dated as of May 19, 1998 (the "SUPPLEMENTAL SENIOR SUBORDINATED NOTE INDENTURE") among P&L Coal Holdings Corporation, the Senior Subordinated Note Guarantors listed on Schedule I thereto and State Street Bank and Trust Company, as Senior Subordinated Note Trustee (the "SENIOR SUBORDINATED NOTE TRUSTEE"), (a) the due and punctual payment of the principal of, premium, if any, and interest on the Senior Subordinated Notes (as defined in the Senior Subordinated Note Indenture), whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal and premium, and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Company to the Holders or the Senior Subordinated Note Trustee all in accordance with the terms of the Senior Subordinated Note Indenture and (b) in case of any extension of time of payment or renewal of any Senior Subordinated Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Senior Subordinated Note Guarantors to the Holders of Senior Subordinated Notes and to the Senior Subordinated Note Trustee pursuant to the Subordinated Subsidiary Guarantee and the Senior Subordinated Note Indenture are expressly set forth in Article 11 of the Senior Subordinated Note Indenture and reference is hereby made to the Senior Subordinated Note Indenture for the precise terms of the Subordinated Subsidiary Guarantee. Each Holder of a Senior Subordinated Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Senior Subordinated Note Trustee, on behalf of such Holder, to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Senior Subordinated Note Indenture and (c) appoints the Senior Subordinated Note Trustee attorney-in-fact of such Holder for such purpose; provided, however, that the Indebtedness evidenced by this Subordinated Subsidiary Guarantee shall cease to be so subordinated and subject in right of payment upon any defeasance of this Senior Subordinated Note in accordance with the provisions of the Senior Subordinated Note Indenture. (Signature on following page) ARID OPERATIONS, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President DARIUS GOLD MINE, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President COLONY BAY COAL COMPANY By: Charles Coal Company By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President GOLD FIELDS CHILE, S.A. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President GOLD FIELDS MINING CORPORATION By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President GOLD FIELDS OPERATING CO.-ORTIZ By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY AMERICA, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY HOLDING COMPANY, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President AFFINITY MINING COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President BIG SKY COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President BLACKROCK FIRST CAPITAL CORPORATION By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President BLUEGRASS COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President CABALLO COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President CHARLES COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President COAL PROPERTIES CORP. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President COOK MOUNTAIN COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President COTTONWOOD LAND COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President EACC CAMPS, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President EASTERN ASSOCIATED COAL CORP By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President EASTERN ROYALTY CORP. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President GRAND EAGLE MINING, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President HAYDEN GULCH TERMINAL, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President INDEPENDENCE MATERIAL HANDLING COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President INTERIOR HOLDINGS CORP. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President JAMES RIVER COAL TERMINAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President JUNIPER COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President KAYENTA MOBILE HOME PARK, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President MARTINKA COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President MIDCO SUPPLY AND EQUIPMENT CORPORATION By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President MIDWEST COAL RESOURCES, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President MOUNTAIN VIEW COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President NORTH PAGE COAL CORP. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President OHIO COUNTY COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PATRIOT COAL COMPANY L.P. By: Bluegrass Coal Company By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY COALSALES COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY COALTRADE, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY DEVELOPMENT COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY ENERGY SOLUTIONS, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY NATURAL RESOURCES COMPANY By: Gold Fields Mining Corp. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY TERMINALS, INC. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY VENEZUELA COAL CORP. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PEABODY WESTERN COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President PINE RIDGE COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President POWDER RIVER COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President RIO ESCONDIDO COAL CORP. By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President SENECA COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President SENTRY MINING COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President SNOWBERRY LAND COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President STERLING SMOKELESS COAL COMPANY By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President THOROUGHBRED, L.L.C. By: Peabody Holding Company By: /s/ James C. Sevem --------------------------------- Name: James C. Sevem Title: Vice President P&L COAL HOLDINGS CORPORATION By: /s/ Felix Herlihy --------------------------------- Name: Felix Helihy Title: Vice President, Treasurer and Assistant Secretary STATE STREET BANK AND TRUST COMPANY as Senior Subordinated Note Trustee By: /s/ Philip G. Kane, Jr. --------------------------------- Name: Philip G. Kane, Jr. Title: Vice President SCHEDULE I SCHEDULE OF SENIOR NOTE GUARANTORS The following schedule lists each Senior Note Guarantor under the Senior Note Indenture as of May 19, 1998: Arid Operations Inc., a Delaware corporation. Darius Gold Mine, Inc., a Delaware corporation. 1. Gold Fields Chile, S.A., a Delaware corporation. Gold Fields Mining Corporation, a Delaware corporation. 2. Gold Fields Operating Co.- Ortiz, a Delaware corporation. 3. Peabody America, Inc., a Delaware corporation. 4. Peabody Holding Company, Inc., a New York corporation. 5. Affinity Mining Company, a West Virginia corporation. 6. Big Sky Coal Company, a Delaware corporation. 7. Blackrock First Capital Corporation, a West Virginia corporation. 8. Bluegrass Coal Company, a Delaware corporation. 9. Caballo Coal Company, a Delaware corporation. 10.Charles Coal Company, a Delaware corporation. 11.Coal Properties Corp., a Delaware corporation. 12.Cook Mountain Coal Company, a Delaware corporation. 13.Cottonwood Land Company, a Delaware corporation. 14.EACC Camps, Inc., a West Virginia corporation. 15.Eastern Associated Coal Corp, a West Virginia corporation. 16.Eastern Royalty Corp., a Delaware corporation. 17.Grand Eagle Mining, Inc., a Kentucky corporation. 18.Hayden Gulch Terminal, Inc., a Delaware corporation. 19.Independence Material Handling Company, a Delaware corporation. 20.Interior Holdings Corp., a Delaware corporation. 21.James River Coal Terminal Company, a Delaware corporation. 22.Juniper Coal Company, a Delaware corporation. 23.Kayenta Mobile Home Park, Inc., a Delaware corporation. 24.Martinka Coal Company, a Delaware corporation. 25.Midco Supply and Equipment Corporation, an Illinois corporation. 26.Midwest Coal Resources, Inc., a Delaware corporation. 27.Mountain View Coal Company, a Delaware corporation. 28.North Page Coal Corp., a West Virginia corporation. 29.Ohio County Coal Company, a Kentucky corporation. 30.Patriot Coal Company, L.P., a Delaware limited partnership. 31.Peabody COALSALES Company, a Delaware corporation. 32.Peabody COALTRADE, Inc., a Delaware corporation. 33.Peabody Coal Company, a Delaware corporation. 34.Peabody Development Company, a Delaware corporation. 35.Peabody Energy Solutions, Inc., a Delaware corporation. 36.Peabody Natural Resources Company, a Delaware general partnership. 37.Peabody Terminals, Inc., a Delaware corporation. 38.Peabody Venezuela Coal Corp., a Delaware corporation. 39.Peabody Western Coal Company, a Delaware corporation. 40.Pine Ridge Coal Company, a Delaware corporation. 41.Powder River Coal Company, a Delaware corporation. 42.Rio Escondido Coal Corp., a Delaware corporation. 43.Seneca Coal Company, a Delaware corporation. 44.Sentry Mining Company, a Delaware corporation. 45.Snowberry Land Company, a Delaware corporation. 46.Sterling Smokeless Coal Company, a West Virginia corporation. 47.Thoroughbred, L.L.C., a Delaware limited liability company. 48.Colony Bay Coal Company, a West Virginia partnership EX-4.7 111 SENIOR NOTE REG RIGHT AGMT 5/19/98 EXHIBIT 4.7 Execution Copy ================================================================================ SENIOR NOTE REGISTRATION RIGHTS AGREEMENT DATED AS OF MAY 18, 1998 BY AND BETWEEN P&L COAL HOLDINGS CORPORATION, AND LEHMAN BROTHERS INC. =============================================================================== This Registration Rights Agreement (this "AGREEMENT") is made and entered into as of May 18, 1998, by and between P&L Coal Holdings Corporation, a Delaware corporation (the "COMPANY"), and Lehman Brothers Inc. (the "INITIAL PURCHASER") who has agreed to purchase the Company's 8-7/8% Series A Senior Notes due 2008 (the "SERIES A SENIOR NOTES") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated May 13, 1998, (the "PURCHASE AGREEMENT"), by and between the Company and the Initial Purchaser relating to the purchase by the Initial Purchaser of the Company's Series A Senior Notes and the Company's 9-5/8% Senior Subordinated Notes due 2008 (the "SERIES A SENIOR SUBORDINATED NOTES"). In order to induce the Initial Purchaser to purchase the Series A Senior Notes, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchaser set forth in Section 7 of the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Indenture, dated May 18, 1998, relating to the Series A Senior Notes and the Series B Senior Notes (the "SENIOR NOTE INDENTURE") between the Company and the trustee (the "SENIOR NOTE TRUSTEE"). The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: ACT: The Securities Act of 1933, as amended. AFFILIATE: As defined in Rule 144 of the Act. AFFILIATED MARKET MAKER: A Broker-Dealer who is deemed to be an Affiliate of the Company. BROKER-DEALER: Any broker or dealer registered under the Exchange Act. CERTIFICATED SECURITIES: Definitive Notes as defined in the Senior Note Indenture. CLOSING DATE: The date hereof. COMMISSION: The Securities and Exchange Commission. CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Series B Senior Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the period required pursuant to Section 3(b) hereof and (c) the delivery by the Company to the Registrars under the Senior Note Indenture of Series B Senior Notes in the same aggregate principal amount as the aggregate principal amount of Series A Senior Notes tendered by Holders thereof pursuant to the Exchange Offer. CONSUMMATION DEADLINE: As defined in Section 3(b) hereof. EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof. 1 EXCHANGE ACT: The Securities Exchange Act of 1934, as amended. EXCHANGE OFFER: The exchange and issuance by the Company of a principal amount of Series B Senior Notes (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of the Series A Senior Notes that are tendered by such Holders in connection with such exchange and issuance. EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating to the Exchange Offer, including the related Prospectus. EXEMPT RESALES: The transactions in which the Initial Purchaser proposes to sell the Series A Senior Notes to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act and pursuant to Regulation S under the Act. FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof. HOLDERS: As defined in Section 2 hereof. PROSPECTUS: The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. RECOMMENCEMENT DATE: As defined in Section 6(d) hereof. REGISTRATION DEFAULT: As defined in Section 5 hereof. REGISTRATION STATEMENT: Any registration statement of the Company and the Guarantors relating to (a) an offering of Series B Senior Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case, (i) that is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. REGULATION S: Regulation S promulgated under the Act. RULE 144: Rule 144 promulgated under the Act. SERIES B SENIOR NOTES: The Company's 8-7/8% Series B Senior Notes due 2008 to be issued pursuant to the Senior Note Indenture: (i) in the Exchange Offer or (ii) as contemplated by Section 4 hereof. SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof. SUSPENSION NOTICE: As defined in Section 6(d) hereof. TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Senior Note Indenture. TRANSFER RESTRICTED SECURITIES: Each (A) Series A Senior Note, until the earliest to occur of (i) the date on which such Series A Senior Note is exchanged in the Exchange Offer for a Series B Senior 2 Note which is entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Act, (ii) the date on which such Series A Senior Note has been disposed of in accordance with a Shelf Registration Statement (and the purchasers thereof have been issued Series B Senior Notes), or (iii) the date on which such Series A Senior Note is distributed to the public pursuant to Rule 144 under the Act and each (B) Series B Senior Note held by a Broker Dealer until the date on which such Series B Senior Note is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including the delivery of the Prospectus contained therein). SECTION 2. HOLDERS A Person is deemed to be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such Person owns Transfer Restricted Securities. SECTION 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permitted by applicable federal law (after the procedures set forth in Section 6(a)(i) below have been complied with), the Company shall (i) cause the Exchange Offer Registration Statement to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 90 days after the Closing Date (such 90/th/ day being the "FILING DEADLINE"), (ii) use its best efforts to cause such Exchange Offer Registration Statement to become effective at the earliest possible time, but in no event later than 180 days after the Closing Date (such 180/th/ day being the "EFFECTIVENESS DEADLINE"), (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause it to become effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Series B Senior Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting (i) registration of the Series B Senior Notes to be offered in exchange for the Series A Senior Notes that are Transfer Restricted Securities and (ii) resales of Series B Senior Notes by Broker-Dealers that tendered into the Exchange Offer Series A Senior Notes that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Series A Senior Notes acquired directly from the Company or any of its Affiliates) as contemplated by Section 3(c) below. (b) The Company shall use its best efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Company shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Series B Senior Notes shall be included in the Exchange Offer Registration Statement. The Company shall use its best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 business days thereafter (such 30/th/ day being the "CONSUMMATION DEADLINE"). (c) The Company shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Broker-Dealer who holds Transfer 3 Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than Series A Senior Notes acquired directly from the Company or any Affiliate of the Company), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of Distribution" section shall also contain all other information with respect to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Transfer Restricted Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the date of this Agreement. See the Shearman & Sterling no-action letter (available July 2, 1993). Because such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with its initial sale of any Series B Senior Notes received by such Broker-Dealer in the Exchange Offer, the Company shall permit the use of the Prospectus contained in the Exchange Offer Registration Statement by such Broker-Dealer to satisfy such prospectus delivery requirement. To the extent necessary to ensure that the prospectus contained in the Exchange Offer Registration Statement is available for sales of Series B Senior Notes by Broker-Dealers, the Company and the Guarantors agree to use its best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented, amended and current as required by and subject to the provisions of Section 6(a) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of one year from the Consummation Deadline or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto. The Company shall provide sufficient copies of the latest version of such Prospectus to such Broker-Dealers, promptly upon request, and in no event later than one day after such request, at any time during such period. SECTION 4. SHELF REGISTRATION (a) Shelf Registration. If (i) the Exchange Offer is not permitted by ------------------ applicable law or Commission policy (after the Company has complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities shall notify the Company within 20 Business Days following the Consummation Deadline that (A) such Holder was prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the Series B Senior Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A Senior Notes acquired directly from the Company or any of its Affiliates, then the Company shall: (x) cause to be filed, on or prior to 90 days after the earlier of (i) the date on which the Company determines that the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) above and (ii) the date on which the Company receives the notice specified in clause (a)(ii) above, (such earlier date, the "FILING DEADLINE"), a shelf registration statement pursuant to Rule 415 under the Act (which may be an amendment to the Exchange Offer Registration Statement (the "SHELF REGISTRATION STATEMENT")), relating to all Transfer Restricted Securities, and (y) shall use its best efforts to cause such Shelf Registration Statement to become effective on or prior to 180 days after the Filing Deadline for the Shelf Registration Statement (such 180/th/ day the "EFFECTIVENESS DEADLINE"). 4 If, after the Company has filed an Exchange Offer Registration Statement that satisfies the requirements of Section 3(a) above, the Company is required to file and make effective a Shelf Registration Statement solely because the Exchange Offer is not permitted under applicable federal law (i.e., clause (a)(i) above), then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the requirements of clause (x) above; provided that, in such event, the Company shall remain obligated to meet the Effectiveness Deadline set forth in clause (y). To the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a) and the other securities required to be registered therein pursuant to Section 6(b)(ii) hereof, the Company shall use its best efforts to keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Sections 6(b) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for as long as the Initial Purchaser is deemed to be an affiliate of the Company but in no event less than the shorter of (i) two years (as extended pursuant to Section 6(c)(i)) following the Closing or (ii) the date on which all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant thereto. Notwithstanding the foregoing, the Company shall be entitled to suspend the rights of selling Holders to make sales pursuant to any Shelf Registration Statement otherwise required to be kept effective by it hereunder (but the duration of such suspension may not exceed the earlier to occur of (w) 15 days after the cessation of the circumstances described below or (x) 120 days after the date of the determination of the Board of Directors of the Company referred to below, and the duration of such suspension shall be excluded from the calculation of the period specified in this paragraph), if the Board of Directors of the Company determines in good faith that there is a material undisclosed development in the business or affairs of the Company (including any pending or proposed financing, recapitalization, acquisition or disposition), the disclosure of which at such time could be adverse to the Company's interests. If the Company shall so suspend the effectiveness of a Shelf Registration Statement, it shall, as promptly as possible, notify the selling Holders of such determination, and the selling Holders shall have the right to receive an extension of the registration period equal to the number of days of the suspension. (b) Provision by Holders of Certain Information in Connection with the ------------------------------------------------------------------ Shelf Registration Statement. No Holder of Transfer Restricted Securities may - ---------------------------- include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 10 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable or has so complied, of the Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein and agrees to comply with Regulation M under the Exchange Act. The Company may exclude from such registration the Transfer Restricted Securities of any Holder who unreasonably fails to furnish such information. No Holder of Transfer Restricted Securities shall be entitled to liquidated damages pursuant to Section 5 hereof unless and until such Holder shall have provided all such information or has so complied. Each selling Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. SECTION 5. LIQUIDATED DAMAGES If (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline, (ii) any such Registration Statement has not been declared 5 effective by the Commission on or prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not been Consummated on or prior to the Consummation Deadline or (iv) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself declared effective immediately (each such event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the Company hereby agrees to pay to each Holder of Transfer Restricted Securities affected thereby liquidated damages in an amount equal to $.05 per week per $1,000 principal amount of Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence of such Registration Default. The amount of the liquidated damages shall increase by an additional $.05 per week per $1,000 principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.50 per week per $1,000 principal amount of Transfer Restricted Securities; provided that the Company shall in no event be required to pay liquidated damages for more than one Registration Default at any given time. Notwithstanding anything to the contrary set forth herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or made usable in the case of (iv) above, the liquidated damages payable with respect to the Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease. All accrued liquidated damages shall be paid to the Holders entitled thereto, in the manner provided for the payment of interest in the Senior Note Indenture, on each Interest Payment Date, as more fully set forth in the Senior Note Indenture and the Series A Senior Notes. Notwithstanding the fact that any securities for which liquidated damages are due cease to be Transfer Restricted Securities, all obligations of the Company to pay liquidated damages with respect to securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. SECTION 6. REGISTRATION PROCEDURES (a) Exchange Offer Registration Statement. In connection with the ------------------------------------- Exchange Offer, the Company shall (x) comply with all applicable provisions of Section 6(c) below, (y) use its best efforts to effect such exchange and to permit the resale of the Series B Senior Notes by Broker-Dealers that tendered in the Exchange Offer and Series A Senior Notes that such Broker-Dealer acquired for its own account as a result of its market making activities or other trading activities (other than Series A Senior Notes acquired directly from the Company or any of its Affiliates) being sold in accordance with the intended method or methods of distribution thereof, and (z) comply with all of the following provisions: (i) If, following the date hereof there has been announced a change in Commission policy with respect to exchange offers such as the Exchange Offer, that in the reasonable opinion of counsel to the Company raises a substantial question as to whether the Exchange Offer is permitted by applicable federal law, the Company hereby agrees to seek a no-action letter or other favorable decision from the Commission allowing the Company to Consummate an Exchange Offer for such Transfer Restricted Securities. The Company hereby agrees to pursue the issuance of such a decision to the Commission staff level. In connection with the foregoing, the Company 6 and the Guarantors hereby agree to take all such other actions as may be reasonably requested by the Commission or otherwise required in connection with the issuance of such decision, including without limitation (A) participating in telephonic conferences with the Commission, (B) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff. (ii) As a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a Broker Dealer) shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an Affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Series B Senior Notes to be issued in the Exchange Offer and (C) it is acquiring the Series B Senior Notes in its ordinary course of business. As a condition to its participation in the Exchange Offer, each Holder using the Exchange Offer to participate in a distribution of the Series B Senior Notes shall acknowledge and agree that, if the resales are of Series B Senior Notes obtained by such Holder in exchange for Series A Senior Notes acquired directly from the Company or an Affiliate thereof, it (1) could not, under Commission policy as in effect on the date of this Agreement, rely on the position of the Commission enunciated in Morgan Stanley and ------------------ Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation --------- ---------------------------------- (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters ------------------- (including, if applicable, any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Company shall provide a supplemental letter to the Commission (A) stating that the Company is registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital ------------- Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. -------------------- ---------------------------- (available June 5, 1991) as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action ------------------- letter obtained pursuant to clause (i) above, (B) including a representation that the Company has not entered into any arrangement or understanding with any Person to distribute the Series B Senior Notes to be received in the Exchange Offer and that, to the best of the Company's information and belief, each Holder participating in the Exchange Offer is acquiring the Series B Senior Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Series B Senior Notes received in the Exchange Offer and (C) any other undertaking or representation reasonably required by the Commission as set forth in any no-action letter obtained pursuant to clause (i) above, if applicable. (b) Shelf Registration Statement. ---------------------------- In connection with the Shelf Registration Statement, the Company shall: (i) comply with all the provisions of Section 6(c) below and use its best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance 7 with the intended method or methods of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof, and (ii) issue, upon the request of any Holder or purchaser of Series A Senior Notes covered by any Shelf Registration Statement contemplated by this Agreement, Series B Senior Notes having an aggregate principal amount equal to the aggregate principal amount of Series A Senior Notes sold pursuant to the Shelf Registration Statement and surrendered to the Company for cancellation; the Company shall register Series B Senior Notes on the Shelf Registration Statement for this purpose and issue the Series B Senior Notes to the purchaser(s) of securities subject to the Shelf Registration Statement in the names as such purchaser(s) shall designate. (c) General Provisions. In connection with any Registration Statement and ------------------ any related Prospectus required by this Agreement, the Company shall: (i) use its best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable. Notwithstanding the foregoing, the Company shall be entitled to suspend the rights of selling Holders to make sales pursuant to any Registration Statement otherwise required to be kept effective by it hereunder (but the duration of such suspension may not exceed the earlier to occur of (w) 15 days after the cessation of the circumstances described below or (x) 120 days after the date of the determination of the Board of Directors of the Company referred to below, and the duration of such suspension shall be excluded from the calculation of the period specified in Section 4(a)), if the Board of Directors of the Company determines in good faith that there is a material undisclosed development in the business or affairs of the Company (including any pending or proposed financing, recapitalization, acquisition or disposition), the disclosure of which at such time could be adverse to the Company's interests. If the Company shall so suspend the effectiveness of a Registration Statement, it shall, as promptly as possible, notify the selling Holders of such determination, and the selling Holders shall have the right to receive an extension of the registration period equal to the number of days of the suspension. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company shall file promptly an appropriate amendment to such Registration Statement curing such defect, and, if Commission review is required, use its best efforts to cause such amendment to be declared effective as soon as practicable. (ii) prepare and file with the Commission such amendments and post- effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as the case may be; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; 8 (iii) advise each Holder and the Initial Purchaser who is required to deliver a prospectus in connection with sales or market making activities (an "AFFILIATED MARKET MAKER") promptly and, if requested by such Person, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company shall use its best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) subject to Section 6(c)(i), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an 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; (v) furnish to each Holder and each Affiliated Market Maker in connection with such exchange or sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Persons in connection with such sale, if any, for a period of at least three Business Days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which such Persons shall reasonably object within three Business Days after the receipt thereof. Such Person shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omits to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Act; (vi) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to each Holder and each Affiliated Market Maker in connection with such exchange or sale, if any, make the Company's representatives available for discussion of such document and other customary due 9 diligence matters, and include such information in such document prior to the filing thereof as such Persons may reasonably request; (vii) make available, at reasonable times during normal business hours, for inspection by each Holder and each Affiliated Market Maker and any attorney or accountant retained by such Persons, all financial and other records, pertinent corporate documents of the Company and the Guarantors and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Persons, attorney or accountant in connection with such Registration Statement or any post- effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; (viii) if requested by any Holders in connection with such exchange or sale or any Affiliated Market Maker, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post- effective amendment if necessary, such information as such Persons may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities and the use of the Registration Statement or Prospectus for market making activities; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; (ix) furnish to each Holder in connection with such exchange or sale and each Affiliated Market Maker, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each Holder and each Affiliated Market Maker, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company hereby consents to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Person in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto and all market making activities of such Affiliated Market Maker, as the case may be; (xi) upon the request of any Holder, enter into such agreements (including underwriting agreements in usual and customary form) and make such representations and warranties which, in the opinion of the Company, are reasonably required and take all such other reasonable actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Shelf Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder in connection with any sale or resale pursuant to any Shelf Registration Statement. In such connection, and also in connection with market making activities by any Affiliated Market Maker, the Company shall: (A) upon request of any Person holding at least $25.0 million principal amount of Transfer Restricted Securities, furnish (or in the case of paragraphs (2) and (3), use its best efforts to cause to be furnished) to each Person, upon the effectiveness of the Shelf Registration Statement: (1) a certificate, dated such date, signed on behalf of the Company and each of the Guarantors by (x) the President or any Vice President and (y) a principal financial or accounting officer of the Company and such Guarantor, confirming, as of the date thereof, the matters set forth in Sections 7(l), 7(n) and 10 7(o) of the Purchase Agreement and such other similar matters as such Person may reasonably request; (2) an opinion, dated the date of effectiveness of the Shelf Registration Statement, of counsel for the Company covering matters similar to those set forth in paragraph (d) of Section 7 of the Purchase Agreement and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants for the Company and has considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing, no facts came to such counsel's attention that caused such counsel to believe that the Shelf Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date contained 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. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in the Shelf Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated the date of effectiveness of the Shelf Registration Statement, from the Company's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 7(j) of the Purchase Agreement; and (B) deliver such other documents and certificates as may be reasonably requested by such Persons to evidence compliance with the matters covered in clause (A) above and with any customary conditions contained in the any agreement entered into by the Company and the Guarantors pursuant to this clause (xi); (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that the Company shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; 11 (xiii) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the selling Holders may request at least two Business Days prior to such sale of Transfer Restricted Securities; (xiv) use its best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (xv) obtain a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Senior Note Trustee under the Senior Note Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with The Depository Trust Company; (xvi) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve- month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); (xvii) cause the Senior Note Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Senior Note Trustee and the Holders to effect such changes to the Senior Note Indenture as may be reasonably required for such Senior Note Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its best efforts to cause the Senior Note Trustee to execute, all documents that may be reasonably required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Senior Note Indenture to be so qualified in a timely manner; and (xviii) provide promptly to each Holder and Affiliated Market Maker, upon request, each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act. (d) Restrictions on Holders. Each Holder agrees by acquisition of a ----------------------- Transfer Restricted Security and each Affiliated Market Maker agrees that, upon receipt of the notice referred to in Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a "SUSPENSION NOTICE"), such Person will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until (i) such Person has received copies of the supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Person is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT DATE"). Each Person receiving a Suspension Notice hereby agrees that it will either (i) destroy any Prospectuses, other than permanent file copies, then in such Person's possession which have been replaced by the Company with more recently dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Person's possession of the Prospectus covering such Transfer Restricted Securities that was current 12 at the time of receipt of the Suspension Notice. The time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the date of delivery of the Recommencement Date. SECTION 7. REGISTRATION EXPENSES (a) All expenses incident to the Company's performance of or compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Series B Senior Notes to be issued in the Exchange Offer and printing of Prospectuses whether for exchanges, sales, market making or otherwise), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company and the Guarantors; and (v) all fees and disbursements of independent certified public accountants of the Company and the Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance). The Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company or the Guarantors. (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company will reimburse the Initial Purchaser and the Holders of Transfer Restricted Securities who are tendering Series A Senior Notes into in the Exchange Offer and/or selling or reselling Series A Senior Notes or Series B Senior Notes pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Latham & Watkins, unless another firm shall be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. SECTION 8. INDEMNIFICATION (a) The Company and the Guarantors agree, jointly and severally, to indemnify and hold harmless each Holder, its directors, officers and each Person, if any, who controls such Holder (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from and against any and all losses, claims, damages, liabilities, judgments, (including without limitation, any reasonable legal or other expenses incurred in connection with investigating or defending any matter, including any action that could give rise to any such losses, claims, damages, liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus (or any amendment or supplement thereto) provided by the Company to any Holder or any prospective purchaser of the Series B Senior Notes or of the registered Series A Senior Notes, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by an untrue statement or omission or alleged untrue statement or omission that is based upon information relating to any of the Holders furnished in writing to the 13 Company by any of the Holders; and provided that with respect to any such untrue -------- statement or omission made in a preliminary prospectus, the foregoing indemnity shall not inure to the benefit of any Holder (or any person who controls such Holder or any officer or director thereof) from whom the person asserting such loss, claim, damage, liability or action purchased the Series B Senior Subordinated Notes, to the extent that such sale was an initial resale by such Holder and any such loss, claim, damage, liability or action of such Holder is a result of the fact that both (i) to the extent required by applicable law, a copy of the Prospectus, as the same may be amended or supplemented, was not sent or given to such person at or prior to the written confirmation of the sale of such Series B Senior Subordinated Notes to such person, and (ii) the untrue statement or omission in the preliminary prospectus was corrected in the Prospectus unless, in either case, such failure to deliver the Prospectus was a result of non-compliance by the Company with Section 6(c)(i). (b) Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company, and its directors and officers, and each Person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company to the same extent as the foregoing indemnity from the Company set forth in section (a) above, but only with reference to information relating to such Holder furnished in writing to the Company by such Holder expressly for use in any Registration Statement. In no event shall any Holder, its directors, officers or any Person who controls such Holder be liable or responsible for any amount in excess of the amount by which the total amount received by such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages that such Holder, its directors, officers or any Person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (c) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing and the indemnifying party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of all reasonable fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required to assume the defense of such action pursuant to this Section 8(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of the Holder). Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by a majority of the Holders, in the case of the parties indemnified pursuant to Section 8(a), and by the Company, in the case of parties indemnified pursuant 14 to Section 8(b). The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without its written consent if the settlement is entered into more than twenty business days after the indemnifying party shall have received a request from the indemnified party for reimbursement for the reasonable fees and expenses of counsel (in any case where such reasonable fees and expenses are at the expense of the indemnifying party) and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement request. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party. (d) To the extent that the indemnification provided for in this Section 8 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Holders, on the other hand, from their sale of Transfer Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Company, on the one hand, and of the Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the Company, on the one hand, and of the Holder, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or by the Holder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and judgments referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any matter, including any action that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 8, no Holder, its directors, its officers or any Person, if any, who controls such Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total proceeds received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of 15 Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 8(d) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not joint. (e) The Company agrees that the indemnity and contribution provisions of this Section 8 shall apply to Affiliated Market Makers to the same extent, on the same conditions, as they apply to Holders. SECTION 9. RULE 144A AND RULE 144 The Company agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. SECTION 10. MISCELLANEOUS (a) Remedies. The Company acknowledge and agree that any failure by the -------- Company to comply with its obligations under Sections 3 and 4 hereof may result in material irreparable injury to the Initial Purchaser or the Holders or Affiliated Market Makers for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchaser or any Holder or Affiliated Market Makers may obtain such relief as may be required to specifically enforce the Company's obligations under Sections 3 and 4 hereof. The Company further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Company will not, on or after the -------------------------- date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The Company has not previously entered into any agreement granting any registration rights with respect to its securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under any agreement in effect on the date hereof. (c) Amendments and Waivers. The provisions of this Agreement may not be ---------------------- amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of Section 5 hereof and this Section 10(c)(i), the Company has obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer, and that does not affect directly or indirectly 16 the rights of other Holders whose Transfer Restricted Securities are not being tendered pursuant to such Exchange Offer, may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (d) Third Party Beneficiary. The Holders and Affiliated Market Makers ----------------------- shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial Purchaser, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect their rights or the rights of Holders and Affiliated Market Makers hereunder. (e) Notices. All notices and other communications provided for or ------- permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Senior Note Indenture, with a copy to the Registrar under the Senior Note Indenture; and (ii) if to the Company: P&L Coal Holdings Corporation 701 Market Street St. Louis, MO 63101-1826 Telecopier No.: 314-342-3449 Attention: Chief Financial Officer With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017-3954 Telecopier No.: 212-455-2502 Attention: Rise B. Norman All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Senior Note Trustee at the address specified in the Senior Note Indenture. Upon the date of filing of the Exchange Offer or a Shelf Registration Statement, as the case may be, notice shall be delivered (in the form attached hereto as Exhibit A) and shall be addressed to: Lehman Brothers Inc. Attention: Randy Stuzin, 3 World Financial Center, 200 Vesey Street, New York, New York 10285. (f) Successors and Assigns. This Agreement shall inure to the benefit of ---------------------- and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders; provided, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof 17 or of the Purchase Agreement or the Senior Note Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof. (g) Counterparts. This Agreement may be executed in any number of ------------ counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of -------- reference only and shall not limit or otherwise affect the meaning hereof. (i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ------------- ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. (j) Severability. In the event that any one or more of the provisions ------------ contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement is intended by the parties as a ---------------- final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. (Signature page(s) follow) 18 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. P&L Coal Holdings Corporation By:/s/ Felix Herlihy __________________________________ Name: Felix Herlihy Title: Vice President, Treasurer and Assistant Secretary Accepted: Lehman Brothers Inc. By:/s/ Alexander V. Ponomarenko ____________________________ Name: Alexander V. Ponomarenko Title: Authorized Signatory Registration Rights Agreement signature page(s)-1 EXHIBIT A NOTICE OF FILING OF A/B EXCHANGE OFFER REGISTRATION STATEMENT To: Lehman Brothers, Inc. 3 World Financial Center 200 Vesey Street New York, New York 10285 Attention: Randy Stuzin Fax: (212) 526-4911 From: P&L Coal Holdings Corporation $400,000,000 8-7/8% Senior Notes due 2008 Date:____, 199_ For your information only (NO ACTION REQUIRED): Today, ______, 199_, we filed [an A/B Exchange Registration Statement/a Shelf Registration Statement] with the Securities and Exchange Commission. We currently expect this registration statement to be declared effective within __ business days of the date hereof. EX-4.8 112 SENIOR SUB NOTE REG RIGHT AGMT 5/18/98 EXHIBIT 4.8 EXECUTION COPY ================================================================================ SENIOR SUBORDINATED NOTE REGISTRATION RIGHTS AGREEMENT DATED AS OF MAY 18, 1998 BY AND BETWEEN P&L COAL HOLDINGS CORPORATION, and LEHMAN BROTHERS INC. ================================================================================ This Registration Rights Agreement (this "AGREEMENT") is made and entered into as of May 18, 1998, by and between P&L Coal Holdings Corporation, a Delaware corporation (the "COMPANY"), and Lehman Brothers Inc. (the "INITIAL PURCHASER") who has agreed to purchase the Company's 9-5/8% Series A Senior Subordinated Notes due 2008 (the "SERIES A SENIOR SUBORDINATED NOTES") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated May 13, 1998, (the "PURCHASE AGREEMENT"), by and between the Company and the Initial Purchaser relating to the purchase by the Initial Purchaser of the Company's Series A Senior Subordinated Notes and the Company's 8-7/8% Senior Notes due 2008 (the "SERIES A SENIOR NOTES"). In order to induce the Initial Purchaser to purchase the Series A Senior Subordinated Notes, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchaser set forth in Section 7 of the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Indenture, dated May 18, 1998, relating to the Series A Senior Subordinated Notes and the Series B Senior Subordinated Notes (the "SENIOR SUBORDINATED NOTE INDENTURE") between the Company and the trustee (the "SENIOR SUBORDINATED NOTE TRUSTEE"). The parties hereby agree as follows: SECTION 1 DEFINITIONS ----------- As used in this Agreement, the following capitalized terms shall have the following meanings: ACT: The Securities Act of 1933, as amended. AFFILIATE: As defined in Rule 144 of the Act. AFFILIATED MARKET MAKER: A Broker-Dealer who is deemed to be an Affiliate of the Company. BROKER-DEALER: Any broker or dealer registered under the Exchange Act. CERTIFICATED SECURITIES: Definitive Notes as defined in the Senior Subordinated Note Indenture. CLOSING DATE: The date hereof. COMMISSION: The Securities and Exchange Commission. CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Series B Senior Subordinated Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the period required pursuant to Section 3(b) hereof and (c) the delivery by the Company to the Registrars under the Senior Subordinated Note Indenture of Series B Senior Subordinated Notes in the same aggregate principal amount as the aggregate principal amount of Series A Senior Subordinated Notes tendered by Holders thereof pursuant to the Exchange Offer. CONSUMMATION DEADLINE: As defined in Section 3(b) hereof. EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof. EXCHANGE ACT: The Securities Exchange Act of 1934, as amended. EXCHANGE OFFER: The exchange and issuance by the Company of a principal amount of Series B Senior Subordinated Notes (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of the Series A Senior Subordinated Notes that are tendered by such Holders in connection with such exchange and issuance. EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating to the Exchange Offer, including the related Prospectus. EXEMPT RESALES: The transactions in which the Initial Purchaser proposes to sell the Series A Senior Subordinated Notes to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act and pursuant to Regulation S under the Act. FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof. HOLDERS: As defined in Section 2 hereof. PROSPECTUS: The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. RECOMMENCEMENT DATE: As defined in Section 6(d) hereof. REGISTRATION DEFAULT: As defined in Section 5 hereof. REGISTRATION STATEMENT: Any registration statement of the Company and the Guarantors relating to (a) an offering of Series B Senior Subordinated Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case, (i) that is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all 2 amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. REGULATION S: Regulation S promulgated under the Act. RULE 144: Rule 144 promulgated under the Act. SERIES B SENIOR SUBORDINATED NOTES: The Company's 9-5/8% Series B Senior Subordinated Notes due 2008 to be issued pursuant to the Senior Subordinated Note Indenture: (i) in the Exchange Offer or (ii) as contemplated by Section 4 hereof. SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof. SUSPENSION NOTICE: As defined in Section 6(d) hereof. TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Senior Subordinated Note Indenture. TRANSFER RESTRICTED SECURITIES: Each (A) Series A Senior Subordinated Note, until the earliest to occur of (i) the date on which such Series A Senior Subordinated Note is exchanged in the Exchange Offer for a Series B Senior Subordinated Note which is entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Act, (ii) the date on which such Series A Senior Subordinated Note has been disposed of in accordance with a Shelf Registration Statement (and the purchasers thereof have been issued Series B Senior Subordinated Notes), or (iii) the date on which such Series A Senior Subordinated Note is distributed to the public pursuant to Rule 144 under the Act and each (B) Series B Senior Subordinated Note held by a Broker Dealer until the date on which such Series B Senior Subordinated Note is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including the delivery of the Prospectus contained therein). SECTION 2 HOLDERS ------- A Person is deemed to be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such Person owns Transfer Restricted Securities. SECTION 3 REGISTERED EXCHANGE OFFER ------------------------- (a) Unless the Exchange Offer shall not be permitted by applicable federal law (after the procedures set forth in Section 6(a)(i) below have been complied with), the Company shall (i) cause the Exchange Offer Registration Statement to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 90 days after the Closing Date (such 90/th/ day being the "FILING DEADLINE"), (ii) use its best efforts to cause such Exchange Offer Registration Statement to become effective at the earliest possible time, but in no event later than 180 days after the Closing Date (such 180/th/ day being the "EFFECTIVENESS DEADLINE"), (iii) in connection with the foregoing, (A) file all pre-effective 3 amendments to such Exchange Offer Registration Statement as may be necessary in order to cause it to become effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Series B Senior Subordinated Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting (i) registration of the Series B Senior Subordinated Notes to be offered in exchange for the Series A Senior Subordinated Notes that are Transfer Restricted Securities and (ii) resales of Series B Senior Subordinated Notes by Broker- Dealers that tendered into the Exchange Offer Series A Senior Subordinated Notes that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Series A Senior Subordinated Notes acquired directly from the Company or any of its Affiliates) as contemplated by Section 3(c) below. (b) The Company shall use its best efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Company shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Series B Senior Subordinated Notes shall be included in the Exchange Offer Registration Statement. The Company shall use its best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 business days thereafter (such 30/th/ day being the "CONSUMMATION DEADLINE"). (c) The Company shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Broker-Dealer who holds Transfer Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than Series A Senior Subordinated Notes acquired directly from the Company or any Affiliate of the Company), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of Distribution" section shall also contain all other information with respect to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Transfer Restricted Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the date of this Agreement. See the Shearman & Sterling no- action letter (available July 2, 1993). Because such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with its initial sale of any Series B Senior Subordinated Notes received by such Broker-Dealer in the Exchange Offer, the Company shall permit the use of the Prospectus contained in the Exchange Offer Registration Statement by such Broker-Dealer to 4 satisfy such prospectus delivery requirement. To the extent necessary to ensure that the prospectus contained in the Exchange Offer Registration Statement is available for sales of Series B Senior Subordinated Notes by Broker-Dealers, the Company agrees to use its best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented, amended and current as required by and subject to the provisions of Section 6(a) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of one year from the Consummation Deadline or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto. The Company shall provide sufficient copies of the latest version of such Prospectus to such Broker-Dealers, promptly upon request, and in no event later than one day after such request, at any time during such period. SECTION 4 SHELF REGISTRATION ------------------ (a) Shelf Registration. If (i) the Exchange Offer is not permitted ------------------ by applicable law or Commission policy (after the Company has complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities shall notify the Company within 20 Business Days following the Consummation Deadline that (A) such Holder was prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the Series B Senior Subordinated Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A Senior Subordinated Notes acquired directly from the Company or any of its Affiliates, then the Company shall: (x) cause to be filed, on or prior to 90 days after the earlier of (i) the date on which the Company determines that the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) above and (ii) the date on which the Company receives the notice specified in clause (a)(ii) above, (such earlier date, the "FILING DEADLINE"), a shelf registration statement pursuant to Rule 415 under the Act (which may be an amendment to the Exchange Offer Registration Statement (the "SHELF REGISTRATION STATEMENT")), relating to all Transfer Restricted Securities, and (y) shall use its best efforts to cause such Shelf Registration Statement to become effective on or prior to 180 days after the Filing Deadline for the Shelf Registration Statement (such 180/th/ day the "EFFECTIVENESS DEADLINE"). If, after the Company has filed an Exchange Offer Registration Statement that satisfies the requirements of Section 3(a) above, the Company is required to file and make effective a Shelf Registration Statement solely because the Exchange Offer is not permitted under applicable federal law (i.e., clause (a)(i) above), then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the requirements of clause (x) above; provided that, in such event, the Company shall remain obligated to meet the Effectiveness Deadline set forth in clause (y). 5 To the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a) and the other securities required to be registered therein pursuant to Section 6(b)(ii) hereof, the Company shall use its best efforts to keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Sections 6(b) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for as long as the Initial Purchaser is deemed to be an affiliate of the Company but in no event less than the shorter of (i) two years (as extended pursuant to Section 6(c)(i)) following the Closing or (ii) the date on which all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant thereto. Notwithstanding the foregoing, the Company shall be entitled to suspend the rights of selling Holders to make sales pursuant to any Shelf Registration Statement otherwise required to be kept effective by it hereunder (but the duration of such suspension may not exceed the earlier to occur of (w) 15 days after the cessation of the circumstances described below or (x) 120 days after the date of the determination of the Board of Directors of the Company referred to below, and the duration of such suspension shall be excluded from the calculation of the period specified in this paragraph), if the Board of Directors of the Company determines in good faith that there is a material undisclosed development in the business or affairs of the Company (including any pending or proposed financing, recapitalization, acquisition or disposition), the disclosure of which at such time could be adverse to the Company's interests. If the Company shall so suspend the effectiveness of a Shelf Registration Statement, it shall, as promptly as possible, notify the selling Holders of such determination, and the selling Holders shall have the right to receive an extension of the registration period equal to the number of days of the suspension. (b) Provision by Holders of Certain Information in Connection with -------------------------------------------------------------- the Shelf Registration Statement. No Holder of Transfer Restricted Securities - -------------------------------- may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 10 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable or has so complied, of the Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein and agrees to comply with Regulation M under the Exchange Act. The Company may exclude from such registration the Transfer Restricted Securities of any Holder who unreasonably fails to furnish such information. No Holder of Transfer Restricted Securities shall be entitled to liquidated damages pursuant to Section 5 hereof unless and until such Holder shall have provided all such information or has so complied. Each selling Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. SECTION 5 LIQUIDATED DAMAGES ------------------ If (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline, (ii) any such Registration 6 Statement has not been declared effective by the Commission on or prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not been Consummated on or prior to the Consummation Deadline or (iv) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself declared effective immediately (each such event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the Company hereby agrees to pay to each Holder of Transfer Restricted Securities affected thereby liquidated damages in an amount equal to $.05 per week per $1,000 principal amount of Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence of such Registration Default. The amount of the liquidated damages shall increase by an additional $.05 per week per $1,000 principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.50 per week per $1,000 principal amount of Transfer Restricted Securities; provided that the Company shall in no event be required to pay liquidated damages for more than one Registration Default at any given time. Notwithstanding anything to the contrary set forth herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or made usable in the case of (iv) above, the liquidated damages payable with respect to the Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease. All accrued liquidated damages shall be paid to the Holders entitled thereto, in the manner provided for the payment of interest in the Senior Subordinated Note Indenture, on each Interest Payment Date, as more fully set forth in the Senior Subordinated Note Indenture and the Series A Senior Subordinated Notes. Notwithstanding the fact that any securities for which liquidated damages are due cease to be Transfer Restricted Securities, all obligations of the Company to pay liquidated damages with respect to securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. SECTION 6 REGISTRATION PROCEDURES ----------------------- (a) Exchange Offer Registration Statement. In connection with the ------------------------------------- Exchange Offer, the Company shall (x) comply with all applicable provisions of Section 6(c) below, (y) use its best efforts to effect such exchange and to permit the resale of the Series B Senior Subordinated Notes by Broker-Dealers that tendered in the Exchange Offer and Series A Senior Subordinated Notes that such Broker-Dealer acquired for its own account as a result of its market making activities or other trading activities (other than Series A Senior Subordinated Notes acquired directly from the Company or any of its Affiliates) being sold in 7 accordance with the intended method or methods of distribution thereof, and (z) comply with all of the following provisions: (i) If, following the date hereof there has been announced a change in Commission policy with respect to exchange offers such as the Exchange Offer, that in the reasonable opinion of counsel to the Company raises a substantial question as to whether the Exchange Offer is permitted by applicable federal law, the Company hereby agrees to seek a no-action letter or other favorable decision from the Commission allowing the Company to Consummate an Exchange Offer for such Transfer Restricted Securities. The Company hereby agrees to pursue the issuance of such a decision to the Commission staff level. In connection with the foregoing, the Company hereby agrees to take all such other actions as may be reasonably requested by the Commission or otherwise required in connection with the issuance of such decision, including without limitation (A) participating in telephonic conferences with the Commission, (B) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff. (ii) As a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a Broker Dealer) shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an Affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Series B Senior Subordinated Notes to be issued in the Exchange Offer and (C) it is acquiring the Series B Senior Subordinated Notes in its ordinary course of business. As a condition to its participation in the Exchange Offer, each Holder using the Exchange Offer to participate in a distribution of the Series B Senior Subordinated Notes shall acknowledge and agree that, if the resales are of Series B Senior Subordinated Notes obtained by such Holder in exchange for Series A Senior Subordinated Notes acquired directly from the Company or an Affiliate thereof, it (1) could not, under Commission policy as in effect on the date of this Agreement, rely on the position of the Commission enunciated in Morgan Stanley and ------------------ Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation --------- ---------------------------------- (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters ------------------- (including, if applicable, any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Company shall provide a supplemental letter to the Commission (A) stating that the 8 Company is registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available ---------------------------------- May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as ---------------------------- interpreted in the Commission's letter to Shearman & Sterling dated July 2, ------------------- 1993, and, if applicable, any no-action letter obtained pursuant to clause (i) above, (B) including a representation that the Company has not entered into any arrangement or understanding with any Person to distribute the Series B Senior Subordinated Notes to be received in the Exchange Offer and that, to the best of the Company's information and belief, each Holder participating in the Exchange Offer is acquiring the Series B Senior Subordinated Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Series B Senior Subordinated Notes received in the Exchange Offer and (C) any other undertaking or representation reasonably required by the Commission as set forth in any no-action letter obtained pursuant to clause (i) above, if applicable. (b) Shelf Registration Statement. ---------------------------- In connection with the Shelf Registration Statement, the Company shall: (i) comply with all the provisions of Section 6(c) below and use its best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof, and (ii) issue, upon the request of any Holder or purchaser of Series A Senior Subordinated Notes covered by any Shelf Registration Statement contemplated by this Agreement, Series B Senior Subordinated Notes having an aggregate principal amount equal to the aggregate principal amount of Series A Senior Subordinated Notes sold pursuant to the Shelf Registration Statement and surrendered to the Company for cancellation; the Company shall register Series B Senior Subordinated Notes on the Shelf Registration Statement for this purpose and issue the Series B Senior Subordinated Notes to the purchaser(s) of securities subject to the Shelf Registration Statement in the names as such purchaser(s) shall designate. (c) General Provisions. In connection with any Registration ------------------ Statement and any related Prospectus required by this Agreement, the Company shall: (i) use its best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable. Notwithstanding the foregoing, the Company shall be entitled to suspend the rights of selling Holders to make sales 9 pursuant to any Registration Statement otherwise required to be kept effective by it hereunder (but the duration of such suspension may not exceed the earlier to occur of (w) 15 days after the cessation of the circumstances described below or (x) 120 days after the date of the determination of the Board of Directors of the Company referred to below, and the duration of such suspension shall be excluded from the calculation of the period specified in Section 4(a)), if the Board of Directors of the Company determines in good faith that there is a material undisclosed development in the business or affairs of the Company (including any pending or proposed financing, recapitalization, acquisition or disposition), the disclosure of which at such time could be adverse to the Company's interests. If the Company shall so suspend the effectiveness of a Registration Statement, it shall, as promptly as possible, notify the selling Holders of such determination, and the selling Holders shall have the right to receive an extension of the registration period equal to the number of days of the suspension. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company shall file promptly an appropriate amendment to such Registration Statement curing such defect, and, if Commission review is required, use its best efforts to cause such amendment to be declared effective as soon as practicable. (ii) prepare and file with the Commission such amendments and post- effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as the case may be; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise each Holder and the Initial Purchaser who is required to deliver a prospectus in connection with sales or market making activities (an "AFFILIATED MARKET MAKER") promptly and, if requested by such Person, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes 10 any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company shall use its best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) subject to Section 6(c)(i), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an 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; (v) furnish to each Holder and each Affiliated Market Maker in connection with such exchange or sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Persons in connection with such sale, if any, for a period of at least three Business Days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which such Persons shall reasonably object within three Business Days after the receipt thereof. Such Person shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omits to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Act; (vi) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to each Holder and each Affiliated Market Maker in connection with such exchange or sale, if any, make the Company's 'representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such Persons may reasonably request; 11 (vii) make available, at reasonable times during normal business hours, for inspection by each Holder and each Affiliated Market Maker and any attorney or accountant retained by such Persons, all financial and other records, pertinent corporate documents of the Company and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Persons, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; (viii) if requested by any Holders in connection with such exchange or sale or any Affiliated Market Maker, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post- effective amendment if necessary, such information as such Persons may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities and the use of the Registration Statement or Prospectus for market making activities; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; (ix) furnish to each Holder in connection with such exchange or sale and each Affiliated Market Maker, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each Holder and each Affiliated Market Maker without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company hereby consents to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Person in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto and all market making activities of such Affiliated Market Maker, as the case may be; (xi) upon the request of any Holder, enter into such agreements (including underwriting agreements in usual and customary form) and make such representations and warranties which, in the opinion of the Company, are reasonably required and take all such other reasonable actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Shelf Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder in connection with any sale or resale pursuant to any Shelf Registration Statement. In such connection, and also in connection with market making activities by any Affiliated Market Maker, the Company shall: (A) upon request of any Person holding at least $25.0 million principal amount of Transfer Restricted Securities, furnish (or in the case of paragraphs 12 (2) and (3), use its best efforts to cause to be furnished) to each Person, upon the effectiveness of the Shelf Registration Statement: (1) a certificate, dated such date, signed on behalf of the Company and each of the Guarantors by (x) the President or any Vice President and (y) a principal financial or accounting officer of the Company and such Guarantor, confirming, as of the date thereof, the matters set forth in Sections 7(l), 7(n) and 7(o) of the Purchase Agreement and such other similar matters as such Person may reasonably request; (2) an opinion, dated the date of effectiveness of the Shelf Registration Statement, of counsel for the Company covering matters similar to those set forth in paragraph (d) of Section 7 of the Purchase Agreement, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants for the Company and has considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing, no facts came to such counsel's attention that caused such counsel to believe that the Shelf Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date contained 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. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any the Shelf Registration Statement contemplated by this Agreement or the related Prospectus; and 13 (3) a customary comfort letter, dated the date of effectiveness of the Shelf Registration Statement, from the Company's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 7(j) of the Purchase Agreement; and (B) deliver such other documents and certificates as may be reasonably requested by such Persons to evidence compliance with the matters covered in clause (A) above and with any customary conditions contained in the any agreement entered into by the Company pursuant to this clause (xi); (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that the Company shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the selling Holders may request at least two Business Days prior to such sale of Transfer Restricted Securities; (xiv) use its best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (xv) obtain a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Senior Subordinated Note Trustee under the Senior Subordinated Note Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with The Depository Trust Company; 14 (xvi) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve- month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); (xvii) cause the Senior Subordinated Note Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Senior Subordinated Note Trustee and the Holders to effect such changes to the Senior Subordinated Note Indenture as may be reasonably required for such Senior Subordinated Note Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its best efforts to cause the Senior Subordinated Note Trustee to execute, all documents that may be required to effect such changes and all other forms and documents that may be reasonably required to be filed with the Commission to enable such Senior Subordinated Note Indenture to be so qualified in a timely manner; and (xviii) provide promptly to each Holder and Affiliated Market Maker, upon request, each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act. (d) Restrictions on Holders. Each Holder agrees by acquisition of a ----------------------- Transfer Restricted Security and each Affiliated Market Maker agrees that, upon receipt of the notice referred to in Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a "SUSPENSION NOTICE"), such Person will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until (i) such Person has received copies of the supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Person is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT DATE"). Each Person receiving a Suspension Notice hereby agrees that it will either (i) destroy any Prospectuses, other than permanent file copies, then in such Person's possession which have been replaced by the Company with more recently dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Person's possession of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of the Suspension Notice. The time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the date of delivery of the Recommencement Date. SECTION 7 REGISTRATION EXPENSES --------------------- (a) All expenses incident to the Company's performance of or compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement 15 becomes effective, including without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Series B Senior Subordinated Notes to be issued in the Exchange Offer and printing of Prospectuses whether for exchanges, sales, market making or otherwise), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company and the Guarantors; and (v) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance). The Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company or the Guarantors. (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company will reimburse the Initial Purchaser and the Holders of Transfer Restricted Securities who are tendering Series A Senior Subordinated Notes into in the Exchange Offer and/or selling or reselling Series A Senior Subordinated Notes or Series B Senior Subordinated Notes pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Latham & Watkins, unless another firm shall be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. SECTION 8 INDEMNIFICATION --------------- (a) The Company agree, jointly and severally, to indemnify and hold harmless each Holder, its directors, officers and each Person, if any, who controls such Holder (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from and against any and all losses, claims, damages, liabilities, judgments, (including without limitation, any reasonable legal or other expenses incurred in connection with investigating or defending any matter, including any action that could give rise to any such losses, claims, damages, liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus (or any amendment or supplement thereto) provided by the Company to any Holder or any prospective purchaser of the Series B Senior Subordinated Notes or of the registered Series A Senior Subordinated Notes, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by an untrue statement or omission or alleged untrue statement or omission that is based upon information relating to any of the Holders furnished in writing to the Company by any of the Holders; and provided -------- that with respect to any such untrue statement or omission made in a preliminary prospectus, the foregoing indemnity shall not inure to the benefit of any Holder (or any person who controls such Holder or any officer or director thereof) from whom the 16 person asserting such loss, claim, damage, liability or action purchased the Series B Senior Subordinated Notes, to the extent that such sale was an initial resale by such Holder and any such loss, claim, damage, liability or action of such Holder is a result of the fact that both (i) to the extent required by applicable law, a copy of the Prospectus, as the same may be amended or supplemented, was not sent or given to such person at or prior to the written confirmation of the sale of such Series B Senior Subordinated Notes to such person, and (ii) the untrue statement or omission in the preliminary prospectus was corrected in the Prospectus unless, in either case, such failure to deliver the Prospectus was a result of non-compliance by the Company with Section 6(c)(i). (b) Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company, and its directors and officers, and each Person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company to the same extent as the foregoing indemnity from the Company set forth in section (a) above, but only with reference to information relating to such Holder furnished in writing to the Company by such Holder expressly for use in any Registration Statement. In no event shall any Holder, its directors, officers or any Person who controls such Holder be liable or responsible for any amount in excess of the amount by which the total amount received by such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages that such Holder, its directors, officers or any Person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (c) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing and the indemnifying party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of all reasonable fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required to assume the defense of such action pursuant to this Section 8(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of the Holder). Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction 17 arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by a majority of the Holders, in the case of the parties indemnified pursuant to Section 8(a), and by the Company, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without its written consent if the settlement is entered into more than twenty business days after the indemnifying party shall have received a request from the indemnified party for reimbursement for the reasonable fees and expenses of counsel (in any case where such reasonable fees and expenses are at the expense of the indemnifying party) and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement request. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party. (d) To the extent that the indemnification provided for in this Section 8 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Holders, on the other hand, from their sale of Transfer Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Company, on the one hand, and of the Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the Company , on the one hand, and of the Holder, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or by the Holder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and judgments referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation (even if the 18 Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any matter, including any action that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 8, no Holder, its directors, its officers or any Person, if any, who controls such Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total proceeds received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 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. The Holders' obligations to contribute pursuant to this Section 8(d) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not joint. The Company agrees that the indemnity and contribution provisions of this Section 8 shall apply to Affiliated Market Makers to the same extent, on the same conditions, as they apply to Holders. SECTION 9 RULE 144A AND RULE 144 ---------------------- The Company agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. SECTION 10 MISCELLANEOUS ------------- (a) Remedies. The Company acknowledge and agree that any failure by -------- the Company to comply with its obligations under Sections 3 and 4 hereof may result in material irreparable injury to the Initial Purchaser or the Holders or Affiliated Market Makers for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchaser or any Holder or Affiliated Market Makers may obtain such relief as may be required to specifically enforce the Company's obligations under Sections 3 and 4 hereof. The Company further 19 agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Company will not, on or after -------------------------- the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The Company has not previously entered into any agreement granting any registration rights with respect to its securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under any agreement in effect on the date hereof. (c) Amendments and Waivers. The provisions of this Agreement may not ---------------------- be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of Section 5 hereof and this Section 10(c)(i), the Company has obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer, and that does not affect directly or indirectly the rights of other Holders whose Transfer Restricted Securities are not being tendered pursuant to such Exchange Offer, may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (d) Third Party Beneficiary. The Holders and Affiliated Market ----------------------- Makers shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial Purchaser, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect their rights or the rights of Holders and Affiliated Market Makers hereunder. (e) Notices. All notices and other communications provided for or ------- permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Senior Subordinated Note Indenture, with a copy to the Registrar under the Senior Subordinated Note Indenture; and 20 (ii) if to the Company: P&L Coal Holdings Corporation 701 Market Street St. Louis, MO 63101-1826 Telecopier No.: 314-342-3449 Attention: Chief Financial Officer With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017-3954 Telecopier No.: 212-455-2502 Attention: Rise B. Norman All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Senior Subordinated Note Trustee at the address specified in the Senior Subordinated Note Indenture. Upon the date of filing of the Exchange Offer or a Shelf Registration Statement, as the case may be, notice shall be delivered (in the form attached hereto as Exhibit A) and shall be addressed to: Lehman Brothers Inc. Attention: Randy Stuzin, 3 World Financial Center, 200 Vesey Street, New York, New York 10285. (f) Successors and Assigns. This Agreement shall inure to the ---------------------- benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders; provided, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement or the Senior Subordinated Note Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof. (g) Counterparts. This Agreement may be executed in any number of ------------ counterparts and by the parties hereto in separate counterparts, each of which when so 21 EXHIBIT 4.8 executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of -------- reference only and shall not limit or otherwise affect the meaning hereof. (i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED ------------- IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. (j) Severability. In the event that any one or more of the ------------ provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement is intended by the parties as a ---------------- final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. P&L Coal Holdings Corporation /s/ Felix Herlihy By:___________________________ Name: Felix Herlihy Title: Vice President, Treasurer and Assistant Secretary Accepted: Lehman Brothers Inc. /s/ Alexander V. Ponomarenko By: _____________________________ Name: Alexander V. Ponomarenko Title: Authorized Signatory 1 EXHIBIT A NOTICE OF FILING OF A/B EXCHANGE OFFER REGISTRATION STATEMENT To: Lehman Brothers, Inc. 3 World Financial Center 200 Vesey Street New York, New York 10285 Attention: Randy Stuzin Fax: (212) 526-4911 From: P&L Coal Holdings Corporation $500,000,000 9-5/8% Senior Subordinated Notes due 2008 Date: ___________, 199__ For your information only (NO ACTION REQUIRED): Today, ____________, 199 -, we filed [an A/B Exchange Registration -- Statement/a Shelf Registration Statement] with the Securities and Exchange Commission. We currently expect this registration statement to be declared effective within ____ business days of the date hereof. 2 EX-5 113 OPINION OF SIMPSON THACHER & BARTLETT EXHIBIT 5 July 14, 1998 P&L Coal Holdings Corporation 701 Market Street St. Louis, MO 63101-1826 Ladies and Gentlemen: We have acted as special counsel for P&L Coal Holdings Corporation, a Delaware corporation (the "Company"), in connection with the Registration Statement on Form S-4 (the "Registration Statement") filed by the Company with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), relating to the issuance by the Company of $400,000,000 aggregate principal amount of its 8-7/8% Series B Senior Notes due 2008 (the "Senior Exchange Notes"), guaranteed (the "Senior Guarantees") on a senior basis by the entities listed on Schedule A hereto (collectively, the "Guarantors") and $500,000,000 aggregate principal amount of its 9-5/8% Series B Senior Subordinated Notes due 2008 (the "Senior Subordinated Exchange Notes" and together with the Senior Exchange Notes, the "Exchange Notes"), guaranteed (the "Senior Subordinated Guarantees" and together with the Senior Guarantees, the "Guarantees") on a senior subordinated basis by the Guarantors. The Senior Exchange Notes are to be offered by the Company in exchange for (the "Senior Exchange") $400,000,000 aggregate principal amount of its outstanding 8-7/8% Senior Notes due 2008 (the "Senior Notes") and the Senior Subordinated P&L Coal Holdings Corporation -2- July 14, 1998 Exchange Notes are to be offered by the Company in exchange for (the "Subordinated Exchange" and together with the Senior Exchange, the "Exchanges") $500,000,000 aggregate principal amount of its outstanding 9-5/8% Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes"). The Senior Notes have been, and the Senior Exchange Notes will be, issued under an Indenture, dated as of May 18, 1998 (the "Senior Indenture"), between the Company and State Street Bank and Trust Company, as Trustee. The Senior Subordinated Notes have been, and the Senior Subordinated Exchange Notes will be, issued under an Indenture, dated as of May 18, 1998 (the "Senior Subordinated Indenture" and together with the Senior Indenture, the "Indentures"), between the Company and State Street Bank Trust Company, as Trustee. We have examined the Registration Statement and the Indentures, which have been filed with the Commission as Exhibits to the Registration Statement. In addition, we have examined, and have relied as to matters of fact upon, the originals or copies, certified or otherwise identified to our satisfaction, of such corporate records, agreements, documents and other instruments and such certificates or comparable documents of public officials and of officers and representatives of the Company, and have made such other and further investigations, as we have deemed relevant and necessary as a basis for the opinions hereinafter set forth. In such examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as P&L Coal Holdings Corporation -3- July 14, 1998 certified or photostatic copies, and the authenticity of the originals of such latter documents. Based upon the foregoing, and subject to the qualifications and limitations stated herein, we are of the opinion that: 1. Assuming the Indentures have been duly authorized and validly executed and delivered by the respective parties thereto, when (1) the respective Indentures have been duly qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), (2) the Board of Directors of the Company, a duly constituted and acting committee thereof or duly authorized officers thereof have taken all necessary corporate action to approve the issuance and terms of the Exchange Notes, the terms of the Exchanges and related matters, and (3) the Exchange Notes have been duly executed, authenticated, issued and delivered in accordance with the provisions of the respective Indentures upon the Exchanges, the Exchange Notes will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the respective Indentures. 2. Assuming the Indentures have been duly authorized and validly executed and delivered by the parties thereto, when (1) the Indentures have been duly qualified under the Trust Indenture Act, (2) the Board of Directors of the Company, a duly constituted and acting committee thereof or duly authorized officers thereof have taken all necessary corporate action to approve the issuance and terms of the Exchange Notes, the terms of the Exchanges and related matters, (3) the Board of Directors of each Guarantor, a duly constituted and acting committee thereof or duly authorized officers thereof have taken all necessary corporate action to approve the issuance and terms of such Guarantor's Guarantee and (4) the Exchange Notes and the Guarantees endorsed thereon have been duly executed, authenticated, issued and delivered in accordance with the provisions of the respective Indentures upon the Exchanges, each Guarantor's Guarantee will constitute a valid and legally binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms and entitled to the benefits of the respective Indentures. Our opinions set forth in paragraphs 1 and 2 above are subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other P&L Coal Holdings Corporation -4- July 14, 1998 similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing. We are members of the Bar of the State of New York and we do not express any opinion herein concerning any law other than the law of the State of New York, the federal law of the United States and the Delaware General Corporation Law. We hereby consent to the use of this opinion as an Exhibit to the Registration Statement and to the reference to our firm under the caption "Legal Matters" in the Prospectus included therein. Very truly yours, /s/ Simpson Thacher & Bartlett ------------------------------ SIMPSON THACHER & BARTLETT SCHEDULE A Guarantors - ---------- Affinity Mining Company Arid Operations, Inc. Big Sky Coal Company Blackrock First Capital Corporation Bluegrass Coal Company Caballo Coal Company Charles Coal Company Coal Properties Corp. Colony Bay Coal Company Cook Mountain Coal Company Cottonwood Land Company Darius Gold Mine Inc. EACC Camps, Inc. Eastern Associated Coal Corp. Eastern Royalty Corp. Gold Fields Chile, S.A. Gold Fields Mining Corporation Gold Fields Operating Co. - Ortiz Grand Eagle Mining, Inc. Hayden Gulch Terminal, Inc. Independence Material Handling Company Interior Holdings Corp. James River Coal Terminal Company Juniper Coal Company Kayenta Mobile Home Park, Inc. Martinka Coal Company Midco Supply and Equipment Corporation Midwest Coal Resources, Inc. Mountain View Coal Company North Page Coal Corp. Ohio County Coal Company Patriot Coal Company, L.P. Peabody America, Inc. Peabody Coal Company Peabody COALSALES Company Peabody COALTRADE, Inc. Peabody Development Company Peabody Energy Solutions, Inc. Peabody Holding Company, Inc. Peabody Natural Resources Company Peabody Terminals, Inc. Peabody Venezuela Coal Corp. Peabody Western Coal Company Pine Ridge Coal Company P&L Coal Holdings Corporation -6- July 14, 1998 Powder River Coal Company Rio Escondido Coal Corp. Seneca Coal Company Sentry Mining Company Snowberry Land Company Sterling Smokeless Coal Company Thoroughbred, L.L.C. EX-10.1 114 AMENDED & RESTATED CREDIT AGMT DATED 6/9/1998 EXHIBIT 10.1 ================================================================================ P&L COAL HOLDINGS CORPORATION, a Delaware corporation, as Borrower _________________________ AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 9, 1998 _________________________ $1,400,000,000 Credit Facility _________________________ THE LENDERS PARTY HERETO, LEHMAN COMMERCIAL PAPER INC., as Syndication Agent LEHMAN BROTHERS INC., as Arranger, THE FIRST NATIONAL BANK OF CHICAGO, as Administrative Agent and BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION and THE FUJI BANK, LIMITED, as Documentation Agents ================================================================================ TABLE OF CONTENTS -----------------
Page ---- SECTION 1. DEFINITIONS................................................................ 2 1.1 Defined Terms.............................................................. 2 1.2 Other Definitional Provisions.............................................. 24 1.3 Interrelationship with Original Credit Agreement........................... 24 1.4 Confirmation of Existing Obligations....................................... 25 SECTION 2. AMOUNT AND TERMS OF COMMITMENTS AND LOANS.................................. 25 2.1 Commitments................................................................ 25 2.2 Procedure for Borrowing.................................................... 27 2.3 Commitment Fee............................................................. 28 2.4 Termination or Reduction of Revolving Credit Commitments................... 28 2.5 Repayment of Loans; Evidence of Debt....................................... 28 2.6 Optional Prepayments; Mandatory Prepayments and Reduction of Commitments... 32 2.7 Conversion and Continuation Options........................................ 34 2.8 Minimum Amounts and Maximum Number of Tranches............................. 34 2.9 Interest Rates and Payment Dates........................................... 35 2.10 Computation of Interest and Fees........................................... 35 2.11 Inability to Determine Interest Rate....................................... 35 2.12 Pro Rata Treatment and Payments............................................ 36 2.13 Illegality................................................................. 37 2.14 Requirements of Law........................................................ 37 2.15 Taxes...................................................................... 38 2.16 Indemnity.................................................................. 40 2.17 Replacement of Lenders..................................................... 41 2.18 Certain Fees............................................................... 41 2.19 Certain Rules Relating to the Payment of Additional Amounts................ 41 SECTION 3. LETTERS OF CREDIT.......................................................... 42 3.1 L/C Commitment............................................................. 42 3.2 Procedure for Issuance of Letters of Credit................................ 42 3.3 Fees, Commissions and Other Charges........................................ 43 3.4 L/C Participation.......................................................... 43 3.5 Reimbursement Obligation of the Borrower................................... 44 3.6 Obligations Absolute....................................................... 45 3.7 Letter of Credit Payments.................................................. 45 3.8 Application................................................................ 45 SECTION 4. REPRESENTATIONS AND WARRANTIES............................................. 45 4.1 Financial Statements and Condition......................................... 45 4.2 No Change.................................................................. 46 4.3 Corporate Existence........................................................ 46
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Page ---- 4.4 Corporate Power; Authorization; Enforceable Obligations; No Conflict............ 46 4.5 No Legal Bar.................................................................... 47 4.6 Litigation; Compliance with Laws; Reserves...................................... 47 4.7 No Default...................................................................... 47 4.8 Ownership and Location of Property; Liens....................................... 47 4.9 Intellectual Property........................................................... 49 4.10 Taxes........................................................................... 49 4.11 Federal Regulations............................................................. 49 4.12 ERISA; Coal Act; Black Lung Act................................................. 49 4.13 Investment Company Act; Other Regulations....................................... 50 4.14 Subsidiaries and Other Investments.............................................. 50 4.15 Purpose of Loans................................................................ 50 4.16 Environmental Matters........................................................... 51 4.17 Collateral Documents............................................................ 52 4.18 Accuracy and Completeness of Information........................................ 52 4.19 Solvency........................................................................ 53 4.20 Labor Matters................................................................... 53 4.21 Transaction Documents........................................................... 53 4.22 Insurance....................................................................... 53 4.23 Receipt of Proceeds............................................................. 54 4.24 Coal Supply Agreements.......................................................... 54 4.25 Mines........................................................................... 54 4.26 Titled Equipment................................................................ 54 4.27 Acts of God..................................................................... 54 4.28 Surety Bonds.................................................................... 54 4.29 Coal Sales...................................................................... 54 SECTION 5. CONDITIONS PRECEDENT............................................................ 55 5.1 Effective Date.................................................................. 55 5.2 [RESERVED]...................................................................... 57 5.3 Conditions to a Credit Event.................................................... 57 SECTION 6. AFFIRMATIVE COVENANTS........................................................... 58 6.1 Financial Statements............................................................ 58 6.2 Certificates; Other Information................................................. 58 6.3 Payment of Obligations.......................................................... 59 6.4 Existence; Businesses and Properties............................................ 59 6.5 Insurance....................................................................... 60 6.6 Inspection of Properties; Books and Records; Discussions........................ 61 6.7 Notices......................................................................... 62 6.8 Mining and Environmental Laws................................................... 63 6.9 Further Assurances.............................................................. 63 6.10 Additional Collateral........................................................... 63 6.11 Interest Rate Protection........................................................ 68 6.12 Foreign Jurisdictions........................................................... 69 6.13 Maintenance of Collateral; Alterations.......................................... 69 6.14 Use of Proceeds................................................................. 69
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Page ---- 6.15 [RESERVED]...................................................................... 69 6.16 Preparation of Environmental Reports............................................ 69 6.17 Citizens Debt................................................................... 69 6.18 Maintenance of Coal Reserves.................................................... 69 6.19 Coal Supply Agreements.......................................................... 69 6.20 Exploration and Reserves........................................................ 70 6.21 Certain Long Term Liabilities and Environmental Reserves........................ 70 6.22 [RESERVED]...................................................................... 70 6.23 Unrestricted Subsidiaries....................................................... 70 SECTION 7. NEGATIVE COVENANTS.............................................................. 70 7.1 Financial Condition Covenants................................................... 71 7.2 Limitation on Indebtedness...................................................... 72 7.3 Limitation on Liens............................................................. 74 7.4 Limitation on Guarantee Obligations............................................. 76 7.5 Limitation on Fundamental Changes............................................... 77 7.6 Limitation on Sale of Assets.................................................... 77 7.7 Dividends and Distributions; Restrictions on Ability of Restricted Subsidiaries to Pay Dividends............................................................... 79 7.8 Limitation on Capital Expenditures.............................................. 80 7.9 Limitation on Investments, Loans and Advances................................... 80 7.10 Limitation on Optional Payments and Modifications of Instruments and Agreements. 82 7.11 Limitation on Transactions with Affiliates...................................... 82 7.12 Limitation on Sales and Leasebacks.............................................. 83 7.13 Limitation on Changes in Fiscal Year............................................ 84 7.14 Limitation on Negative Pledge Clauses........................................... 84 7.15 Limitation on Lines of Business................................................. 84 7.16 Designated Senior Debt.......................................................... 84 SECTION 8. EVENTS OF DEFAULT............................................................... 84 SECTION 9. THE AGENTS...................................................................... 88 9.1 Appointment..................................................................... 88 9.2 Delegation of Duties............................................................ 88 9.3 Exculpatory Provisions.......................................................... 88 9.4 Reliance by Agents.............................................................. 89 9.5 Notice of Default............................................................... 89 9.6 Non-Reliance on Agents and Other Lenders........................................ 89 9.7 Indemnification................................................................. 90 9.8 Agents, in Their Individual Capacities.......................................... 90 9.9 Successor Administrative Agent.................................................. 90 9.10 The Arranger.................................................................... 91 SECTION 10. MISCELLANEOUS................................................................... 91 10.1 Amendments and Waivers.......................................................... 91 10.2 Notices......................................................................... 92
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Page ---- 10.3 No Waiver; Cumulative Remedies.................................................. 94 10.4 Survival of Representations and Warranties...................................... 94 10.5 Payment of Expenses and Taxes................................................... 94 10.6 Successors and Assigns; Participations and Assignments.......................... 94 10.7 Adjustments; Set-off............................................................ 98 10.8 Counterparts.................................................................... 98 10.9 Severability.................................................................... 98 10.10 Integration..................................................................... 98 10.11 Governing Law................................................................... 98 10.12 Submission to Jurisdiction; Waivers............................................. 99 10.13 Acknowledgements................................................................ 99 10.14 Waivers of Jury Trial........................................................... 100 10.15 Confidentiality................................................................. 100 10.16 Prudential Note................................................................. 100 10.17 Year 2000....................................................................... 100 10.18 Existing Agreements Superseded.................................................. 101
-iv- EXHIBITS Exhibit A-1 Form of Tranche A Term Note Exhibit A-2 Form of Tranche B Term Note Exhibit A-3 Form of Revolving Credit Note Exhibit A-4 Form of Swing Line Note Exhibit B Form of Guarantee and Collateral Agreement Exhibit C-1 Form of Legal Opinion of Simpson Thacher & Bartlett with respect to the Borrower and the other Credit Parties Exhibit C-2 Form of Legal Opinion of Jeffery Klinger with respect to the Borrower and the other Credit Parties Exhibit D Form of Notice of Borrowing Exhibit E Form of Certificate of Non-U.S. Lender Exhibit F Form of Assignment and Acceptance Exhibit G Form of Confirmation Agreement Exhibit H Form of Subordination Agreement Exhibit I Form of Patent Security Agreement Exhibit J Form of Trademark Security Agreement SCHEDULES Schedule I Lenders and Commitments Schedule II Pricing Grid Schedule III Transaction Documents Schedule IV Coal Act Schedule V Black Lung Act Schedule VI Retiree Welfare Benefits Schedule 4.4 Required Consents Schedule 4.5 No Legal Bar Schedule 4.6 Material Litigation Schedule 4.8 Real Property Schedule 4.9 Intellectual Property Claims Schedule 4.12 ERISA Schedule 4.14 Subsidiaries Schedule 4.16 Environmental Matters Schedule 4.17 Filing Jurisdictions Schedule 4.22 Existing Insurance Schedule 4.24 Coal Supply Agreements Schedule 4.25 Mines Schedule 6.10 Certain Real Property Schedule 7.2(e) Existing Indebtedness Schedule 7.3(f) Existing Liens Schedule 7.4 Existing Guarantee Obligations Schedule 7.7 Operating Leases Schedule 7.9(e) Existing Investments THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 9, 1998, among P&L Coal Holdings Corporation, a Delaware corporation (the "Borrower"), -------- the several lenders from time to time parties hereto (the "Lenders"), Lehman ------- Brothers Inc., as arranger (in such capacity, the "Arranger"), Lehman Commercial -------- Paper Inc. ("LCPI"), as syndication agent (in such capacity, the "Syndication ---- ----------- Agent"), Bank of America National Trust & Savings Association and The Fuji Bank, - ----- Limited, each as documentation agent (the "Documentation Agents") and The First -------------------- National Bank of Chicago, as administrative agent for the Agents (as defined below) and the Lenders (in such capacity, the "Administrative Agent"), AMENDS -------------------- AND RESTATES IN FULL the Credit Agreement, dated as of May 14, 1998 (the "Original Credit Agreement"), among the Borrower, LCPI, as lender (the "Original ------------------------- -------- Lender"), the Arranger, the Syndication Agent, LCPI, as administrative agent - ------ (the "Original Administrative Agent"), and LCPI, as documentation agent (the ----------------------------- "Original Documentation Agent"); this amendment and restatement of the Original ---------------------------- Credit Agreement, as amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement". ---------------- W I T N E S S E T H: - - - - - - - - - - WHEREAS, Texas Utilities Company ("TU") previously made an offer (the -- "Offer") to the shareholders of The Energy Group PLC ("TEG"), a diversified ----- --- energy company with its principal place of business in London, England, which offer was conditioned upon the sale by Energy Holdings (No. 2) Ltd. and Peabody Investments, Inc. (collectively, the "Seller"), each a Subsidiary of TEG, to the ------ Borrower of (i) all of the outstanding Capital Stock of the Acquired Companies and (ii) the Minority Interests for $2,064,994,000 in cash (the "Cash ---- Consideration"); - ------------- WHEREAS, the Original Lender previously extended credit to the Borrower under the Original Credit Agreement to (i) finance the Acquisition and related fees and expenses, (ii) repay up to $50,000,000 of Indebtedness of Peabody Australia and its Subsidiaries, (iii) if necessary, provide cash collateral for certain letters of credit of the Acquired Subsidiaries and (iv) to finance the working capital and other general corporate needs of the Borrower and its Restricted Subsidiaries in the ordinary course of business and to make certain investments permitted thereunder; WHEREAS, the Borrower has requested that the Original Credit Agreement be amended and restated in full as set forth herein; WHEREAS, the Original Lender and the Original Agents are willing so to amend and restate the Original Credit Agreement and to continue to extend credit to the Borrower, upon and subject to the terms and conditions set forth herein, and in connection therewith (i) the Original Lender will be assigning a portion of its Loans and Commitments under the Original Credit Agreement to the Lenders in the amounts set forth on Schedule I hereto, (ii) the Administrative Agent will be replacing the Original Administrative Agent and (iii) the Documentation Agents will be replacing the Original Documentation Agent; WHEREAS, it is the intent of the Borrower, the Original Lender, the Lenders, the Original Agents and the Agents that this Credit Agreement amend and restate in its entirety the Original Credit Agreement and that, from and after the Effective Date, the Original Credit Agreement shall be of no force and effect except to evidence the terms and conditions under which the Borrower heretofore has incurred obligations and liabilities to the Original Lender and the Original Agents (as evidenced by the Original Credit Agreement and the Original Administrative Agent's books and records); and WHEREAS, this Credit Agreement is made in renewal, amendment, restatement and modification of, but not in extinguishment of, the obligations under the Original Credit Agreement. NOW, THEREFORE, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Defined Terms. As used in this Agreement, the following terms ------------- shall have the following meanings: "Acquired Companies": collectively, PHCI, Citizens, Gold Fields, ------------------- Darex and Peabody Australia. "Acquired Subsidiaries": collectively, the Acquired Companies and --------------------- their respective Subsidiaries. "Acquisition": the acquisition by the Borrower of (i) all of the ----------- outstanding Capital Stock of the Acquired Companies and (ii) the Minority Interests, on the terms and conditions set forth in the Acquisition Agreement. "Acquisition Agreement": the Agreement dated as of March 2, 1998, --------------------- between the Borrower and TEG, as the same may be amended, modified or supplemented from time to time not in violation of the terms hereof. "Adjustment Date": the fifth day following the receipt by the --------------- Administrative Agent of the financial statements for the most recently completed fiscal period furnished pursuant to subsection 6.1(a) or (b), as the case may be, and the compliance certificate with respect to such financial statements furnished pursuant to subsection 6.2(c). For purposes of determining the Applicable Margin and the Commitment Fee Rate, the first "Adjustment Date" shall mean the date on which the financial statements for --------------- the fiscal quarter ended September 30, 1998 furnished pursuant to subsection 6.1(b) and the related compliance certificate furnished pursuant to subsection 6.2(c) are delivered to the Administrative Agent pursuant to subsection 6.1(b) and 6.2(c), respectively. "Affiliate": as to any Person, any other Person which, directly or --------- indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person ------- means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "Agents": the collective reference to the Arranger, the Syndication ------ Agent, the Documentation Agents and the Administrative Agent. "Aggregate Outstanding Extensions of Credit": as to any Lender with ------------------------------------------ respect to any Type of Loan at any time, an amount equal to the sum of (a) the aggregate principal amount of all Loans of such Type made by such Lender then outstanding and (b) in the case of 2 Revolving Credit Loans, such Lender's Commitment Percentage of the L/C Obligations then outstanding. "Agreement": this Credit Agreement, as amended, restated, supplemented --------- or otherwise modified from time to time. "Applicable Margin": at any time, the percentages set forth on ----------------- Schedule II under the relevant column heading opposite the level of the Debt Ratio most recently determined; provided that (a) the Applicable Margins commencing on the Closing Date (or, if earlier, the Escrow Date) shall be those set forth in Schedule II opposite a Debt Ratio captioned "4.75x" until the first Adjustment Date, (b) the Applicable Margins determined for any Adjustment Date (including the first Adjustment Date) shall remain in effect until a subsequent Adjustment Date for which the Debt Ratio falls within a different level and (c) if the financial statements and related compliance certificate for any fiscal period are not delivered by the date due pursuant to subsections 6.1 and 6.2, the Applicable Margins shall be (i) for the first 35 days subsequent to such due date, the Applicable Margin in effect prior to such due date and (ii) thereafter, those set forth opposite a Debt Ratio captioned "4.75x" in either case, until the date of delivery of such financial statements and compliance certificate. "Application": an application or request, in such form as the Issuing ----------- Lender may specify from time to time and delivered by such means (including, without limitation, by facsimile or other means of electronic transmission or pursuant to a computerized system established by the Issuing Lender) as the Issuing Lender and the Borrower may from time to time agree, requesting the Issuing Lender to issue a Letter of Credit. "Asset Sale": any sale, sale and leaseback, or other disposition by ---------- any Person or any Subsidiary thereof of any of its property or assets, including the stock of any Subsidiary of such Person, except (i) sales and dispositions permitted by subsection 7.6 (other than subsection 7.6(b), (e), (k) or (m)) and (ii) a sale and leaseback of property or assets consummated within 180 days of the initial acquisition of such property or assets by such Person or its Subsidiary. "Assignee": as defined in subsection 10.6(c). -------- "Attributable Debt": in respect of a sale and leaseback transaction ----------------- resulting in a Financing Lease, at the time of determination, the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with GAAP) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended). "Available Commitment": as to any Lender and any Type of Loan, at any -------------------- time, an amount equal to the excess, if any, of (a) such Lender's Commitment with respect to such Type of Loan minus (b) such Lender's Aggregate Outstanding Extensions of Credit with respect to such Type of Loan. "Base Rate": for any day, the higher of: (a) 0.50% per annum above --------- the latest Federal Funds Rate; and (b) the per annum rate of interest in effect for such day as announced from 3 time to time by the Administrative Agent as its "corporate base rate", ------------------- "reference rate", "prime rate" or the substantial equivalent of any -------------- ---------- thereof. "Base Rate Loans": Loans the rate of interest applicable to which is --------------- based upon the Base Rate. "Black Lung Act": collectively, the Black Lung Benefits Revenue Act of -------------- 1977, as amended and the Black Lung Benefits Reform Act of 1977, as amended. "Borrowing Date": any Business Day specified in a notice pursuant to -------------- subsection 2.2 as a date on which the Borrower requests the Lenders to make Loans hereunder. "Business": as defined in subsection 4.16(b). -------- "Business Day": a day other than a Saturday, Sunday or other day on ------------ which commercial banks in New York, New York, or Chicago, Illinois, are authorized or required by law to close and, if the applicable Business Day relates to LIBOR Loans, any day on which dealings are carried on in the applicable London interbank market. "Capital Expenditures": for any fiscal period, the aggregate of all -------------------- expenditures that, in conformity with GAAP (but excluding capitalized interest), are or are required to be included as additions during such period to property, plant or equipment reflected on the consolidated balance sheet of the Borrower and its Subsidiaries, excluding the expenditures relating to the Transaction and the non-cash component of any federal coal lease obligations during such period. "Capital Lease Obligations": of any Person as of the date of ------------------------- determination, the aggregate liability of such Person under Financing Leases reflected on a balance sheet of such Person under GAAP. "Capital Stock": any and all shares, interests, participations or ------------- other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. "Cash Consideration": as defined in the recitals to this Agreement. ------------------ "Cash Equivalents": (a) securities with maturities of one year or ---------------- less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and time deposits with maturities of one year or less from the date of acquisition and overnight bank deposits of any Lender or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 90 days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) commercial paper of a domestic issuer rated at least A-2 by Standard and Poor's Ratings Group ("S&P") or --- P-2 by Moody's Investors Service, Inc. ("Moody's"), or carrying an ------- equivalent rating by a nationally recognized rating agency if both of S&P and Moody's cease publishing ratings of investments, (e) securities 4 with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody's, (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Chaco Royalty Stream": the royalty payments pursuant to the coal -------------------- lease dated April 15, 1977 between Hospah Coal Company and Chaco Energy Company, as amended and assigned to one of the Borrower's Restricted Subsidiaries. "Change in Control": (i) prior to the effectiveness of an initial ----------------- registered public offering of Capital Stock by the Borrower, (A) LBMBP II and its Affiliates shall cease to have the power to vote or direct the voting of securities having a majority of the ordinary voting power for the election of directors or managers of the Borrower (determined on a fully diluted basis), (B) LBMBP II and its Affiliates shall cease to own of record and beneficially at least a majority of the outstanding common stock of the Borrower or (C) the board of directors or managers of the Borrower shall cease to consist of a majority of directors or managers appointed by LBMBP II; and (ii) after the effectiveness of an initial registered public offering of Capital Stock by the Borrower, (A) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding LBMBP II and its ------------ Affiliates shall (x) become, or obtain rights (whether by means or warrants, options or otherwise) to become, the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of a greater percentage of the outstanding common stock of the Borrower than the percentage of such common stock owned by LBMBP II and its Affiliates or (y) have the power to vote or direct the voting of securities having a majority of the ordinary voting power for the election of directors or managers of the Borrower (determined on a fully diluted basis). "Citizens": Citizens Power LLC, a Delaware Limited Liability Company. -------- "Citizens Entities": Citizens and its Subsidiaries. ----------------- "Class": (i) Lenders having Tranche A Term Loan Exposure and/or ----- Revolving Credit Loan Exposure (taken together as a single class) and (ii) Lenders having Tranche B Term Loan Exposure. "Closing Date": May 19, 1998. ------------ "Coal": all of the coal owned or leased by any Credit Party and (i) ---- located on, under, or within, or (ii) produced and severed from, the properties owned or leased by any Credit Party. "Coal Act": the Coal Industry Retiree Health Benefits Act of 1992, as -------- amended. 5 "Coal Supply Agreements": those contracts now in effect or hereafter ---------------------- entered into by the Borrower or any of its Subsidiaries for the sale, purchase, exchange, processing or handling of Coal with an initial term of more than one year. "Code": the Internal Revenue Code of 1986, as amended from time to ---- time. "Collateral": all assets of the Credit Parties, now owned or ---------- hereafter acquired, upon which a Lien is purported to be created by this Agreement or any Security Document. "Collateral Amount": as defined in subsection 7.6. ----------------- "Commitment": as to any Lender, such Lender's Tranche A Term Loan ---------- Commitment, Tranche B Term Loan Commitment, and Revolving Credit Commitment. "Commitment Fee Rate": at any time, the rates per annum set forth on ------------------- Schedule II under the relevant column heading opposite the level of the Debt Ratio most recently determined; provided that (a) the Commitment Fee Rate commencing on the Closing Date (or, if earlier, the Escrow Date) shall be that set forth in Schedule II opposite a Debt Ratio captioned "4.75x" until the first Adjustment Date, (b) the Commitment Fee Rate determined for any Adjustment Date (including the first Adjustment Date) shall remain in effect until a subsequent Adjustment Date for which the Debt Ratio falls within a different level and (c) if the financial statements and related compliance certificate for any fiscal period are not delivered by the date due pursuant to subsections 6.1 and 6.2, the Commitment Fee Rate shall be (i) for the first 35 days subsequent to such due date, the Commitment Fee Rate in effect prior to such due date and (ii) thereafter, that set forth opposite a Debt Ratio captioned "4.75x," in either case, until the date of delivery of such financial statements and compliance certificate. "Commitment Percentage": as to the Commitment of any Lender with --------------------- respect to any Type of Loan at any time, the percentage which the Commitment of such Lender with respect to such Type of Loan then constitutes of the aggregate Commitments with respect to such Type of Loan (or, at any time after such Commitments shall have expired or terminated, the percentage which the aggregate amount of the Aggregate Outstanding Extensions of Credit of such Lender with respect to such Type of Loan constitutes of the aggregate amount of the Aggregate Outstanding Extensions of Credit of all Lenders with respect to such Type of Loan). "Commitment Period": the period from and including the Effective Date ----------------- to but not including the Revolving Loan Termination Date or such earlier date on which the Revolving Credit Commitments shall terminate as provided herein. "Commonly Controlled Entity": an entity, whether or not incorporated, -------------------------- which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414 (b) or (c) of the Code. "Confirmation Agreement": the Confirmation Agreement dated as of the ---------------------- date hereof substantially in the form of Exhibit G, by the Borrower and the other Credit Parties in favor of 6 the Agents and the Lenders, as the same may be amended, supplemented or otherwise modified from time to time. "Consolidated": consolidation in accordance with GAAP, but excluding ------------ any Unrestricted Subsidiary. "Consolidated Cash Interest Expense": as of the last day of any ---------------------------------- fiscal quarter, the amount of interest expense, payable in cash of the Borrower and its Restricted Subsidiaries determined in accordance with GAAP, for the four fiscal quarters ended on such date; provided that for any calculation of Consolidated Cash Interest Expense for any fiscal period ending during the first three full fiscal quarters following June 30, 1998, Consolidated Cash Interest Expense shall be deemed to be Consolidated Cash Interest Expense from June 30, 1998 to the last day of such period multiplied by a fraction the numerator of which is 365 and the denominator of which is the number of days from June 30, 1998 to the last day of such period. "Consolidated EBITDA": as of the last day of any fiscal quarter, ------------------- Consolidated Net Income for such quarter (excluding without duplication, (w) noncash compensation expenses related to common stock and other equity securities issued to employees, (x) extraordinary or non-recurring gains and losses in accordance with GAAP, (y) gains or losses on discontinued operations and (z) any FAS 121 writedowns, in each case for such quarter), plus (i) consolidated interest expense for such quarter, determined in accordance with GAAP, plus (ii) any minority interests share of income and losses plus (iii) to the extent deducted in computing such Consolidated Net Income, the sum of all income taxes, depreciation, depletion and amortization of property, plant, equipment and intangibles, in each case for such quarter. "Consolidated Net Income": for any fiscal period, net income of the ----------------------- Borrower and its Restricted Subsidiaries for such period, determined in accordance with GAAP. "Consolidated Total Debt": at any date, all indebtedness of the ----------------------- Borrower and its Restricted Subsidiaries outstanding on such date for borrowed money, the deferred purchase price of property (other than (i) current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices and accrued expenses incurred in the ordinary course of business, (ii) obligations under federal coal leases, (iii) obligations under coal leases which may be terminated at the discretion of the lessee and (iv) deferred purchase obligations in connection with the acquisition of the Martinka mine) and all obligations of the Borrower and its Restricted Subsidiaries in respect of Financing Leases; provided, that Consolidated Total Debt shall not include, in any event, Non-Recourse Debt. "Consolidated Working Capital": at any date, the excess of (a) the sum ---------------------------- of all amounts (other than cash and Cash Equivalents) that would, in accordance with GAAP, be set forth opposite the caption "total current ------------- assets"any like caption) on a consolidated balance sheet of the Borrower ------ and its Restricted Subsidiaries at such date minus (b) the sum of all amounts that would, in accordance with GAAP, be set forth opposite the caption "total current liabilities" (or any like caption) on a consolidated ------------------------- balance sheet of the Borrower and its Restricted Subsidiaries on such date (excluding, to the extent it would otherwise be included under current liabilities, any short-term Consolidated Total Debt and the current portion of any long-term Consolidated Total Debt). 7 "Constitutional Documents": as to any Person, the articles or ------------------------ certificate of incorporation and by-laws, partnership agreement or other organizational documents of such Person. "Contractual Obligation": as to any Person, any provision of any ---------------------- security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Credit Documents": this Agreement, the Notes, the Applications, the ---------------- Subordination Agreement, the Security Documents and the Confirmation Agreement. "Credit Event": the obligation of any Lender to make a Loan or of the ------------ Issuing Lender to issue a Letter of Credit. "Credit Parties": the Borrower and each Subsidiary of the Borrower -------------- which is a party to a Credit Document. "Darex": Darex Capital Inc., a corporation organized under the laws of ----- the Republic of Panama. "Debt Ratio": as at the last day of any fiscal quarter, the ratio of ---------- (a) Consolidated Total Debt on such date to (b) Consolidated EBITDA for the four fiscal quarters ended on such date. "Default": any of the events specified in Section 8, whether or not ------- any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Dollars" and "$": dollars in lawful currency of the United States of ------- - America. "EBITDA": for any Person, as of the last day of any fiscal quarter, ------ Net Income of such Person for such quarter (excluding without duplication, (w) noncash compensation expenses related to common stock and other equity securities issued to employees, (x) extraordinary or non-recurring gains and losses in accordance with GAAP, (y) gains or losses on discontinued operations and (z) any FAS 121 writedowns, in each case, for such quarter), plus (i) consolidated interest expense for such quarter, determined in accordance with GAAP, plus (ii) any minority interests share of income and losses plus (iii) to the extent deducted in computing such Net Income, the sum of all income taxes, depreciation, depletion and amortization of property, plant, equipment and intangibles, in each case, for such quarter. "Effective Date": the first date on which all of the conditions -------------- precedent set forth in subsection 5.1 have been satisfied. "Equity Documents": the Employment Agreement by and between the ---------------- Borrower and certain management parties; the 1998 Option Plan for Key Employees of the Borrower; the Common Stock Subscription Agreement between the Borrower and certain purchasers of its common stock; the Non-Qualified Stock Option Agreement made by and between the Borrower and certain employees of the Borrower or a Subsidiary or Affiliate of the Borrower; the Dragline Management Proposal; the Stockholders Agreement among the Borrower, 8 LBMBP II, certain affiliates of LBMBP II entities and certain management investors; the Common Stock/Preferred Stock Subscription Agreement between the Borrower and certain other parties; and each other agreement governing the initial equity capitalization of the Borrower and the rights of the equity holders of the Borrower; as each may be amended, modified or supplemented from time to time not in violation of the terms hereof. "Equity Investment": the $480,000,000 equity contribution to be made ----------------- to the Borrower pursuant to the Equity Documents by LBMBP II, its Affiliates and certain members of existing management of the Borrower. "ERISA": the Employee Retirement Income Security Act of 1974, as ----- amended from time to time. "Escrow Date": May 18, 1998. ----------- "Event of Default": any of the events specified in Section 8, ---------------- provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Excess Cash Flow": for any fiscal year of the Borrower, the excess ---------------- of (a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal year, (ii) the net decrease, if any, in Consolidated Working Capital during such fiscal year, (iii) to the extent deducted in computing such Consolidated Net Income, non-cash interest expense, depreciation, depletion and amortization for such fiscal year, (iv) extraordinary non- cash losses during such fiscal year subtracted in the determination of Consolidated Net Income for such fiscal year, (v) net decrease in deferred income tax assets or net increase in deferred income tax liabilities of the Borrower and its Restricted Subsidiaries for such fiscal year, (vi) non- cash losses in connection with asset dispositions whether or not constituting extraordinary losses and (vii) non-cash ordinary losses over ---- (b) the sum, without duplication, of (i) the aggregate amount of permitted cash Capital Expenditures made by the Borrower and its Restricted Subsidiaries during such fiscal year, (ii) the net increase, if any, in Consolidated Working Capital during such fiscal year, (iii) the aggregate amount of payments of principal in respect of any Indebtedness not prohibited hereunder during such fiscal year (other than prepayments of Revolving Credit Loans not accompanied by reductions of the Commitments and prepayments of other short-term lines of credit), (iv) net increase in deferred income tax assets or net decrease in deferred income tax liabilities of the Borrower and its Restricted Subsidiaries for such fiscal year, (v) extraordinary non-cash gains during such fiscal year added in the determination of Consolidated Net Income for such fiscal year, (vi) non- cash gains in connection with asset dispositions whether or not constituting extraordinary gains and (vii) non-cash ordinary gains. "Excess Cash Flow Payment Date": in respect of any fiscal year, the ----------------------------- date on which the Borrower is required to deliver audited financial statements for such fiscal year to each Lender pursuant to subsection 6.1(a). "Federal Funds Rate": means, for any day, the rate per annum (rounded ------------------ upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighed average of the per annum rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers as published by the Federal Reserve Bank of New York for 9 such day (or, if such rate is not so published for any day, the average of the rates quoted by three federal funds brokers to the Administrative Agent on such day on such transactions). "Final Maturity Date": June 30, 2006. ------------------- "Financing Lease": any lease of property, real or personal, the --------------- obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. "Foreign Subsidiary": any Subsidiary which is organized under the ------------------ laws of any jurisdiction outside the United States or under the laws of the U.S. Virgin Islands, excluding any such Subsidiary that is, as of the date of determination, treated as (i) a domestic entity or (ii) a partnership or a division of a domestic entity, in each case for United States federal income tax purposes. "FRB": means the Board of Governors of the Federal Reserve System, --- and any governmental authority succeeding to any of its principal functions. "GAAP": generally accepted accounting principles in the United States ---- of America in effect on March 31, 1998; provided, that with respect to Australian Subsidiaries of the Borrower, "GAAP" shall mean generally accepted accounting principles in Australia to the extent such principles are permitted to be applied in accordance with generally accepted accounting principles in the United States of America. "Gold Fields": Gold Fields Mining Corporation, a Delaware ----------- corporation. "Governmental Authority": any nation or government, any state or ---------------------- other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantee and Collateral Agreement": the Guarantee and Collateral ---------------------------------- Agreement, dated as of May 14, 1998, substantially in the form of Exhibit B, among the Borrower, the Subsidiaries from time to time party thereto and the Original Administrative Agent (as predecessor-in-interest to the Administrative Agent), for the benefit of the Agents and the Lenders, as the same may be amended, supplemented or otherwise modified from time to time. "Guarantee Obligation": as to any Person (the "guaranteeing person"), -------------------- ------------------- any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to the extent the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation in order to induce the creation of such obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any ------------------- other third Person (the "primary obligor") in any manner, whether directly --------------- or indirectly, including, without limitation, reimbursement obligations under letters of credit and any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to 10 purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include (i) indemnification or reimbursement obligations under or in respect of Surety Bonds, (ii) ordinary course performance guarantees by any Credit Party of the obligations (other than for the payment of borrowed money) of any other Credit Party and (iii) endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith. "Hedge Agreement": any Interest Rate Agreement, and any currency --------------- future or option contract, commodities future or option contract for materials used in the ordinary course of business and other similar agreements. "Indebtedness": of any Person at any date, (a) all indebtedness of ------------ such Person for borrowed money or for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices and accrued expenses incurred in the ordinary course of business), (b) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (c) all obligations of such Person under Financing Leases, (d) all obligations of such Person in respect of acceptances issued or created for the account of such Person, (e) all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof, (f) all Attributable Debt of such Person with respect to sale and leaseback transactions of such Person, (g) obligations of such Person in respect of Hedge Agreements and (h) all obligations of such Person for Production Payments from property operated by or on behalf of such Person. "Insolvency": with respect to any Multiemployer Plan, the condition ---------- that such Plan is insolvent within the meaning of Section 4245 of ERISA. "Insolvent": pertaining to a condition of Insolvency. --------- "Interest Payment Date": (a) as to any Base Rate Loan, the last --------------------- Business Day of each March, June, September and December, (b) as to any LIBOR Loan having an Interest Period of three months or less, the last Business Day of such Interest Period, and (c) as to any LIBOR Loan having an interest period longer than three months, (i) each Business Day which is three months or a whole multiple thereof after the first day of such Interest Period and (ii) the last Business Day of such Interest Period. "Interest Period": with respect to any LIBOR Loan: --------------- 11 (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such LIBOR Loan and ending one, two, three or six, and to the extent available to all the Lenders, nine or twelve months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the preceding Interest Period applicable to such LIBOR Loan and ending one, two, three or six, and to the extent available to all the Lenders, nine or twelve months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following: (i) if any Interest Period pertaining to a LIBOR Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day; (ii) any Interest Period for any Loan that would otherwise extend beyond the Termination Date of such Loan shall end on the Termination Date of such Loan; (iii) any Interest Period pertaining to a LIBOR Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month in which such Interest Period would otherwise be scheduled to end) shall end on the last Business Day of the appropriate calendar month; and (iv) no Interest Period with respect to any portion of any Type of Term Loan shall extend beyond a date on which the Borrower is required to make a scheduled payment of principal of Term Loans of such Type unless the sum of (a) the aggregate principal amount of Term Loans of such Type that are Base Rate Loans plus (b) the aggregate principal amount of Term Loans of such Type that are LIBOR Rate Loans with Interest Periods expiring on or before such date equals or exceeds the principal amount required to be paid on Term Loans of such Type on such date. "Interest Rate Agreement": any interest rate swap agreement, interest ----------------------- rate cap agreement, interest rate collar agreement, interest rate future or option contract, or other similar agreement or arrangement. "Interest Rate Agreement Obligations": the obligations of the ----------------------------------- Borrower or any of its Subsidiaries to make payments to counterparties under Interest Rate Agreements in the event of the occurrence of a termination event thereunder. "Investments": as defined in subsection 7.9. ----------- 12 "Issuing Lender": Such Lender or Lenders that agree to act as Issuing -------------- Lender at the request of the Administrative Agent and the Borrower. "Joint Venture": any Person (other than a Subsidiary) in which the ------------- Borrower and its Subsidiaries collectively hold a percentage ownership interest of no greater than fifty percent (50%). "LBMBP II": Lehman Brothers Merchant Banking Partners II L.P., a -------- Delaware limited partnership. "LCPI": as defined in the preamble to this Agreement. ---- "L/C Commitment": $330,000,000. -------------- "L/C Fee Payment Date": the last Business Day of each March, June, -------------------- September and December. "L/C Obligations": at any time, an amount equal to the sum of (a) the --------------- aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to subsection 3.5. "L/C Participants": the collective reference to all the Revolving ---------------- Credit Lenders other than the Issuing Lender. "Lender" and "Lenders": the persons identified as Lenders and listed -------------------- on the signature pages of this Agreement (including the Issuing Lender and the Swing Line Lender), together with their successors and permitted assigns pursuant to subsection 10.6; provided that the term "Lenders", when -------- ------- used in the context of a particular Commitment, shall mean Lenders having that Commitment. "Letters of Credit": as defined in subsection 3.1(a). ----------------- "LIBOR": the rate appearing on Page 3750 of the Telerate Service (or ----- on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to commencement of such Interest Period, as the rate of interest for dollar deposits in the approximate amount of the Loan to be made or continued as, or converted into, a LIBOR Rate Loan and having a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then LIBOR shall be the rate of interest per annum determined by the Administrative Agent to be the arithmetic mean (rounded upward to the next 1/16th of 1%) of the rates of interest per annum notified to the Administrative Agent by each Reference Bank as the rate of interest at which dollar deposits in the approximate amount of the amount of the Loan to be made or continued as, or converted into, a LIBOR Rate Loan by such Reference Bank and having a maturity comparable to such Interest Period would be offered to such 13 Reference Bank in the London interbank market at its request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period. "LIBOR Loans": Loans the rate of interest applicable to which is ----------- based upon the LIBOR Rate. "LIBOR Rate": means, for any Interest Period, with respect to LIBOR ---------- Loans comprising part of the same borrowing, the rate of interest per annum (rounded upward to the next 1/16th of 1%) determined by the Administrative Agent as follows: LIBOR Rate = LIBOR ------------------------------ 1.00 - LIBOR Reserve Percentage "LIBOR Reserve Percentage": for any day for any Interest Period the ------------------------ maximum reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on such day (whether or not applicable to any Lender) under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"). ------------------------ "Lien": any mortgage, deed of trust, charge, pledge, hypothecation, ---- assignment, easement, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing). "Loan": any loan made by any Lender pursuant to this Agreement. ---- "Martinka mine": the closed deep mine located in Marion County, West ------------- Virginia, also known as the Tygart River Mine. "Material Adverse Effect": a material adverse effect on (a) the ----------------------- business, assets, operations, property or condition (financial or otherwise) of the Borrower and its Restricted Subsidiaries taken as a whole, (b) the validity or enforceability of this or any of the other Credit Documents or the rights or remedies of the Agents or the Lenders hereunder or thereunder, (c) the value of the Collateral considered as a whole or the ability of the Agents and the Lenders to realize thereon or (d) the Transaction. "Materials of Environmental Concern": any hazardous or toxic ---------------------------------- substances, materials or wastes, defined or regulated as such in or under, or that could give rise to liability under, any applicable Mining and Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls, urea-formaldehyde insulation, gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products. "Mine": any excavation or opening into the earth now and hereafter ---- made from which Coal is or can be extracted on or from any of the properties owned or leased by any Credit Party, together with all appurtenances, fixtures, structures, improvements, and all tangible 14 property of whatsoever kind or nature in connection therewith, including without limitation the Mines described in Schedule 4.25. "Mining and Environmental Laws": any and all applicable current and ----------------------------- future federal, state, local and foreign statutes, laws, regulations, guidances, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions or common law causes of action relating to mining operations and activities or to the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment including ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes or to the reclamation of lands. Mining and Environmental Laws shall include, but not be limited to the Federal Coal Leasing Amendments Act, the Surface Mining Control and Reclamation Act, all other land reclamation and use statutes and regulations, the Federal Coal Mine Health and Safety Act, the Comprehensive Environmental Response, Compensation, and Liability Act; the Resource Conservation and Recovery Act; the Toxic Substances Control Act; the Federal Water Pollution Control Act; the Hazardous Materials Transportation Act; the Clean Air Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act, the Black Lung Act and the Coal Act, each as amended, and their state and local counterparts or equivalents. "Mining and Environmental Permits": any and all permits, licenses, -------------------------------- registrations, notifications, exemptions and any other authorization required under any applicable Mining and Environmental Law. "Minority Interests": the 1% interests of Peabody Investments, Inc. in ------------------ CL Hartford, L.L.C., a Delaware limited liability company, and Citizens Power Sales, a Delaware general partnership. "Mortgages": the collective reference to the mortgages, deeds of --------- trust, fixture filings (whether recorded as part of such mortgages or deeds of trust or as separate instruments), assignments of rent, and any other functionally similar instruments or agreements, securing the obligations under the Credit Documents, and covering certain real property (whether owned or leased) of the Borrower or the appropriate Restricted Subsidiary as contemplated hereunder, to be executed and delivered by the Borrower or such Restricted Subsidiary in form and substance reasonably satisfactory to the Agents, as the same may be amended, supplemented or otherwise modified from time to time (individually, a "Mortgage"). "Multiemployer Plan": a Plan which is a multiemployer plan as defined ------------------ in Section 3(37) or Section 4001(a)(3) of ERISA. "Net Income": for any Person for any fiscal period, net income of ---------- such Person for such period, determined in accordance with GAAP. "Net Proceeds": the aggregate cash proceeds (including Cash ------------ Equivalents) received by the Borrower or any of its Restricted Subsidiaries in respect of: 15 (a) any issuance after the Closing Date by the Borrower or any of its Restricted Subsidiaries of (i) indebtedness for borrowed money and (ii) any other indebtedness of the Borrower or its Restricted Subsidiaries evidenced by a note, bond, debenture or similar instrument; (b) any Asset Sale by the Borrower or any Restricted Subsidiary; and (c) any cash payments received in respect of promissory notes or other evidences of indebtedness delivered to the Borrower or such Restricted Subsidiary in respect of any such Asset Sale; in each case net of (without duplication) (i), (A) in the case of an Asset Sale, the amount required to repay any Indebtedness (other than the Loans) secured by a Lien on any assets of the Borrower or a Subsidiary of the Borrower that are sold or otherwise disposed of in connection with such Asset Sale and (B) reasonable and appropriate amounts established by the Borrower or such Subsidiary, as the case may be, as a reserve against liabilities associated with such Asset Sale and retained by the Borrower or such Subsidiary, (ii) the reasonable expenses (including legal fees and brokers' and underwriters' commissions, lenders fees, credit enhancement fees, accountants' fees, investment banking fees, survey costs, title insurance premiums and other customary fees, in any case, paid to third parties or, to the extent permitted hereby, Affiliates) incurred in effecting such issuance or sale and (iii) any taxes reasonably attributable to such sale and reasonably estimated by the Borrower or such Subsidiary to be actually payable. "Non-Excluded Taxes": as defined in subsection 2.15(a). ------------------ "Non-Recourse Debt" means Indebtedness (i) as to which neither the ----------------- Borrower nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) other than a pledge of the equity interests of any Unrestricted Subsidiary, (b) is directly or indirectly liable (as a guarantor or otherwise) other than by virtue of a pledge of the equity interests of any Unrestricted Subsidiary, or (c) constitutes the lender; (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against any Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness (other than the Obligations) of the Borrower or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders thereunder will not have any recourse to the Capital Stock or assets of the Borrower or any of its Restricted Subsidiaries (other than the equity interests of any Unrestricted Subsidiary). "Non-U.S. Lender": as defined in subsection 2.15(b). --------------- "Notes": the Tranche A Term Notes, the Tranche B Term Notes, the ----- Revolving Credit Notes and the Swing Line Note (or any of them as the case may be). "Notice of Borrowing": as defined in subsection 2.2. ------------------- "Obligations": as defined in the Security Documents. ----------- 16 "Offer": as defined in the recitals to this Agreement. ----- "Operating Equipment": all surface and subsurface machinery, ------------------- equipment, facilities and other property of every kind or nature now owned or hereafter acquired (by purchase or lease) by the Borrower or any Subsidiary, which are useful for the processing or transportation of Coal, including, but not by way of limitation, all hoisting shafts, air shafts, draglines, miners, longwall units, engines, boilers, dynamos, generators, belts and conveyor belts and other electrical apparatus, drills, machinery and tipples, store houses and other buildings of every kind, used in connection with the Mines; and all trucks, shovels, endloaders, dozers, loaders, tools, supplies, equipment and personal property of every kind or nature now owned or hereafter acquired by the Borrower or any Subsidiary for use, or used in connection with the Mines or the processing and transportation of Coal. "Original Administrative Agent": as defined in the preamble to this ----------------------------- Agreement. "Original Agents": the "Agents" under and as defined in the Original --------------- Credit Agreement. "Original Credit Agreement": as defined in the preamble to this ------------------------- Agreement. "Original Documentation Agent": as defined in the preamble to this ---------------------------- Agreement. "Original Lender": as defined in the preamble to this Agreement. --------------- "Participants": as defined in subsection 10.6(b). ------------ "Participation Agreement": the Agreement dated as of March 2, 1998, ----------------------- between TU and LBMBP II, relating to the Offer and the Acquisition, as the same may be amended, modified or supplemented from time to time not in violation of the terms hereof. "Patent Security Agreements": the agreements dated as of the date -------------------------- hereof by certain Credit Parties in favor of the Administrative Agent, for the benefit of the Agents and the Lenders, substantially in the form of Exhibit I. "PBGC": the Pension Benefit Guaranty Corporation established pursuant ---- to Subtitle A of Title IV of ERISA, or any successor thereto. "Peabody Australia": Peabody Australia Ltd., a private limited ----------------- company incorporated in England and Wales. "Permitted Liens": Liens permitted to exist under subsection 7.3. --------------- "Person": an individual, partnership, corporation, business trust, ------ joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "PHCI": Peabody Holding Company, Inc., a New York corporation. ---- 17 "Plan": at a particular time, any employee benefit plan as defined in ---- Section 3(3) of ERISA which the Borrower or any Commonly Controlled Entity maintains, administers, contributes to or is required to contribute to, or under which the Borrower or any Commonly Controlled Entity could reasonably be expected to incur any liability. "Pro Forma Financial Statements": as defined in subsection 4.1(b). ------------------------------ "Production Payments": with respect to any Person, shall mean all ------------------- production payment obligations and other similar obligations with respect to coal and other natural resources of such Person that are recorded as a liability or deferred revenue on the financial statements of such Person in accordance with GAAP. "Properties": as defined in subsection 4.16. ---------- "Prudential Note": that certain 5% Subordinated Income Note Due March --------------- 1, 2007, made by PHCI in favor of The Prudential Insurance Company of America (as successor-in-interest to Kennecott Copper Corporation), dated June 30, 1977 (as amended by Amendment No. 1 dated as of February 8, 1991, and Amendment No. 2 dated as of September 9, 1992), in an original principal amount of $400,000,000. "Purchase Agreement": the Purchase Agreement dated as of May 18, ------------------ 1998, among the Borrower, Lehman Brothers Inc. and the Guarantors party thereto pursuant to which Lehman Brothers Inc. agreed to purchase from the Borrower the Senior Notes and the Subordinated Notes. "Reference Bank": each of the Administrative Agent and Bank of -------------- America National Trust & Savings Association. "Refinancing Indebtedness": as defined in subsection 7.2(j). ------------------------ "Refunded Swing Line Loan": as defined in subsection 2.1(b)(iii). ------------------------ "Register": as defined in subsection 10.6(d). -------- "Registration Rights Agreement": the Registration Rights Agreement, ----------------------------- dated as of May 18, 1998, between the Borrower and Lehman Brothers Inc. "Regulation H": Regulation H of the FRB as in effect from time to ------------ time. "Regulation U": Regulation U of the FRB as in effect from time to ------------ time. "Regulation X": Regulation X of the FRB as in effect from time to ------------ time. "Reimbursement Obligation": the obligation of the Borrower to ------------------------ reimburse the Issuing Lender pursuant to subsection 3.5 for amounts drawn under Letters of Credit. "Reorganization": with respect to any Multiemployer Plan, the -------------- condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. 18 "Reportable Event": any of the events set forth in Section 4043(c) of ---------------- ERISA, other than those events as to which the thirty-day notice period is waived under the regulations of the PBGC. "Required Lenders": at any time, Lenders the Commitment Percentages ---------------- for all Types of Loans of which aggregate more than 50%. "Requirement of Law": as to any Person, the Constitutional Documents ------------------ of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Requisite Class Lenders": at any time, (a) for the Class Lenders ----------------------- having Tranche A Term Loan Exposure, Lenders having or holding no less than 66 2/3% of the aggregate Tranche A Term Loan Exposure of all Lenders, (b) for the Class Lenders having Revolving Credit Loan Exposure, Lenders having or holding no less than 66 2/3% of the aggregate Revolving Credit Loan Exposure of all Lenders, and (c) for the Class Lenders having Tranche B Term Loan Exposure, Lenders having or holding no less than 66 2/3% of the aggregate Tranche B Term Loan Exposure of all Lenders. "Responsible Officer": the chief executive officer, the president or ------------------- vice president of the Borrower or, with respect to financial matters, the chief financial officer or treasurer of the Borrower. "Restricted Subsidiary" of a Person means any Subsidiary of the --------------------- referent Person that is not an Unrestricted Subsidiary. "Revolving Credit Commitment": the commitment of a Lender, as set --------------------------- forth on Schedule I hereto, to make Revolving Credit Loans to the Borrower ---------- pursuant to subsection 2.1(a)(iii) and, to issue and/or purchase participations in Letters of Credit pursuant to Section 3. "Revolving Credit Commitments" means such commitments of all Lenders ---------------------------- in the aggregate, which shall be $480,000,000 (subject to the Revolving Loan Sublimit). "Revolving Credit Lender": any Lender having a Revolving Credit ----------------------- Commitment or a Revolving Credit Loan outstanding. "Revolving Credit Loans": the Loans made (or deemed made) by Revolving ---------------------- Credit Lenders to the Borrower pursuant to subsection 2.1(a)(iii). "Revolving Credit Loan Exposure": with respect to any Lender as of any ------------------------------ date of determination, (i) if there are no outstanding Letters of Credit or Revolving Credit Loans, that Lender's Revolving Credit Commitment, and (ii) otherwise, the sum of (a) the aggregate outstanding principal amount of the Revolving Credit Loans of that Lender plus (b) in the event that Lender is an Issuing Lender, the aggregate face amount in respect of all Letters of Credit issued by that Lender (in each case net of any participations purchased by other Lenders in such Letters of Credit or any unreimbursed drawings thereunder) plus (c) in the event that 19 such Lender is the Swing Line Lender, the aggregate principal amount of Swing Line Loans made by such Lender then outstanding (net of any participations purchased by other Lenders in such Swing Line Loans) plus (d) the aggregate amount of all participations purchased by that Lender in any outstanding Swing Line Loans or Letters of Credit or any unreimbursed drawings under any Letters of Credit. "Revolving Credit Notes": (i) the promissory notes of the Borrower ---------------------- issued pursuant to subsection 2.5(h)(C) on the Effective Date to evidence the Revolving Credit Loans of any Lender and (ii) any promissory notes issued by the Borrower pursuant to Section 10.6(d) in connection with assignments of the Revolving Credit Commitments and Revolving Credit Loans of any Lenders, in each case substantially in the form of Exhibit A-4 annexed hereto, as they may be amended, supplemented or otherwise modified from time to time. "Revolving Loan Sublimit": as of any date of determination the lesser ----------------------- of (i) the Revolving Credit Commitments then in effect and (ii) $200,000,000. "Revolving Loan Termination Date": June 30, 2004. ------------------------------- "Security Documents": the collective reference to the Guarantee and ------------------ Collateral Agreement, the Patent Security Agreements, the Trademark Security Agreement, the Mortgages and all other security documents now or hereafter delivered to the Administrative Agent in connection with the Original Credit Agreement and/or this Agreement granting a Lien on any asset or assets of any Person to secure the obligations and liabilities of the Borrower under the Original Credit Agreement and/or this Agreement and under any of the other Credit Documents or to secure any guarantee of any such obligations and liabilities. "Seller": as defined in the recitals to this Agreement. ------ "Senior Notes": the Borrower's 8 7/8% Senior Notes, due 2008 (the ------------ "Initial Senior Notes"), issued on the Closing Date (or, if earlier, the --------------------- Escrow Date), and the senior notes of the Borrower, having the same terms as the Initial Senior Notes, issued in exchange for the Initial Senior Notes as contemplated by the Senior Notes Documents. "Senior Notes Documents": the Senior Notes Indenture, the ---------------------- Registration Rights Agreement, the Purchase Agreement and the Senior Notes. "Senior Notes Indenture": the Indenture among the Borrower, the ---------------------- Guarantors party thereto and State Street Bank and Trust Company, as trustee, pursuant to which the Senior Notes are issued. "Similar Business": coal production, coal mining, coal brokering, ---------------- coal transportation, mine development, power marketing, electricity generation, power/energy sales and trading, energy transactions/asset restructurings, risk management products associated with energy, fuel/power integration and other energy related businesses, ash disposal, environmental remediation, coal, natural gas, petroleum or other fossil fuel exploration, production, marketing, transportation and distribution and other related businesses, and activities of the Borrower and its Subsidiaries as of the date of the closing of the Acquisition and any business 20 or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto. "Single Employer Plan": any Plan which is covered by Title IV of -------------------- ERISA, but which is not a Multiemployer Plan. "Specified Subsidiary": any Subsidiary whose EBITDA determined for -------------------- the fiscal quarter most recently ended prior to the time of determination hereunder was greater than or equal to 20% of the Consolidated EBITDA of the Borrower and its Subsidiaries for such fiscal quarter, as determined in accordance with GAAP. "Subordinated Notes": the Borrower's 9 5/8% Senior Subordinated ------------------ Notes, due 2008 (the "Initial Subordinated Notes"), issued on the Closing -------------------------- Date (or, if earlier, the Escrow Date), and the subordinated notes of the Borrower, having the same terms as the Initial Subordinated Notes, issued in exchange for the Initial Subordinated Notes as contemplated by the Subordinated Notes Documents. "Subordinated Notes Documents": the Subordinated Notes Indenture, the ---------------------------- Purchase Agreement and the Subordinated Notes. "Subordinated Notes Indenture": the Indenture among the Borrower, the ---------------------------- Guarantors party thereto and State Street Bank and Trust Company, as trustee, pursuant to which the Subordinated Notes are issued. "Subordination Agreement": the Subordination Agreement, dated as of ----------------------- May 19, 1998, substantially in the form of Exhibit H, by the Credit Parties, as subordinated creditors, in favor of the Original Agents and the Original Lenders (as predecessors-in-interest to the Agents and the Lenders), as senior creditors, pursuant to which all Indebtedness of any Credit Party to any other Credit Party is subordinated to the Obligations. "Subsidiary": as to any Person, a corporation, partnership or other ---------- entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, directly or indirectly, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a ---------- ------------ Subsidiary or Subsidiaries of the Borrower. "Surety Bonds": surety bonds obtained by the Borrower or any ------------ Restricted Subsidiary in the ordinary course of business consistent with past practice and the indemnification or reimbursement obligations of the Borrower or such Restricted Subsidiary in connection therewith as to which reserves with respect to the underlying obligations are maintained in accordance with GAAP. "Swing Line Lender": means LCPI or such other Lender that agrees to ----------------- act as Swing Line Lender at the request of the Administrative Agent and the Borrower. "Swing Line Loans": as defined in Section 2.1(b). ---------------- 21 "TEG": as defined in the recitals to this Agreement. --- "Term Loan Commitment or Term Loan Commitments": the commitments of a --------------------------------------------- Lender to make any Term Loans pursuant to subsection 2.1(a); and Term Loan --------- Commitments means such commitments of all Lenders in the aggregate, which ----------- shall be $920,000,000. "Term Loan Exposure": with respect to a Lender of a Type of Term Loan ------------------ as of any date of determination, (i) prior to the termination of all of a Lender's Commitment with respect to the Term Loans of such Type, that Lender's Commitment with respect to Term Loans of such Type (or any portion thereof that has not been terminated) plus the outstanding principal amount of the Term Loan of such Type of that Lender, and (ii) after the termination of all of a Lender's Commitment with respect to the Term Loans of such Type, the outstanding principal amount of the Term Loan of such Type of that Lender. "Term Loans": one or more of the Tranche A Term Loans or the Tranche ---------- B Term Loans. "Termination Date": (i) with respect to Tranche A Term Loans, June ---------------- 30, 2004 (the "Tranche A Term Loan Termination Date"); (ii) with respect to ------------------------------------ Tranche B Term Loans, June 30, 2006 (the "Tranche B Term Loan Termination ------------------------------- Date"); and (iii) with respect to Revolving Credit Loans and Swing Line ---- Loans, the Revolving Loan Termination Date. "Title Opinion": as defined in subsection 6.10(d). ------------- "Title Policy": as defined in subsection 6.10(d). ------------ "Total Assets": the total assets of the Borrower and its Consolidated ------------ Subsidiaries, as shown on the most recently available Consolidated balance sheet of the Borrower. "Total Commitments": the sum of the Revolving Credit Commitments and ----------------- the Term Loan Commitments. "Trademark Security Agreement": the agreement dated as of the date ---------------------------- hereof by a certain Credit Party in favor of the Administrative Agent, for the benefit of the Agents and the Lenders, substantially in the form of Exhibit J. "Tranche": the collective reference to certain LIBOR Loans, all of ------- which the then current Interest Periods with respect to such LIBOR Loans, begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day); Tranches may be identified as "LIBOR Tranches". -------------- "Tranche A Term Lender": any Lender having a Tranche A Term Loan --------------------- Commitment or a Tranche A Term Loan outstanding. "Tranche A Term Loans": the Loans made (or deemed made) by Tranche A -------------------- Term Lenders to the Borrower pursuant to subsection 2.1(a)(i). 22 "Tranche A Term Loan Commitment": the commitment of a Tranche A Term ------------------------------ Lender, as set forth on Schedule I hereto, to make a Tranche A Term Loan to ---------- the Borrower pursuant to subsection 2.1(a)(i); and "Tranche A Term Loan ------------------- Commitments" means such commitments of all Tranche A Term Lenders in the ----------- aggregate, which shall be $270,000,000. "Tranche A Term Notes": (i) the promissory notes of the Borrower -------------------- issued pursuant to subsection 2.5(h)(A) on the Effective Date to evidence the Tranche A Term Loans of any Lender and (ii) any promissory notes issued by the Borrower pursuant to subsection 10.6(d) in connection with assignments of the Tranche A Term Loan Commitments and Tranche A Term Loans of any Lender, in each case substantially in the form of Exhibit A-1 annexed hereto, as they may be amended, supplemented or otherwise modified from time to time. "Tranche B Term Lenders": any Lender having a Tranche B Term Loan ---------------------- Commitment or a Tranche B Term Loan outstanding. "Tranche B Term Loans": the Loans made (or deemed made) by Tranche B -------------------- Term Lenders to the Borrower pursuant to subsection 2.1(a)(ii). "Tranche B Term Loan Commitment": the commitment of a Tranche B Term ------------------------------ Lender to make a Tranche B Term Loan to the Borrower pursuant to subsection 2.1(a)(ii); and "Tranche B Term Loan Commitments" means such commitments of ------------------------------- all Tranche B Term Lenders in the aggregate, which shall be $650,000,000. "Tranche B Term Notes": (i) the promissory notes of the Borrower -------------------- issued pursuant to subsection 2.5(h)(B) on the Effective Date to evidence the Tranche B Term Loans of any Lender and (ii) any promissory notes issued by the Borrower pursuant to subsection 10.6(d) in connection with assignments of the Tranche B Term Loan Commitments and Tranche B Term Loans of any Lender, in each case substantially in the form of Exhibit A-2 annexed hereto, as they may be amended, supplemented or otherwise modified from time to time. "Transaction": the transactions contemplated by the Transaction ----------- Documents. "Transaction Documents": (i) the Acquisition Agreement, the --------------------- Participation Agreement, the Schedules thereto and the documents set forth on Schedule III hereto, (ii) the Equity Documents, (iii) the Senior Notes Documents and (iv) the Subordinated Notes Documents. "Transfer Agreements": as defined in subsection 4.12. ------------------- "Transferee": as defined in subsection 10.6(f). ---------- "TU": as defined in the recitals to this Agreement. -- "Type": a Revolving Credit Loan, a Tranche A Term Loan, a Tranche B ---- Term Loan or a Swing Line Loan. "Uniform Customs": the Uniform Customs and Practice for Documentary --------------- Credits (1993 Revision), International Chamber of Commerce Publication No. 500, as the same may be amended from time to time. 23 "Unrestricted Subsidiary": any Subsidiary of the Borrower that is a ----------------------- Citizens Entity and any other Subsidiary of the Borrower that the Borrower notifies the Administrative Agent in writing is an "Unrestricted Subsidiary", but only to the extent that such Citizens Entity or other Subsidiary (a) has no Indebtedness other than Non-Recourse Debt; (b) is not a party to any agreement, contract, arrangement or understanding with the Borrower or any Restricted Subsidiary of the Borrower except as expressly permitted by subsection 7.11; (c) is a Person with respect to which neither the Borrower nor any of its Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional equity interests in such Person, except with respect to Investments permitted under subsection 7.9(n), or (y) to maintain or preserve such Person's financial condition (except with respect to performance guarantees expressly permitted under subsection 7.4(g)) or to cause such Person to achieve any specified levels of operating results; and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Borrower or any of its Restricted Subsidiaries. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary (or is redesignated by the Borrower as a Restricted Subsidiary), it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement, any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date and any Investments in such Subsidiary shall be deemed to be Investments in a Restricted Subsidiary of the Borrower as of such date (and, if such Indebtedness or Investments are not permitted to be incurred hereunder the Borrower shall be in default under this Agreement). At the time of any designation by the Borrower of any Restricted Subsidiary as an Unrestricted Subsidiary, such designation shall be deemed (A) an Investment in an Unrestricted Subsidiary in an amount equal to the sum of (i) the net worth of such designated Restricted Subsidiary immediately prior to such designation (such net worth to be calculated without regard to any Guarantee Obligation incurred by such designated Restricted Subsidiary with respect to the Obligations) and (ii) the aggregate principal amount of any Indebtedness owed by such designated Restricted Subsidiary to the Borrower or any other Restricted Subsidiary immediately prior to such designation, all calculated, except as set forth in the parenthetical to clause (i), on a consolidated basis in accordance with GAAP and (B) an Asset Sale which must comply with the provisions of subsections 7.6(b), (l) or (n). "Upstream Payment": as defined in subsection 7.7. ---------------- "U.S. Taxes": any tax, assessment, or other charge or levy and any ---------- liabilities with respect thereto, including any penalties, additions to tax, fines or interest thereon, imposed by or on behalf of the United States or any taxing authority thereof. "Year 2000 Problem": any significant risk that computer hardware, ----------------- software or equipment containing embedded microchips essential to the business or operations of the Borrower or any of its Subsidiaries will not, in the case of dates or time periods occurring after December 31, 1999, function at least as effectively and reliably as in the case of dates or time periods occurring before January 1, 2000, including the making of accurate leap year calculations. 1.2 Other Definitional Provisions. (a) Unless otherwise specified ----------------------------- therein, all terms defined in this Agreement shall have the defined meanings when used in any Credit Document or any certificate or other document made or delivered pursuant hereto. 24 (b) As used herein and in any Credit Document, and any certificate or other document made or delivered pursuant hereto, accounting terms relating to the Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms partly defined in subsection 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words "hereof," "herein" and "hereunder" and words of similar ------ ------ --------- import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 1.3 Interrelationship with Original Credit Agreement. As stated in ------------------------------------------------ the preamble hereof, this Credit Agreement is intended to amend and restate the provisions of the Original Credit Agreement and, notwithstanding any substitution of Notes as of the Effective Date, except as expressly modified herein, (a) all of the terms and provisions of the Original Credit Agreement shall continue to apply for the period prior to the Effective Date, including any determinations of payment dates, interest rates, Events of Default or any amount that may be payable to the Original Agents or the Original Lenders (or their assignees or replacements hereunder), and (b) the Obligations (as defined in the Original Credit Agreement) under the Original Credit Agreement shall continue to be paid or prepaid on or prior to the Effective Date, and be secured by the Collateral, and shall from and after the Effective Date continue to be owing and be subject to the terms of this Credit Agreement. All references in the Notes and the other Credit Documents to (i) the Original Credit Agreement or the "Credit Agreement" shall be deemed to include references to this Credit Agreement and (ii) the "Lenders" or a "Lender" or to the "Agents" or any Agent shall mean such terms as defined in this Credit Agreement. As of the Effective Date all of the covenants set forth in the Original Credit Agreement are of no further force and effect, it being understood that all obligations of the Borrower with respect to the Obligations (as defined in the Original Credit Agreement) shall be governed by this Credit Agreement from and after the Effective Date. 1.4 Confirmation of Existing Obligations. The Borrower hereby (i) ------------------------------------ confirms and agrees that it is truly and justly indebted to the Lenders (as assignees of the Original Lender) in the aggregate amount of the Obligations (as defined in the Original Credit Agreement) outstanding immediately prior to the Effective Date, including, without limitation, all accrued and unpaid interest, fees and expenses that are due and owing in respect thereto, (ii) reaffirms and admits the validity and enforceability of this Agreement and the other Credit Documents (including the granting of liens and security interests in the Collateral) and all of its obligations thereunder and (iii) agrees and admits that, as of the date hereof, it has no defenses to, or offsets or counterclaim against, any of its obligations to the Agents or any Lender under the Credit Documents of any kind whatsoever. SECTION 2. AMOUNT AND TERMS OF COMMITMENTS AND LOANS 2.1 Commitments. (a) Subject to the terms and conditions hereof, ----------- each Lender severally agrees to make the loans described in this subsection 2.1(a), as applicable, to the Borrower. 25 (i) Tranche A Term Loans. Each Tranche A Term Lender shall be -------------------- deemed to have made a term loan to the Borrower on the Effective Date in an aggregate principal amount equal to such Lender's Tranche A Term Loan Commitment. Amounts borrowed under this subsection 2.1(a)(i) and subsequently repaid may not be reborrowed. (ii) Tranche B Term Loans. Each Tranche B Term Lender shall be -------------------- deemed to have made a term loan to the Borrower on the Effective Date in an aggregate principal amount equal to such Lender's Tranche B Term Loan Commitment. Amounts borrowed under this subsection 2.1(a)(ii) and subsequently repaid may not be reborrowed. (iii) Revolving Credit Loans. To the extent that any Revolving ---------------------- Credit Loans are outstanding under the Original Credit Agreement on the Effective Date, each Revolving Credit Lender shall be deemed to have made Revolving Credit Loans to the Borrower on the Effective Date in an aggregate principal amount equal to such Lender's Commitment Percentage of all Revolving Credit Loans outstanding on the Effective Date. In addition, subject to the immediately following sentence, each Revolving Credit Lender severally agrees to make revolving credit loans to the Borrower, from time to time during the Commitment Period, in an aggregate principal amount at any one time outstanding which, when added to the aggregate principal amount of outstanding Swing Line Loans made by such Lender (or in which such Lender has purchased a participation) and such Lender's Commitment Percentage of (A) the then outstanding L/C Obligations and (B) any Revolving Credit Loans then outstanding, does not exceed the amount of such Lender's Revolving Credit Commitment. Notwithstanding anything contained in this Agreement to the contrary, at no time may the amount of Revolving Credit Loans outstanding exceed the Revolving Loan Sublimit. During the Commitment Period, the Borrower may use the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans, in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. (b) (i) Subject to the terms and conditions hereof, the Swing Line Lender agrees to make swing line loans (individually, a "Swing Line Loan"; --------------- collectively, the "Swing Line Loans") to the Borrower from time to time during ---------------- the Commitment Period in an aggregate principal amount at any one time outstanding not to exceed $50,000,000; provided, that no Swing Line Loan shall be made if, after giving effect thereto and to the simultaneous use of the proceeds thereof, (A) the aggregate principal amount of Revolving Credit Loans then outstanding plus the aggregate principal amount of Swing Line Loans then outstanding would exceed the Revolving Loan Sublimit or (B) the aggregate principal amount of Revolving Credit Loans then outstanding plus the aggregate principal amount of Swing Line Loans then outstanding, plus the aggregate amount of L/C Obligations then outstanding would exceed the Revolving Credit Commitments of the Revolving Credit Lenders. Until the Termination Date, Amounts borrowed by the Borrower under this subsection 2.1(b) may be repaid and reborrowed. All Swing Line Loans shall be made as Base Rate Loans and may not be converted into LIBOR Loans. In order to borrow a Swing Line Loan, the Borrower shall give the Swing Line Lender, with a copy to the Administrative Agent, irrevocable notice (which notice must be received by the Swing Line Lender prior to 12:00 Noon, New York City time) on the requested Borrowing Date specifying the amount of 26 of the requested Swing Line Loan which shall be in a minimum amount of $500,000 or whole multiples of $100,000 in excess thereof. The proceeds of the Swing Line Loan will be made available by the Swing Line Lender to the Borrower at the office of the Swing Line Lender by crediting the account of the Borrower at such office with such proceeds. (ii) The Swing Line Loans shall be evidenced by a promissory note of the Borrower, substantially in the form of Exhibit A-4 (the "Swing Line Note"), --------------- with appropriate insertions, payable to the order of the Swing Line Lender and representing the obligation of the Borrower to pay the unpaid principal amount of the Swing Line Loans, with interest thereon as prescribed in subsection 2.9. The Swing Line Note shall (i) be dated the Effective Date, (ii) be stated to mature on the Termination Date and (iii) bear interest, payable on the dates specified in 2.9, for the period from the date thereof to the Termination Date on the unpaid principal amount thereof from time to time outstanding at the applicable interest rate per annum specified in subsection 2.9. (iii) The Swing Line Lender, at any time in its sole and absolute discretion, may on behalf of the Borrower (which hereby irrevocably directs the Swing Line Lender to act on its behalf) request each Lender, including the Swing Line Lender, to make a Revolving Credit Loan (which shall be a Base Rate Loan) in an amount equal to such Lender's Commitment Percentage with respect to Revolving Credit Loans of the Swing Line Loans (the "Refunded Swing Line Loans") ------------------------- outstanding on the date such notice is given. Unless any of the events described in subsection 8(f) shall have occurred (in which event the procedures of subsection 2.1(b)(iv) shall apply) each Lender shall, not later than 12:00 P.M., New York City time, on the Business Day next succeeding the date on which such notice is given, make available to the Swing Line Lender in immediately available funds the amount equal to the Revolving Credit Loan to be made by such Lender. The proceeds of such Revolving Credit Loans shall be immediately applied to repay the Refunded Swing Line Loans. Upon any request by the Swing Line Lender to the Lender pursuant to this subsection 2.1(b)(iii), the Administrative Agent shall promptly give notice to the Borrower of such request. (iv) If prior to the making of a Revolving Credit Loan pursuant to subsection 2.1(b)(iii) one of the events described in subsection 8(f) shall have occurred, each Lender will, on the date such Loan was to have been made, purchase an undivided participating interest in the Swing Line Loans in an amount equal to its Commitment Percentage with respect to Revolving Credit Loans. Each Lender will immediately transfer to the Swing Line Lender, in immediately available funds, the amount of its participation. (v) Whenever, at any time after the Swing Line Lender has received from any Lender such Lender's participating interest in a Swing Line Loan, the Swing Line Lender receives any payment on account thereof, the Swing Line Lender will distribute to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded); provided, however, that in the event that such payment received by the Swing Line Lender is required to be returned, such Lender will return to the Swing Line Lender any portion thereof previously distributed by the Swing Line Lender to it. (vi) Each Lender's obligation to purchase participating interests pursuant to subsection 2.1(b)(iv) shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (a) any set- off, counterclaim, recoupment, defense or other right which such Lender or the Borrower may have against the Swing Line Lender, any other Lender or anyone else for any reason whatsoever, (b) the occurrence or continuance of any Default or Event 27 of Default; (c) any adverse change in the condition (financial or otherwise) of the Borrower; (d) any breach of this Agreement by the Borrower or any other Lender; or (e) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. (c) Except for Swing Line Loans, which shall be Base Rate Loans, the Loans may from time to time be (i) LIBOR Loans, (ii) Base Rate Loans or (iii) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with subsections 2.2 and 2.7, provided that no Revolving Credit Loan shall be made as a LIBOR Loan after the day that is one month prior to the Termination Date with respect to such Loan. 2.2 Procedure for Borrowing. The Borrower may borrow under the ----------------------- Commitments during the Commitment Period on any Business Day, provided that the Borrower shall give the Administrative Agent irrevocable notice substantially in the form attached as Exhibit D (a "Notice of Borrowing") (which notice must be ------------------- received by the Administrative Agent prior to (a) 11:00 A.M., New York City time, three Business Days prior to the requested Borrowing Date, if all or any part of the requested Loans are to be initially LIBOR Loans, (b) 11:00 A.M., New York City time, one Business Day prior to the requested Borrowing Date in the case of a Base Rate Loan and, (c) 11:00 A.M., New York City time, on the requested Borrowing Date in the case of a Swing Line Loan), specifying (i) the amount to be borrowed of each Type of Loan, (ii) the requested Borrowing Date, (iii) whether the borrowing is to be of LIBOR Loans, Base Rate Loans or a combination thereof and (iv) if the borrowing is to be entirely or partly of LIBOR Loans, the respective lengths of the initial Interest Periods therefor. Each borrowing under the Commitments shall be in an amount equal to (x) in the case of Base Rate Loans (other than Swing Line Loans), $2,000,000 or a whole multiple of $100,000 in excess thereof (or, if the then Available Commitments are less than $2,000,000, such lesser amount), (y) in the case of Swing Line Loans, as provided in subsection 2.1(b)(i) and (z) in the case of LIBOR Loans, $5,000,000 or a whole multiple of $100,000 in excess thereof. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each applicable Lender thereof. Each such Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in subsection 10.2 prior to 11:00 A.M., New York City time (in the case of LIBOR Loans) or 2:30 P.M., New York City time (in the case of Base Rate Loans), on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent. All notices given by the Borrower under this subsection 2.2 may be made by telephonic notice promptly confirmed in writing. 2.3 Commitment Fee. The Borrower agrees to pay to the Administrative -------------- Agent for the account of each Revolving Credit Lender a commitment fee for the period from and including the first day of the Commitment Period to and including the Revolving Loan Termination Date, computed at the Commitment Fee Rate on the average daily amount of the Available Commitment of such Revolving Credit Lender during the period for which payment is made, payable in arrears on the last Business Day of each March, June, September and December and on the Revolving Loan Termination Date, commencing on the first of such dates to occur after the date hereof. 2.4 Termination or Reduction of Revolving Credit Commitments. The -------------------------------------------------------- Borrower shall have the right, upon not less than three Business Days' written notice to the Administrative Agent, to 28 terminate the Revolving Credit Commitments or, from time to time, to reduce the amount of the Revolving Credit Commitments ratably among the Revolving Credit Lenders; provided that no such termination or reduction shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Credit Loans made on the effective date thereof, (i) the aggregate principal amount of the Revolving Credit Loans then outstanding, when added to the outstanding Swing Line Loans, would exceed the Revolving Loan Sublimit or (ii) the aggregate principal amount of the Revolving Credit Loans then outstanding, when added to the then outstanding L/C Obligations and the outstanding Swing Line Loans, would exceed the Revolving Credit Commitments then in effect. Any such reduction shall be in an amount equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce permanently the Revolving Credit Commitments then in effect. 2.5 Repayment of Loans; Evidence of Debt. ------------------------------------ (a) Scheduled Payments of Tranche A Term Loans. The Borrower shall ------------------------------------------ make principal payments on the Tranche A Term Loans on March 31, June 30, September 30 and December 31 of each year, commencing on September 30, 1998, in the amounts set forth opposite the corresponding Payment Date as follows: [CONTINUED ON NEXT PAGE] 29
Scheduled Repayment Payment Date of Tranche A Term Loans ------------ ----------------------- 9/30/98 $ 2,500,000 12/31/98 $ 2,500,000 3/31/99 $ 2,500,000 6/30/99 $ 2,500,000 9/30/99 $ 3,750,000 12/31/99 $ 3,750,000 3/31/00 $ 3,750,000 6/30/00 $ 3,750,000 9/30/00 $ 5,000,000 12/31/00 $ 5,000,000 3/31/01 $ 5,000,000 6/30/01 $ 5,000,000 9/30/01 $12,500,000 12/31/01 $12,500,000 3/31/02 $12,500,000 6/30/02 $12,500,000 9/30/02 $18,750,000 12/31/02 $18,750,000 3/31/03 $18,750,000 6/30/03 $18,750,000 9/30/03 $25,000,000 12/31/03 $25,000,000 3/31/04 $25,000,000 6/30/04 $25,000,000
provided that the scheduled installments of principal of the Tranche A Term Loans set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the Term Loans in accordance with subsection 2.6 (as provided in such subsection); and provided further that the Tranche A Term Loans and all other amounts owed hereunder with respect to the Tranche A Term Loans shall be paid in full no later than the Tranche A Term Loan Termination Date, and the final installment payable by the Borrower in respect of the Tranche A Term Loans on such date shall be in an amount, if such amount is different from that specified above, sufficient to repay all amounts owing by the Borrower under this Agreement with respect to the Tranche A Term Loans. [CONTINUED ON NEXT PAGE] 30 (b) Scheduled Payments of Tranche B Term Loans. The Borrower shall ------------------------------------------ make principal payments on the Tranche B Term Loans on March 31, June 30, September 30 and December 31 of each year, commencing on September 30, 1998, in the amounts set forth opposite the corresponding Payment Date as follows:
Scheduled Repayment Payment Date of Tranche B Term Loans ------------ ----------------------- 9/30/98 $ 1,625,000 12/31/98 $ 1,625,000 3/31/99 $ 1,625,000 6/30/99 $ 1,625,000 9/30/99 $ 1,625,000 12/31/99 $ 1,625,000 3/31/00 $ 1,625,000 6/30/00 $ 1,625,000 9/30/00 $ 1,625,000 12/31/00 $ 1,625,000 3/31/01 $ 1,625,000 6/30/01 $ 1,625,000 9/30/01 $ 1,625,000 12/31/01 $ 1,625,000 3/31/02 $ 1,625,000 6/30/02 $ 1,625,000 9/30/02 $ 1,625,000 12/31/02 $ 1,625,000 3/31/03 $ 1,625,000 6/30/03 $ 1,625,000 9/30/03 $ 1,625,000 12/31/03 $ 1,625,000 3/31/04 $ 1,625,000 6/30/04 $ 1,625,000 9/30/04 $ 25,000,000 12/31/04 $ 25,000,000 3/31/05 $ 25,000,000 6/30/05 $ 25,000,000 9/30/05 $127,750,000 12/31/05 $127,750,000 3/31/06 $127,750,000 6/30/06 $127,750,000
31 provided that the scheduled installments of principal of the Tranche B Term Loans set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the Term Loans in accordance with subsection 2.6 (as provided in such subsection); and provided further that the Tranche B Term Loans and all other amounts owed hereunder with respect to the Tranche B Term Loans shall be paid in full no later than the Tranche B Term Loan Termination Date, and the final installment payable by the Borrower in respect of the Tranche B Term Loans on such date shall be in an amount, if such amount is different from that specified above, sufficient to repay all amounts owing by the Borrower under this Agreement with respect to the Tranche B Term Loans. (c) Payments on Revolving Credit Loans and Swing Line Loans. The ------------------------------------------------------- Borrower hereby unconditionally promises to pay to the Administrative Agent on the Revolving Loan Termination Date (or such earlier date on which the Loans become due and payable pursuant to Section 8) (i) for the account of each Revolving Credit Lender the then unpaid principal amount of each Revolving Credit Loan of such Lender and all other amounts owing to such Lender hereunder with respect to such Revolving Credit Loan and (ii) for the account of the Swing Line Lender (and each other Revolving Credit Lender that has purchased a participation in then outstanding Swing Line Loans) the then unpaid principal amount of Swing Line Loans and all other amounts owed to such Lender hereunder with respect to the Swing Line Loans. (d) Interest. The Borrower hereby further agrees to pay interest on -------- the unpaid principal amount of the Loans from time to time outstanding from the date such Loans are made until payment in full thereof at the rates per annum, and on the dates, set forth in subsection 2.9. (e) Recording. Each Lender shall maintain in accordance with its --------- usual practice an account or accounts evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (f) Register. The Administrative Agent shall maintain the Register -------- pursuant to subsection 10.6(d), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan and each Obligation evidenced by a Note made hereunder, the Type thereof, whether each such Loan is a Base Rate Loan or a LIBOR Loan and each Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender's share thereof. (g) Prima Facie Evidence. The entries made in the Register and the -------------------- accounts of each Lender maintained pursuant to subsection 2.5(f) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement. (h) Notes. The Borrower agrees that the Borrower will execute and ----- deliver to each Lender a promissory note of the Borrower evidencing (A) the Tranche A Term Loans of such Lender, substantially in the form of Exhibit A-1 with appropriate insertions as to date and principal amount (a "Tranche A Term -------------- Note"), (B) the Tranche B Term Loans of such Lender, substantially in - ---- 32 the form of Exhibit A-2 with appropriate insertions as to date and principal amount (a "Tranche B Term Note"), and (C) the Revolving Credit Loans of such -------------------- Lender, substantially in the form of Exhibit A-3 with appropriate insertions as to date and principal amount ("Revolving Credit Note"). A Note and the --------------------- Obligation evidenced thereby may be assigned or otherwise transferred in whole or in part only by registration of such assignment or transfer of such Note and the Obligation evidenced thereby in the Register (and each Note shall expressly so provide). Any assignment or transfer of all or part of an Obligation evidenced by a Note shall be registered in the Register only upon surrender for registration of assignment or transfer of the Note evidencing such Obligation, duly endorsed by (or accompanied by a written instrument of assignment or transfer duly executed by) the holder thereof, and thereupon one or more new Notes shall be issued to the designated Assignee and the old Note shall be returned by the Administrative Agent to the Borrower marked "cancelled." No --------- assignment of a Note and the Obligation evidenced thereby shall be effective unless it shall have been recorded in the Register by the Administrative Agent as provided in this subsection 2.5(h). 2.6 Optional Prepayments; Mandatory Prepayments and Reduction of ------------------------------------------------------------ Commitments. (a) Subject to subsection 2.16, the Borrower may at any time and - ----------- from time to time prepay any Loans, in whole or in part, without premium or penalty, upon irrevocable notice to the Administrative Agent prior to 11:00 A.M., New York City time, three Business Days prior to the date of prepayment, specifying the date and amount of prepayment, the Type of Loan to be prepaid (which loans shall be prepaid on a pro rata basis among the applicable Lenders) and whether the prepayment is of LIBOR Loans, Base Rate Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. Upon receipt of any such notice the Administrative Agent shall promptly notify each applicable Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with any amounts payable pursuant to subsection 2.16. Partial prepayments shall be in an aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. (b) (i) If, subsequent to the Closing Date, the Borrower or any of its Subsidiaries shall incur or permit the incurrence of any Indebtedness (other than Indebtedness permitted pursuant to subsection 7.2), 100% of the Net Proceeds thereof shall be promptly applied toward the prepayment of the Loans and permanent reduction of the Commitments as set forth in clause (iv) of this subsection 2.6(b). Nothing in this paragraph (b) shall be deemed to permit any Indebtedness not permitted by subsection 7.2. (ii) If, subsequent to the Closing Date (or, if earlier, the Escrow Date), the Borrower or any of its Restricted Subsidiaries shall receive Net Proceeds from any Asset Sale or series of related Asset Sales in excess of $500,000, such Net Proceeds shall be promptly applied toward the prepayment of the Loans and permanent reduction of the Commitments as set forth in clause (iv) of this subsection 2.6(b); provided that Net Proceeds from any Asset Sales shall not be required to be so applied to the extent that such Net Proceeds are used by the Borrower or such Restricted Subsidiary (A) to acquire assets to be employed in the business of the Borrower or its Restricted Subsidiaries or a Similar Business of the Borrower or its Restricted Subsidiaries or, (B) to the extent permitted by subsection 7.9, to acquire (i) equity interests in a Person engaged in a Similar Business or (ii) assets constituting a business unit of a Person engaged in a Similar Business, in each case within 358 days of receipt thereof, but if such Net Proceeds are not so used, 100% of the amount of such Net Proceeds not so used shall be applied toward the prepayment of the Loans and the permanent reduction of the Commitments as set forth in clause (iv) of this subsection 2.6(b) on the earlier of (x) the 359th day after receipt of such Net Proceeds and (y) the date on which the Borrower has determined that such 33 Net Proceeds shall not be so used. To the extent that more than $50,000,000 in Net Proceeds from Asset Sales shall at any time remain unused or unapplied as provided in this subsection 2.6(b)(ii) for a period of more than 60 days, the Borrower shall deposit all such unused or unapplied Net Proceeds into a cash collateral account satisfactory to the Administrative Agent established for the benefit of the Lenders; provided, however, that so long as an Event of Default shall not have occurred and be continuing, such funds shall be released promptly upon notice from the Borrower for prompt use or application in accordance with this subsection 2.6(b)(ii). The Borrower hereby grants to the Administrative Agent for the benefit of the Lenders, a security interest in such cash collateral account and cash collateral to secure all obligations of the Borrower under this Agreement and the other Credit Documents until used or applied as provided herein. (iii) If there is Excess Cash Flow for any fiscal year and the Debt Ratio as of the last day of such fiscal year is greater than 4.0 to 1.0, 75% of such Excess Cash Flow shall be applied toward the prepayment of the Loans and the permanent reduction of the Commitments as set forth in clause (iv) of this subsection 2.6(b) on the Excess Cash Flow Payment Date for such fiscal year. If there is Excess Cash Flow for any fiscal year and the Debt Ratio as of the last day of such fiscal year is less than or equal to 4.0 to 1.0, 50% of such Excess Cash Flow shall be applied toward the prepayment of the Loans and the permanent reduction of the Commitments as set forth in clause (iv) of this subsection 2.6(b) on the Excess Cash Flow Payment Date for such fiscal year. (iv) Any mandatory prepayments of the Loans pursuant to this subsection 2.6 shall be applied (x) first, to the Tranche A Term Loans and Tranche B Term Loans on a pro rata basis to reduce the unpaid scheduled installments of principal of each such Tranche of Term Loans due in the year 2001, (y) second, to the Tranche A Term Loans and the Tranche B Term Loans on a pro rata basis to reduce the unpaid scheduled installments of principal of each such Tranche of Term Loans on a pro rata basis, and (z) thereafter to the permanent reduction of the Revolving Credit Commitment; provided that, in the case of Tranche B Term Loans, so long as any Tranche A Term Loans are outstanding, the Tranche B Term Lenders shall have the right to waive such Lenders' right to receive any portion of such prepayment. The Administrative Agent shall notify the Tranche B Term Lenders of such receipt and the amount of the prepayment to be applied to each such Lender's Term Loans; provided, that the Borrower shall use its reasonable efforts to notify the Tranche B Term Lenders of such waivable mandatory prepayment three (3) Business Days prior to the payment to the Administrative Agent of such waivable mandatory prepayment. In the event any such Tranche B Term Lender desires to waive such Lender's right to receive any such waivable mandatory prepayment, such Lender shall so advise the Administrative Agent no later than the close of business on the Business Day immediately following the date of such notice from the Administrative Agent. In the event that any such Lender waives such Lender's right to any such waivable mandatory prepayment, the Administrative Agent shall apply 50% of the amount so waived by such Lender to prepay the Tranche A Term Loans to reduce unpaid scheduled installments of principal of the Tranche A Term Loans on a pro rata basis. The Administrative Agent shall return the remainder of the amount so waived by such Lender to the Borrower. Revolving Credit Commitment reductions made pursuant to subsections 2.6(b)(i), (ii) and (iii) shall be applied to each Lender's Revolving Credit Commitment on a pro rata basis and shall reduce permanently such Commitments. (v) If after giving effect to any reduction of the Revolving Credit Commitments under subsection 2.4 or 2.6 (A) the aggregate outstanding principal amount of Swing Line Loans plus the aggregate outstanding principal amount of Revolving Credit Loans shall exceed the Revolving Loan Sublimit or (B) the amount in clause (A) plus the aggregate outstanding amount of L/C 34 Obligations, shall exceed the aggregate amount of the Revolving Credit Commitments, such reduction shall be accompanied by prepayment in the amount of such excess to be applied (x) first, to the outstanding Swing Line Loans and (y) ----- second, to outstanding Revolving Credit Loans (in each case, together with any - ------ amounts payable under subsection 2.16); provided that, with respect to clause (B) above, if the aggregate principal amount of Swing Line Loans and Revolving Credit Loans then outstanding is less than the amount of such excess (because Letters of Credit constitute a portion of such excess), the Borrower shall immediately, without notice or demand, to the extent of the balance of such excess, replace outstanding Letters of Credit and/or deposit an amount (but in no event greater than such balance) in a cash collateral account satisfactory to the Administrative Agent established for the benefit of the Issuing Lender and the L/C Participants. The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Lender and the L/C Participants, a security interest in such cash collateral account and cash collateral to secure all obligations of the Borrower under this Agreement and the other Credit Documents. 2.7 Conversion and Continuation Options. (a) The Borrower may elect ----------------------------------- from time to time to convert LIBOR Loans to Base Rate Loans, by giving the Administrative Agent prior irrevocable notice of such election at or before 11:00 A.M. New York City time, on the Business Day immediately preceding the date of the proposed conversion and of the amount and Type of Loan to be converted, provided that any such conversion of LIBOR Loans may only be made on the last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert Base Rate Loans (other than Swing Line Loans) to LIBOR Loans by giving the Administrative Agent prior irrevocable notice of such election at or before 11:00 A.M., New York City time, on the third Business Day immediately preceding the date of the proposed conversion and of the amount and Type of Loan to be converted. Any such notice of conversion to LIBOR Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each applicable Lender thereof. All or any part of outstanding LIBOR Loans and Base Rate Loans may be converted as provided herein, provided that (i) no Loan may be converted into a LIBOR Loan when any Event of Default has occurred and is then continuing and the Required Lenders have determined in their sole discretion not to permit such conversion and (ii) no Loan may be converted into a LIBOR Loan after the date that is one month prior to the Termination Date with respect to such Loan. (b) Any LIBOR Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving notice to the Administrative Agent, in accordance with the applicable provisions of the term "Interest Period" set forth in subsection 1.1, of the length of the --------------- next Interest Period to be applicable to such Loans and of the amount and Type of Loan to be continued, provided that no LIBOR Loan may be continued as such (i) when any Event of Default has occurred and is then continuing and the Required Lenders have determined in their sole discretion not to permit such continuation or (ii) after the date that is one month prior to the Termination Date with respect to such Loan and provided, further, that if the Borrower shall fail to give such notice or if such continuation is not permitted such Loans shall be automatically converted to Base Rate Loans on the last day of such then expiring Interest Period. (c) All notices given by the Borrower under this subsection 2.7 may be made by telephonic notice promptly confirmed in writing. 2.8 Minimum Amounts and Maximum Number of Tranches. All borrowings, ---------------------------------------------- conversions and continuations of Loans hereunder and all selections of Interest Periods hereunder shall 35 be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Loans comprising each LIBOR Tranche shall be equal to $10,000,000 or a whole multiple of $1,000,000 in excess thereof. All Loans hereunder may be converted or continued into Base Rate Loans without reference to the minimum principal amount requirements for new Base Rate Borrowings set forth in Section 2.2 above. In no event shall there be more than 25 LIBOR Tranches outstanding at any time. 2.9 Interest Rates and Payment Dates. (a) Each LIBOR Loan shall -------------------------------- bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the LIBOR Rate determined for such day plus the Applicable Margin. (b) Each Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate plus the Applicable Margin. (c) If all or a portion of (i) any principal of any Loan, (ii) any interest payable thereon, (iii) any commitment fee or (iv) any other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), the principal of the Loans and any such overdue interest, commitment fee or other amount shall bear interest at a rate per annum which is (x) in the case of principal, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this subsection plus 2% or (y) in the case of any such overdue interest, commitment fee or other amount, the rate described in paragraph (b) of this subsection plus 2%, in each case from the date of such non-payment until such overdue principal, interest, commitment fee or other amount is paid in full (as well after as before judgment). (d) Interest shall be payable with respect to each Loan in arrears on each Interest Payment Date and on the Termination Date with respect to such Loan, provided that interest accruing pursuant to paragraph (c) of this subsection shall be payable from time to time on demand. 2.10 Computation of Interest and Fees. (a) Interest on Base Rate -------------------------------- Loans and fees shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed; all other interest shall be calculated on the basis of a 360-day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of each determination of a LIBOR Rate. Any change in the interest rate on a Loan resulting from a change in the Base Rate or the LIBOR Reserve Percentage shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of the effective date and the amount of each such change in interest rate. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to subsection 2.9(a) or (c). 36 2.11 Inability to Determine Interest Rate. If prior to the first day ------------------------------------ of any Interest Period: (a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the eurodollar market, adequate and reasonable means do not exist for ascertaining the LIBOR Rate for such Interest Period, or (b) the Administrative Agent shall have received notice from the Required Lenders that the LIBOR Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period, the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as practicable thereafter. If such notice is given (x) any LIBOR Loans requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans that were to have been converted on the first day of such Interest Period to LIBOR Loans shall be converted to or continued as Base Rate Loans and (z) any outstanding LIBOR Loans shall be converted, on the first day of such Interest Period, to Base Rate Loans. Until such notice has been withdrawn in writing by the Administrative Agent (which the Administrative Agent agrees to do when the Administrative Agent has determined, or has been instructed by the Required Lenders that, the circumstances that prompted the delivery of such notice no longer exist), no further LIBOR Loans shall be made or continued as such, nor shall the Borrower have the right to convert Base Rate Loans to LIBOR Loans. 2.12 Pro Rata Treatment and Payments. (a) Each borrowing by the ------------------------------- Borrower from the Revolving Credit Lenders hereunder, each payment by the Borrower on account of any commitment fee hereunder and any reduction of the Revolving Credit Commitments of Revolving Credit Lenders shall be made pro rata according to the respective Commitment Percentages of the Revolving Credit Lenders. Each payment (including each prepayment (other than as provided in subsection 2.6(b)(iv) of this Agreement)) by the Borrower on account of principal of and interest on any Term Loans or the Revolving Credit Loans, and any application by the Administrative Agent of the proceeds of any Collateral, shall be made pro rata according to the respective outstanding principal amounts of such Loans then held by the Lenders. All payments (including prepayments) to be made by the Borrower hereunder in respect of any Loan, whether on account of principal, interest, Reimbursement Obligations, fees, expenses or otherwise, shall be made without set off or counterclaim and shall be made prior to 11:00 A.M., New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders with respect to such Loans, at the Administrative Agent's office specified in subsection 10.2, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the applicable Lenders promptly upon receipt in like funds as received. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. (b) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its Commitment Percentage of such borrowing available to the Administrative Agent, the Administrative 37 Agent may assume that such Lender is making such amount available to the Administrative Agent on such Borrowing Date, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. If such Lender's Commitment Percentage of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to Base Rate Loans hereunder, on demand, from the Borrower. The failure of any Lender to make any Loan to be made by it shall not relieve any other Lender of its obligation hereunder to make its Loan on such Borrowing Date. 2.13 Illegality. Notwithstanding any other provision herein, if the ---------- adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain LIBOR Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make LIBOR Loans, continue LIBOR Loans as such and convert Base Rate Loans to LIBOR Loans shall forthwith be cancelled and (b) such Lender's Loans then outstanding as LIBOR Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a LIBOR Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to subsection 2.16. If circumstances subsequently change so that any affected Lender shall determine that it is no longer so affected, such Lender will promptly notify the Borrower and the Administrative Agent, and upon receipt of such notice, the obligations of such Lender to make or continue LIBOR Loans or to convert Base Rate Loans into LIBOR Loans shall be reinstated. 2.14 Requirements of Law. (a) If the adoption of or any change in ------------------- any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: (i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Note, any Letter of Credit, any Application or any LIBOR Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes that are covered by subsection 2.15 and changes in the rate of net income taxes (including branch profits taxes and minimum taxes) or franchise taxes (imposed in lieu of net income taxes) of such Lender); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the LIBOR Rate hereunder; or 38 (iii) shall impose on such Lender any other condition; and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining LIBOR Loans or issuing or participating in Letters of Credit or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender upon written demand such additional amount or amounts as will compensate such Lender for such increased cost or reduced amount receivable; provided that before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions and so long as such efforts would not be disadvantageous to it, in its reasonable discretion, in any legal, economic or regulatory manner) to designate a different LIBOR lending office if the making of such designation would allow the Lender or its LIBOR lending office to continue to perform its obligations to make LIBOR Loans or to continue to fund or maintain LIBOR Loans and avoid the need for, or reduce the amount of, such increased cost. If any Lender becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify the Borrower, through the Administrative Agent, of the event by reason of which it has become so entitled. If the Borrower so notifies the Administrative Agent within five Business Days after any Lender notifies the Borrower of any increased cost pursuant to the foregoing provisions of this Section, the Borrower may convert all LIBOR Loans of such Lender then outstanding into Base Rate Loans in accordance with the terms hereof. (b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of its obligations hereunder or under any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a prompt written request therefor, the Borrower shall promptly pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. (c) If any Lender becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled; provided that the Borrower shall not be required to compensate a Lender pursuant to this subsection for any increased costs or reductions incurred more than 90 days prior to the date that such Lender notifies the Borrower of the Requirement of Law giving rise to such increased costs or reductions and of such Lender's intention to claim compensation therefor; provided further that, if the Requirement of Law giving rise to such increased costs or reductions is retroactive, then the 90-day period referred to above shall be extended to include the period of retroactive effect thereof. A certificate as to any additional amounts payable pursuant to this subsection, showing the calculation thereof in reasonable detail, submitted by such Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 39 2.15 Taxes. (a) Except as provided in this subsection 2.15, all ----- payments made by the Borrower under this Agreement and any Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority ("Taxes"), ----- excluding Taxes on net income (including, without limitation, branch profits taxes and minimum taxes) and franchise taxes (imposed in lieu of net income taxes) imposed on any Agent or any Lender as a result of a present or former connection between such Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any Note). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to be withheld or ------------------ deducted from any amounts payable to any Agent or any Lender hereunder or under any Note, the amounts so payable to such Agent or such Lender shall be increased to the extent necessary to yield to such Agent or such Lender (after payment of all Non-Excluded Taxes) the amount of interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement, provided, however, that the Borrower shall not be required to increase any such amounts payable to any Lender that is not a United States person as defined in Section 7701(a)(30) of the Code with respect to any Taxes that are imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement or that are attributable to such Lender's failure at any time to comply with the requirements of paragraph (b) of this subsection. Whenever any Non-Excluded Taxes are so required to be withheld or deducted, the Borrower shall make any such required withholding or deduction and remit the full amount withheld or deducted to the relevant authority in accordance with applicable law, and, as promptly as possible thereafter, the Borrower shall send to the relevant Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof or, if such official receipt was not received, any other proof of payment reasonably satisfactory to such Agent and Lender. (b) Each Lender, Assignee and Participant that is not a United States person as defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall --------------- deliver to the Borrower and the Administrative Agent, and if applicable, the assigning Lender (or, in the case of a Participant, solely to the Lender from which the related participation shall have been purchased) on or before the date on which it becomes a party to this Agreement (or, in the case of a Participant, on or before the date on which such Participant purchases the related participation) either: (A) two duly completed and signed copies of either Internal Revenue Service Form 1001 (relating to such Non-U.S. Lender and entitling it to a complete exemption from withholding of U.S. Taxes on all amounts to be received by such Non-U.S. Lender pursuant to this Agreement and the other Credit Documents) or Form 4224 (relating to all amounts to be received by such Non-U.S. Lender pursuant to this Agreement and the other Credit Documents), or successor and related applicable forms, as the case may be; or (B) in the case of a Non-U.S. Lender that is not a "bank" within the ---- meaning of Section 881(c)(3)(A) of the Code and that cannot comply with the requirements of clause (A) hereof, (x) a statement in the form of Exhibit E (or such other form of statement as shall be reasonably requested by the Borrower (or, in the case of a Participant, the applicable Lender) from time to time) to the effect that such Non-U.S. Lender is eligible for a complete 40 exemption from withholding of U.S. Taxes under Code Section 871(h) or 881(c), and (y) two duly completed and signed copies of Internal Revenue Service Form W-8 or successor and related applicable form. Further, each Non-U.S. Lender agrees (i) to deliver, upon request, to the Borrower and the Administrative Agent, and if applicable, the assigning Lender (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two further duly completed and signed copies of such Forms 1001 or 4224, as the case may be, or successor and related applicable forms, on or before the date that any such form expires or becomes obsolete and promptly after the occurrence of any event requiring a change from the most recent form(s) previously delivered by it to the Borrower (or, in the case of a Participant, solely to the Lender from which the related participation shall have been purchased) in accordance with applicable U.S. laws and regulations and (ii) in the case of a Non-U.S. Lender that delivers a statement in the form of Exhibit E (or such other form of statement as shall have been requested by the Borrower), to deliver to the Borrower and the Administrative Agent, and if applicable, the assigning Lender, such additional statements and forms as shall be reasonably requested by the Borrower (or, in the case of a Participant, the applicable Lender) from time to time unless, in any such case, any change in law or regulation has occurred subsequent to the date such Lender (or Participant) became a party to this Agreement (or in the case of a Participant, the date on which such Participant purchased the related participation) which renders all such forms inapplicable or which would prevent such Lender (or Participant) from properly completing and executing any such form with respect to it and such Lender (or Participant) promptly notifies the Borrower and the Administrative Agent (or, in the case of a Participant, the Lender from which the related participation shall have been purchased) if it is no longer able to deliver, or if it is required to withdraw or cancel, any form or statement previously delivered by it pursuant to this subsection 2.15(b). The Borrower hereby agrees that for so long as a Lender that is a Non-U.S. Lender complies with this subsection 2.15(b), the Borrower shall not withhold any amounts from any payments made pursuant to this Agreement to such Non-U.S. Lender, unless the Borrower reasonably determines that it is required by law to withhold or deduct any amounts from any payments made to such Non-U.S. Lender pursuant to this Agreement. (c) The Borrower will indemnify each Agent and each Lender for the full amount of Non-Excluded Taxes paid by such Agent or such Lender, as the case may be, and any liability for penalties, interest and expenses (including reasonable attorney's fees and expenses) arising therefrom or with respect thereto, whether or not such Non-Excluded Taxes were correctly or legally asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability prepared by an Agent or a Lender, absent manifest error, shall be final after the date such Agent or such Lender, as the case may be, makes written demand therefor. (d) If any Agent or any Lender receives a refund with respect to Non- Excluded Taxes paid by the Borrower, which in the sole discretion and good faith judgment of such Lender or Agent is allocable to such payment, it shall promptly pay such refund to the extent allocable to payment of Non-Excluded Taxes to the Borrower, net of all out-of-pocket expenses of such Lender incurred in obtaining such refund, if all the payments due under this subsection 2.15 have been paid in full; provided, however, that the Borrower agrees to promptly return such amount, net of any incremental additional costs, to the applicable Agent or Lender, as the case may be, if it receives notice from the applicable Agent or Lender that such Agent or Lender is required to repay such refund. 41 (e) In addition to its agreements under paragraph (b) of this subsection, each Lender and each Agent shall, at the request of the Borrower, use best efforts to provide any certificate or document that such Lender or Agent could legally provide without any material burden on its part and that would reduce (or avoid) any Non-Excluded Taxes on payments to it made under this Agreement or any Notes. (f) The agreements in this subsection 2.15 shall survive the termination of this Agreement and the payment of all Loans and other amounts payable hereunder. 2.16 Indemnity. The Borrower agrees to indemnify each Lender and to --------- hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of LIBOR Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of LIBOR Loans on a day which is not the last day of an Interest Period with respect thereto (but excluding loss of margin). Such indemnification under this subsection 2.16 may include an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (but excluding loss of margin) over (ii) the amount of interest (as reasonably determined by such Lender) which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. This covenant shall survive the termination of this Agreement and the payment of the Loans and all amounts payable thereunder. 2.17 Replacement of Lenders. If at any time (a) the Borrower becomes ---------------------- obligated to pay additional amounts described in subsection 2.14 or 2.15 as a result of any condition described in such subsections, or any Lender ceases to make LIBOR Loans pursuant to subsection 2.13, (b) any Lender becomes insolvent and its assets become subject to a receiver, liquidator, trustee, custodian or other Person having similar powers or (c) any Lender becomes a "Nonconsenting ------------- Lender" (hereinafter defined), then the Borrower may, on ten Business Days' - ------ prior written notice to the Administrative Agent and such Lender, replace such Lender by causing such Lender to (and such Lender shall) assign pursuant to subsection 10.6 all of its rights and obligations under this Agreement to a Lender or other financial institution selected by the Borrower and acceptable to the Administrative Agent for a purchase price equal to the outstanding principal amount of such Lender's Loans and all accrued interest and fees and other amounts payable hereunder (including amounts payable under subsection 2.16 as though such Loans were being paid instead of being purchased); provided that (i) neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender or other such entity, (ii) in the event of a replacement of a Nonconsenting Lender or a Lender to which the Borrower becomes obligated to pay additional amounts pursuant to this subsection 2.17, in order for the Borrower to be entitled to replace such a Lender, such replacement must take place no later than 180 days after (A) the date the Nonconsenting Lender shall have notified the Borrower and the Administrative Agent of its failure to agree to any requested consent, waiver or amendment or (B) the Lender shall have demanded payment of additional amounts under one of the subsections described in this subsection 2.17, as the case may be, and (iii) in no event shall the Lender hereby replaced be required to pay or surrender to such replacement Lender or other entity any of the fees 42 received by such Lender hereby replaced pursuant to this Agreement. In the case of a replacement of a Lender to which the Borrower becomes obligated to pay additional amounts pursuant to subsection 2.14 or 2.15, the Borrower shall pay such additional amounts to such Lender prior to such Lender being replaced and the payment of such additional amounts shall be a condition to the replacement of such Lender. In the event that (x) the Borrower or the Administrative Agent has requested the Lenders to consent to a departure or waiver of any provisions of the Credit Documents or to agree to any amendment thereto, (y) the consent, waiver or amendment in question requires the agreement of all Lenders in accordance with the terms of subsection 10.1 and (z) the Required Lenders have agreed to such consent, waiver or amendment, then any Lender who does not agree to such consent, waiver or amendment shall be deemed a "Nonconsenting Lender." -------------------- 2.18 Certain Fees. Borrower agrees to pay to the Administrative ------------ Agent, for its own account, a non-refundable administration fee in an amount previously agreed to with the Administrative Agent, payable in advance on the Closing Date and annually in advance on each anniversary thereof prior to the earlier of (x) the Final Maturity Date and (y) the payment in full of all Loans and all other amounts owing under this Agreement. 2.19 Certain Rules Relating to the Payment of Additional Amounts. ----------------------------------------------------------- (a) Upon the request, and at the expense, of the Borrower, each Lender to which the Borrower is required to pay any additional amount pursuant to subsection 2.14 or 2.15 shall, at the option of such Lender, either (A) forego payment of such additional amount from the Borrower or (B) reasonably afford the Borrower the opportunity to contest, and reasonably cooperate with the Borrower in contesting, the imposition of any Non-Excluded taxes giving rise to such payment; provided that (i) such Lender shall not be required to afford the Borrower the opportunity to so contest unless the Borrower shall have confirmed in writing to such Lender its obligation to pay such amounts pursuant to this Agreement and (ii) the Borrower shall reimburse such Lender for its out-of- pocket costs, including attorneys' and accountants' fees and disbursements incurred in so cooperating with the Borrower in contesting the imposition of such Non-Excluded Taxes. (b) Each Lender agrees that if it makes any demand for payment under subsection 2.14 or 2.15(a), or if any adoption or change of the type described in subsection 2.13 shall occur with respect to it, it will use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions and so long as such efforts would not be disadvantageous to it, as determined in its reasonable discretion) to designate a different lending office if the making of such a designation would allow the Lender to continue to make and maintain LIBOR Loans and would reduce or obviate the need for the Borrower to make payments under subsection 2.14 or 2.15(a), or would eliminate or reduce the effect of any adoption or change described in subsection 2.13. SECTION 3. LETTERS OF CREDIT 3.1 L/C Commitment. (a) Subject to the terms and conditions -------------- hereof, the Issuing Lender, in reliance on the agreements of the Revolving Credit Lenders set forth in subsection 3.4(a), agrees to issue letters of credit ("Letters of Credit") for the account of the Borrower on any Business Day during ----------------- the Commitment Period in such form as may be approved from time to time by the Issuing Lender; provided that the Issuing Lender shall have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the Available Commitment with respect to Revolving Credit Loans of all Revolving Credit Lenders 43 less the aggregate principal amount of the Swing Line Loans then outstanding - ---- would be less than zero. (b) Each Letter of Credit shall (i) be denominated in Dollars, (ii) be a standby letter of credit issued to support obligations of the Borrower or any of its Restricted Subsidiaries, contingent or otherwise and (iii) expire no later than the earlier of (x) the date that is 12 months after the date of its issuance and (y) the fifth Business Day prior to the Revolving Loan Termination Date; provided that any Letter of Credit with an expiration date occurring up to twelve months after such Letter of Credit's date of issuance may be automatically renewable for subsequent 12-month periods (but in no event later than the fifth Business Day prior to the Revolving Loan Termination Date). (c) Each Letter of Credit shall be subject to the Uniform Customs and, to the extent not inconsistent therewith, the laws of the State of New York. (d) The Issuing Lender shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law or any policies of the Issuing Lender. 3.2 Procedure for Issuance of Letters of Credit. The Borrower may ------------------------------------------- from time to time request that the Issuing Lender issue a Letter of Credit at any time prior to the fifth Business Day prior to the Revolving Loan Termination Date by delivering to the Issuing Lender with a copy to the Administrative Agent at its address for notices specified herein an Application therefor, completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may reasonably request. Upon receipt of any Application, the Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower and the Administrative Agent (with copies for each Lender) promptly following the issuance thereof. 3.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay ----------------------------------- to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, a letter of credit fee with respect to each Letter of Credit, computed for the period from and including the date of issuance of such Letter of Credit to the expiration date of such Letter of Credit at a rate per annum equal to the Applicable Margin then in effect for LIBOR Revolving Credit Loans, of the aggregate face amount of Letters of Credit outstanding, payable in arrears on each L/C Fee Payment Date and on the Revolving Loan Termination Date. Such fee shall be payable to the Administrative Agent to be shared ratably among the Revolving Credit Lenders in accordance with their respective Commitment Percentages with respect to Revolving Credit Loans. In addition, the Borrower shall pay to the Administrative Agent, for the sole account of the Issuing Lender, a fee equal to 0.250% per annum of the aggregate face amount of outstanding Letters of Credit payable quarterly in arrears on each L/C Fee Payment Date and on the Revolving Loan Termination Date. 44 (b) In addition to the foregoing fees and commissions, the Borrower shall pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are incurred or charged by the Issuing Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit. (c) The Administrative Agent shall, promptly following its receipt thereof, distribute to the Issuing Lender and the L/C Participants all fees and commissions received by the Administrative Agent for their respective accounts pursuant to this subsection. 3.4 L/C Participation. (a) The Issuing Lender irrevocably agrees to ----------------- sell and hereby sells to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Commitment Percentage with respect to Revolving Credit Loans from time to time in effect in the Issuing Lender's obligations and rights under each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at the Issuing Lender's address for notices specified herein an amount equal to such L/C Participant's then Commitment Percentage with respect to Revolving Credit Loans of the amount of such draft, or any part thereof, which is not so reimbursed; provided that, if such demand is made prior to 11:00 A.M., New York City time, on a Business Day, such L/C Participant shall make such payment to the Issuing Lender prior to the end of such Business Day and otherwise such L/C Participant shall make such payment on the next succeeding Business Day. (b) If any amount required to be paid by any L/C Participant to the Issuing Lender pursuant to subsection 3.4(a) in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit is paid to the Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Rate, as quoted by the Issuing Lender, during the period from and including the date such payment is required to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to subsection 3.4(a) is not in fact made available to the Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, the Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Base Rate Loans hereunder. A certificate of the Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. (c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with subsection 3.4(a), the Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by the Issuing Lender), or any payment of interest on account thereof, the Issuing Lender will, 45 if such payment is received prior to 11:00 A.M., New York City time, on a Business Day, distribute to such L/C Participant its pro rata share thereof prior to the end of such Business Day and otherwise the Issuing Lender will distribute such payment on the next succeeding Business Day; provided, however, that in the event that any such payment received by the Issuing Lender and distributed to the L/C Participants shall be required to be returned by the Issuing Lender, each such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it. 3.5 Reimbursement Obligation of the Borrower. (a) The Borrower ---------------------------------------- agrees to reimburse the Issuing Lender on the same Business Day on which the Issuing Lender notifies the Borrower of the date and amount of a draft presented under any Letter of Credit and paid by the Issuing Lender provided such notice is received by 1:00 P.M., New York City time, on such Business Day, and the next Business Day if such notice is received after such time. The Issuing Lender shall provide notice to the Borrower on each Business Day on which a draft is presented and paid by the Issuing Lender indicating the amount of (i) such draft so paid and (ii) any taxes, fees, charges or other costs or expenses incurred by the Issuing Lender in connection with such payment. Each such payment shall be made to the Issuing Lender at its address for notices specified herein in lawful money of the United States of America and in immediately available funds. (b) Interest shall be payable on any and all amounts remaining unpaid by the Borrower under this subsection from the date a draft presented under any Letter of Credit is paid by the Issuing Lender until payment in full (i) at the rate which would be payable on any Loans that are Base Rate Loans at such time until such payment is required to be made pursuant to subsection 3.5(a), and (ii) thereafter, at the rate which would be payable on any Loans that are Base Rate Loans at such time which were then overdue. 3.6 Obligations Absolute. (a) The Borrower's obligations under -------------------- subsection 3.5(a) shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Borrower may have or have had against the Issuing Lender, any L/C Participant or any beneficiary of a Letter of Credit. (b) The Borrower also agrees with the Issuing Lender that the Issuing Lender shall not be responsible for, and the Borrower's Reimbursement Obligations under subsection 3.5(a) shall not be affected by, among other things, (i) the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged (unless the Issuing Lender has actual knowledge of such invalidity, fraud or forgery), or (ii) any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or (iii) any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. (c) Neither the Issuing Lender nor any L/C Participant shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions caused by the Issuing Lender's gross negligence or willful misconduct. (d) The Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the 46 Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall not result in any liability of the Issuing Lender or any L/C Participant to the Borrower. 3.7 Letter of Credit Payments. If any draft shall be presented for ------------------------- payment under any Letter of Credit, the Issuing Lender shall promptly notify the Borrower and the Administrative Agent of the date and amount thereof. If any draft shall be presented for payment under any Letter of Credit, the responsibility of the Issuing Lender to the Borrower in connection with such draft shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment appear on their face to be in conformity with such Letter of Credit. 3.8 Application. To the extent that any provision of any Application ----------- related to any Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall govern and control. SECTION 4. REPRESENTATIONS AND WARRANTIES To induce the Agents, the Issuing Lender, the Swing Line Lender and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, the Borrower hereby represents and warrants to the Agents, the Issuing Lender, the Swing Line Lender and each Lender that: 4.1 Financial Statements and Condition. (a) The Borrower has ---------------------------------- heretofore furnished to the Lenders the combined balance sheet and statements of income and retained earnings and cash flows of the Acquired Subsidiaries, in each case as of and for the fiscal year most recently ended, as applicable. Such financial statements present fairly in all material respects the financial condition, results of operations and cash flows of the Acquired Subsidiaries as of such dates and for such periods in accordance with GAAP. (b) The Borrower has heretofore delivered to the Lenders its unaudited pro forma consolidated balance sheet as of December 31, 1997 (the "Pro --- Forma Financial Statements"), prepared giving effect to the Transactions as if - -------------------------- they had occurred on such date and unaudited pro forma condensed statements of income for the twelve and nine months ended December 31, 1997 and the year ended March 31, 1997, assuming the Transactions had actually occurred on April 1, 1997. Such pro forma financial statements have been prepared in good faith by the Borrower based on assumptions believed by the Borrower to be reasonable, and reflect on a pro forma basis the estimated consolidated financial position and results of operations of the Borrower as of December 31, 1997, and March 31, 1997 assuming that the Transactions had actually occurred at April 1, 1997. 4.2 No Change. Since March 31, 1997 there has been no development, --------- event or circumstance which has had or could reasonably be expected to have a Material Adverse Effect. 4.3 Corporate Existence. The Borrower and each of its Subsidiaries ------------------- (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization (i) as of the Closing Date and (ii) with respect to the Borrower and its Restricted Subsidiaries, on the Effective Date and on each Borrowing Date, (b) has the corporate power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the 47 business in which it is currently engaged except, with respect to Unrestricted Subsidiaries, where the failure to have such power, authority and legal right could not reasonably be expected to have a Material Adverse Effect and (c) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent that the failure to so qualify could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 4.4 Corporate Power; Authorization; Enforceable Obligations; No ----------------------------------------------------------- Conflict. The Borrower and each of its Restricted Subsidiaries has the - -------- corporate power and authority, and the legal right, to make, deliver and perform the Credit Documents to which it is a party and, in the case of the Borrower, to borrow hereunder and has taken all necessary corporate action to authorize the borrowings on the terms and conditions of this Agreement and to authorize the execution, delivery and performance of such Credit Documents and the Transaction Documents. After giving effect to the Acquisition, no consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of the Credit Documents and Transaction Documents to which the Borrower and each other Credit Party is a party (including, without limitation, the collateral assignment of the Coal Supply Agreements listed on Schedule 4.24 to the Administrative Agent for the benefit of the Agents and the Lenders and the mortgaging of all real property intended by the Credit Agreement to be mortgaged to the Administrative Agent for the benefit of the Agents and the Lenders), except those set forth on Schedule 4.4. This Agreement and each other Credit Document and Transaction Document have been duly executed and delivered on behalf of the Borrower and each other Credit Party. This Agreement and each other Credit Document and Transaction Document to which it is a party constitute legal, valid and binding obligations of each Credit Party party thereto enforceable against each such Credit Party, as the case may be, in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 4.5 No Legal Bar. Except as set forth on Schedule 4.5 or as could ------------ not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect, the execution, delivery and performance of each Credit Document by the Borrower and each Restricted Subsidiary party thereto, the borrowing and use of the proceeds of the Loans and the consummation of the transactions contemplated by the Credit Documents and the Transaction Documents: (a) will not violate any Requirement of Law or any Contractual Obligation applicable to or binding, the Borrower or any Restricted Subsidiary (after giving effect to the Acquisition) or any of their respective properties or assets and (b) will not result in the creation or imposition of any Lien on any of its properties or assets pursuant to any Requirement of Law applicable to it or any of its Contractual Obligations, except for the Liens arising under the Credit Documents. 4.6 Litigation; Compliance with Laws; Reserves. (a) Except as set ------------------------------------------ forth in Schedule 4.6, there are not any actions, suits or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary (after giving effect to the Acquisition) or any business, property or rights of any such person (i) that expressly involve any Credit Document or the Transactions or (ii) as to which there is a reasonable possibility of any adverse determination and that, 48 in either case could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. (b) To the extent required by GAAP, the Borrower and its Subsidiaries (after giving effect to the Acquisition) maintain adequate reserves for (i) future costs associated with any lung disease claim alleging pneumoconiosis or silicosis or arising out of exposure or alleged exposure to coal dust or the coal mining environment, (ii) future costs associated with retiree and health care benefits, (iii) future costs associated with reclamation of disturbed acreage, removal of facilities and other closing costs in connection with its mining operations and (iv) future costs associated with other potential environmental liabilities. (c) None of the Borrower or any of its Subsidiaries (after giving effect to the Acquisition) or any of its respective material properties or assets is in violation of, nor will the continued operation of its material properties and assets as currently conducted violate, any law, rule or regulation (including any zoning, building, Mining and Environmental Law, ordinance, code or approval or any building or mining permits), or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority, where such violation or default could reasonably be expected to result in a Material Adverse Effect. 4.7 No Default. Neither the Borrower nor any of its Subsidiaries ---------- (after giving effect to the Acquisition) is in default under or with respect to any of its Contractual Obligations in any respect which could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 4.8 Ownership and Location of Property; Liens. (a) Schedule 4.8(a) ----------------------------------------- lists completely and correctly as of the Closing Date all material real property (including surface rights and coal and other mineral rights) owned by the Borrower and the other Credit Parties (after giving effect to the Acquisition) and Schedule 6.10 sets forth the addresses (or reasonably specific locations) of such properties for which a Mortgage or fixture filing is required hereunder. As of the Closing Date, (i) with respect to each parcel of real property listed on Schedule 4.8(a) for which a Mortgage is required hereunder, the Borrower or its applicable Restricted Subsidiary (after giving effect to the Acquisition) has good record title in fee simple to such parcel, except for defects in title to such parcel which do not or will not have a material adverse effect on the (A) marketability, (B) title insurability, or (C) operation and intended use, of such parcel; and (ii) with respect to all other real property listed on Schedule 4.8(a), the Borrower and its applicable Restricted Subsidiaries (after giving effect to the Acquisition) have good record title in fee simple, except, with respect to this clause (ii), for defects in title which could not reasonably be expected to result in a Material Adverse Effect. (b) Schedule 4.8(b) lists completely and correctly as of the Closing Date (A) all material real property (including surface rights and coal and other mineral rights) leased by the Borrower and the other Credit Parties (after giving effect to the Acquisition) and (B) the lessors thereof and the addresses (or reasonably specific locations) of such properties for which a Mortgage or fixture filing is required hereunder. As of the Closing Date, (i)(A) with respect to each parcel of real property listed on Schedule 4.8(b) for which a Mortgage is required hereunder, the Borrower or its applicable Restricted Subsidiary (after giving effect to the Acquisition) has a valid and enforceable leasehold interest, except where such lack of validity or enforceability does not or will not have a material adverse effect on the (x) title insurability or (y) operation and intended use, of such parcel, and (B) with respect to all other real property listed on Schedule 4.8(b), the Borrower and its applicable 49 Restricted Subsidiaries (after giving effect to the Acquisition) have valid and enforceable leasehold interests, except, with respect to this clause (B), where such lack of validity or enforceability could not reasonably be expected to have a Material Adverse Effect; (ii)(A) with respect to each parcel of real property listed on Schedule 4.8(b) for which a Mortgage is required hereunder, the Borrower or its applicable Restricted Subsidiary (after giving effect to the Acquisition) possesses the leasehold interest(s) necessary for the operation of the applicable Mine(s) currently being operated on such parcel, and each of its rights under the applicable lease(s), contracts, rights-of-way and easements necessary for the operation of such Mine(s) is in full force and effect, except to the extent that failure to maintain such lease(s), contracts, rights of way and easements in full force and effect does not and will not have a material adverse effect on the operation and intended use of such parcel by the Borrower or such Restricted Subsidiary, and (B) with respect to all other real property listed on Schedule 4.8(b), the Borrower and its Restricted Subsidiaries (after giving effect to the Acquisition) possess all leasehold interests necessary for the operation of the Mines currently being operated by each of them, and each of their respective rights under the leases, contracts, rights-of-way and easements necessary for the operation of such Mines are in full force and effect, except to the extent, with respect to this clause (B), that failure to maintain such leases, contracts, rights of way and easements in full force and effect could not reasonably be expected to have a Material Adverse Effect; (iii)(A) with respect to each parcel of real property listed on Schedule 4.8(b) for which a Mortgage is required hereunder, neither the Borrower nor its applicable Restricted Subsidiary (after giving effect to the Acquisition) is in default under any of the applicable instruments or agreements described in clauses 4.8(b)(i) and 4.8(b)(ii) above, except for any defaults which, in the aggregate, do not or will not have a material adverse effect on the operation and intended use of such parcel, and (B) with respect to all other real property listed on Schedule 4.8(b), neither the Borrower nor its Restricted Subsidiaries (after giving effect to the Acquisition) is in default under any of the applicable instruments or agreements described in clauses 4.8(b)(i) and 4.8(b)(ii) above, except, with respect to this clause (B), for any defaults which, in the aggregate, could not reasonably be expected to have a Material Adverse Effect; (iv) each of the Borrower and its Restricted Subsidiaries (after giving effect to the Acquisition) possesses all licenses, permits (including, but not limited to, all Mining and Environmental Permits necessary for the operation of the Mines being operated by each of them in accordance with applicable Mining and Environmental Laws) or franchises which are necessary to carry out its business as presently conducted, except where failure to possess such licenses, permits or franchises could not, in the aggregate, be reasonably expected to have a Material Adverse Effect, and neither the Borrower nor any Restricted Subsidiary (after giving effect to the Acquisition) is in violation in any material respect of any such license, permit or franchise. 4.9 Intellectual Property. Each of the Borrower and its Restricted --------------------- Subsidiaries (after giving effect to the Acquisition) owns, or is licensed to use, all trademarks, tradenames, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted except for those the failure to own or license which could not reasonably be expected to have a Material Adverse Effect (the "Intellectual Property"). To the best of --------------------- the Borrower's knowledge, and except as set forth on Schedule 4.9, no claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does the Borrower know of any valid basis for any such claim which could reasonably be expected to have a Material Adverse Effect. The use of such Intellectual Property by the Borrower and its Restricted Subsidiaries (after giving effect to the Acquisition) does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 50 4.10 Taxes. Each of the Borrower and its Subsidiaries, and any other ----- affiliate with joint and several liability for taxes (after giving effect to the Acquisition), has filed or caused to be filed all Federal, state, local and other material tax returns or materials required to have been filed by it and has paid or caused to be paid all taxes due and payable by it pursuant thereto and all assessments received by it (other than any taxes or assessments the amount or validity of which are currently being contested in good faith and for which adequate reserves are maintained on the books of the Borrower or such affiliate), except where the failure to do any of the foregoing could not reasonably be expected to result in a Material Adverse Effect; no tax Lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge. 4.11 Federal Regulations. No part of the proceeds of any Loans has ------------------- been or will be used for "purchasing" or "carrying" any "margin stock" within ---------- -------- ------------ the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. 4.12 ERISA; Coal Act; Black Lung Act. Except as (i) set forth on ------------------------------- Schedule 4.12 or (ii) described pursuant to the notice provisions of 6.7(d)(vi) the Borrower has no agreements, arrangements or understandings relating to the transfer of Plans from TEG or the Seller to the Borrower (the "Transfer -------- Agreements"). Except as could not reasonably be expected, individually or in - ---------- the aggregate, to have a Material Adverse Effect: no Reportable Event has occurred with respect to any Single Employer Plan; all contributions required to be made with respect to a Plan have been timely made; none of the Borrower or any of its Subsidiaries (after giving effect to the Acquisition) nor any Commonly Controlled Entity has incurred any material liability to or on account of a Plan pursuant to Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code or, to the knowledge of the Borrower, reasonably expects to incur any liability (including any indirect, contingent or secondary liability) under any of the foregoing Sections with respect to any Plan; no termination of, or institution of proceedings to terminate or appoint a trustee to administer, a Single Employer Plan has occurred; and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code (except that with respect to any Multiemployer Plan, such representation is deemed made only to the knowledge of the Borrower). No "accumulated funding deficiency" (within the ------------------------------ meaning of Section 412 of the Code or Section 302 of ERISA), extension of any amortization period (within the meaning of Section 412 of the Code) or Lien in favor of the PBGC or a Plan has arisen or has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Single Employer Plan. Neither the Borrower nor any Commonly Controlled Entity (after giving effect to the Acquisition) currently intends to undertake a complete or partial withdrawal (as described in ERISA section 4203 and 4205, respectively) from any Multiemployer Plan for which there is any outstanding liability; if the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made, the Borrower anticipates that there would be a withdrawal liability in an amount which would be reasonably likely to have a Material Adverse Effect. To the best knowledge of the Borrower, no such Multiemployer Plan is in Reorganization or Insolvent. The Borrower, its Subsidiaries and its "related persons" (as defined in the Coal Act) are in compliance in all material respects with the Coal Act and none of the Borrower, its Subsidiaries or its related persons has any liability under the Coal Act except with respect to premiums or other payments required thereunder which have been paid when due and except to the extent that the liability thereunder could not reasonably be expected to have a Material Adverse Effect. The 51 Borrower and its Subsidiaries are in compliance in all material respects with the Black Lung Act, and neither the Borrower nor its Subsidiaries has any liability under the Black Lung Act except with respect to premiums, contributions or other payments required thereunder which have been paid when due and except to the extent that the liability thereunder could not reasonably be expected to have a Material Adverse Effect. 4.13 Investment Company Act; Other Regulations. Neither the Borrower ----------------------------------------- nor any Restricted Subsidiary (after giving effect to the Acquisition) is (a) an 'investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. None of the Borrower or any of its Restricted Subsidiaries is subject to regulation under the Federal Power Act or any other Federal or State statute or regulation (other than Regulation X) which limits its ability to incur Indebtedness. 4.14 Subsidiaries and Other Investments. (a) Schedule 4.14(a) sets ---------------------------------- forth as of the Closing Date a list of all direct and indirect Subsidiaries of the Borrower (after giving effect to the Acquisition) and the percentage ownership interest of the Borrower (and each Subsidiary) therein. The shares of Capital Stock or other ownership interests so indicated in Schedule 4.14(a) are owned by the Borrower (or such Subsidiaries), directly or indirectly, and, with respect to Restricted Subsidiaries only, are fully paid and non-assessable and free and clear of all Liens, except for Permitted Liens. (b) Schedule 4.14(b) sets forth as of the Closing Date a list of all Joint Ventures and other minority investments to which the Borrower or any Subsidiary (after giving effect to the Acquisition) is a party, including a listing of each other Person party to such Joint Venture or investment and the Borrower's or such Subsidiary's percentage interest therein. The shares of Capital Stock or other ownership interests so indicated in Schedule 4.14(b) are owned by the Borrower or such Subsidiary, directly or indirectly, and except with respect to Unrestricted Subsidiaries, are fully paid and non-assessable and free and clear of all Liens, except for Permitted Liens. 4.15 Purpose of Loans. The proceeds of the Term Loans shall be used ---------------- by the Borrower to finance the Acquisition and related fees and expenses, to repay up to $50,000,000 of Indebtedness of Peabody Australia and its Subsidiaries and, if necessary, to provide cash collateral for certain letters of credit of the Acquired Subsidiaries. The proceeds of the Revolving Credit Loans shall be used by the Borrower for working capital purposes and other general corporate purposes in the ordinary course of business of the Borrower and its Restricted Subsidiaries, including, without limitation, to make Investments permitted under subsection 7.9. 4.16 Environmental Matters. --------------------- Except as listed on Schedule 4.16, or as would not, individually or in the aggregate, be expected to result in a Material Adverse Effect: (a) The facilities and properties currently or formerly owned, leased or operated by the Borrower or any of its Subsidiaries (after giving effect to the Acquisition) (the "Properties") do not contain, and have not ---------- previously contained, any Materials of Environmental Concern in amounts or concentrations which (i) constitute or constituted a violation of, or (ii) could reasonably be expected to give rise to liability under, any applicable Mining and Environmental Law. 52 (b) None of the Borrower nor any of its Subsidiaries (after giving effect to the Acquisition) has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Mining and Environmental Laws with regard to any of the Properties or the business operated by the Borrower or any of its Subsidiaries (after giving effect to the Acquisition) (the "Business"), or any prior business for which the Borrower has, or may --------- reasonably be alleged to have, retained liability under any Mining and Environmental Law, nor does the Borrower have knowledge or reason to believe that any such notice will be received or is being threatened. (c) Materials of Environmental Concern have not been transported or disposed of from the Properties in violation of, or in a manner or to a location which could reasonably be expected to give rise to liability under, any applicable Mining and Environmental Law, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could reasonably be expected to give rise to liability under, any applicable Mining and Environmental Law. (d) No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Borrower, threatened under any Mining and Environmental Law to which the Borrower or any Subsidiary (after giving effect to the Acquisition) is or, to the knowledge of the Borrower, will be named as a party or with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other similar administrative or judicial requirements outstanding under any Mining and Environmental Law with respect to the Properties or the Business. (e) There has been no release or threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of the Borrower or any Subsidiary (after giving effect to the Acquisition) in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could reasonably give rise to liability under any applicable Mining and Environmental Laws. (f) The Properties and all operations at the Properties are in compliance in all respects with all applicable Mining and Environmental Laws, and there is no contamination at, under or about the Properties or violation of any applicable Mining and Environmental Law with respect to the Properties or the Business that could interfere with the continued operation of the Properties or materially impair the fair saleable value thereof. (g) The Borrower and its Subsidiaries (after giving effect to the Acquisition) hold and are in compliance with all Mining and Environmental Permits necessary for their operations. (h) No Lien relating to or in connection with any Mining and Environmental Law has been filed or has been attached to any Property. (i) The Borrower has delivered, or otherwise made available, to the Lenders copies of all material written environmental reports, audits and assessments concerning the Properties and the Business in the custody or control of the Borrower, including any prior business for which the Borrower has, or may reasonably be alleged to have, retained liability under any Mining and Environmental Law. 53 4.17 Collateral Documents. (a) The Guarantee and Collateral -------------------- Agreement is effective to create in favor of the Administrative Agent, for the ratable benefit of the Agents and the Lenders, a legal, valid and enforceable security interest in the pledged stock and other equity ownership interests described therein and, when stock certificates representing or constituting the pledged stock and other equity ownership interests described therein are delivered to the Administrative Agent, such security interest shall, subject to the existence of Permitted Liens, constitute a perfected first lien on, and security interest in, all right, title and interest of the pledgor party thereto in the pledged stock or other equity ownership interests described therein. (b) The Guarantee and Collateral Agreement is effective to create in favor of the Administrative Agent, for the ratable benefit of the Agents and the Lenders, a legal, valid and enforceable security interest in the Collateral described therein. Uniform Commercial Code financing statements have been filed in each of the jurisdictions listed on Part I of Schedule 4.17 (which lists fixture filings as well), or arrangements have been made for such filing in such jurisdictions, and upon such filings, and upon the taking of possession by the Administrative Agent of any such Collateral the security interests in which may be perfected only by possession, such security interests will, subject to the existence of Liens as permitted by the definition of Permitted Liens, constitute perfected first priority Liens on, and security interests in, all right, title and interest of the debtor party thereto in the collateral described therein. (c) Any and all consents or approvals (whether pursuant to Requirements of Law or any contract or other agreement or instrument) which are required, necessary or prudent to perfect a security interest in each of the Mortgages required hereunder, have been obtained or will be obtained within the applicable periods set forth in subsection 6.10(c). Upon (a) execution and delivery of such Mortgages, (b) the recording of each Mortgage in the applicable jurisdiction listed on Part II of Schedule 4.17, and (c) the payment of any required mortgage-recording taxes or fees, each of the Mortgages will be effective to create in favor of the Administrative Agent, for the ratable benefit of the Agents and Lenders, a legal, valid and enforceable lien on the real property or leasehold interest described therein and such liens will, at the time of recordation of such Mortgages in such jurisdictions, constitute first priority liens on the real property or leasehold interest described therein, subject only to the existence of Liens as permitted by subsection 7.3(a), (e), (f), (g) and (j). 4.18 Accuracy and Completeness of Information. No fact is known to ---------------------------------------- the Borrower or any of its Subsidiaries which has had or could reasonably be expected to have a Material Adverse Effect, which has not been disclosed to the Lenders by the Borrower or its Subsidiaries in writing prior to the date hereof. No document furnished or statement made in writing to the Lenders by the Borrower, any Subsidiary or, to the best of its knowledge, any party to any of the Transaction Documents in connection with the negotiation, preparation or execution of this Agreement or any of the other Credit Documents, taken as a whole, contains any untrue statement of a material fact or omits to state any such material fact necessary in order to make the statements contained therein not misleading in the context in which such statements are made. The Equity Documents constitute all of the material agreements relating to the Equity Investment, the Senior Notes Documents constitute all of the material agreements relating to the Senior Notes and the Subordinated Notes Documents constitute all of the material agreements relating to the Subordinated Notes. 4.19 Solvency. As of the Closing Date and after giving effect to the -------- Acquisition and the other transactions contemplated by the Transaction Documents including borrowings under the Original Credit Agreement on the Closing Date (or, if earlier, the Escrow Date) and the incurrence of 54 all other Indebtedness and Guarantee Obligations being incurred on such date, the Borrower was "Solvent," in that (a) the property, at a fair valuation, of ------- the Borrower and its Subsidiaries, taken together as a single entity, exceeded their debts, (b) the present fair salable value of the assets of the Borrower and its Subsidiaries, taken together as a single entity, was greater than the amount that will be required to pay their probable debts as such debts become absolute and matured, and (c) the Borrower did not intend to, and did not believe that the Borrower and its Subsidiaries, taken together as a single entity, would, incur debts or liabilities beyond the their ability to pay as such debts and liabilities mature. For purposes of this subsection, "debt" ---- means "liability on a claim" and "claim" means any (i) right to payment, whether -------------------- ----- or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (ii) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured. 4.20 Labor Matters. There are no strikes, stoppages, slowdowns or ------------- other labor disputes or controversies pending or, to the Borrower's knowledge, overtly threatened against the Borrower or any of its Subsidiaries (after giving effect to the Acquisition) which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. The hours worked and payments made to employees of the Borrower and each of its Subsidiaries (and their predecessors) have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law, except to the extent such violations could not, or in the aggregate, be reasonably expected to have a Material Adverse Effect. 4.21 Transaction Documents. To the best of the Borrower's knowledge, --------------------- the representations and warranties contained in the Transaction Documents, taken as a whole, are true and correct in all material respects as of the Closing Date (and, if earlier, the Escrow Date). On the Closing Date, the Acquisition was consummated in accordance with the Transaction Documents. 4.22 Insurance. Schedule 4.22 sets forth a true, complete and --------- correct description of all material insurance maintained by the Borrower or by the Borrower for its Subsidiaries as of the Closing Date and after giving effect to the Acquisition. As of such date, such insurance is in full force and effect and all premiums have been duly paid (unless such premium is being contested in good faith; provided that the policy to which such premium relates is not canceled or in imminent danger of cancellation as a result of such contest). The Borrower and its Restricted Subsidiaries (after giving effect to the Acquisition) and the Citizens Entities (as of the Closing Date only) have insurance in such amounts and covering such risks and liabilities as are in accordance with normal industry practice. 4.23 Receipt of Proceeds. On the Closing Date, the Borrower received ------------------- (i) at least $400,000,000 in gross proceeds from the issuance of the Senior Notes on the terms and conditions set forth in the Senior Notes Documents, (ii) at least $500,000,000 in gross proceeds from the issuance of the Senior Subordinated Notes on the terms and conditions set forth in the Subordinated Notes Documents and (iii) the Equity Investment on the terms and conditions set forth in the Equity Documents. 4.24 Coal Supply Agreements. Schedule 4.24 sets forth a complete and ---------------------- accurate list of all Coal Supply Agreements to which the Borrower or any other Credit Party (after giving effect to the Acquisition) is a party as of the Closing Date, including the counterparty to each such agreement, 55 which, by their terms, do not prohibit a collateral assignment thereof to the Administrative Agent for the ratable benefit of the Agents and the Lenders or would not, upon such assignment or attempted assignment require notice to any other party thereto. As of the Closing Date, each such Coal Supply Agreement is in full force and effect, except to the extent that the failure to be in full force and effect could not reasonably be expected to have a Material Adverse Effect. 4.25 Mines. Schedule 4.25 sets forth a complete and accurate list of ----- all Mines (including addresses and the owner and operator thereof) owned or operated by the Borrower or any of its Restricted Subsidiaries (after giving effect to the Acquisition) as of the Closing Date. 4.26 Titled Equipment. The value of all vehicles, rolling stock and ---------------- other Operating Equipment owned by the Borrower or any of its Restricted Subsidiaries (after giving effect to the Acquisition) as of the Closing Date and covered by certificates of title is not, in the aggregate, material to the Borrower and its Subsidiaries taken as a whole. 4.27 Acts of God. Neither the Business nor the Properties has been ----------- affected by any fire, explosion, accident, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance), which could reasonably be expected to have a Material Adverse Effect. 4.28 Surety Bonds. All surety, reclamation and similar bonds ------------ required to be maintained by the Borrower or any of its Restricted Subsidiaries (after giving effect to the Acquisition) under any Requirement of Law or Contractual Obligation are in full force and effect and were not and will not be terminated, suspended, revoked or otherwise adversely affected by virtue of the consummation of the Transaction and the financing hereunder and under the other Transaction Documents; provided that (i) self-bonding permitted under Requirements of Law prior to the Closing Date may be required to be replaced following the Closing Date with surety bonds, (ii) the cost of such bonds may be increased and (iii) certain of such bonds may be terminated, suspended or revoked, provided that, taken together, the events specified in clauses (i), (ii) and (iii) above will not have a Material Adverse Effect. All required guarantees of, and letters of credit with respect to, such surety, reclamation and similar bonds are in full force and effect except where such failure to be in full force and effect could not reasonably be expected to have a Material Adverse Effect. 4.29 Coal Sales. The Borrower and each of the other Credit Parties ---------- (taken as a whole) sell not less than 80% of their inventory "F.O.B. mine" from which such inventory was severed, other than those sales of inventory designated for export. Not less than 66 2/3% of the Borrower's and the other Credit Parties' (taken as a whole) foreign sales of inventory are exported from the shipping terminal owned by Dominion Terminal Associates in Newport News, Virginia or the shipping terminal in Lambert's Point, Virginia. The Borrower and the other Credit Parties (taken as a whole) will not materially modify, change or alter the manner and method of their coal sales described in this subsection 4.29 without (i) providing to the Administrative Agent prompt written notice thereof and (ii) performing within thirty (30) days after any such modification, change or alteration, any and all acts (including, without limitation, the execution of any and all documents (including, without limitation, financing statements and continuation statements for filing under the provisions of the Uniform Commercial Code or any other Requirement of Law)) which are reasonably necessary in the opinion of the Administrative Agent to maintain in favor of the Administrative Agent, for the benefit of the Agents and the Lenders, its first priority security interest in such Collateral. 56 SECTION 5. CONDITIONS PRECEDENT 5.1 Effective Date. The effectiveness of this amendment and -------------- restatement of the Original Credit Agreement shall be subject to the satisfaction of each of the following conditions precedent: (a) The Administrative Agent shall have received (i) a copy of the certificate of incorporation, including all amendments thereto, of the Borrower, certified as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing of the Borrower as of a recent date, from such Secretary of State; (ii) a certificate of the Secretary or Assistant Secretary of the Borrower dated the Effective Date and certifying (A) that attached thereto is a true and complete copy of the by-laws of the Borrower as in effect on the Effective Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of the Borrower authorizing the execution, delivery and performance of the Credit Documents to which the Borrower is a party, the borrowing hereunder, and that such resolutions have not been modified or rescinded and that the certificate of incorporation of the Borrower have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above, and (C) as to the incumbency and specimen signature of each officer executing any Credit Document or any other document delivered in connection herewith on behalf of the Borrower; (iii) a certificate of a Responsible Officer (other than the Secretary or Assistant Secretary executing the certificate pursuant to clause (ii) above) as to the incumbency and specimen signature of such Secretary or Assistant Secretary. (b) The Administrative Agent shall have received a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of each Credit Party (other than the Borrower) authorizing (i) the execution, delivery and performance of the Credit Documents to which it is a party and (ii) the granting by it of the Liens created pursuant to the Security Documents to which it is a party, certified by the Secretary or an Assistant Secretary of such Credit Party as of the Closing Date, which certificate shall be in form and substance reasonably satisfactory to the Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded. (c) The Administrative Agent shall have received a certificate of each Credit Party (other than the Borrower), dated the Closing Date, as to the incumbency and signature of the officers of such Credit Party executing any Credit Document, reasonably satisfactory in form and substance to the Administrative Agent, executed by the President or any Vice President and the Secretary or any Assistant Secretary of such Credit Party. (d) The Administrative Agent shall have received true and complete copies of the certificate of incorporation and by-laws of each Credit Party (other than the Borrower), certified as of the Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of such Credit Party. (e) The Administrative Agent shall have received from the Borrower, the other Credit Parties, the Lenders and the Agents duly-executed signature pages to each Credit Document to which each such Person is a party (including, without limitation, this Agreement, the 57 Confirmation Agreement, the Notes, the Trademark Security Agreement and the Patent Security Agreements) and each such Credit Document shall be in full force and effect. (f) The Administrative Agent shall have received the following executed legal opinions: (i) the executed legal opinion of Simpson Thacher & Bartlett, counsel to the Borrower and special New York counsel to the other Credit Parties, substantially in the form of Exhibit C-1; (ii) the executed legal opinion of Jeffery Klinger, Esq., special Missouri counsel to the Borrower and in-house counsel to the other Credit Parties, substantially in the form of Exhibit C-2; and (iii) the executed legal opinions of local counsel to the Borrower and the other Credit Parties in the states of Wyoming, Arizona and West Virginia regarding perfection of security interests in Collateral located in such jurisdictions. Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Agents may reasonably require. (g) The Administrative Agent shall have received duly-executed UCC financing statement amendments and assignments with respect to all UCC-1 financing statements and fixture filings originally executed and delivered on the Closing Date by the Credit Parties under the Original Credit Agreement, in each case reflecting the assignment of such financing statements to the Administrative Agent by the Original Administrative Agent and reflecting the amendment and restatement of the Original Credit Agreement by this Agreement, as well as any other instruments and documents in form and substance reasonably satisfactory to the Administrative Agent necessary or, in the opinion of the Administrative Agent, desirable to continue the perfection of the Administrative Agent's (as assignee of the Original Administrative Agent) security interest in any Collateral granted by the Borrower on the Closing Date pursuant to the Security Documents. (h) The Administrative Agent shall have received evidence reasonably satisfactory to it that the Agents and the Lenders have been named as additional insureds on all liability insurance policies of the Borrower and its Restricted Subsidiaries and that the Administrative Agent has been named as loss payee on all property and casualty insurance policies of the Borrower and its Restricted Subsidiaries. (i) Each assignment of a Loan and/or a Commitment by the Original Lender to a Lender contemplated to occur on or prior to the Effective Date shall have been consummated. (j) The Original Administrative Agent shall have received payment in full for all fees and expenses incurred by it through the Effective Date in its capacity as Administrative Agent under the Original Credit Agreement (including, without limitation, the fees and expenses of its legal counsel), to the extent the Borrower has received a written statement therefor. 58 (k) The Administrative Agent and the Syndication Agent shall have received a certificate, signed by a Responsible Officer of the Borrower, dated the Effective Date and confirming that the representations and warranties set forth herein and in the other Credit Documents are true and correct in all material respects as of such date, except to the extent such representations and warranties expressly relate solely to an earlier date. (l) On the Effective date, no Default or Event of Default shall have occurred and be continuing. (m) On the Effective Date, no event shall have occurred that could reasonably be expected to have a Material Adverse Effect. (n) The Administrative Agent shall have received from the Original Administrative Agent all documents delivered to the Original Administrative Agent pursuant to subsections 5.1(a) and 6.22 of the Original Credit Agreement. 5.2 [RESERVED] 5.3 Conditions to a Credit Event. The obligation of any Lender or ---------------------------- of the Issuing Lender on the occasion of any Credit Event is subject to the satisfaction of the following conditions: (a) The Administrative Agent shall have received a Notice of Borrowing at least three (3) Business Days in advance of the date of such Credit Event (subject to any shorter notice periods provided for in subsection 2.2) or, in the case of the issuance of a Letter of Credit, the Issuing Lender, the Administrative Agent shall have received an Application requesting the issuance of such Letter of Credit at least three (3) Business Days in advance of the date of such Credit Event. (b) The Administrative Agent and the Syndication Agent shall have received a certificate, signed by a Responsible Officer of the Borrower, dated the date of such Credit Event and confirming that the representations and warranties set forth herein and in the other Credit Documents are true and correct in all material respects as of such date, except to the extent such representations and warranties expressly relate solely to an earlier date. (c) At the time of and immediately after such Credit Event, no Default or Event of shall have occurred and be continuing. (d) No event shall have occurred that could reasonably be expected to have a Material Adverse Effect. SECTION 6. AFFIRMATIVE COVENANTS The Borrower hereby agrees that, so long as the Commitments remain in effect or any amount is owing to any Lender or any Agent hereunder or under any other Credit Document, the Borrower shall, and shall cause each of its Subsidiaries (or, where specified, Restricted Subsidiaries) to: 59 6.1 Financial Statements. Furnish to the Administrative Agent with -------------------- copies for each Lender: (a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the consolidated balance sheet of (i) the Borrower and its consolidated Subsidiaries and (ii) the Borrower and its Consolidated Subsidiaries, in each case as at the end of such year and the related consolidated and Consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year and, in the case of statements delivered under clause (i), reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by independent certified public accountants of nationally recognized standing and, in the case of statements delivered under clause (ii), certified by a Responsible Officer; (b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, (i) the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries and (ii) the Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries, in each case as at the end of such quarter and the related unaudited consolidated and Consolidated statements of income and retained earnings and of cash flows of the Borrower and its applicable Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments). All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). 6.2 Certificates; Other Information. Furnish to the Administrative ------------------------------- Agent with copies for each Lender: (a) concurrently with the delivery of the financial statements referred to in subsection 6.1(a)(i), a certificate of the independent certified public accountants reporting on such financial statements stating that, in performing their audit, nothing came to their attention that caused them to believe that the Borrower failed to comply with the provisions of subsection 7.1, except as specified in such certificate; (b) concurrently with the delivery of the financial statements referred to in subsections 6.1(a)(ii) and (b), a certificate of a Responsible Officer stating that, to the best of such Officer's knowledge, during such period (i) no Restricted Subsidiary has been formed or acquired (or, if any such Subsidiary has been formed or acquired, the Borrower has complied with the requirements of subsection 6.10 with respect thereto), (ii) neither of the Borrower nor any of its Restricted Subsidiaries has changed its name, its principal place of business, its chief executive office or the location of any material item of tangible Collateral without complying with the requirements of this Agreement and the Security Documents with respect thereto and 60 (ii) such Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate; (c) concurrently with the delivery of financial statements pursuant to subsection 6.1(a)(ii) or (b), a certificate of the chief financial officer of the Borrower setting forth, in reasonable detail, the computations, as applicable, of (i) Debt Ratio, (ii) Excess Cash Flow and (iii) the financial covenants set forth in subsection 7.1, as of such last day or for the fiscal period then ended, as the case may be; (d) not later than 60 days after the end of each fiscal year of the Borrower, a copy of summary projections by the Borrower of the operating budget and cash flow budget of the Borrower and its Subsidiaries for the succeeding fiscal year, such projections to be accompanied by a certificate of a Responsible Officer to the effect that such projections have been prepared based on assumptions believed by the Borrower to be reasonable; (e) within five days after the same are sent, copies of all financial statements and reports which the Borrower or any of its Restricted Subsidiaries sends to its stockholders, and within five days after the same are filed, copies of all financial statements and other reports which the Borrower or any of its Subsidiaries may make to, or file with, the Securities and Exchange Commission or any successor or analogous Governmental Authority; and (f) promptly, such additional financial and other information as any Lender may from time to time reasonably request. 6.3 Payment of Obligations. With respect to the Borrower and each of ---------------------- its Restricted Subsidiaries, pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, or otherwise in accordance with customary industry practice, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Borrower or such Restricted Subsidiary, as the case may be. 6.4 Existence; Businesses and Properties. (a) Do or cause to be done ------------------------------------ all things necessary to preserve, renew and keep in full force and effect the legal existence of the Borrower and each Restricted Subsidiary, except as otherwise expressly permitted under subsections 7.5 and 7.6. (b) With respect to the Borrower and its Restricted Subsidiaries, maintain, preserve, protect, and keep all Collateral and all other property used or useful and necessary in the conduct of its business in good condition (ordinary wear and tear and damage by fire or other casualty or taking by condemnation excepted and in compliance with all applicable material Requirements of Law. (c) Keep in full force and effect all of its material leases and other material contract rights, and all material rights of way, easements and privileges necessary or appropriate for the proper operation of the Mines being operated by the Borrower or a Restricted Subsidiary. (d) Obtain and comply with each permit, license, authorization and other governmental approval necessary to recover Coal from any Mine being operated by the Borrower or a 61 Restricted Subsidiary and observe the requirements thereof in all material respects, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. (e) Cause each Mine being operated by the Borrower or a Restricted Subsidiary to be operated, maintained, developed and mined and cause the associated processing plants and other fixed and operating assets to be operated and maintained, in a workmanlike manner, as would a prudent coal mine operator, and in accordance with generally accepted mining practices and all applicable Requirements of Law, including but not limited to applicable Mining and Environmental Laws, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. (f) Cause the Operating Equipment, the processing plants associated with the Mines being operated by the Borrower or a Restricted Subsidiary and other fixed and operating assets to be kept in effective operating condition, and all repairs, renewals, replacements, addition and improvements thereof or thereto needful to the production, processing and transportation of Coal from any such Mine or associated properties to be promptly made, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. (g) Pay or cause to be paid when due all expenses incurred in connection with the maintenance, development, operation and protection of processing plants associated with the Mines being operated by the Borrower or a Restricted Subsidiary and other fixed and operating assets, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.5 Insurance. (a) Maintain with financially sound and reputable --------- insurance companies insurance (including, without limitation, all required surety, reclamation and similar bonds) on all its property in at least such amounts and against at least such risks (but including in any event public liability, cargo loss and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business; and furnish to the Administrative Agent with copies for each Lender, upon written request, full information as to the insurance carried except to the extent that the failure to do any of the foregoing with respect to any such property could not reasonably be expected to result in a Material Adverse Effect, or, in the case of the Borrower and any Restricted Subsidiary, materially adversely affect the value or usefulness of such property; provided that in any event the Borrower will maintain, and will cause each of its Restricted Subsidiaries to maintain, to the extent obtainable on commercially reasonable terms, (i) property and casualty insurance on all real and personal property on an all risks basis (including the perils of flood and quake), covering the repair or replacement cost of all such property and consequential loss coverage for business interruption and extra expense (which shall be limited to fixed construction expenses and such other business interruption expenses as are otherwise generally available to similar businesses), and (ii) public liability insurance. All such insurance with respect to the Borrower and its Restricted Subsidiaries shall be provided by insurers or reinsurers which (x) in the case of United States insurers and reinsurers, have an A.M. Best policyholders rating of not less than A- with respect to primary insurance and B+ with respect to excess insurance and (y) in the case of non-United States insurers or reinsurers, the providers of at least 80% of such insurance have either an ISI policyholders rating of not less than A, an A.M. Best policyholders rating of not less than A- or a surplus of not less than $500,000,000 with respect to primary insurance, and an ISI policyholders rating of not less than BBB with respect to excess insurance, or, if the relevant insurance is not available from such insurers, such other insurers as the Administrative Agent may approve in writing. All insurance shall provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by the Administrative Agent of written notice thereof. 62 (b) The Borrower and its Restricted Subsidiaries will deliver to the Administrative Agent on behalf of the Lenders, (i) on the Closing Date (or, if earlier, the Escrow Date), a certificate dated such date showing the amount of insurance coverage as of such date, (ii) upon request of any Lender through the Administrative Agent from time to time full information as to the insurance carried, (iii) promptly following receipt of notice from any insurer, a copy of any notice of cancellation or material change in coverage from that existing on the Closing Date, (iv) forthwith, notice of any cancellation or nonrenewal of coverage by the Borrower or any Subsidiary, and (v) promptly after such information is available to the Borrower, full information as to any claim for an amount in excess of $2,500,000 with respect to any property and casualty insurance policy maintained by the Borrower or any Restricted Subsidiary. The Agents and the Lenders shall be named as additional insureds on all such liability insurance policies of the Borrower and its Restricted Subsidiaries and the Administrative Agent shall be named as loss payee on all property and casualty insurance policies of the Borrower and its Restricted Subsidiaries. Any proceeds from any such insurance policy in respect of any claim, or any condemnation award or other compensation in respect of a condemnation (or any transfer or disposition of property in lieu of condemnation) for which the Borrower or any of its Restricted Subsidiaries receives a condemnation award or other compensation shall be paid to the Borrower or the Restricted Subsidiary; provided that any such proceeds paid to the Borrower or any Restricted Subsidiary with respect to, and to the extent of, a loss attributable to any Unrestricted Subsidiary or its property shall be paid to such Unrestricted Subsidiary; provided further that: (A) the Borrower or the Restricted Subsidiary will use such proceeds, condemnation award or other compensation to repair, restore or replace the assets which were the subject of such claim within 12 months after receipt thereof (and a Responsible Officer shall deliver a certificate specifying in reasonable detail such usage not later than the last day of such relevant period), and (B) if, at the time of the receipt of such proceeds, condemnation award or other compensation, an Event of Default has occurred and is continuing, the aggregate amount of all such proceeds, condemnation award or other compensation shall be paid to the Administrative Agent and held as Collateral for application in accordance with the Security Documents; and provided further that, to the extent that any amount of such proceeds, condemnation award or other compensation are not used or committed during the time period specified in proviso (A) above, then, if requested by notice from the Required Lenders to the Borrower, all such remaining uncommitted proceeds, condemnation award or other compensation shall be paid to the Administrative Agent and held as Collateral for application in accordance with the Security Documents. 6.6 Inspection of Properties; Books and Records; Discussions. Keep -------------------------------------------------------- proper books of record and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of any Lender to visit and inspect any of its properties and examine any of its books, records, agreements, contracts and the like (except to the extent (i) any such access is restricted by a Requirement of Law or (ii) any such agreements, contracts or the like are subject to a written confidentiality agreement with a non-Affiliate that prohibits the Borrower or any of its Subsidiaries from granting such access to the Lenders; provided that, with respect to such confidentiality restrictions affecting the Borrower or any of its Restricted Subsidiaries, a Responsible Officer is made available to such Lender to discuss such confidential information to the extent permitted) at any reasonable time and upon reasonable notice on a Business Day and as often as may reasonably be desired by any Lender and to discuss the business, operations, properties and financial and other condition of the Borrower and its Subsidiaries with officers and employees of the Borrower and its Subsidiaries and with its independent certified public accountants; provided that the Administrative Agent or such Lender shall notify the Borrower prior to any contact with such 63 accountants and give the Borrower the opportunity to participate in such discussions; provided, further, that the Borrower shall notify the Administrative Agent of any such visits, inspections or discussions prior to each occurrence thereof. 6.7 Notices. Promptly give notice to the Administrative Agent and ------- each Lender of: (a) the occurrence of any Default or Event of Default; (b) any (i) default or event of default under any material Contractual Obligation of the Borrower or any of its Restricted Subsidiaries, (ii) litigation, investigation or proceeding which may exist at any time between the Borrower or any of its Subsidiaries and any Governmental Authority, which in either case, could reasonably be expected to have a Material Adverse Effect or (iii) any material asset sale by the Borrower or a Restricted Subsidiary (describing in reasonable detail the assets sold, the consideration received therefor and the proposed use of the proceeds thereof); (c) any other litigation or proceeding affecting the Borrower or any of its Restricted Subsidiaries in which the amount involved is $10,000,000 or more and not covered by insurance; and (d) the following events that, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect, as soon as possible and in any event within 20 days after the Borrower knows or has reason to know thereof: (i) the incurrence or expected incurrence of an accumulated funding deficiency or the filing or expected filing of an application to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension or expected extension of any amortization period under Section 412 of the Code with respect to a Plan, the creation of any Lien or the expected creation of any Lien in favor of the PBGC or a Plan, and the reassumption or expected reassumption by the Seller of sponsorship of any Single Employer Plan, (ii) the occurrence or expected occurrence of any Reportable Event with respect to any Plan (other than a Multiple Employer Plan), or any withdrawal from or expected withdrawal from, or the termination, Reorganization or Insolvency, or expected termination, Reorganization or Insolvency of, any Multiemployer Plan, or a failure or reasonably expected failure to make any required contribution to a Plan, (iii) the institution or the expected institution of proceedings by the PBGC or any Person (including any employer) with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Single Employer Plan or Multiemployer Plan, (iv) the incurrence or expected incurrence of any liability pursuant to (A) the Coal Act (other than with respect to required premiums or other payments which are timely paid), or (B) the Black Lung Act (other than with respect to required premiums, contributions or other payments which are timely paid), (v) any adoption of, assumption of, amendment of, or modification of any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees (other than as required by Section 601 of ERISA or the Coal Act which on a FAS 106 basis results in the incurrence or expected incurrence of any increased liability with respect thereto) or (vi) any Transfer Agreement with the PBGC (which notice shall describe all the material terms of any such Transfer Agreement). 64 Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower proposes to take with respect thereto. 6.8 Mining and Environmental Laws. Except as would not reasonably be ----------------------------- expected to have a Material Adverse Effect: (a)(i) Comply in all respects with all applicable Mining and Environmental Laws, and obtain, comply in all respects with, and maintain any and all Mining and Environmental Permits necessary for its operations as conducted and as planned; and (ii) take all reasonable efforts to ensure that all of its tenants, subtenants, contractors, subcontractors, and invitees comply in all respects with all applicable Mining and Environmental Laws, and obtain, comply in all respects with and maintain any and all Mining and Environmental Permits, applicable to any of them. Notwithstanding the foregoing, upon learning of any actual or suspected noncompliance, the Borrower or one or more of its Subsidiaries, as appropriate, shall promptly undertake all reasonable efforts to achieve compliance; and (b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions in each case required under applicable Mining and Environmental Laws and promptly comply in all respects with all lawful orders and directives of all Governmental Authorities regarding applicable Mining and Environmental Laws except to the extent that the same are being contested in good faith by appropriate proceedings and the pendency of such proceedings could not be reasonably expected to have a Material Adverse Effect. 6.9 Further Assurances. With respect to the Borrower and its ------------------ Restricted Subsidiaries, upon the reasonable request of the Administrative Agent, promptly perform or cause to be performed any and all acts and execute or cause to be executed any and all documents (including, without limitation, financing statements and continuation statements) for filing under the provisions of the Uniform Commercial Code or any other Requirement of Law which are necessary or advisable to maintain in favor of the Administrative Agent, for the benefit of the Agents and the Lenders, Liens on the Collateral that are duly perfected in accordance with all applicable Requirements of Law. 6.10 Additional Collateral. (a) With respect to any assets (other --------------------- than (x) any assets described in subsection 6.10(b), (y) immaterial assets a Lien on which cannot be perfected by physical delivery to the Administrative Agent or by filing UCC-1 financing statements, and (z) assets constituting interests in real property, which are governed by subsection 6.10(c)) acquired on or after the Closing Date by the Borrower or any of its Restricted Subsidiaries (including, without limitation, the Capital Stock of newly created or acquired Restricted Subsidiaries) which are not already subject to the Lien created by any of the Security Documents, promptly (and in any event within thirty (30) days after the acquisition thereof): (i) execute and deliver to the Administrative Agent such amendments to the relevant Security Documents or such other documents as the Administrative Agent shall deem necessary or advisable to grant to the Administrative Agent, for the benefit of the Agents and the Lenders, a Lien on such assets, (ii) take all actions necessary or advisable to cause such Lien to be duly perfected in accordance with all applicable Requirements of Law, including, without limitation, the delivery of the applicable assets to the Administrative Agent or the filing of financing statements in such jurisdictions as may be requested by the Administrative Agent, and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described in clauses (i) and (ii) of this subsection 6.10(a), which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. 65 (b) With respect to any Person that, on or subsequent to the Closing Date, (x) becomes a direct or indirect Restricted Subsidiary (other than any Acquired Subsidiary (for which the ten (10) day time periods set forth below do not apply)), (y) ceases to be a Foreign Subsidiary but retains its Restricted Subsidiary status, or (z) ceases to be an Unrestricted Subsidiary but retains its, or otherwise qualifies hereunder for, Subsidiary status, as applicable (except, in each case, with respect to the execution and delivery of any Mortgages, the timing of the execution and delivery of which is governed by subsection 6.10(c)(vi) below): (i) no later than ten (10) days after the date such Person becomes such a Subsidiary, execute and deliver to the Administrative Agent, for the benefit of the Agents and the Lenders, such amendments to the Guarantee and Collateral Agreement as the Administrative Agent shall deem necessary or advisable to grant to the Administrative Agent, for the benefit of the Agents and the Lenders, a Lien on the Capital Stock of such Restricted Subsidiary which is owned by the Borrower or any of its Restricted Subsidiaries, (ii) no later than ten (10) days after the date such Person becomes such a Subsidiary, deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers executed and delivered in blank by a duly authorized officer of the Borrower or such Restricted Subsidiary, as the case may be, (iii) cause such Restricted Subsidiary (A) no later than ten (10) days after the date such Person becomes such a Subsidiary, to become a party to the Guarantee and Collateral Agreement, and the Subordination Agreement, in each case pursuant to documentation which is in form and substance reasonably satisfactory to the Administrative Agent and (B) no later than thirty (30) days after the date such Person becomes such a Subsidiary, to take all actions necessary or advisable to cause each Lien created by the Guarantee and Collateral Agreement to be duly perfected in accordance with and pursuant to all applicable Requirements of Law, including, without limitation, the filing of fixture filings and financing statements in such jurisdictions as may be requested by the Administrative Agent, and (iv) within thirty (30) days of the date such Person becomes such a Subsidiary, if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described in clauses (i), (ii) and (iii) of this subsection 6.10(b), which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. Notwithstanding the foregoing, (1) no Foreign Subsidiary of the Borrower shall be required to execute the Guarantee and Collateral Agreement, (2) no more than 65% of the Capital Stock of or equity interests in any direct Foreign Subsidiary of the Borrower or any of its Subsidiaries (and none of the Capital Stock of or equity interests in any indirect Foreign Subsidiary), or any other of its Subsidiaries if more than 65% of the assets of such Subsidiary are securities of foreign companies (such determination to be made on the basis of fair market value), shall be required to be pledged hereunder, (3) no Unrestricted Subsidiary shall be required to become a party to the Guarantee and Collateral Agreement or deliver any Mortgages with respect to any of its real properties and (4) the Capital Stock of Unrestricted Subsidiaries pledged to the Administrative Agent pursuant to the Guarantee and Collateral Agreement shall be released as provided in subsection 8.16 thereof. (c) As promptly as practicable, but in any event: (i) within sixty (60) days following the Closing Date or, with respect to clause (C) only, within sixty (60) days following the Administrative Agent's election of a Title Policy or a Title Opinion, the Borrower, at its sole cost and expense, shall have delivered to the Administrative Agent (A) a Mortgage with respect to each of the real property interests described in Part I of Schedule 6.10, executed and delivered by a duly authorized officer of the mortgagor party thereto, with a counterpart or a conformed copy for each Lender, (B) a legal opinion in form and substance, and from counsel licensed to practice in the jurisdiction in which such Mortgage is to be recorded, reasonably satisfactory to the Administrative Agent, including, without limitation, an opinion that such 66 Mortgage is a legal, valid and binding instrument, enforceable according to its terms, and (C) either a Title Policy (as defined in subsection 6.10(d)) or a Title Opinion (as defined in subsection 6.10(d)), to be selected by the Administrative Agent in its reasonable discretion, the exercise of which shall take into account industry practices in the area in which such Mortgage is to be recorded; (ii) within ninety (90) days following the Closing Date, or, with respect to clause (C) only, within ninety (90) days following the Administrative Agent's election of a Title Policy or a Title Opinion, the Borrower, at its sole cost and expense, shall have delivered to the Administrative Agent, (A) a Mortgage with respect to each of the real property interests described in Part II of Schedule 6.10, executed and delivered by a duly authorized officer of the mortgagor party thereto, with a counterpart or a conformed copy for each Lender, (B) a legal opinion in form and substance, and from counsel licensed to practice in the jurisdiction in which such Mortgage is to be recorded, reasonably satisfactory to the Administrative Agent, including, without limitation, an opinion that such Mortgage is a legal, valid and binding instrument, enforceable according to its terms, and (C) either a Title Policy or a Title Opinion, to be selected by the Administrative Agent in its reasonable discretion, the exercise of which shall take into account industry practices in the area in which such Mortgage is to be recorded; (iii) within one hundred fifty (150) days following the Closing Date or, with respect to clause (C) only, within one hundred fifty (150) days following the Administrative Agent's election of a Title Policy or a Title Opinion, the Borrower, at its sole cost and expense, shall have delivered to the Administrative Agent, (A) a Mortgage with respect to the each of the real property interests described in Part III of Schedule 6.10, executed and delivered by a duly authorized officer of the mortgagor party thereto, with a counterpart or a conformed copy for each Lender, (B) a legal opinion in form and substance, and from counsel licensed to practice in the jurisdiction in which such Mortgage is to be recorded, reasonably satisfactory to the Administrative Agent, including, without limitation, an opinion that such Mortgage is a legal, valid and binding instrument, enforceable according to its terms, and (C) either a Title Policy or a Title Opinion, to be selected by the Administrative Agent in its reasonable discretion, the exercise of which shall take into account industry practices in the area in which such Mortgage is to be recorded; (iv) commencing on the Closing Date and continuing thereafter for a period of one (1) year (or such longer period as may be reasonably requested by the Administrative Agent (after taking into account such factors as the overall value of the Collateral package granted to the Lenders, the Borrower's financial performance to date and the prospects of obtaining such Mortgages within a reasonable period of time)), the Borrower at its sole cost and expense shall use commercially reasonable efforts to deliver to the Administrative Agent, (A) a Mortgage with respect to each of the real property interests described in Part IV of Schedule 6.10, executed and delivered by a duly authorized officer of the mortgagor party thereto, with a counterpart or a conformed copy for each Lender, (B) a legal opinion in form and substance, and from counsel licensed to practice in the jurisdiction in which such Mortgage is to be recorded, reasonably satisfactory to the Administrative Agent, including, without limitation, an opinion that such Mortgage is a legal, valid and binding instrument, enforceable according to its terms, and (C) either a Title Policy or a Title Opinion, to be selected by the Administrative Agent in its reasonable discretion, the exercise of which shall take into account industry practices in the area in which such Mortgage is to be recorded; (v) within thirty (30) days (or, with respect to clause (C) only, within written thirty (30) days following the Administrative Agent's election of a Title Policy or Title Opinion) following the acquisition (by purchase, lease, or other means) of any real property interests by the 67 Borrower or any Restricted Subsidiary on or after the Closing Date, the Borrower or such Restricted Subsidiary, as applicable, at its sole cost and expense, shall have delivered to the Administrative Agent (A) a Mortgage with respect to each such real property interest covering each newly acquired parcel or parcels of real property (provided that such real property interest (x) if comprised of more than one parcel, consists of contiguous parcels, (y) comprises a "logical mining unit," or (z) is otherwise mortgageable in the reasonable opinion of the Administrative Agent) which contain(s) (collectively, if more than one parcel) at least five (5) million tons of reasonably proven (by industry standards) coal reserves, executed and delivered by a duly authorized officer of the mortgagor party thereto, with a counterpart or a conformed copy for each Lender, (B) a legal opinion in form and substance, and from counsel licensed to practice in the jurisdiction in which such Mortgage is to be recorded, reasonably satisfactory to the Administrative Agent, including, without limitation, an opinion that such Mortgage is a legal, valid and binding instrument, enforceable according to its terms, and (C) either a Title Policy or a Title Opinion, to be selected by the Administrative Agent in its reasonable discretion, the exercise of which shall take into account industry practices in the area in which such Mortgage is to be recorded, but shall ultimately be subject to the Administrative Agent's obligation to maximize Lenders' security with respect to such Mortgage; provided, however, that notwithstanding the foregoing in this clause 6.10(c)(v), with respect to the securing of any leasehold interest by a Mortgage, the Borrower or its Restricted Subsidiary, as applicable, shall only be required to use its commercially reasonable efforts to deliver such Mortgage for such a period of time as is reasonably required to deliver such Mortgage or for the Administrative Agent to determine with reasonable certainty that, notwithstanding such efforts, such Mortgage cannot be delivered; (vi) within sixty (60) days following the date on which any Person (other than any Acquired Subsidiary) becomes a Restricted Subsidiary, or ceases to be a Foreign Subsidiary but retains its Restricted Subsidiary status, or ceases to be an Unrestricted Subsidiary but retains its, or otherwise qualifies hereunder for Subsidiary status or, with respect to clause (C) only within sixty (60) days following the Administrative Agent's election of a Title Policy or a Title Opinion, the Borrower at its sole cost and expense shall have delivered or caused to be delivered to the Administrative Agent with respect to each such Person (A) a Mortgage with respect to each real property interest owned by such Person covering each parcel or parcels of real property (provided that such real property interest (x) if comprised of more than one parcel, consists of contiguous parcels, (y) comprises a "logical mining unit," or (z) is otherwise mortgageable in the reasonable opinion of the Administrative Agent) which contain(s) (collectively, if more than one parcel) at least five (5) million tons of reasonably proven (by industry standards) coal reserves, executed and delivered by a duly authorized officer of the mortgagor party thereto, with a counterpart or a conformed copy for each Lender, (B) a legal opinion in form and substance, and from counsel licensed to practice in the jurisdiction in which such Mortgage is to be recorded, reasonably satisfactory to the Administrative Agent, including, without limitation, an opinion that such Mortgage is a legal, valid and binding instrument, enforceable according to its terms, and (C) either a Title Policy or a Title Opinion, to be selected by the Administrative Agent in its reasonable discretion, the exercise of which shall take into account industry practices in the area in which such Mortgage is to be recorded; provided, however, that notwithstanding the foregoing in this clause 6.10(c)(vi), with respect to the securing of any leasehold interest by a Mortgage, the Borrower or its Restricted Subsidiary, as applicable, shall only be required to use its commercially reasonable efforts to deliver such Mortgage for such a period of time as is reasonably required to deliver such Mortgage or for the Administrative Agent to determine with reasonable certainty that, notwithstanding such efforts, such Mortgage cannot be delivered; and, 68 (vii) at all times after the Borrower and its Restricted Subsidiaries have recognized, collectively, an asset "impairment loss" (as such term is contemplated by and pursuant to F.A.S. 121 ("Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of")) (or more than one such asset impairment loss) totaling in the aggregate Fifty Million Dollars ($50,000,000.00) or more, no later than thirty (30) days after each such recognition after recognition in excess of such initial $50,000,000, the Borrower at its sole cost and expense shall have delivered or caused to be delivered to the Administrative Agent (i) one or more Mortgages with respect to real property interests owned by Borrower or any of its Restricted Subsidiaries which (A) are not already subject to any Mortgage, (B) which have been selected by the Administrative Agent in its sole and absolute discretion, and (C) have a total value (as reasonably determined by the Administrative Agent) at least equal to the dollar value of such "impairment loss" recognition, such Mortgages in each case to be executed and delivered by a duly authorized officer of the mortgagor party thereto, with a counterpart or a conformed copy for each Lender, (ii) a legal opinion in form and substance, and from counsel licensed to practice in the jurisdiction in which each such Mortgage is to be recorded, reasonably satisfactory to the Administrative Agent, including, without limitation, an opinion that such Mortgage is a legal, valid and binding instrument, enforceable according to its terms, (iii) either a Title Policy or a Title Opinion, to be selected by the Administrative Agent in its reasonable discretion, the exercise of which shall take into account industry practices in the area in which each such Mortgage is to be recorded and (iv) a certificate executed by an officer of the Borrower or the Restricted Subsidiary, as applicable, issued to the Administrative Agent, certifying that at the time of such certification the fair market value of the real property interests which are being secured pursuant to this clause 6.10(c)(vii) equal or exceed the amount of the applicable "impairment loss" recognition, and that such recognition is in all other respects in accordance with GAAP. (d) As promptly as practicable, but in any event, as applicable and in either case, (i) within sixty (60) days following the Closing Date with respect to the real property described in Part I of Schedule 6.10, (ii) within ninety (90) days following the Closing Date with respect to the real property described in Part II of Schedule 6.10, (iii) within one hundred fifty (150) days following the Closing Date with respect to the real property described in Part III of Schedule 6.10, (iv) with respect to some or all of the real property described in Part IV of Schedule 6.10, if deliverable in accordance with the provisions of clause 6.10(c)(iv) above, promptly upon the receipt of the consents or other approvals required or necessary for the delivery thereof, and (vi) no later than the required date of delivery of each Mortgage subject and pursuant to subsections 6.10(c)(v), 6.10(c)(vi), and 6.10(c)(vii), the Borrower shall have delivered or caused to be delivered to the Administrative Agent, with respect to each parcel covered by the applicable Mortgage encumbering such real property, (1) a mortgagee's title policy (or policies) (each such policy satisfying the requirements of this subsection 6.10(d), a "Title Policy") dated ------------ a date reasonably satisfactory to the Administrative Agent, which such policy(ies) shall (A) be in an amount reasonably satisfactory to the Administrative Agent; (B) ensure that the Mortgage insured thereby creates a valid first Lien on such parcel free and clear of all defects and encumbrances, except for liens permitted by subsections 7.3(a), (e), (f), (g), and (j) such other liens and defects as may be approved in writing by the Administrative Agent; (C) name the Administrative Agent for the benefit of the Agents and the Lenders as the insured thereunder; (D) be in the form of ALTA Loan Policy -1992; (E) contain such endorsements and affirmative coverage as the Administrative Agent may reasonably request and (F) be issued by title companies satisfactory to the Administrative Agent (including any such title companies acting as co- insurers or reinsures, at the option of the Administrative Agent), and the Administrative Agent shall have received evidence reasonably satisfactory to it that all premiums in respect of each such policy, and all charges for mortgage recording tax, if any, have been paid, or (2) a legal opinion from local counsel in the 69 jurisdiction of such Mortgage, in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent, including, without limitation, an opinion that the mortgagor who is named in such Mortgage holds legal and valid title to the interests secured thereby, free and clear of all defects and encumbrances, except for liens permitted by subsections 7.3(a), (e), (f), (g) and (j), and such other liens and defects approved by and/or acceptable to the Administrative Agent (a "Title Opinion"). ------------- (e) If requested by the Administrative Agent, for each Title Policy or Title Opinion issued pursuant to subsection 6.10(d), as promptly as possible, but in any event within the applicable time periods referred to in subsection 6.10(d), the Borrower shall deliver or cause to be delivered to the Administrative Agent a copy of all recorded documents referred to, or listed as exceptions to title in, such Title Policy or Title Opinion, as applicable, together with a copy, certified by such parties as the Administrative Agent may reasonably deem appropriate, of any other all other documents affecting the real property interest covered by such Title Policy or Title Opinion. (f) As promptly as possible, but in any event within the applicable time periods referred to in subsection 6.10(d), if required pursuant to Regulation H of the Board of Governors of the Federal Reserve System ("Regulation H") the Borrower shall deliver to the Administrative Agent (A) a - -------------- policy of flood insurance which (i) covers the parcel of improved real property which is encumbered by the applicable Mortgage set forth on Schedule 6.10, (ii) is written in an amount not less than the outstanding principal amount of the indebtedness secured by such Mortgage which is reasonably allocable to such parcel of improved real property or the maximum limit of coverage made available with respect to the particular type of property under the National Flood Insurance Act of 1968, whichever is less, and (iii) has a term ending not earlier than the maturity of the Indebtedness secured by such Mortgage and (B) confirmation that the Borrower has received the notice required pursuant to Section 208(e)(3) of Regulation H. (g) As promptly as possible, but in any event within forty-five (45) days following the Closing Date, with respect to each parcel of real property set forth on Part V of Schedule 6.10 (which shall include, without limitation, all active Mines, preparation plants, loading facilities and other major facilities owned by the Borrower or any other Credit Party), the Borrower shall take all actions that the Administrative Agent may reasonably require, including (if such property is not covered by a recorded Mortgage) the filing of UCC fixture filing financing statements, to cause the security interest created by the Security Documents in such fixtures to be perfected and with respect to each such parcel of real property and, if such real property is leased by the Borrower or the applicable Restricted Subsidiary or the Borrower or the appropriate Restricted Subsidiary is otherwise prohibited by contract from granting such fixture filing, use commercially reasonable efforts to obtain the consent, if necessary, of the landlord of such property or any other Person to the filing of UCC fixture filing financing statements and make such filings if such consent is obtained. (h) The Borrower hereby represents and warrants that the real property interests described on Schedule 6.10, Parts I-IV, constitute substantially all of the real property interests owned or controlled by the Borrower or any of its Restricted Subsidiaries with respect to (i) the operating mines (including coal reserves) known or referred to by the Borrower or any of its Restricted Subsidiaries as the Federal No. 2 Mine, the Lee Ranch Mine, the Rawhide Mine, the Caballo Mine, the North Antelope/Rochelle Mine Complex and the Black Mesa/Kayenta Mine Complex, and (ii) the coal reserves known or referred to by the Borrower or its Restricted Subsidiaries as the Belleville Reserves. 70 6.11 Interest Rate Protection. As promptly as practicable and in any ------------------------ event within 180 days after the Closing Date, enter into, and thereafter maintain in full force and effect through the second anniversary of the Closing Date one or more Interest Rate Agreements in form reasonably satisfactory to the Administrative Agent, the effect of which shall be to set at fixed rates the interest cost to the Borrower with respect to at least 33% of the aggregate average outstanding principal amount of the Term Loans and deliver evidence of the execution and delivery thereof to the Administrative Agent. 6.12 Foreign Jurisdictions. On the Effective Date, (i) be duly --------------------- qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent that the failure to so qualify could not, in the aggregate, reasonably be expected to have a Material Adverse Effect, and (ii) with respect to the Borrower and the other Credit Parties, and to the extent not already done so under the Original Credit Agreement, deliver to the Administrative Agent certificates of good standing issued by the Secretary of State (or other relevant officers) of each jurisdiction referred to in clause (i) of this subsection 6.12, each dated as of a recent date. The Borrower and each of its Restricted Subsidiaries agree to maintain such qualification as a foreign corporation and such good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent that the failure to do so qualify could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 6.13 Maintenance of Collateral; Alterations. Refrain from committing -------------------------------------- any waste on any Collateral, except in the ordinary course of its business, or make any material change in the use of any Collateral, provided that any Credit Party may sell or lease to any other Person all or any portion of any item of Collateral that the Borrower has determined in good faith is not used or useful in such Credit Party's operating business. 6.14 Use of Proceeds. Use the proceeds of the Loans only for the --------------- purposes specified in subsection 4.15. 6.15 [RESERVED] 6.16 Preparation of Environmental Reports. If an Event of Default ------------------------------------ caused by reason of a breach of subsection 4.16 or 6.8 (with respect to compliance with Mining and Environmental Laws) shall have occurred and be continuing, at the reasonable request of the Required Lenders through the Administrative Agent, the Borrower shall provide to the Lenders within 60 days after such request, at the expense of the Borrower, an environmental site assessment report for the Properties which are the subject of such default prepared by an environmental consulting firm reasonably acceptable to the Administrative Agent and indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance or remedial action in connection with such Properties. 6.17 Citizens Debt. Ensure (i) that TU causes the Seller or an ------------- affiliate of the Seller to provide the credit support for certain existing debt of Citizens contemplated by Section 4 of the Participation Agreement and (ii) that such debt is and remains non-recourse to the Borrower and its Restricted Subsidiaries. 71 6.18 Maintenance of Coal Reserves. Maintain at all times available ---------------------------- Coal reserves, or the rights to acquire coal from third parties, sufficient to fulfill its requirements under existing Coal Supply Agreements. 6.19 Coal Supply Agreements. At all times comply fully with all of ---------------------- the terms and conditions of its Coal Supply Agreements, the nonperformance with which could reasonably be expected to have a Material Adverse Effect. The Borrower and each of its Subsidiaries shall further perform any and all actions necessary to maintain all Coal Supply Agreements material to its business in full force and effect. To the extent practicable and commercially reasonable (provided that in no circumstance shall the Borrower or any of its Restricted Subsidiaries be required to incur any additional costs or impair any existing or potential business relationship), neither the Borrower nor any of its Restricted Subsidiaries shall after the Closing Date enter into any Coal Supply Agreements which do not provide that such Coal Supply Agreements are assignable to the Lenders without the consent of any other party to such Coal Supply Agreement. 6.20 Exploration and Reserves. All primary and basic exploration ------------------------ data and information pertaining to the Mines will be preserved where reasonable in accordance with customary industry practice and in a sound and careful manner for future use and review. All such information together with all other reserve reports and maps, analysis and, upon reasonable notice, engineering and operating data and similar information pertaining to the Mines being operated by any Credit Party shall be available at all reasonable times for inspection and review by authorized representatives of the Administrative Agent (except to the extent (i) any such access is restricted by a Requirement of Law or (ii) any such data, information or the like are subject to a written confidentiality agreement with a non-Affiliate that prohibits the Borrower or any of its Subsidiaries from granting such access to the Lenders; provided that, with respect to the Borrower or any of its Restricted Subsidiaries, a Responsible Officer is made available to such Lender to discuss such confidential information to the extent permitted). 6.21 Certain Long Term Liabilities and Environmental Reserves. To -------------------------------------------------------- the extent required by GAAP, maintain adequate reserves for (i) future costs associated with any lung disease claim alleging pneumoconiosis or silicosis or arising out of exposure or alleged exposure to coal dust or the coal mining environment, (ii) future costs associated with retiree and health care benefits, (iii) future costs associated with reclamation of disturbed acreage, removal of facilities and other closing costs in connection with its mining operations and (iv) future costs associated with other potential environmental liabilities. 6.22 [RESERVED] 6.23 Unrestricted Subsidiaries. No Restricted Subsidiary may be ------------------------- owned in whole or in part by an Unrestricted Subsidiary. SECTION 7. NEGATIVE COVENANTS The Borrower hereby agrees that, so long as any portion of the Commitments remain in effect or any amount is owing to any Lender or any of the Agents hereunder or under any other Credit Document, the Borrower shall not, and (except with respect to subsection 7.1), shall not permit 72 any of its Restricted Subsidiaries (and, with respect to Subsections 7.2, 7.3, 7.4 and 7.16, its Unrestricted Subsidiaries) to, directly or indirectly: 7.1 Financial Condition Covenants. ----------------------------- (a) Debt Ratio. Permit the Debt Ratio at the last day of any fiscal ---------- quarter to be greater than the ratio set forth below opposite such date:
Fiscal Quarter Ending Ratio --------------------- ----- 9/30/98 6.00 12/31/98 6.00 3/31/99 6.00 6/30/99 6.00 9/30/99 6.00 12/31/99 6.00 3/31/00 5.75 6/30/00 5.75 9/30/00 5.75 12/31/00 5.75 3/31/01 5.60 6/30/01 5.60 9/30/01 5.60 12/31/01 5.60 3/31/02 5.00 6/30/02 5.00 9/30/02 5.00 12/31/02 5.00 3/31/03 4.75 6/30/03 4.75 9/30/03 4.75 12/31/03 4.75 3/31/04 4.25 Thereafter 4.25
[CONTINUED ON NEXT PAGE] 73 (b) Interest Coverage. Permit the ratio of (i) Consolidated EBITDA ----------------- for the four fiscal quarters ending on the last day of the fiscal quarter set forth below to (ii) Consolidated Cash Interest Expense for the four fiscal quarters ending on the last day of the fiscal quarter set forth below to be less than the ratio set forth opposite such date below (such ratio, the "Interest Coverage Ratio"): -----------------------
Fiscal Quarter Ending Ratio --------------------- ----- 9/30/98 1.50 12/31/98 1.50 3/31/99 1.50 6/30/99 1.50 9/30/99 1.50 12/31/99 1.50 3/31/00 1.85 6/30/00 1.85 9/30/00 1.85 12/31/00 1.85 3/31/01 2.00 6/30/01 2.00 9/30/01 2.00 12/31/01 2.00 3/31/02 2.25 Thereafter 2.25
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to -------------------------- exist any Indebtedness (including in respect of Interest Rate Agreements) except: (a) Indebtedness of the Borrower under the Credit Documents, the Senior Note Documents and the Subordinated Note Documents; (b) Indebtedness of the Borrower and any Restricted Subsidiary incurred to finance the acquisition by the Borrower or a Restricted Subsidiary of fixed or capital assets (whether pursuant to a loan, a Financing Lease or otherwise) in an aggregate principal amount not exceeding $100,000,000 at any time outstanding; provided, however, that the aggregate amount of any mandatory payments made by the Borrower with respect to such Indebtedness shall not exceed $20,000,000 in any fiscal year; (c) Indebtedness of a Person (other than any Acquired Subsidiary) which becomes a Restricted Subsidiary after the date hereof, provided that (i) such indebtedness existed at the time such Person became a Restricted Subsidiary and was not created in anticipation thereof, (ii) immediately after giving effect to the acquisition of such Person by the Borrower or its Restricted Subsidiary, no Default or Event of Default shall have occurred and be continuing, (iii) immediately after giving effect to the acquisition of such Person by the Borrower or its Restricted Subsidiary, the Borrower and its Restricted Subsidiaries shall be in pro forma 74 compliance with the covenants contained in subsection 7.1, calculated based on the relevant financial statements delivered pursuant to subsection 6.1, as though such acquisition occurred at the beginning of the period covered thereby, as evidenced by a certificate of a Responsible Officer of the Borrower furnished to the Administrative Agent demonstrating such compliance; and (iv) at no time shall all such Indebtedness permitted under this subsection (c) exceed $200,000,000 in the aggregate outstanding. (d) additional Indebtedness of the Borrower and its Restricted Subsidiaries not otherwise permitted hereunder not exceeding $100,000,000 in aggregate principal amount at any time outstanding; provided, however, that the aggregate amount of any mandatory payments made by the Borrower with respect to such Indebtedness shall not exceed $20,000,000 in any fiscal year; (e) Indebtedness of the Borrower and the Acquired Subsidiaries (other than under subsection (a)) outstanding or committed on the Closing Date and reflected on Schedule 7.2(e), provided that, with respect to all Indebtedness of one Credit Party to another Credit Party, such Credit Parties have complied with the provisions of subsection 7.2(h); (f) Indebtedness in respect of the Interest Rate Agreements required by subsection 6.11; (g) Indebtedness in respect of Hedge Agreements incurred in the ordinary course of business and consistent with prudent business practice (in any case, for the purpose of risk management only and not for the purpose of speculation); (h) unsecured Indebtedness of any Credit Party to any other Credit Party; provided, that (i) such Credit Parties have complied with the provisions of Subsection 6.10(b) and (ii) there exists an instrument or instruments evidencing such Indebtedness and such instrument or instruments have been pledged to the Administrative Agent, for the benefit of the Agents and the Lenders, pursuant to the terms of the Guarantee and Collateral Agreement; (i) Indebtedness secured by Permitted Liens; (j) extensions, renewals or refinancings of Indebtedness under subsection 7.2(c) and (e) so long as (i) such Indebtedness (the "Refinancing Indebtedness") is in an aggregate principal amount not greater ------------------------- than the aggregate principal amount of the Indebtedness being extended, renewed or refinanced plus the amount of any premiums required to be paid thereon and fees and expenses associated therewith, (ii) such Refinancing Indebtedness has a later or equal final maturity and a longer or equal weighted average life than the Indebtedness being extended, renewed or refinanced, (iii) the interest rate applicable to such Refinancing Indebtedness is a market interest rate (as determined in good faith by the Board of Directors of the Borrower) as of the time of such extension, renewal or refinancing, (iv) if the Indebtedness being extended, renewed or refinanced is subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the extent of the Indebtedness being extended, renewed, or refinanced, (v) the covenants, events of default and other provisions thereof (including any guarantees thereof), taken as a whole, are no less favorable to the Lenders than those contained in the Indebtedness being refinanced and (vi) at the time and after giving effect to such extension, renewal or refinancing, no Event of Default shall have occurred and be continuing; 75 (k) [RESERVED] (l) Indebtedness of any Unrestricted Subsidiary consisting entirely of Non-Recourse Debt; provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of such Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Borrower that was not permitted by this subsection 7.2(l); and (m) Indebtedness of Peabody Australia to the Borrower in an aggregate amount not to exceed $50,000,000; provided that there exists an instrument or instruments evidencing such Indebtedness and such instrument or instruments have been pledged to the Administrative Agent for the benefit of the Agents and the Lenders pursuant to the terms of the Guarantee and Collateral Agreement. 7.3 Limitation on Liens. Create, incur, assume or suffer to exist ------------------- any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for: (a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Subsidiaries, as the case may be, in conformity with GAAP; (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings; (c) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation and deposits securing liability to insurance carriers under insurance or self-insurance arrangements; (d) deposits to secure the performance of bids, surety bonds, trade contracts (other than for borrowed money), leases (other than Capital Lease Obligations), reclamation bonds, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (e) easements, rights-of-way, zoning restrictions, other restrictions and other similar encumbrances previously or hereafter incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or such Subsidiary, or which are set forth in any Title Policy delivered to the Administrative Agent pursuant to the terms of this Agreement; (f) Liens in existence on the Closing Date and listed on Schedule 7.3(f), securing Indebtedness permitted by subsection 7.2(e); (g) Liens securing Indebtedness of the Borrower and its Restricted Subsidiaries permitted by subsection 7.2(b) incurred to finance the acquisition of fixed or capital assets, provided that (i) such Liens shall be created substantially simultaneously with the acquisition of such fixed or capital assets, (ii) such Liens do not at any time encumber any property other 76 than the property financed by such Indebtedness (other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the instrument creating such Lien) and (iii) the principal amount of Indebtedness secured by any such Lien shall at no time exceed 100% of the original purchase price of such property of such property at the time it was acquired; (h) Liens on the property or assets of a Person (other than any Acquired Subsidiary) which becomes a Restricted Subsidiary after the date hereof securing Indebtedness permitted by subsection 7.2(c), provided that (i) such Liens existed at the time such corporation became a Subsidiary and were not created in anticipation thereof, (ii) any such Lien is not expanded to cover any property or assets of such in or on such property and proceeds of the existing collateral in accordance with the instrument creating such Lien, and (iii) the amount of Indebtedness secured thereby is not increased; (i) Liens created pursuant to this Agreement and the Security Documents; (j) Liens on the property of the Borrower or any of its Subsidiaries, as a tenant under a lease or sublease entered into in the ordinary course of business by such Person, in favor of the landlord under such lease or sublease, securing the tenant's performance under such lease or sublease, as such Liens are provided to the landlord under applicable law and not waived by the landlord; (k) so long as no Default or Event of Default shall have occurred and be continuing under subsection 8(h), attachment or judgment Liens in an aggregate amount outstanding at any one time not in excess of $20,000,000; (l) Liens arising from precautionary Uniform Commercial Code financing statement filings with respect to operating leases or consignment arrangements entered into by the Borrower or any of its Restricted Subsidiaries in the ordinary course of business; (m) Liens in favor of a banking institution arising by operation of law encumbering deposits (including the right of set-off) held by such banking institutions incurred in the ordinary course of business and which are within the general parameters customary in the banking industry; (n) Liens securing Refinancing Indebtedness, to the extent that the Indebtedness being refinanced was originally secured in accordance with this subsection 7.3; provided that such Lien does not apply to any additional property or assets of the Borrower or any Subsidiary (other than the proceeds of the property or asset subject to such Lien); (o) Production Payments, royalties, dedication of reserves under supply agreements or similar rights or interests granted, taken subject to, or otherwise imposed on properties consistent with normal practices in the mining industry; (p) Liens on assets of (and Capital Stock and other equity interests in) Unrestricted Subsidiaries securing obligations of Unrestricted Subsidiaries not otherwise prohibited hereunder; 77 (q) Liens on the Chaco Royalty Stream in connection with a securitization thereof permitted by subsection 7.6; (r) Liens (not otherwise permitted hereunder) which secure obligations not exceeding $5,000,000 in the aggregate at any time outstanding and which are not senior to the Liens created pursuant to this Agreement and the Security Documents; and (s) Liens securing the net amount of Indebtedness under Hedging Obligations. 7.4 Limitation on Guarantee Obligations. Create, incur, assume or ----------------------------------- suffer to exist any Guarantee Obligation except: (a) Guarantee Obligations in existence on the Closing Date and listed on Schedule 7.4 and extensions, renewals and replacements thereof, including the exercise of a 5% option requiring an increase of the Guarantee Obligations of the Borrower in respect of Black Beauty Coal Company provided, however, that no such extension, renewal or replacement shall shorten the fixed maturity or increase the principal amount of the Indebtedness guaranteed by the original guarantee; (b) Guarantee Obligations not otherwise permitted under this subsection 7.4 incurred after the Closing Date in an aggregate amount not to exceed $50,000,000 at any one time outstanding for the Borrower and its Restricted Subsidiaries provided, however, that any such Guarantee Obligations incurred by the Borrower and any of its Restricted Subsidiaries with respect to the same transaction shall be treated as a single transaction for the purposes of calculating the amount of Guarantee Obligations outstanding under this subsection 7.4(b); (c) guarantees made by the Subsidiaries of the Borrower pursuant to the Senior Notes Documents and the Subordinated Notes Documents; provided that such Subsidiaries are parties to the Guarantee and Collateral Agreement; (d) Guarantee Obligations of the Credit Parties created under the Credit Documents; (e) the L/C Obligations; (f) Guarantee Obligations of the Borrower or any Subsidiary in respect of obligations of a Restricted Subsidiary or the Borrower permitted to be incurred by such Subsidiary or the Borrower by this Agreement; (g) Guarantee Obligations which are performance guarantees by the Borrower or any of its Restricted Subsidiaries of the ordinary course obligations (other than for the payment of borrowed money) of any Unrestricted Subsidiary in an aggregate amount not to exceed $150,000,000 at any one time outstanding; provided, however, that any such performance guarantee incurred by the Borrower and any of its Subsidiaries with respect to the same transaction shall be treated as a single transaction for the purpose of calculating the amount of obligations outstanding under this subsection 7.4(g); (h) indemnities in favor of the companies issuing title insurance policies insuring the Mortgages to induce such issuance; 78 (i) indemnities made in the Commitment Letter, the Credit Documents and the Transaction Documents (including, without limitation, the indemnification of TEG with respect to the "value at risk" in respect of Citizens' trading book, which shall not exceed $5,000,000) and in the Constitutional Documents of the Borrower and its Subsidiaries; (j) Guarantee Obligations of Unrestricted Subsidiaries in respect of the obligations of other Unrestricted Subsidiaries not otherwise prohibited hereunder; and (k) Guarantee Obligations in respect of a letter of credit issued for the account of the Borrower and for benefit of the PBGC in a face amount not to exceed $37,000,000 and for which TEG provides credit support. 7.5 Limitation on Fundamental Changes. Enter into any merger, --------------------------------- consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all of its property, business or assets, or make any material change in its present method of conducting business (other than as provided in subsection 7.15), except: (a) any Restricted Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with or into any one or more wholly-owned Restricted Subsidiaries of the Borrower (provided that the wholly owned Subsidiary or Subsidiaries shall be the continuing or surviving corporations); provided that a Credit Party may only be merged or consolidated with or into another Credit Party; (b) any wholly-owned Restricted Subsidiary may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any other wholly-owned Restricted Subsidiary of the Borrower that is a Credit Party; and (c) the Acquisition. 7.6 Limitation on Sale of Assets. Convey, sell, lease, assign, ---------------------------- transfer or otherwise dispose of any of its property, business or assets (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired, or, in the case of any Restricted Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any Person other than the Borrower or any wholly-owned Subsidiary that is a Credit Party, except: (a) the sale or other disposition of obsolete or worn out property in the ordinary course of business; (b) the sale for fair market value (as determined in good faith by the Borrower (and evidenced in a resolution of the Board of Directors of the Borrower delivered to the Administrative Agent with respect to any such sale determined to have a fair market value in excess of $25,000,000)) of any property or assets not otherwise permitted by this subsection 7.6; provided that the Net Proceeds thereof shall be applied pursuant to subsection 2.6(b)(ii) provided, further, that (i) the aggregate fair market value of all such Asset Sales during the first year after the Closing Date does not exceed five percent (5%) of the Total Assets of the Borrower and its Restricted Subsidiaries (determined immediately prior to the time of each 79 such sale) and (ii) the aggregate fair market value of all such Asset Sales during each year subsequent to the first year after the Closing Date does not exceed ten percent (10%) of the Total Assets of the Borrower and its Restricted Subsidiaries (determined immediately prior to the time of each such sale); (c) as permitted pursuant to subsection 7.5(b); (d) the sale, lease, transfer or exchange of inventory (including Coal and related products and mining equipment) in the ordinary course of business; (e) subject to subsection 6.5, transfers resulting from any casualty or condemnation of property or assets; (f) intercompany sales or transfers (among Credit Parties) of assets made in the ordinary course of business; (g) licenses, leases or subleases of tangible property in the ordinary course of business; (h) any consignment arrangements or similar arrangements for the sale of assets in the ordinary course of business; (i) the sale or discount of overdue accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof; (j) the sale or discount of accounts receivable without recourse arising in the ordinary course of business and, in any event, not including a securitization or other similar transaction; (k) the sale of any assets in connection with any sale and leaseback transaction otherwise permitted by subsection 7.12; (l) the sale or transfer of property or assets to the extent constituting an Investment in a Joint Venture or Unrestricted Subsidiary permitted by subsections 7.9(k) or 7.9(n), respectively, or otherwise permitted by subsection 7.9(i); (m) the restructuring, renegotiation or termination of any Coal Supply Agreements resulting in the Borrower or its Restricted Subsidiaries receiving in a single transaction, or series of related transactions, cash proceeds of no greater than $50,000,000; and (n) an exchange or "swap" of assets of the Borrower or any of its Restricted Subsidiaries for the assets (including ownership interests and excluding cash) of a Person other than the Borrower or a Restricted Subsidiary; provided that (A) the assets received by the Borrower or such Restricted Subsidiary will be used or useful in a Similar Business and (B) the Borrower or such Restricted Subsidiary receives reasonably equivalent value for such assets, such equivalent value to be demonstrated to the Administrative Agent (i) in a certificate of a Responsible Officer of the Borrower or such Restricted Subsidiary if the fair market value of the assets received by the Borrower or such Restricted Subsidiary is no greater than $10,000,000, (ii) in a resolution of the Board of Directors of the Borrower or such Restricted 80 Subsidiary if the fair market value of the assets received by the Borrower or such Restricted Subsidiary is no greater than $10,000,000, (ii) in a resolution of the Board of Directors of the Borrower or such Restricted Subsidiary if the fair market value of the assets received by the Borrower or such Restricted Subsidiary is greater than $10,000,000 but no greater than $25,000,000 or (iii) at the Borrower's expense, in an opinion of an independent valuation firm selected by the Administrative Agent and reasonably acceptable to the Borrower if the fair market value of the assets received by the Borrower or such Restricted Subsidiary is greater than $25,000,000; provided, further, that the fair market value of all such assets exchanged or "swapped" in any fiscal year of the Borrower does not exceed ten percent (10%) of the Total Assets of the Borrower and its Restricted Subsidiaries (determined immediately prior to the time of each such exchange or swap); and (o) the sale of the Chaco Royalty Stream in connection with the securitization thereof for fair market value as determined by the Administrative Agent in its reasonable discretion; provided, however, that with respect to any conveyance, sale, lease, assignment, transfer, exchange, "swap" or disposition of any assets of the Borrower or its Restricted Subsidiaries that constitutes Collateral to Persons that are not Credit Parties (including, without limitation, by virtue of the designation of a Credit Party as an Unrestricted Subsidiary as otherwise permitted hereunder, but other than pursuant to subsections 7.6(a), (d), (e), (g), (h), (i), (j), (k) (to the extent such sale and leaseback is permitted under subsection 7.12(b)) or (o)), no more than the sum (the "Collateral Amount") of (i) 5% the Total Assets ----------------- of the Borrower and its Restricted Subsidiaries (determined immediately prior to the time of each such conveyance, sale, lease, assignment, transfer, exchange, "swap", disposition or designation) and (ii) the net amount by which the Total Commitments have been permanently reduced at such time, may be so conveyed, sold, leased, assigned, transferred or disposed of in the aggregate during the term of this Agreement without the Borrower substantially simultaneously replacing (pursuant to subsections 2.6(b)(ii), 7.6(n) or otherwise) such assets so conveyed, sold, leased, assigned, transferred, exchanged, "swapped," disposed of or designated in excess of the Collateral Amount with other assets to be included as Collateral on a dollar-for-dollar basis (as valued by the Administrative Agent (or its experts) in its reasonable discretion (but at the expense of the Borrower). 7.7 Dividends and Distributions; Restrictions on Ability of ------------------------------------------------------- Restricted Subsidiaries to Pay Dividends. (a) Declare or pay, directly or - ----------------------------------------- indirectly, any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any shares of its Capital Stock or directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any Subsidiary to purchase or acquire) any shares of any class of its Capital Stock or set aside any amount for any such purpose provided, however, that any Restricted Subsidiary may declare and pay dividends or make other distributions to the Borrower or another Subsidiary that is a Credit Party. (b) Permit its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Restricted Subsidiary to (i) pay any dividends or make any other distributions on its capital stock or any other interest or (ii) make or repay any loans or advances to the Borrower or the parent of such Restricted Subsidiary (subclauses (i) and (ii) are collectively referred to as an "Upstream Payment"); provided, ---------------- however, that the foregoing shall not restrict any encumbrances or restrictions: (i) existing on the Closing Date under Indebtedness set forth on Schedule 7.2(e) or under Operating Leases set forth on Schedule 7.7; 81 (ii) contained in any debt instrument relating to a Person (other than any Acquired Subsidiary) acquired after the Closing Date; provided that (A) such encumbrances and restrictions are not applicable to any Person other than such Person or property or assets acquired, (B) such instrument was in existence at the time of such acquisition, and (C) the Borrower reasonably believes at the time of such acquisition that the terms of such instrument will not encumber or restrict the ability of such acquired Person to make an Upstream Payment in manner that would adversely affect the Borrower's ability to perform its obligations under the Credit Documents when due; (iii) incurred in connection with any Indebtedness permitted pursuant to subsection 7.2 (including any permitted extension, refinancing, renewal or replacement of Indebtedness contemplated by clauses (i) and (ii) above); provided that, (A) the Borrower reasonably believes at the time such Indebtedness is incurred that the terms of such Indebtedness will not restrict the ability of the Person incurring such Indebtedness to make an Upstream Payment in a manner that would adversely affect the Borrower's ability to perform its obligations under the Credit Documents when due and (B) such Indebtedness (other than Non-Recourse Debt of Unrestricted Subsidiaries) contains no express encumbrances or restrictions on the ability of such Person to make an Upstream Payment; (iv) contained in agreements relating to the sale of a Subsidiary pending such sale, provided, that such encumbrances and restrictions apply only to the Subsidiary that is to be sold and that such sale is otherwise permitted hereunder; and (v) existing under, or by reason of, applicable law. 7.8 Limitation on Capital Expenditures. Make or commit to make ---------------------------------- Capital Expenditures in respect of the purchase or other acquisition of fixed or capital assets (excluding with respect to any such asset acquired in connection with normal replacement and maintenance programs properly charged to current operations, any assets acquired with the proceeds from insurance for casualty or condemnation losses whether or not paid with the proceeds from insurance policies, any assets purchased with the intent to enter into a permitted sale and leaseback transaction resulting in an operating lease pursuant to subsection 7.12(b) and reinvestments of the proceeds of Asset Sales permitted by subsection 2.6(b)(ii)) except for Capital Expenditures in the ordinary course of business not exceeding, in the aggregate for the Borrower and its Restricted Subsidiaries during any of the fiscal years of the Borrower set forth below, the amount set forth opposite such fiscal year below:
Fiscal Year Amount ----------- ------ 1999 $300,000,000 2000 $300,000,000 2001 $300,000,000 2002 $300,000,000 2003 $300,000,000 2004 $300,000,000 2005 and thereafter $300,000,000
82 provided, that up to 33 1/3% of any amount listed above for any fiscal year not so expended in such fiscal year may be carried over for expenditure in the immediately following fiscal year. 7.9 Limitation on Investments, Loans and Advances. Make any advance, --------------------------------------------- loan, extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person ("Investments"), ----------- except : (a) extensions of trade credit in the ordinary course of business; (b) Investments in Cash Equivalents; (c) loans and advances to employees of the Borrower or its Restricted Subsidiaries for travel, entertainment and relocation expenses in the ordinary course of business in an aggregate amount for the Borrower and its Restricted Subsidiaries not to exceed $5,000,000 at any one time outstanding; (d) Investments by the Borrower or its Restricted Subsidiaries in Persons that are, or become by virtue of such Investment (and compliance with subsection 6.10), Credit Parties and investments by such Subsidiaries in the Borrower and in other Subsidiaries that are Credit Parties; (e) Investments in existence on the Closing Date set forth on Schedule 7.9(e) and extensions, renewals, modifications, restatements or replacements thereof; provided that no such extension, renewal, modification or restatement shall increase the amount of the original loan, advance or investment; (f) promissory notes and other similar non-cash consideration received by the Borrower and its Restricted Subsidiaries in connection with the dispositions permitted by subsection 7.6(b); (g) Investments required by subsection 6.11; (h) Investments (including debt obligations and Capital Stock) received in connection with the bankruptcy or reorganization of suppliers and customers of the Borrower and its Restricted Subsidiaries and in settlement of delinquent obligations of, and other disputes with, such customers and suppliers arising in the ordinary course of business; (i) so long as no Event of Default has occurred and is continuing, in addition to the other Investments permitted by this subsection 7.9, Investments in an aggregate amount not exceeding $75,000,000 (net of dividends and any other distributions paid in respect thereof), at cost, without regard to any write down or write up thereof; (j) Investments in the nature of Production Payments, royalties, dedication of reserves under supply agreements or similar rights or interests granted, taken subject to, or otherwise imposed on properties with normal practices in the mining industry; 83 (k) Investments in Joint Ventures in an amount not to exceed, in the aggregate outstanding at any time (net of dividends and any other distributions paid in respect thereof), five percent (5%) of the Total Assets of the Borrower and its Restricted Subsidiaries (determined immediately prior to the time of each such Investment); (l) Investments in any assets constituting a business unit received by the Borrower or its Restricted Subsidiaries by virtue of an asset exchange or swap with a third party permitted by subsection 7.6(n) or acquired as a permitted Capital Expenditure under subsection 7.8; (m) Investments in a special purpose entity created in connection with the securitization of the Chaco Royalty Stream as permitted by subsection 7.6(o) in an amount not to exceed $20,000,000 in the aggregate; (n) Investments in Unrestricted Subsidiaries in an amount not to exceed in the aggregate outstanding at any time (net of dividends and any other distributions paid in respect thereof) two and one-half percent (2 1/2%)) of the Total Assets of the Borrower and its Restricted Subsidiaries (determined immediately prior to the time of each such Investment) during the first year after the Closing Date, and five percent (5%) of the Total Assets of the Borrower and its Restricted Subsidiaries (determined immediately prior to the time of each such Investment) at all times thereafter; (o) Investments in Citizens Entities on the Closing Date in an amount not to exceed $32,000,000 and Investments in Citizens Entities substantially concurrent with the Closing Date in an amount not to exceed $50,000,000; (p) Hedge Agreements permitted under subsection 7.2(g); and (q) subject to the provisions of subsection 7.2(m), Investments by the Borrower in Peabody Australia in an aggregate amount not to exceed $50,000,000. 7.10 Limitation on Optional Payments and Modifications of Instruments ---------------------------------------------------------------- and Agreements. (a) Make any optional payment or prepayment on or redemption - -------------- or purchase of, or deliver any funds to any trustee for the prepayment, redemption or defeasance of, the Senior Notes or the Subordinated Notes (whether upon acceleration of the maturity thereof, upon a "Change of Control" (as defined in the Senior Notes Indenture or the Subordinated Notes Indenture) or otherwise) or (b) amend, modify or change, or consent or agree to any amendment, modification or change to any of the material terms of any Senior Notes Documents or Subordinated Notes Documents (other than any such amendment, modification or change which would extend the maturity or reduce the amount of any payment of principal thereof or which would reduce the rate or extend the date for payment of interest thereon). (b) Amend its Constitutional Documents in any manner which could adversely affect the rights of the Lenders under the Credit Documents or their ability to enforce the same. (c) Modify or amend, or waive any provision or condition contained in, any of the Transaction Documents in any manner that could reasonably be expected to be adverse to the Lenders. 84 7.11 Limitation on Transactions with Affiliates. (a) Enter into any ------------------------------------------ transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate unless such transaction is (i) otherwise permitted under this Agreement, (ii) in the ordinary course of the Borrower's or such Restricted Subsidiary's business and (iii) upon fair and not materially less favorable terms to the Borrower or such Restricted Subsidiary, as the case may be, than it reasonably believes it would obtain in a comparable arm's length transaction with a Person which is not an Affiliate; provided that satisfaction of the foregoing clause (iii) shall be demonstrated to the Administrative Agent (i) in a certificate of a Responsible Officer of the Borrower or such Restricted Subsidiary if the fair market value of the property or service purchased, sold, leased or exchanged by the Borrower or such Restricted Subsidiary is no greater than $10,000,000 (ii) in a resolution of the Board of Directors of the Borrower or such Restricted Subsidiary if the fair market value of the property or service purchased, sold, leased or exchanged by the Borrower or such Restricted Subsidiary is greater than $10,000,000 but no greater than $25,000,000 or (iii) at the Borrower's expense in an opinion of an independent valuation firm selected by the Administrative Agent and reasonably acceptable to the Borrower if the fair market value of the property or service purchased, sold, leased or exchanged by the Borrower or such Restricted Subsidiary is greater than $25,000,000; provided, however, that the provisions of the immediately preceding proviso of this subsection 7.11 shall not apply with respect to the pledge by the Borrower of the Capital Stock of any Citizens Entity to Lehman Brothers Holding Inc. to secure Guarantee Obligations issued by Lehman Brothers Holding Inc. in favor of any Person to support the Citizens Entities' "trading book". Notwithstanding the foregoing, any such transaction which is determined to be materially less favorable to the Borrower or a Restricted Subsidiary than the Borrower or such Restricted Subsidiary reasonably believes it would obtain in a comparable arm's length transaction nevertheless shall be permitted if the excess consideration being paid to such Affiliate would otherwise be permitted at such time as an Investment in such Affiliate under subsection 7.9 and, upon consummation of such transaction, such excess consideration being paid to such Affiliate shall constitute an Investment for the purposes of calculating compliance with subsection 7.9; (b) In addition, notwithstanding the foregoing, the Borrower and its Restricted Subsidiaries shall be entitled to make the following payments and/or to enter into the following transactions: (i) the payment of reasonable and customary fees and reimbursement of expenses payable to directors of the Borrower; (ii) the employment arrangements with respect to the procurement of services of directors, officers and employees in the ordinary course of business and the payment of reasonable fees in connection therewith; (iii) payments to directors and officers of the Borrower and its Subsidiaries in respect of the indemnification of such Persons in such respective capacities from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements, as the case may be, pursuant to the Constitutional Documents or other corporate action of the Borrower or its Restricted Subsidiaries, respectively, or pursuant to applicable law; (iv) transactions described in the Transaction Documents; 85 (v) Investments in Unrestricted Subsidiaries and Joint Ventures permitted by subsection 7.9; and (vi) transactions among Credit Parties. 7.12 Limitation on Sales and Leasebacks. Enter into any arrangement ---------------------------------- with any Person providing for the leasing by the Borrower or any Restricted Subsidiary of real or personal property which has been or is to be sold or transferred by the Borrower or such Restricted Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower or such Restricted Subsidiary; provided that the Borrower or a Restricted Subsidiary may enter into (a) a sale and leaseback transaction if the Borrower or such Restricted Subsidiary could have (i) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction and (ii) incurred a Lien to secure such Indebtedness, in each case in accordance with the restrictions contained in this Agreement and the other Credit Documents and (b) any sale and leaseback transaction relating to newly acquired assets where such sale and leaseback is consummated within 180 days after the initial acquisition of such assets by the Borrower or such Restricted Subsidiary. 7.13 Limitation on Changes in Fiscal Year. Permit the fiscal year of ------------------------------------ the Borrower to end on a day other than March 31, except that the Borrower may change its fiscal year end to December 31. 7.14 Limitation on Negative Pledge Clauses. Enter into with any ------------------------------------- Person any agreement, other than (a) this Agreement, (b) the Senior Notes Documents, (c) the Subordinated Notes Documents and (d) any industrial revenue bonds, purchase money mortgages, Financing Leases permitted by this Agreement or agreements evidencing Indebtedness permitted by subsection 7.2(b), (c) or (j) (to the extent refinancing Indebtedness incurred under subsection 7.2(c)) (in which cases, any prohibition or limitation shall only be effective against the assets financed thereby other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the instrument creating such Lien), which prohibits or limits the ability of the Borrower or any of its Restricted Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired. 7.15 Limitation on Lines of Business. Enter into any business, ------------------------------- either directly or through any Subsidiary, except for Similar Businesses. 7.16 Designated Senior Debt. Designate any Indebtedness or other ---------------------- obligation, other than Indebtedness under the Credit Documents, as "Designated ---------- Senior Debt," as such term is defined in the Subordinated Notes Indenture as in - ----------- effect on the Closing Date, or any comparable designation that confers upon the holders of such Indebtedness or other obligation (or any Person acting on their behalf) the right to initiate blockage periods under the Subordinated Notes Indenture or any other Indebtedness or other obligation of the Borrower and its Subsidiaries. SECTION 8. EVENTS OF DEFAULT If any of the following events shall occur and be continuing: 86 (a) The Borrower shall fail to pay any principal of any Loan or any Reimbursement Obligation when due in accordance with the terms thereof or hereof; or the Borrower shall fail to pay any interest on any Loan, or any other amount payable hereunder, within five days after any such interest or other amount becomes due in accordance with the terms thereof or hereof; or (b) any representation or warranty made or deemed made by the Borrower or any other Credit Party herein or in any other Credit Document or which is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Credit Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) the Borrower or any other Credit Party shall default in the observance or performance of any agreement contained in subsection 6.4(a), 6.4(d), 6.5(a) (first sentence only), 6.7(d), 6.10, 6.14 or 6.17 or Section 7 of this Agreement or subsection 5.5, 5.6, 5.7, 5.8(b), 5.9(a), 5.10 or 5.11 of the Guarantee and Collateral Agreement; or (d) the Borrower or any other Credit Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Credit Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days (unless a shorter cure period therefor is provided therein); or (e) the Borrower or any of its Restricted Subsidiaries shall (i) default (w) in any payment under any coal lease, (x) in any payment of principal of or interest of any Indebtedness (other than the Loans, the L/C Obligations and any intercompany debt) or the net obligations under any Interest Rate Agreement or (y) in the payment of any Guarantee Obligation (excluding any guaranties of the Obligations), beyond the period of grace, if any, provided in the instrument or agreement under which such lease, Indebtedness, Interest Rate Agreement obligation or Guarantee Obligation was created; or (ii) default in the observance or performance of any other agreement or condition relating to any such lease, Indebtedness, Interest Rate Agreement obligation or Guarantee Obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or, other than with respect to a lease, any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the lessor under such lease or the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such lease to be terminated (and such lease is actually terminated), such Indebtedness to become due prior to its stated maturity or such Guarantee Obligation to become payable; provided, however, that no Default or Event of Default shall exist under this paragraph unless (i) the aggregate amount of lease payment obligations, Indebtedness, Interest Rate Agreement obligations and/or Guarantee Obligations in respect of which any default or other event or condition referred to in this paragraph shall have occurred shall be equal to at least $50,000,000, (ii) such default continues for a period in excess of 10 days and (iii) with respect to defaults under coal leases only, the termination of such lease could reasonably be expected to result in a Material Adverse Effect; or 87 (f) (i) the Borrower, any of its Restricted Subsidiaries or any of its Specified Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, the Borrower, any of its Restricted Subsidiaries or any of its Specified Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower, any of its Restricted Subsidiaries or any of its Specified Subsidiaries, any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Borrower, any of its Restricted Subsidiaries or any of its Specified Subsidiaries, any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower, any of its Restricted Subsidiaries or any of its Specified Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower, any of its Restricted Subsidiaries or any of its Specified Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (g) (i) the Borrower, any Subsidiary or any Commonly Controlled Entity has incurred or is likely to incur a liability in connection with any "prohibited transaction" (as defined in Section 406 of ERISA or Section ---------------------- 4975 of the Code) involving any Plan, (ii) any "accumulated funding ------------------- deficiency" (as defined in Section 302 of ERISA), whether or not waived, ---------- shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Administrative Agent is reasonably likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan, (vi) the Borrower, its Subsidiaries or its "related persons" as defined in the Coal Act, shall be required to make during any fiscal year payments pursuant to the Coal Act that, in the aggregate, exceed the amount set forth on Schedule IV with respect to such fiscal year, (vii) the Borrower or its Subsidiaries shall be required to make during any fiscal year payments pursuant to federal and state Black Lung Act claims in excess of the amount set forth on Schedule V with respect to such fiscal year, (viii) the Borrower or its Subsidiaries shall be required to make during any fiscal year payments pursuant to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees (other than as required by Section 601 of ERISA or the Coal Act) that, in the aggregate, exceed the amount set forth on Schedule VI with respect to such fiscal year or (ix) any other similar event or condition shall occur or exist with respect to a Plan that is not in the ordinary course; and in each case in clauses (i) through (ix) above, such event or 88 condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or (h) one or more judgments or decrees shall be entered against the Borrower or any of its Restricted Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance (which coverage has been acknowledged by the appropriate insurers)) of $25,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or (i) one or more surety, reclamation or similar bonds securing obligations of the Borrower or any Subsidiary (or any required guarantees thereof or required letters of credit with respect thereto) with an aggregate face amount of $100,000,000 or more shall be terminated, suspended or revoked and not replaced within 30 days of such termination, suspension or revocation; provided that the Borrower or any Subsidiary shall be permitted to replace such surety bonds with self-bonding obligations to the extent permitted by any Person to which the obligations secured by such bonds are owed) prior to full satisfaction of the obligations secured by such bonds; or (j) (i) any of the Security Documents shall cease, for any reason, to be in full force and effect (unless released by the Administrative Agent at the direction of the requisite Lenders or as otherwise permitted under this Agreement or the other Credit Documents), or the Borrower or any other Credit Party which is a party to any of the Security Documents shall so assert or (ii) the Lien created by any of the Security Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby (and, if such invalidity is such so as to be amenable to cure without materially disadvantaging the position of the Administrative Agent and the Lenders, as the case may be, as secured parties thereunder, the Credit Party shall have failed to cure such invalidity within 30 days after notice from the Administrative Agent); or (k) the Guarantee Obligation of any Credit Party under the Credit Documents shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Credit Party or any Person acting on behalf of any Credit Party, shall deny or disaffirm its obligations under such Guarantee Obligation; or (l) there shall have occurred a Change in Control, then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) of this Section above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) and the Notes shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice of default to the Borrower, declare the Loans 89 hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) and the Notes to be due and payable forthwith, whereupon the same shall immediately become due and payable. Upon an Event of Default hereunder, the Agents and the Lenders shall also have all of the rights granted to them under the Security Documents and applicable law. Upon an Event of Default, and at the request of the Administrative Agent, for each real property interest (including coal reserves) selected by the Administrative Agent which is owned or leased by the Borrower or any of its Restricted Subsidiaries, the Borrower shall promptly (i) deliver to the Administrative Agent, a Mortgage, executed and delivered by a duly authorized officer of the mortgagor party thereto, with a counterpart or a conformed copy for each Lender, and (ii) with respect to each such Mortgage, comply with all other requirements in connection with the delivery thereof as set forth in subsections 6.10(c)(i)(B) and 6.10(c)(i)(C). With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to the preceding paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Lender and the L/C Participants, a security interest in such cash collateral and cash collateral account to secure all obligations of the Borrower under this Agreement and the other Credit Documents. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the Notes. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the Notes shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower. The Borrower shall execute and deliver to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, such further documents and instruments as the Administrative Agent may request to evidence the creation and perfection of such security interest in such cash collateral account. EXCEPT AS EXPRESSLY PROVIDED ABOVE IN THIS SECTION, PRESENTMENT, DEMAND, PROTEST AND ALL OTHER NOTICES OF ANY KIND ARE HEREBY EXPRESSLY WAIVED. SECTION 9. THE AGENTS 9.1 Appointment. Each Lender hereby irrevocably designates and ----------- appoints each of the Agents as the agent of such Lender under this Agreement and the other Credit Documents, and each such Lender irrevocably authorizes each of the Agents, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, none of the Agents shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, 90 obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against any of the Agents. 9.2 Delegation of Duties. The Agents may execute any of their duties -------------------- under this Agreement and the other Credit Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. None of the Agents shall be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care. 9.3 Exculpatory Provisions. Neither any of the Agents nor any of ---------------------- their officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Credit Document (except for its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in this Agreement or any other Credit Document or in any certificate, report, statement or other document referred to or provided for in, or received by such Agent under or in connection with, this Agreement or any other Credit Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Credit Document or for any failure of the Borrower to perform its obligations hereunder or thereunder. None of the Agents shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of the Borrower. 9.4 Reliance by Agents. The Agents shall be entitled to rely, and ------------------ shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by such Agent. The Agents may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with such Agent. Except as expressly provided in this Agreement, the Agents shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agents shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. 9.5 Notice of Default. No Agent shall be deemed to have knowledge or ----------------- notice of the occurrence of any Default or Event of Default hereunder unless such Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that any Agent receives such a ----------------- notice, such Agent shall give notice thereof to the Lenders. Each Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided that unless and until such Agent shall have received such directions, such Agent may (but shall not be 91 obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. 9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly ---------------------------------------- acknowledges that neither any of the Agents nor any of their officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by any of the Agents hereafter taken, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or warranty by any of the Agents to any Lender. Each Lender represents to each of the Agents that it has, independently and without reliance upon any of the Agents or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and credit worthiness of the Borrower and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any of the Agents or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Credit Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and credit worthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by any of the Agents hereunder (or copies of which have been provided to the Administrative Agent pursuant to this Agreement), none of the Agents shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Credit Party which may come into the possession of such Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. 9.7 Indemnification. The Lenders agree to indemnify each of the --------------- Agents in their respective capacities as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Commitment Percentages with respect to all Types of Loans in effect on the date on which indemnification is sought, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against any of the Agents in any way relating to or arising out of, the Commitments, this Agreement, any of the other Credit Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by any of the Agents under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent's gross negligence or willful misconduct. The agreements in this subsection shall survive the payment of the Loans and all other amounts payable hereunder. 9.8 Agents, in Their Individual Capacities. The Agents and their -------------------------------------- respective Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower as though the Agents were not acting in such capacities hereunder and under the other Credit Documents. With respect to the Loans made or renewed by it and any Note issued to it and with respect to any Letter of Credit issued or participated in by it, each Agent shall have the same rights and powers under this Agreement and the other Credit Documents as any Lender and may exercise the 92 same as though it were not an Agent, and the terms "Lender" and "Lenders" shall ------ ------- include the Agents in their individual capacities. 9.9 Successor Administrative Agent, Documentation Agent and ------------------------------------------------------- Syndication Agent. The Administrative Agent, any Documentation Agent or the - ----------------- Syndication Agent may resign as Administrative Agent, Documentation Agent or Syndication Agent, as the case may be, upon 30 days' notice to the Lenders. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Credit Documents or if a Documentation Agent or the Syndication Agent shall resign as Syndication Agent or Documentation Agent under this Agreement and the other Credit Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent (provided that it shall have been approved by the Borrower, which approval shall not be unreasonably withheld), shall succeed to the rights, powers and duties of the Administrative Agent or a Documentation Agent or the Syndication Agent, as the case may be, hereunder. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent's, Documentation Agent's or Syndication Agent's, as the case may be, giving of notice of resignation, the retiring Administrative Agent, Documentation Agent, or Syndication Agent, as the case may be, may, on behalf of the Required Lenders, appoint a successor, Administrative Agent, Documentation Agent, or Syndication Agent, as the case may be, which shall be a Lender, and if no Lender shall be willing to serve, be a commercial bank having a combined capital and surplus of at least $500,000,000. Effective upon such appointment and approval, the term "Administrative Agent" or "Documentation Agent" or "Syndication Agent" -------------------- ------------------- ----------------- as the case may be, shall mean or include such successor agent, and the former Administrative Agent's or Syndication Agent's or Documentation Agent's, as the case may be, rights, powers and duties as Administrative Agent or Syndication Agent or Documentation Agent, as the case may be, shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or Documentation Agent or Syndication Agent, as the case may be, or any of the parties to this Agreement or any holders of the Loans. After any retiring Administrative Agent's or Documentation Agent's or Syndication Agent's resignation as Administrative Agent or Documentation Agent or Syndication Agent, as the case may be, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent or Documentation Agent or Syndication Agent, as the case may be, under this Agreement and the other Credit Documents. In connection with the appointment of any successor Administrative Agent hereunder, the Borrower shall, and shall cause each of the Credit Parties to, promptly execute such documents, instruments, amendments and the like (such as, without limitation, UCC-3 amendments) necessary to effect such succession and preserve the Agents' and the Lender's rights hereunder, under the other Credit Documents and in the Collateral. 9.10 The Arranger. Except as expressly set forth herein, the ------------ Arranger, in its capacity as such, shall ha ve no duties or responsibilities, and shall incur no liabilities, under this Agreement or the other Credit Documents. SECTION 10. MISCELLANEOUS 10.1 Amendments and Waivers. Neither this Agreement nor any other ---------------------- Credit Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this subsection. The Required Lenders may, or, with the written consent of the Required Lenders, the Administrative Agent may, from time to time, (a) enter into with 93 the Borrower written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding any provisions to this Agreement or the other Credit Documents or changing in any manner the rights of the Lenders or of the Borrower hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Credit Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (i) reduce the amount or extend any scheduled date of payment or maturity of any Loan or any L/C Obligation under subsection 3.5, extend the expiration of any Letter of Credit beyond the Revolving Loan Termination Date, or reduce the stated rate or amount of any interest or fee payable hereunder or extend the scheduled date of any payment thereof, in each case without the consent of each Lender affected thereby, or increase any commitment of any Lender or extend the expiry of any commitment of any Lender without the consent of such Lender, or (ii) amend, modify or waive any provision of this subsection or reduce the percentage specified in the definition of Required Lenders or Requisite Class Lenders, or consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Credit Documents, in each case without the written consent of all the Lenders, or (iii) release all or substantially all of the Collateral or release any of the Credit Parties from their Guarantee Obligations under the Credit Documents (except as otherwise expressly permitted under the Credit Documents) without the consent of all Lenders, or (iv) amend, modify or waive any provision of Section 9 without the written consent of the then Agents, (v) amend, modify or waive any provision of subsection 2.1(b), any other provision of this Agreement relating to the Swing Line Loans or the Swing Line Note without the written consent of the Swing Line Lender, or (vi) amend, modify or waive any provision of this Agreement or any other Credit Document which would directly and adversely affect the Arranger or the Agents or the Issuing Lender or the Swing Line Lender without the written consent of the Arranger, the Agents or the Issuing Lender or the Swing Line Lender, as the case may be. In addition to the foregoing, no amendment, modification, termination or waiver of any provision of subsection 2.5 or subsection 2.6 which has the effect of changing any interim scheduled payments, voluntary or mandatory prepayments (or the applications thereof) or Commitment reductions applicable to any Class (an "Affected Class") in a manner that disproportionately disadvantages such Class -------------- relative to the other Class shall be effective without the written concurrence of the Requisite Class Lenders of the Affected Class (it being understood and agreed that any amendment, modification, termination or waiver of any provision which only postpones or reduces any interim scheduled payment, voluntary or mandatory prepayment or Commitment reduction from those set forth in subsection 2.6 with respect to only one Class shall be deemed to not disproportionately disadvantage the other Class and, therefore, shall not require the consent of Requisite Class Lenders of such other Class). Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Borrower, the Lenders, the Agents and the Issuing Lender and all future holders of the Loans. Any extension of a Letter of Credit by the Issuing Lender shall be treated hereunder as an issuance of a new Letter of Credit. In the case of any waiver, the Borrower, the Lenders and the Agents and the Issuing Lender shall be restored to their former positions and rights hereunder and under the other Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. 10.2 Notices. Except as otherwise expressly set forth herein, all ------- notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (a) in the case of delivery by hand, when delivered, (b) in the case of delivery by 94 mail, three days after being deposited in the mails, postage prepaid, or (c) in the case of delivery by facsimile transmission, when sent and receipt has been confirmed, addressed as follows in the case of the Borrower, the Administrative Agent, the Syndication Agent or either Documentation Agent, and as set forth in Schedule I in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto: The Borrower or any of its Subsidiaries: Lehman Merchant Banking 3 World Financial Center 200 Vesey Street New York, NY 10285 Attention: Steven Berkenfeld, Esq. Fax: 212-526-2198 P&L Coal Holdings Corporation 701 Market Street St. Louis, Missouri Attention: Steve Schaab Fax: 314-342-3449 95 The Administrative Agent: The First National Bank of Chicago Mail Suite 0362 One First National Plaza Chicago, Illinois 60670-0362 Attention: Energy, Minerals & Utilities Fax: 312-732-3055 The Documentation Agents: Bank of America National Trust & Savings Association 335 Madison Avenue New York, NY 10017 Attention: Heidi Sandquist Fax: 212-503-7502 and The Fuji Bank, Limited 2 World Trade Center 79th Floor New York, NY 10048 Attention: David Lee Fax: 212-848-2399 The Syndication Agent: Lehman Commercial Paper Inc. 3 World Financial Center, 9th Floor New York, New York 10285 Attention: Michelle Swanson Fax: 212-526-4911 The Arranger: Lehman Brothers Inc. 3 World Financial Center, 9th Floor New York, New York 10285 Attention: Michelle Swanson Fax: 212-526-4911 provided that any notice, request or demand to or upon the Administrative Agent or the Lenders pursuant to subsection 2.2, 2.4, 2.6, 2.7, 2.12 or 3.2 shall not be effective until received. 96 10.3 No Waiver; Cumulative Remedies. No failure to exercise and no ------------------------------ delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Credit Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 10.4 Survival of Representations and Warranties. All representations ------------------------------------------ and warranties made hereunder, in the other Credit Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. 10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay ----------------------------- or reimburse each Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Credit Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees, charges and disbursements of a single counsel for the Agents (in addition to any local and foreign counsel), (b) to pay or reimburse each Lender and each Agent for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Credit Documents and any such other documents and any "workout" hereunder or thereunder, including, without limitation, the fees and disbursements of counsel to each Lender and of counsel to any Agent, (c) to pay, indemnify, and hold each Lender and each Agent and each Issuing Lender harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Credit Documents and any such other documents, and (d) to pay, defend, indemnify, and hold each Lender and each Agent and each Issuing Lender harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement or the other Credit Documents or the use of the proceeds of the Loans in connection with the Transaction, including, without limitation, any of the foregoing relating to the violation of, noncompliance with or liability under, any Mining and Environmental Law applicable to the activities of the Borrower, any of its Subsidiaries or any of the Properties or Businesses or any prior businesses for which the Borrower has, or may reasonably be alleged to have retained liability (all the foregoing in this clause (d), collectively, the "indemnified liabilities"). The Borrower shall have no ----------------------- obligation hereunder to any Agent or the Issuing Lender or any Lender with respect to otherwise indemnified liabilities arising from the gross negligence or willful misconduct of such Agent or the Issuing Lender or such Lender. The agreements in this subsection shall survive repayment of the Loans and all other amounts payable hereunder. 10.6 Successors and Assigns; Participations and Assignments. (a) ------------------------------------------------------ This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Agents and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. 97 (b) Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Loan owing to such ------------ Lender or any other interest of such Lender hereunder and under the other Credit Documents. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Loan for all purposes under this Agreement and the other Credit Documents, and the Borrower and the Agents shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Credit Documents. No Lender shall be entitled to create in favor of any Participant, in the participation agreement pursuant to which such Participant's participating interest shall be created or otherwise, any right to vote on, consent to or approve any matter relating to this Agreement or any other Credit Document except for those specified in clauses (i) and (ii) of the proviso to subsection 10.1. The Borrower agrees that if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall, to the maximum extent permitted by applicable law, be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement; provided that, in purchasing such participating interest, such Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as provided in subsection 10.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees that each Participant shall be entitled to the benefits of subsections 2.14, 2.15 and 2.16 with respect to its participation in the Letters of Credit, the Commitments and the Loans outstanding from time to time as if it was a Lender; provided that in the case of subsection 2.15, such Participant shall have complied with the requirements of said Section; provided, further, that no Participant shall be entitled to receive any greater amount pursuant to any such subsection than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred. (c) Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time and from time to time assign to any Lender or any affiliate thereof (including, without limitation, in the case of any Lender that is an investment fund which is regularly engaged in making, purchasing or investing in loans or securities, any other such fund which is under common (or affiliated) management with such Lender), or, with the consent of the Borrower, the Issuing Lender (with respect to assignments of Revolving Credit Commitments and Revolving Credit Loans only) and the Syndication Agent (which in each case shall not be unreasonably withheld and shall not be required in connection with an assignment involving LCPI), to any other Person (an "Assignee") all or any part of its rights and obligations under this Agreement -------- and the other Credit Documents pursuant to an Assignment and Acceptance, substantially in the form of Exhibit F, executed by such Assignee, such assigning Lender (and, in the case of an Assignee that is not then a Lender or an affiliate thereof (including, without limitation, in the case of a fund, another fund under common (or affiliated) management therewith), by the Borrower, the Issuing Lender (with respect to assignments of Revolving Credit Commitments and Revolving Credit Loans only) and the Syndication Agent) and delivered to the Administrative Agent for its acceptance and recording in the Register with a copy to the Syndication Agent, provided that, (A) in the case of any such assignment to a Person other than a Lender or any affiliate thereof (including, without limitation, in the case of a fund, another fund under common (or affiliated) management therewith), either (x) such assignment is of all the rights and obligations of the assigning Lender or (y) the sum of the aggregate principal amount of 98 the Loans, the aggregate amount of the L/C Obligations and the aggregate amount of the unused Commitments being assigned is not less than $5,000,000 (or such lesser amount as may be agreed to by the Borrower and the Syndication Agent), (B) in the case of any such assignment to a Person other than a Lender or any affiliate thereof (including, without limitation, in the case of a fund, another fund under common (or affiliated) management therewith), each Assignee which is a Non-U.S. Lender shall comply with the provisions of subsection 2.15(b) hereof and (C) any assignment to an Assignee as to which the Borrower has no right of consent under this subsection shall not be permitted if it would at the time of assignment thereof result in additional cost to the Borrower under subsection 2.14 or 2.15. Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with a Commitment as set forth therein and (y) the assigning Lender thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such assigning Lender shall cease to be a party hereto). Notwithstanding any provision of this paragraph (c) and paragraph (f) of this subsection to the contrary, the consent of the Borrower shall not be required for any assignment which occurs at any time when any of the events described in Section 8 shall have occurred and be continuing. (d) The Administrative Agent, on behalf of the Borrower, shall maintain at the address of the Administrative Agent referred to in subsection 10.2 a copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders -------- and Commitments of and principal amounts of the Loans of each Type owing to, each Lender from time to time and the registered owners of the Obligations evidenced by the Notes. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register as the owner of a Loan, a Note or other Obligation hereunder as the owner thereof for all purposes of this Agreement and the other Credit Documents, notwithstanding any notice to the contrary. Any assignment of any Loan or other obligation evidenced by a Note shall be effective only upon appropriate entries with respect thereto being made in the Register. Any assignment or transfer of all or part of an Obligation evidenced by a Note shall be registered in the Register only upon surrender for registration of assignment or transfer of the Note evidencing such Obligation, duly endorsed by (or accompanied by a written instrument of assignment or transfer duly executed by) the holder thereof, and thereupon one or more new Notes shall be issued to the designated Assignee and the old Note shall be returned by the Administrative Agent to the Borrower marked "cancelled." --------- (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an Assignee (and, in the case of an Assignee that is not then a Lender or an affiliate thereof (including, without limitation, in the case of a fund, another fund under common (or affiliated) management therewith), by the Borrower, the Issuing Lender (with respect to assignments of Revolving Credit Commitments and Revolving Credit Loans only) and the Syndication Agent) together with payment by the assigning Lender or the Assignee to the Administrative Agent of a registration and processing fee of $2,500 (provided that no such payment shall be required with respect to assignments (y) involving LCPI as assignor or assignee or (z) assignments to an Assignee which is already a Lender; provided, further, that with respect to one or more substantially concurrent assignments by a Lender to an affiliate or affiliates thereof or to Persons under common (or affiliated) management with such Lender, only one such fee shall be payable), the Administrative Agent shall (i) 99 promptly accept such Assignment and Acceptance and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Lenders and the Borrower. (f) The Borrower authorizes each Lender to disclose to any Participant or Assignee (each, a "Transferee") and any prospective Transferee, ---------- subject to the provisions of subsection 10.15, any and all financial information in such Lender's possession concerning the Borrower and its Affiliates which has been delivered to such Lender by or on behalf of the Borrower pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrower in connection with such Lender's credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement. (g) If, pursuant to this subsection 10.6, any interest in this Agreement or any Loan is transferred to any Transferee which would be a Non-U.S. Lender upon the effectiveness of such transfer, the assigning Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, (i) to represent to the assigning Lender (for the benefit of the assigning Lender, the Administrative Agent and the Borrower) that under applicable law and treaties no U.S. Taxes will be required to be withheld by the Administrative Agent, the Borrower or the assigning Lender with respect to any payments to be made to such Transferee in respect of the Loans, (ii) to furnish to the assigning Lender (and, in the case of any Assignee registered in the Register, the Administrative Agent and the Borrower such Internal Revenue Service Forms required to be furnished pursuant to subsection 2.15(b) and (iii) to agree (for the benefit of the assigning Lender, the Administrative Agent and the Borrower) to be bound by the provisions of subsection 2.15(b). (h) For the avoidance of doubt, the parties to this Agreement acknowledge that the provisions of this subsection and subsection 2.5(h) concerning assignments of Loans and Notes relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests, including, without limitation, (i) any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank in accordance with applicable law and (ii) the assignment or pledge by any Lender that is a fund of all or any portion of its rights under this Agreement to secure such Lender's Indebtedness; provided that, no such assignment under this clause (h) shall release the assignor Lender from its obligations hereunder. (i) On the Effective Date, each of the Lenders party hereto (other than the Original Lender) shall be deemed to have purchased and accepted from the Original Lender (and the Original Lender shall be deemed to have so sold and assigned to each such Lender) a portion of the Original Lender's Commitments and Loans under the Original Credit Agreement, in each case in the amounts set forth on Schedule I hereto and without recourse to the Original Lender, each such purchase and acceptance to be effective when full payment therefor is received by the Original Lender in immediately available funds. To the extent that any Lenders choose to consummate the sale of any Loans between them by utilizing the cash management facilities of the Administrative Agent, (y) such Lenders authorize and direct the Administrative Agent, upon receipt of the purchase price for such assignment from the Assignee in immediately available funds, to promptly remit such amount to the assigning Lender and (z) to the extent such Lenders have agreed to the payment of any fees from the assigning Lender to the Assignee in connection with such assignment, such Lenders authorize and direct the Administrative Agent, upon receipt of such fees from the assigning Lender in immediately available funds, to promptly remit such amount to the Assignee. Such Lenders hereby agree to indemnify and hold harmless the Administrative Agent from and against any and all liabilities, 100 obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent in connection with performing these cash management functions; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent's gross negligence or willful misconduct. 10.7 Adjustments; Set-off. (a) If any Lender (a "benefitted -------------------- ---------- Lender") shall at any time receive any payment of all or part of its Loans or - ------ the Reimbursement Obligations owing to it, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in subsection 8(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Loans or the Reimbursement Obligations owing to it, or interest thereon, such benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Loans or the Reimbursement Obligations owing to it, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. (b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) to set- off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. 10.8 Counterparts. This Agreement may be executed by one or more of ------------ the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent. 10.9 Severability. Any provision of this Agreement which is ------------ prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 101 10.10 Integration. This Agreement and the other Credit Documents ----------- represent the agreement of the Borrower, the Agents and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by any Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents. 10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ------------- OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 10.12 SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY ----------------------------------- IRREVOCABLY AND UNCONDITIONALLY: (a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF; (b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN SUBSECTION 10.2 OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; (d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND (e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 10.13 Acknowledgements. The Borrower hereby acknowledges that: ---------------- (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents; 102 (b) none of the Arranger, the Agents and the Lenders has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Credit Documents, and the relationship between any of the Agents and the Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders. 10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS, THE ARRANGER, --------------------- THE LENDERS AND THE OTHER PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 10.15 Confidentiality. Each Lender agrees to keep confidential all --------------- non-public information provided to it by the Borrower pursuant to this Agreement that is designated by the Borrower in writing as confidential (excluding any such information already in the possession of such Lender or provided to such Lender by a third party not in violation of this Agreement which, in either case, is not, to the knowledge of such Lender, subject to a confidentiality agreement); provided that nothing herein shall prevent any Lender from disclosing any such information (i) to any Agent or any other Lender or any of its Affiliates, (ii) to any Transferee or prospective Transferee or to any direct or indirect contractual counterparties in swap agreements or such contractual counterparties' professional advisors which receives such information and agrees to be bound by the confidentiality provisions hereof, (iii) to its employees, directors, agents, attorneys, accountants and other professional advisors, (iv) upon the request or demand of any Governmental Authority having jurisdiction over such Lender, (v) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (vi) which has been publicly disclosed other than in breach of this Agreement, (vii) to the National Association of Insurance Commissioners or any similar organization or any nationally-recognized rating agency that requires access to information about such Lender's investment portfolio in connection with ratings issued with respect to such Lender, or (viii) in connection with the exercise of any remedy hereunder. 10.16 Prudential Note. For the avoidance of doubt, the parties --------------- hereto hereby agree that the Obligations of the Borrower and the other Credit Parties hereunder and under the other Credit Documents (including, without limitation, all Indebtedness of the Borrower hereunder and of the other Credit Parties (including, without limitation, PHCI) under the Guarantee and Collateral Agreement) is "Senior Debt," as such term is defined in the Prudential Note. 10.17 Year 2000. The Borrower has reviewed, or will expeditiously --------- review, its operations and those of its Subsidiaries with a view to assessing whether its businesses, or the businesses of any of its Subsidiaries, will be vulnerable to a Year 2000 Problem. The Borrower shall take all actions necessary and commit adequate resources to assure that its computer-based and other systems (and those of all of its Subsidiaries) are able to effectively process data, including dates before, on and after January 1, 2000, without experiencing any Year 2000 Problem that could reasonably be expected to cause a Material Adverse Effect. At the request of the Administrative Agent, the Borrower will provide the Administrative Agent with assurances and substantiations 103 (including, but not limited to, the results of internal or external audit reports prepared in the ordinary course of business) reasonably acceptable to the Administrative Agent as to the capability of the Borrower and its Subsidiaries to conduct its and their businesses and operations before, on and after January 1, 2000 without experiencing a Year 2000 Problem causing a Material Adverse Effect. The Borrower represents and warrants that it has a reasonable basis to believe that no Year 2000 Problem will cause a Material Adverse Effect. 10.18 Existing Agreements Superseded. As set forth in Section 1.3 ------------------------------ hereof, the Original Credit Agreement is superseded by this Credit Agreement, which has been executed in renewal, amendment, restatement and modification, but not in extinguishment of, the obligations under the Original Credit Agreement. [SIGNATURE PAGES FOLLOW] 104 IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. P&L Coal Holdings Corporation, as Borrower /s/ H.E. Lentz By:__________________________________ Name: H.E. Lentz Title: President Lehman Commercial Paper Inc., as a Lender and as Syndication Agent /s/ Dennis J. Dee By:__________________________________ Name: Dennis J. Dee Title: Vice President Lehman Brothers Inc., as Arranger /s/ Dennis J. Dee By:__________________________________ Name: Dennis J. Dee Title: Vice President The First National Bank of Chicago, as a Lender and as Administrative Agent /s/ William V. Clifford By:__________________________________ Name: William V. Clifford Title: Vice President [SIGNATURES CONTINUED ON NEXT PAGE] Bank of America National Trust & Savings Association, as a Lender and as Documentation Agent /s/ Daniel Rencricca By:__________________________________ Name: Daniel Rencricca Title: Vice President The Fuji Bank, Limited, as a Lender and as Documentation Agent /s/ Teiji Teramoto By:__________________________________ Name: Teiji Teramoto Title: Vice President & Manager Schedule I to Credit Agreement ------------------- [Available from the Administrative Agent] Schedule II to Credit Agreement ------------------- Pricing Grid ------------
RATIO OF TOTAL TRANCHE A TRANCHE A TRANCHE B TRANCHE B COMMITMENT DEBT TO TERM TERM TERM LOAN TERM LOAN FEE* EBITDA LOAN AND LOAN AND APPLICABLE APPLICABLE REVOLVING REVOLVING MARGIN - MARGIN - CREDIT CREDIT LIBOR BASE RATE* FACILITY FACILITY RATE* APPLICABLE APPLICABLE MARGIN - MARGIN - BASE LIBOR RATE* RATE* - -------------------------------------------------------------------------------------------------------- Greater than or Equal to 4.75X 2.250% 1.250% 2.375% 1.375% .500% Greater than or Equal to 4.25X 2.000% 1.000% 2.125% 1.125% .500% Greater than or Equal to 3.75X 1.750% 0.750% 2.000% 1.000% .375% Less than 3.75X 1.500% 0.500% 2.000% 1.000% .375%
_________________ * Notwithstanding the foregoing grid: (a) the Applicable Margin for the Tranche A Term Loan and the Revolving Credit Facility for the 6 months following the Closing Date will be 1.250% for Base Rate Loans and 2.250% for LIBOR Loans, (b) the Applicable Margin for the Tranche B Term Loan for the 6 months following the Closing Date will be 1.375% for Base Rate Loans and 2.375% for LIBOR Loans and (c) the Commitment Fee rate Revolving Credit Facility for the 6 months following the Closing Date will be 0.50%. 108 Schedule III to the Credit Agreement ----------------------- Transaction Documents --------------------- Schedule IV to Credit Agreement ------------------- Coal Act --------
Fiscal Year Payments ------------- ----------- 1998 $11,802,000 1999 $ 8,300,000 2000 $ 8,100,000 2001 $ 7,800,000 2002 $ 7,500,000 2003 $ 7,000,000 2004 $ 6,600,000 2005 $ 6,900,000 2006 $ 7,200,000 2007 $ 6,700,000
Schedule V ---------- to Credit Agreement ------------------- Black Lung Act -------------- Fiscal Year Payments --------------------
1998 $ 9,334,000 1999 $14,000,000 2000 $15,000,000 2001 $15,400,000 2002 $16,000,000 2003 $15,100,000 2004 $12,400,000 2005 $11,400,000 2006 $11,700,000 2007 $12,000,000
Schedule VI to Credit Agreement ------------------- Retiree Welfare Benefits ------------------------
Fiscal Year Payments ----------- ----------- 1998 $48,710,000 1999 $53,080,000 2000 $59,037,000 2001 $61,295,000 2002 $63,921,000 2003 $66,080,000 2004 $69,523,000 2005 $71,756,000 2006 $74,440,000 2007 $77,917,000
EX-10.2 115 GUARANTEE & COLLATERAL AGMT DATED 5/14/97 EXHIBIT 10_2 ================================================================================ GUARANTEE AND COLLATERAL AGREEMENT made by P&L COAL HOLDINGS CORPORATION, and certain of its Subsidiaries in favor of LEHMAN COMMERCIAL PAPER INC., as Administrative Agent Dated as of May 14, 1998 ================================================================================ TABLE OF CONTENTS
Page ---- SECTION 1. DEFINED TERMS........................................................................... 1 1.1 Definitions............................................................................. 1 1.2 Other Definitional Provisions........................................................... 5 SECTION 2. GUARANTEE............................................................................... 5 2.1 Guarantee............................................................................... 5 2.2 Right of Contribution................................................................... 6 2.3 No Subrogation.......................................................................... 6 2.4 Amendments, etc. with Respect to the Borrower Obligations............................... 6 2.5 Guarantee Absolute and Unconditional.................................................... 7 2.6 Reinstatement........................................................................... 8 2.7 Payments................................................................................ 8 SECTION 3. GRANT OF SECURITY INTEREST.............................................................. 8 SECTION 4. REPRESENTATIONS AND WARRANTIES.......................................................... 9 4.1 Representations in Credit Agreement..................................................... 9 4.2 Title; No Other Liens................................................................... 9 4.3 Perfected First Priority Liens.......................................................... 9 4.4 Chief Executive Office.................................................................. 10 4.5 Inventory and Equipment................................................................. 10 4.6 Farm Products........................................................................... 10 4.7 Pledged Securities...................................................................... 10 4.8 Receivables............................................................................. 11 4.9 Contracts............................................................................... 11 4.10 Intellectual Property................................................................... 11 4.11 Peabody Minerals Pty. Limited........................................................... 11 SECTION 5. COVENANTS............................................................................... 12 5.1 Covenants in Credit Agreement........................................................... 12 5.2 Delivery of Instruments and Chattel Paper............................................... 12 5.3 Maintenance of Insurance................................................................ 12 5.4 Payment of Obligations.................................................................. 12 5.5 Maintenance of Perfected Security Interest; Further Documentation....................... 12 5.6 Changes in Locations, Name, etc......................................................... 13 5.7 Notices................................................................................. 13 5.8 Pledged Securities...................................................................... 13 5.9 Receivables............................................................................. 14 5.10 Contracts............................................................................... 14 5.11 Peabody Minerals Pty. Limited........................................................... 15 SECTION 6. REMEDIAL PROVISIONS..................................................................... 15 6.1 Certain Matters Relating to Receivables................................................. 15 6.2 Communications with Obligors; Grantors Remain Liable.................................... 16 6.3 Pledged Shares.......................................................................... 16
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Page ---- 6.4 Proceeds to be Turned Over To Administrative Agent......................................... 17 6.5 Application of Proceeds.................................................................... 17 6.6 Code and Other Remedies.................................................................... 17 6.7 Registration Rights........................................................................ 18 6.8 Waiver; Deficiency......................................................................... 19 SECTION 7. THE ADMINISTRATIVE AGENT................................................................... 19 7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc................................ 19 7.2 Duty of Administrative Agent............................................................... 20 7.3 Execution of Financing Statements.......................................................... 21 7.4 Authority of Administrative Agent.......................................................... 21 SECTION 8. MISCELLANEOUS.............................................................................. 21 8.1 Amendments in Writing...................................................................... 21 8.2 Notices.................................................................................... 21 8.3 No Waiver by Course of Conduct; Cumulative Remedies........................................ 21 8.4 Enforcement Expenses; Indemnification...................................................... 22 8.5 Successors and Assigns..................................................................... 22 8.6 Set-Off.................................................................................... 22 8.7 Counterparts............................................................................... 23 8.8 Severability............................................................................... 23 8.9 Section Headings........................................................................... 23 8.10 Integration................................................................................ 23 8.11 Governing Law.............................................................................. 23 8.12 Submission To Jurisdiction; Waivers........................................................ 23 8.13 Acknowledgements........................................................................... 24 8.14 WAIVER OF JURY TRIAL....................................................................... 24 8.15 Additional Grantors........................................................................ 24 8.16 Releases................................................................................... 24 8.17 Conflict................................................................................... 25
ii GUARANTEE AND COLLATERAL AGREEMENT GUARANTEE AND COLLATERAL AGREEMENT, dated as of May 14, 1998, made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the "Grantors"), in favor of Lehman Commercial -------- Paper Inc. ("LCPI"), as administrative agent (in such capacity, the ---- "Administrative Agent") for the banks and other financial institutions (the -------------------- "Lenders") from time to time parties to the Credit Agreement, dated as of the ------- date hereof (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among P&L Coal Holdings Corporation, a Delaware ---------------- corporation (the "Borrower"), the Lenders, LCPI, as documentation agent (in such -------- capacity, the "Documentation Agent"), LCPI, as syndication agent (in such ------------------- capacity, the "Syndication Agent"), Lehman Brothers Inc., as arranger (in such ----------------- capacity, the "Arranger", together with the Documentation Agent, the Syndication -------- Agent and the Administrative Agent, the "Agents") and the Administrative Agent. ------ W I T N E S S E T H: - - - - - - - - - - WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein; WHEREAS, the Borrower is a member of an affiliated group of companies that includes each other Grantor; WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in part to enable the Borrower to make valuable transfers to one or more of the other Grantors in connection with the operation of their respective businesses and to finance the costs of the Acquisition; WHEREAS, the Borrower and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the Agents and the Lenders; NOW, THEREFORE, in consideration of the premises and to induce the Agents and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders, as follows: SECTION 1. DEFINED TERMS 1.1 Definitions. (a) Unless otherwise defined herein, terms defined ----------- in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms which are defined in the Uniform Commercial Code in effect in the State of New York on the date hereof are used herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm Products, Fixtures, Instruments and Inventory. (b) The following terms shall have the following meanings: 2 "Agreement": this Guarantee and Collateral Agreement, as the same may --------- be amended, supplemented or otherwise modified from time to time. "Borrower Obligations": the collective reference to the unpaid -------------------- principal of and interest on the Loans and Reimbursement Obligations and all other obligations and liabilities of the Borrower (including, without limitation, (i) interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and Reimbursement Obligations and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and (ii) any exposure of any Lender under any lockbox arrangement, controlled disbursement arrangement, checking accounts or other similar arrangements (collectively, "Cash ---- Management Agreements") with or on behalf of the Borrower and/or its --------------------- Subsidiaries) to the Agents or any Lender (or, in the case of any Interest Rate Agreement referred to below, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, this Agreement, the other Credit Documents, any Letter of Credit or any Interest Rate Agreement entered into by the Borrower with any Lender (or any Affiliate of any Lender) or any Cash Management Agreement entered into by the Borrower or any Subsidiary of the Borrower with any Lender or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent and counsel to the Lenders that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements). "Collateral": as defined in Section 3. ---------- "Collateral Account": any collateral account established by the ------------------ Administrative Agent as provided in Section 6.1 or 6.4. "Contracts": the contracts and agreements listed on Schedule 7, as --------- ---------- the same may be amended, supplemented or otherwise modified from time to time, including, without limitation, (i) all rights of any Grantor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of any Grantor to damages arising thereunder and (iii) all rights of any Grantor to perform and to exercise all remedies thereunder. "Copyrights": (i) all copyrights arising under the laws of the United ---------- States or any political subdivision thereof, whether registered or unregistered and whether published or unpublished (including, without limitation, those listed on Schedule 6), all registrations and recordings ---------- thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof. "Copyright Licenses": any written agreement naming any Grantor as ------------------ licensor or licensee granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright. "General Intangibles": all "general intangibles" as such term is ------------------- defined in Section 9-106 of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in 3 any event, including, without limitation, with respect to any Grantor, (A) all partnership interests, member interests and other ownership interests (other than Pledged Shares) in any Subsidiary of the Borrower (other than any Citizens Entity and any Subsidiary of a Foreign Subsidiary), including, without limitation, the partnership interests held by any Grantor in Colony Bay Coal Company, Patriot Coal Company, L.P. and Peabody Natural Resources Company and the member interests held by any Grantor in Thoroughbred, LLC and (B) all contracts, agreements, instruments and indentures in any form, and portions thereof, to which such Grantor is a party or under which such Grantor has any right, title or interest or to which such Grantor or any property of such Grantor is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (i) all rights of such Grantor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of such Grantor to damages arising thereunder and (iii) all rights of such Grantor to perform and to exercise all remedies thereunder, in each case to the extent the grant by such Grantor of a security interest pursuant to this Agreement in its right, title and interest in such contract, agreement, instrument or indenture is not prohibited by such contract, agreement, instrument or indenture without the consent of any other party thereto, would not give any other party to such contract, agreement, instrument or indenture the right to "reopen" certain provisions thereof or to terminate its obligations thereunder, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate the Borrower to obtain such consents); provided that the -------- foregoing limitation shall not affect, limit, restrict or impair the grant by such Grantor of a security interest pursuant to this Agreement in any Receivable or any money or other amounts due or to become due under any such agreement, contract, instrument or indenture. "Guarantor Obligations": with respect to any Guarantor, the --------------------- collective reference to (i) the Borrower Obligations and (ii) all obligations and liabilities of such Guarantor which may arise under or in connection with this Agreement or any other Credit Document to which such Guarantor is a party, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent and counsel to the Lenders that are required to be paid by such Guarantor pursuant to the terms of this Agreement or any other Credit Document). "Guarantors": the collective reference to each Grantor other than the ---------- Borrower. "Intellectual Property": the collective reference to all rights, --------------------- priorities and privileges relating to intellectual property arising under United States laws, including, without limitation, Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Intercompany Note": any promissory note evidencing loans made by any ----------------- Grantor to the Borrower or any of its Subsidiaries. "Interest Rate Agreement": any interest rate swap agreement, interest ----------------------- rate cap agreement, interest rate collar agreement or other similar agreement or arrangement. "Investment Property": means all "certificated securities", ------------------- "uncertificated securities", "security entitlements", "securities accounts", "commodity contracts" or "commodity accounts" (as each is defined in the New York UCC). 4 "Issuers": the collective reference to each issuer of a Pledged ------- Security (which shall include, without limitation, each presently existing or hereinafter acquired or created Subsidiary of the Borrower (other than any Citizens Entity and any Subsidiary of a Foreign Subsidiary). "New York UCC": the Uniform Commercial Code as from time to time in ------------ effect in the State of New York. "Obligations": (i) in the case of the Borrower, the Borrower ----------- Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations. "Patents": (i) all letters patent of the United States or any ------- political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, including, without limitation, any of the foregoing referred to on Schedule 6, (ii) all applications for letters ---------- patent and design letters patent of the United States and all divisions, continuations and continuations-in-part thereof, including, without limitation, any of the foregoing referred to on Schedule 6, and (iii) all ---------- rights to obtain any reissues or extensions of the foregoing. "Patent License": all agreements, whether written or oral, providing -------------- for the grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to on Schedule 6. ---------- "Pledged Notes": all promissory notes listed on Schedule 2, all ------------- ---------- Intercompany Notes at any time issued to any Grantor and all other promissory notes issued to or held by any Grantor (other than promissory notes issued in connection with extensions of trade credit by any Grantor in the ordinary course of business). "Pledged Securities": the collective reference to the Pledged Notes ------------------ and the Pledged Shares. "Pledged Shares": the shares of Capital Stock listed on Schedule 2, -------------- ---------- whether certificated or uncertificated, all certificates representing such Capital Stock, and all cash dividends, stock dividends, distributions of any nature, cash, warrants, options and other rights, property or proceeds (whether tangible or intangible) and products from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Capital Stock, together with any other shares, stock certificates, options or rights of any nature whatsoever in respect of the Capital Stock of any Person that may be issued or granted to, or held by, a Grantor while this Agreement is in effect (subject to the provisions of subsection 6.10(b) of the Credit Agreement). "Proceeds": all "proceeds" as such term is defined in Section 9- -------- 306(1) of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions or payments with respect thereto. "Receivable": any right to payment for goods sold or leased or for ---------- services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account). "Securities Act": the Securities Act of 1933, as amended. -------------- 5 "Trademarks": (i) all trademarks, trade names, corporate names, ---------- company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States or any State thereof, or otherwise, and all common-law rights related thereto, including, without limitation, any of the foregoing referred to on Schedule -------- 6, and (ii) the right to obtain all renewals thereof. - "Trademark License": any agreement, whether written or oral, ----------------- providing for the grant by or to any Grantor of any right to use any Trademark, including, without limitation, any of the foregoing referred to on Schedule 6. ---------- 1.2 Other Definitional Provisions. (a) The words "hereof," ----------------------------- "herein", "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified. (b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. (c) Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor's Collateral or the relevant part thereof. SECTION 2. GUARANTEE 2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and --------- severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Agents and the Lenders and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations. (b) Anything herein or in any other Credit Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Credit Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors (after giving effect to the right of contribution established in Section 2.2). (c) Each Guarantor agrees that the Borrower Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Administrative Agent, any other Agent or any Lender hereunder. (d) The guarantee contained in this Section 2 shall remain in full force and effect until all the Borrower Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full, no Letter of Credit shall be outstanding and the Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement the Borrower may be free from any Borrower Obligations. 6 (e) No indefeasible payment made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Administrative Agent or any Lender from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Borrower Obligations shall be deemed to release the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Borrower Obligations or any payment received or collected from such Guarantor in respect of the Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability of such Guarantor hereunder until the Borrower Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated. 2.2 Right of Contribution. Each Guarantor hereby agrees that to the --------------------- extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantor's right of contribution shall be subject to the terms and conditions of Section 2.3. The provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any Guarantor to the Administrative Agent, the other Agents and the Lenders, and each Guarantor shall remain jointly and severally liable to the Administrative Agent, the other Agents and the Lenders for the full amount guaranteed by such Guarantor hereunder. 2.3 No Subrogation. Notwithstanding any payment made by any -------------- Guarantor hereunder or any set-off or application of funds of any Guarantor by the Administrative Agent, any other Agent or any Lender, no Guarantor shall be entitled to be subrogated to any of the rights of the Administrative Agent, any other Agent or any Lender against the Borrower or any other Guarantor or any collateral security or guarantee or right of offset held by the Administrative Agent, any other Agent or any Lender for the payment of the Borrower Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Administrative Agent, the other Agents and the Lenders by the Borrower on account of the Borrower Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Borrower Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Administrative Agent, the other Agents and the Lenders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if required), to be applied against the Borrower Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine. 2.4 Amendments, etc. with Respect to the Borrower Obligations. Each --------------------------------------------------------- Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Borrower Obligations made by the Administrative Agent, any other Agent or any Lender may be rescinded by the Administrative Agent, such other Agent or such Lender and any of the Borrower Obligations continued, and the Borrower Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent, any other Agent or any Lender, and the Credit Agreement and the other Credit Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the 7 Administrative Agent (or the Required Lenders or all Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent, any other Agent or any Lender for the payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or released. None of the Administrative Agent, any other Agent or any Lender shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Borrower Obligations or for the guarantee contained in this Section 2 or any property subject thereto. 2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any ------------------------------------ and all notice of the creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or proof of reliance by the Administrative Agent, any other Agent or any Lender upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Borrower Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Borrower and any of the Guarantors, on the one hand, and the Administrative Agent, the other Agents and the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or any of the Guarantors with respect to the Borrower Obligations. Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Credit Agreement or any other Credit Document, any of the Borrower Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent, any other Agent or any Lender, (b) any defense, set- off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Borrower or any other Person against the Administrative Agent, any other Agent or any Lender, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the Borrower Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Administrative Agent, any other Agent or any Lender may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Borrower, any other Guarantor or any other Person or against any collateral security or guarantee for the Borrower Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent, any other Agent or any Lender to make any such demand, to pursue such other rights or remedies or to collect any payments from the Borrower, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent, any other Agent or any Lender against any Guarantor. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. 2.6 Reinstatement. The guarantee contained in this Section 2 shall ------------- continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Borrower Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent, any other Agent or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or 8 conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. 2.7 Payments. Each Guarantor hereby guarantees that payments -------- hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the office of the Administrative Agent located at 3 World Financial Center, New York, New York 10285, Attention: Michelle Swanson, fax: (212) 526-4911. SECTION 3. GRANT OF SECURITY INTEREST Each Grantor hereby assigns and transfers to the Administrative Agent, and hereby grants to the Administrative Agent, for the ratable benefit of the Agents and the Lenders, a security interest in all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the "Collateral"), as collateral security for the prompt and ---------- complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor's Obligations: (a) all Accounts; (b) all Chattel Paper; (c) all Contracts; (d) all Documents; (e) all Equipment; (f) all Fixtures; (g) all General Intangibles; (h) all Instruments; (i) all Intellectual Property; (j) all Inventory (including, without limitation, coal); (k) all Investment Property; (l) all Pledged Securities; (m) all Receivables; (n) all books and records pertaining to the Collateral; and (o) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing. 9 Notwithstanding the foregoing, except as permitted by Section 9-318(4) of the New York UCC, this Agreement shall not constitute an assignment of any Contract, Pledged Security, General Intangible, Copyright License, Patent License or Trademark License, or the instruments giving the same, to the extent that, and only so long as, such Contract, Pledged Security, General Intangible, Copyright License, Patent License or Trademark License, or the instruments or agreements giving or governing the same, would prohibit such assignment or would, upon such assignment or attempted assignment, give any other party to such Contract, Pledged Security, General Intangible, Copyright License, Patent License or Trademark License, or the instruments or agreements giving the same, the right to "reopen" any provision thereof or terminate its obligations thereunder (unless, in either case, all necessary consents to such assignment have been obtained from the other parties thereto). SECTION 4. REPRESENTATIONS AND WARRANTIES To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby represents and warrants to the Administrative Agent and each Lender that: 4.1 Representations in Credit Agreement. In the case of each ----------------------------------- Guarantor, the representations and warranties set forth in Section 4 of the Credit Agreement as they relate to such Guarantor or to the other Credit Documents to which such Guarantor is a party, each of which is hereby incorporated herein by reference, are true and correct, and the Administrative Agent, each other Agent and each Lender shall be entitled to rely on each of them as if they were fully set forth herein, provided that each reference in -------- each such representation and warranty to the Borrower's knowledge shall, for the purposes of this Section 4.1, be deemed to be a reference to such Guarantor's knowledge. 4.2 Title; No Other Liens. Except for the security interest granted --------------------- to the Administrative Agent for the ratable benefit of the Agents and the Lenders pursuant to this Agreement and the other Liens permitted to exist on the Collateral by the Credit Agreement, such Grantor owns each item of the Collateral free and clear of any and all Liens or claims of others. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent, for the ratable benefit of the Agents and the Lenders, pursuant to this Agreement or as are permitted by the Credit Agreement. 4.3 Perfected First Priority Liens. The security interests granted ------------------------------ pursuant to this Agreement (a) upon completion of the filings and other actions specified on Schedule 3 (which, in the case of all filings and other documents ---------- referred to on said Schedule, have been delivered to the Administrative Agent in completed and duly executed form) will constitute valid perfected security interests in all of the Collateral in favor of the Administrative Agent, for the ratable benefit of the Lenders, as collateral security for such Grantor's Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase any Collateral from such Grantor and (b) are prior to all other Liens on the Collateral in existence on the date hereof except for unrecorded Liens and other Liens permitted by the Credit Agreement which have priority over the Liens on the Collateral by operation of law. Without limiting the foregoing, to the extent the Collateral pledged by the Borrower and the Grantor to the Administrative Agent on behalf of the Lenders constitutes partnership interests, member interests and other ownership interests which are uncertificated, the recording of the security interests on the relevant partnership agreement, member agreement or other governing document pursuant to subsection 5.5(d) and the filing of appropriate financing statements and continuation statements will perfect and establish the first priority Lien and security interest in such Collateral hereunder in favor of the Administrative Agent on behalf of the Agents and the Lenders. 10 4.4 Chief Executive Office. On the date such Grantor became a party ---------------------- to this Agreement, such Grantor's jurisdiction of organization and the location of such Grantor's chief executive office or sole place of business are specified on Schedule 4. ---------- 4.5 Inventory and Equipment. On the date such Grantor became a party ----------------------- to this Agreement, the Inventory and the Equipment of such Grantor (other than mobile goods) are kept at the locations listed on Schedule 5. ---------- 4.6 Farm Products. None of the Collateral constitutes, or is the ------------- Proceeds of, Farm Products. 4.7 Pledged Securities. (a) The Pledged Shares pledged by such ------------------ Grantor hereunder constitute all (or in the case of an Issuer that is a Foreign Subsidiary, 65%) of the issued and outstanding shares of all classes of the Capital Stock of each Issuer owned by such Grantor. (b) All the shares of the Pledged Shares have been duly and validly issued and are fully paid and nonassessable. (c) Each of the Pledged Notes constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. The Pledged Notes pledged by such Grantor hereunder constitute the only promissory notes of any Issuer in favor of such Grantor. (d) Such Grantor is the record and beneficial owner of, and has good and marketable title to, the Pledged Securities pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by this Agreement and other Liens expressly permitted by subsection 7.3(a) of the Credit Agreement. (e) Such Grantor has delivered to the Administrative Agent all certificates evidencing Pledged Shares, duly indorsed by such Grantor to the Administrative Agent, if required, together with undated stock powers covering each such certificate duly executed in blank by such Grantor. No shares, units and other securities constituting the Pledged Shares were issued in violation of the preemptive rights of any Person or of any agreement by which Grantor or the Issuer thereof is bound. All documentary, stamp or other taxes or fees owing in connection with the issuance, transfer or pledge of Pledged Shares (or rights in respect thereof) have been paid. No restrictions or conditions exist with respect to the transfer or voting of any Pledged Shares. (f) Such Grantor has delivered to the Administrative Agent originals of all Pledged Notes, duly indorsed by such Grantor to the Administrative Agent, if required, together with undated note powers or instruments of assignment covering each such Pledged Note executed in blank by such Grantor and with, if the Administrative Agent has so requested, signature guaranteed. 4.8 Receivables. (a) Except for (i) the Tennessee Valley Authority, ----------- (ii) federal tax refunds and (iii) Receivables which are not in the aggregate material to the Borrower and its Restricted Subsidiaries taken as a whole, none of the obligors on any Receivables is a Governmental Authority. (b) The amounts represented by such Grantor to the Lenders from time to time as owing to such Grantor in respect of the Receivables will at such times be accurate. 11 4.9 Contracts. (a) Each Contract (and each other contract, --------- agreement, instrument and indenture included in the Collateral (the "Additional ---------- Contracts")) is in full force and effect and constitutes a valid and legally - --------- enforceable obligation of the parties thereto, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (b) No consent or authorization of, filing with or other act by or in respect of any Governmental Authority is required in connection with the execution, delivery, performance, validity or enforceability of any of the Contracts or Additional Contracts by any party thereto other than those which have been duly obtained, made or performed, are in full force and effect and do not subject the scope of any such Contract to any material adverse limitation, either specific or general in nature. (c) Neither such Grantor nor (to the best of such Grantor's knowledge) any of the other parties to the Contracts or Additional Contracts is in default in the performance or observance of any of the terms thereof in any manner that, in the aggregate, could reasonably be expected to have a Material Adverse Effect. (d) The right, title and interest of such Grantor in, to and under the Contracts and the Additional Contracts are not subject to any defenses, offsets, counterclaims or claims that, in the aggregate, could reasonably be expected to have a Material Adverse Effect. (e) Such Grantor has delivered to the Administrative Agent a complete and correct copy of each Contract and Additional Contract, including all amendments, supplements and other modifications thereto. (f) No amount payable to such Grantor under or in connection with any Contract or Additional Contract is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent. 4.10 Intellectual Property. Neither the Borrower nor any Grantor --------------------- owns any Intellectual Property which is, in the aggregate, material to the Borrower and its Restricted Subsidiaries, taken as a whole. 4.11 Peabody Minerals Pty. Limited. Peabody Minerals Pty. Limited has ----------------------------- no material assets or liabilities and conducts no business. 12 SECTION 5. COVENANTS Each Grantor covenants and agrees with the Administrative Agent and the Lenders that, from and after the date of this Agreement until the Obligations shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated: 5.1 Covenants in Credit Agreement. In the case of each Guarantor, ----------------------------- such Guarantor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by such Guarantor or any of its Subsidiaries. 5.2 Delivery of Instruments and Chattel Paper. If any amount payable ----------------------------------------- under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be immediately delivered to the Administrative Agent, duly indorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement. 5.3 Maintenance of Insurance. Such Grantor will maintain insurance ------------------------ in accordance with subsection 6.5 of the Credit Agreement. 5.4 Payment of Obligations. Such Grantor will pay and discharge or ---------------------- otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all material taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of income or profits therefrom, as well as all claims of any kind (including, without limitation, claims for labor, materials and supplies) against or with respect to the Collateral, except that no such charge need be paid if the amount or validity thereof is currently being contested in good faith by appropriate proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books of such Grantor and such proceedings could not reasonably be expected to result in the sale, forfeiture or loss of any material portion of the Collateral or any interest therein. 5.5 Maintenance of Perfected Security Interest; Further --------------------------------------------------- Documentation. (a) Such Grantor shall maintain the security interest created - ------------- by this Agreement as a perfected security interest having at least the priority described in Section 4.3 and shall defend such security interest against the claims and demands of all Persons whomsoever. (b) Such Grantor will furnish to the Administrative Agent and the Lenders from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail. (c) At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby. (d) With respect to any partnership, member or other ownership interests included in the Collateral pledged hereunder, the applicable Grantor will cause the Issuer thereof to mark the relevant 13 partnership agreement, member agreement or other governing document with a legend indicating the Administrative Agent's security interest in such Collateral and prohibiting the transfer thereof except in a manner not in violation of the provisions of this Agreement and the Credit Agreement. 5.6 Changes in Locations, Name, etc. Such Grantor will not, except -------------------------------- upon 30 days' prior written notice to the Administrative Agent and delivery to the Administrative Agent of (a) all additional executed financing statements and other documents reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the security interests provided for herein and (b) if applicable, a written supplement to Schedule 5 showing any additional ---------- location at which Inventory or Equipment shall be kept: (i) permit any of the Inventory or Equipment to be kept at a location other than those listed on Schedule 5; ---------- (ii) change the location of its chief executive office or sole place of business from that referred to in Section 4.4; or (iii) change its name, identity or corporate structure to such an extent that any financing statement filed by the Administrative Agent in connection with this Agreement would become misleading. 5.7 Notices. Such Grantor will advise the Administrative Agent and ------- the Lenders promptly, in reasonable detail, of: (a) any Lien (other than security interests created hereby or Liens permitted under the Credit Agreement) on any of the Collateral which would adversely affect the ability of the Administrative Agent to realize on the Collateral or otherwise exercise any of its remedies hereunder; and (b) of the occurrence of any other event which could reasonably be expected to have a material adverse effect on the aggregate value of the Collateral or on the security interests created hereby. 5.8 Pledged Securities. (a) If such Grantor shall become entitled ------------------ to receive or shall receive any stock certificate (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of the Capital Stock of any Issuer (subject to the provisions of subsection 6.10(b) of the Credit Agreement), whether in addition to, in substitution of, as a conversion of, or in exchange for, any of the Pledged Shares, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the Administrative Agent, the other Agents and the Lenders, hold the same in trust for the Administrative Agent, the other Agents and the Lenders and deliver the same forthwith to the Administrative Agent in the exact form received, duly indorsed by such Grantor to the Administrative Agent, if required, together with an undated stock power covering such certificate duly executed in blank by such Grantor and with, if the Administrative Agent so requests, signature guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Obligations. Any sums paid upon or in respect of the Pledged Securities upon the liquidation or dissolution of any Issuer shall be paid over to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations, and in case any distribution of capital shall be made on or in respect of the Pledged Securities or any property shall be distributed upon or with respect to the Pledged Securities pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall, unless otherwise subject to a perfected security interest in favor of the Administrative Agent, be delivered to the Administrative 14 Agent to be held by it hereunder as additional collateral security for the Obligations. Except as provided in the Credit Agreement, if any sums of money or property so paid or distributed in respect of the Pledged Securities shall be received by such Grantor, such Grantor shall, until such money or property is paid or delivered to the Administrative Agent, hold such money or property in trust for the Agents and the Lenders, segregated from other funds of such Grantor, as additional collateral security for the Obligations. (b) Except as provided in the Credit Agreement, without the prior written consent of the Administrative Agent, such Grantor will not (i) vote to enable, or take any other action to permit, any Issuer to issue any stock or other equity securities of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any stock or other equity securities of any nature of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Pledged Securities or Proceeds thereof (except pursuant to a transaction expressly permitted by the Credit Agreement), (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Pledged Securities or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement or (iv) enter into any agreement or undertaking restricting the right or ability of such Grantor or the Administrative Agent to sell, assign or transfer any of the Pledged Securities or Proceeds thereof. (c) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Pledged Securities issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 5.8(a) with respect to the Pledged Securities issued by it and (iii) the terms of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to ------- -------- all actions that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the Pledged Securities issued by it. 5.9 Receivables. (a) Other than in the ordinary course of business ----------- consistent with its past practices, such Grantor shall not (i) grant any extension of the time of payment of any Receivable, (ii) compromise or settle any Receivable for less than the full amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any Receivable, (iv) allow any credit or discount whatsoever on any Receivable or (v) amend, supplement or modify any Receivable in any manner that could adversely affect the value thereof. (b) Such Grantor will deliver to the Administrative Agent a copy of each material demand, notice or document received by it that questions or calls into doubt the validity or enforceability of more than 5% of the aggregate amount of the then outstanding Receivables. 5.10 Contracts. (a) Such Grantor will maintain its Coal Supply --------- Agreements in compliance with the requirements of subsection 6.19 of the Credit Agreement. With respect to Contracts or Additional Contracts that are not Coal Supply Agreements, such Grantor will perform and comply in all material respects with all its obligations under such Contracts and Additional Contracts. (b) With respect to Contracts or Additional Contracts that are not Coal Supply Agreements, such Grantor will not amend, modify, terminate or waive any provision of any such material Contract or Additional Contract in any manner which could reasonably be expected to materially adversely affect the value of such material Contract or Additional Contract as Collateral. (c) With respect to Contracts or Additional Contracts that are not Coal Supply Agreements, such Grantor will exercise promptly and diligently each and every material right which it may have under each such Contract or Additional Contract (other than any right of termination). 15 (d) Such Grantor will deliver to the Administrative Agent a copy of each material demand, notice or document received by it relating in any way to any Contract or Additional Contract that questions the validity or enforceability of such Contract or Additional Contract. Such Grantor will notify the Administrative Agent immediately upon learning of any default by any party (including, without limitation, the Grantor) under any Contract or Additional Contract. 5.11 Peabody Minerals Pty. Limited. The Borrower will ensure that ----------------------------- the representation and warranty set forth in subsection 4.11 hereof remains true and correct at all times after the Closing Date, unless and until Peabody Minerals Pty. Limited is no longer a Subsidiary of the Borrower. SECTION 6. REMEDIAL PROVISIONS 6.1 Certain Matters Relating to Receivables. (a) Following the --------------------------------------- occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the right to make test verifications of the Receivables in any manner and through any medium that it reasonably considers advisable, and each Grantor shall furnish all such assistance and information as the Administrative Agent may require in connection with such test verifications. At any time and from time to time following the occurrence and during the continuance of an Event of Default, upon the Administrative Agent's reasonable request and at the expense of the relevant Grantor, such Grantor shall cause independent public accountants or others reasonably satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Receivables. (b) The Administrative Agent hereby authorizes each Grantor to collect such Grantor's Receivables, provided that the Administrative Agent may -------- curtail or terminate said authority or require that such authority be subject to the Administrative Agent's direct control, at any time after the occurrence and during the continuance of an Event of Default. If required by the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, any payments of Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any event, within two Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Administrative Agent if required, in a Collateral Account maintained under the sole dominion and control of the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the Agents and the Lenders only as provided in Section 65, and (ii) until so turned over, shall be held by such Grantor in trust for the Administrative Agent, the other Agents and the Lenders, segregated from other funds of such Grantor. Each such deposit of Proceeds of Receivables shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit. (c) At the Administrative Agent's reasonable request at any time after the occurrence and during the continuance of an Event of Default, each Grantor shall deliver to the Administrative Agent all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Receivables, including, without limitation, all original orders, invoices and shipping receipts. 6.2 Communications with Obligors; Grantors Remain Liable. (a) The ---------------------------------------------------- Administrative Agent in its own name or in the name of others may at any time after the occurrence and during the continuance of an Event of Default and after giving notice to the relevant Grantor, communicate with obligors under the Receivables and parties to the Contracts and Additional Contracts to verify with them to the Administrative Agent's satisfaction the existence, amount and terms of any Receivables or Contracts. 16 (b) Upon the request of the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, each Grantor shall notify obligors on the Receivables and parties to the Contracts and Additional Contracts that the Receivables and the Contracts and Additional Contracts have been assigned to the Administrative Agent for the ratable benefit of the Lenders and that payments in respect thereof shall be made directly to the Administrative Agent. (c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of the Receivables, Contracts and Additional Contracts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto. Neither the Administrative Agent nor any Lender shall have any obligation or liability under any Receivable (or any agreement giving rise thereto), Contract or Additional Contract by reason of or arising out of this Agreement or the receipt by the Administrative Agent or any Lender of any payment relating thereto, nor shall the Administrative Agent or any Lender be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Receivable (or any agreement giving rise thereto), Contract or Additional Contract to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. 6.3 Pledged Shares. (a) Unless an Event of Default shall have -------------- occurred and be continuing and the Administrative Agent shall have given notice to the relevant Grantor of the Administrative Agent's intent to exercise its corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Shares and all payments made in respect of the Pledged Notes, in each case paid in the normal course of business of the relevant Issuer and consistent with past practice, to the extent permitted in the Credit Agreement, and to exercise all voting and corporate rights with respect to the Pledged Securities; provided, however, that -------- ------- no vote shall be cast or corporate right exercised or other action taken which, in the Administrative Agent's reasonable judgment, would materially impair the Collateral or which would result in any violation of any provision of the Credit Agreement, this Agreement or any other Credit Document. (b) If an Event of Default shall occur and be continuing and the Administrative Agent shall give notice of its intent to exercise such rights to the relevant Grantor or Grantors, (i) the Administrative Agent shall have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the Pledged Securities and make application thereof to the Obligations in such order as the Administrative Agent may determine, and (ii) any or all of the Pledged Securities may be registered in the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Pledged Securities at any meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Pledged Securities as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Securities upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of any Issuer, or upon the exercise by any Grantor or the Administrative Agent of any right, privilege or option pertaining to such Pledged Securities, and in connection therewith, the right to deposit and deliver any and all of the Pledged Securities with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Administrative Agent may determine), all without liability except to account for property actually received by it, but the Administrative Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing. 17 (c) Each Grantor hereby authorizes and instructs each Issuer of any Pledged Securities pledged by such Grantor hereunder to (i) comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Pledged Securities directly to the Administrative Agent. 6.4 Proceeds to be Turned Over To Administrative Agent. In addition -------------------------------------------------- to the rights of the Administrative Agent, the other Agents and the Lenders specified in Section 6.1 with respect to payments of Receivables, if an Event of Default shall occur and be continuing, all Proceeds received by any Grantor consisting of cash and checks shall be held by such Grantor in trust for the Administrative Agent, the Agents and the Lenders, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to the Administrative Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Administrative Agent, if required). All Proceeds received by the Administrative Agent hereunder shall be held by the Administrative Agent in a Collateral Account maintained under its sole dominion and control. All Proceeds while held by the Administrative Agent in a Collateral Account (or by such Grantor in trust for the Administrative Agent and the Lenders) shall continue to be held as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided in Section 65. 6.5 Application of Proceeds. At such intervals as may be agreed upon ----------------------- by the Borrower and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the Administrative Agent's election, the Administrative Agent may apply all or any part of Proceeds held in any Collateral Account in payment of the Obligations in such order as required by the Credit Agreement, and any part of such funds which are not required as collateral security for the Obligations shall be paid over from time to time by the Administrative Agent to the Borrower or to whomsoever may be lawfully entitled to receive the same. Any balance of such Proceeds remaining after the Obligations shall have been paid in full, no Letters of Credit shall be outstanding and the Commitments shall have terminated shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive the same. 6.6 Code and Other Remedies. If an Event of Default shall occur and ----------------------- be continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the New York UCC or any other applicable law. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker's board or office of the Administrative Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Administrative Agent or any Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released. Each Grantor further agrees, at the Administrative Agent's request, to assemble the 18 Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at such Grantor's premises or elsewhere. The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this Section 6.6, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Administrative Agent, the other Agents and the Lenders hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the New York UCC, need the Administrative Agent account for the surplus, if any, to any Grantor. To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against the Administrative Agent, the other Agents or any Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 15 days before such sale or other disposition. 6.7 Registration Rights. (a) If the Administrative Agent shall ------------------- determine to exercise its right to sell any or all of the Pledged Shares pursuant to Section 6.6, and if in the opinion of the Administrative Agent it is necessary or advisable to have the Pledged Shares, or that portion thereof to be sold, registered under the provisions of the Securities Act, the relevant Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the directors and officers of such Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary or advisable to register the Pledged Shares, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use its commercially reasonable efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Shares, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. Each Grantor agrees to cause such Issuer to comply with the provisions of the securities or "Blue Sky" laws of any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act. (b) Each Grantor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Shares, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Shares for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so. (c) Each Grantor agrees to use its commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Shares pursuant to this Section 6.7 valid and binding and in compliance with any and all other 19 applicable Requirements of Law. Each Grantor further agrees that a breach of any of the covenants contained in this Section 6.7 will cause irreparable injury to the Administrative Agent and the Lenders, that the Administrative Agent and the Lenders have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 6.7 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement. 6.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert ------------------ any rights or privileges which it may acquire under Section 9-112 of the New York UCC. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency. SECTION 7. THE ADMINISTRATIVE AGENT 7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. (a) ----------------------------------------------------------- Each Grantor hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and right, on behalf of such Grantor, without assent by such Grantor, to do any or all of the following: (i) upon the occurrence and during the continuance of an Event of Default and after notice to the applicable Grantor, in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable or any Contract or Additional Contract included in the Collateral or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Receivable or any Contract or Additional Contract or with respect to any other Collateral whenever payable; (ii) in the case of any Intellectual Property included in the Collateral, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as the Administrative Agent may reasonably request to evidence the Administrative Agent's and the Lenders' security interest in such Intellectual Property and the goodwill and general intangibles of such Grantor relating thereto or represented thereby; (iii) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof; (iv) execute, in connection with any sale provided for in Section 6.6 or 6.7, any indorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and 20 (v) upon the occurrence and during the continuance of an Event of Default and after notice to the applicable Grantor (1) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (2) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (3) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (5) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (6) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Administrative Agent may reasonably deem appropriate; (7) assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (8) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent's option and such Grantor's expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Administrative Agent's and the Lenders' security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. (b) If any Grantor fails to perform or comply with any of its agreements contained herein, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement. (c) The expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this Section 7.1, together with interest thereon at a rate per annum equal to the rate per annum at which interest would then be payable on past due Base Rate Loans under the Credit Agreement, from the date of payment by the Administrative Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Administrative Agent on demand. (d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released. 7.2 Duty of Administrative Agent. The Administrative Agent's sole ---------------------------- duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. Neither the Administrative Agent, any other Agent, any Lender nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the Administrative Agent, the other Agents and the Lenders hereunder are solely to protect the Administrative Agent's, the other Agents', and the Lenders' interests in the Collateral and shall 21 not impose any duty upon the Administrative Agent or any Lender to exercise any such powers. The Administrative Agent, the other Agents and the Lenders shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. 7.3 Execution of Financing Statements. Pursuant to Section 9-402 of --------------------------------- the New York UCC and any other applicable law, each Grantor authorizes the Administrative Agent to file or record financing statements (including, without limitation, fixture filings) and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor (but with subsequent notice to such Grantor) in such form and in such offices as the Administrative Agent reasonably determines appropriate to perfect the security interests of the Administrative Agent under this Agreement. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction. 7.4 Authority of Administrative Agent. Each Grantor acknowledges --------------------------------- that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Administrative Agent and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Grantors, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority. SECTION 8. MISCELLANEOUS 8.1 Amendments in Writing. None of the terms or provisions of this --------------------- Agreement may be waived, amended, supplemented or otherwise modified except in accordance with subsection 10.1 of the Credit Agreement. 8.2 Notices. All notices, requests and demands to or upon the Agents ------- or any Grantor hereunder shall be effected in the manner provided for in subsection 10.2 of the Credit Agreement; provided that any such notice, request -------- or demand to or upon any Guarantor shall be addressed to such Grantor at its notice address set forth on Schedule 1. ---------- 8.3 No Waiver by Course of Conduct; Cumulative Remedies. None of the --------------------------------------------------- Administrative Agent, any other Agent or any Lender shall by any act (except by a written instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Administrative Agent, any other Agent or any Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent, any other Agent or any Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent, such other Agent or such Lender would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 22 8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor ------------------------------------- agrees to pay or reimburse each Lender and each Agent for all its costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Agreement and the other Credit Documents to which such Guarantor is a party, including, without limitation, the fees and disbursements of counsel to each Lender and of counsel to the Administrative Agent and the other Agents. (b) Each Guarantor agrees to pay, and to save the Administrative Agent, the other Agents and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement. (c) Each Guarantor agrees to pay, and to save the Administrative Agent, the other Agents and the Lenders harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to subsection 10.5 of the Credit Agreement. (d) The agreements in this Section 8.4 shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Credit Documents. 8.5 Successors and Assigns. This Agreement shall be binding upon the ---------------------- successors and assigns of each Grantor and shall inure to the benefit of the Administrative Agent, the other Agents and the Lenders and their successors and assigns; provided that no Grantor may assign, transfer or delegate any of its -------- rights or obligations under this Agreement without the prior written consent of the Administrative Agent and the Syndication Agent. 8.6 Set-Off. Each Grantor hereby irrevocably authorizes the ------- Administrative Agent, each other Agent and each Lender at any time and from time to time pursuant to subsection 10.7(a) of the Credit Agreement, without notice to such Grantor or any other Grantor, any such notice being expressly waived by each Grantor, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Administrative Agent or such Lender to or for the credit or the account of such Grantor, or any part thereof in such amounts as the Administrative Agent or such Lender may elect, against and on account of the Obligations and liabilities of such Grantor to the Administrative Agent, such other Agent or such Lender hereunder then due and owing and claims of every nature and description of the Administrative Agent, such other Agent or such Lender against such Grantor then due and owing, in any currency, whether arising hereunder, under the Credit Agreement, any other Credit Document or otherwise, as the Administrative Agent, such other Agent or such Lender may elect, whether or not the Administrative Agent, any other Agent or any Lender has made any demand for payment and although such Obligations, liabilities and claims may be contingent or unmatured. The Administrative Agent, each other Agent and each Lender shall notify such Grantor promptly of any such set-off and the application made by the Administrative Agent, such other Agent or such Lender of the proceeds thereof, provided that the failure to give such notice shall not -------- affect the validity of such set-off and application. The rights of the Administrative Agent, each other Agent and each Lender under this Section 8.6 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Administrative Agent, such other Agent or such Lender may have. 23 8.7 Counterparts. This Agreement may be executed by one or more of ------------ the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 8.8 Severability. Any provision of this Agreement which is ------------ prohibited or unenforceable in any jurisdiction with respect to any of the Grantors shall, as to such jurisdiction and such Grantor, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof with respect to such Grantor or any of the other Grantors, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction or with respect to any of the other Grantors in any jurisdiction. 8.9 Section Headings. The Section headings used in this Agreement ---------------- are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 8.10 Integration. This Agreement and the other Credit Documents ----------- represent the agreement of the Grantors, the Administrative Agent, the other Agents and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent, the other Agents or any Lender relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Credit Documents. 8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND ------------- CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby ----------------------------------- irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Credit Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Grantor at its address referred to in Section 8.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages. 24 8.13 Acknowledgements. Each Grantor hereby acknowledges that: ---------------- (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents to which it is a party; (b) None of the Administrative Agent, any other Agent or any Lender has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Credit Documents, and the relationship between the Grantors, on the one hand, and the Administrative Agent, the other Agents and the Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Grantors and the Lenders. 8.14 WAIVER OF JURY TRIAL. EACH GRANTOR AND, BY ACCEPTANCE OF THE -------------------- BENEFITS HEREOF, EACH OF THE LENDERS AND THE AGENTS, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 8.15 Additional Grantors. Each Subsidiary of the Borrower that is ------------------- required to become a party to this Agreement pursuant to subsection 6.10 of the Credit Agreement shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption Agreement in the form of Annex 1 hereto. 8.16 Releases. (a) At such time as the Loans, the Reimbursement -------- Obligations and the other Obligations shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding, the Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantors and the Administrative Agent shall deliver to such Grantor any Collateral held by the Administrative Agent hereunder, and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination. (b) If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Credit Agreement (including, without limitation, the designation of a Credit Party as an Unrestricted Subsidiary as permitted thereunder), then the Administrative Agent, at the request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or other documents reasonably necessary for the release of the Liens created hereby on such Collateral. At the request and sole expense of the Borrower, a Guarantor shall be released from its obligations hereunder in the event that all the Capital Stock of such Guarantor shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement (including, without limitation, the designation of such Guarantor as an Unrestricted Subsidiary as permitted thereunder). (c) If at any time the Capital Stock of any Unrestricted Subsidiary pledged hereunder is to be pledged instead as security for the obligations of any such Unrestricted Subsidiary under any Non-Recourse Debt, the Administrative Agent, at the request and sole expense of the applicable Grantor, shall execute and deliver to such Grantor all releases and other documents reasonably necessary for the release 25 of the Liens created hereby on such Collateral and shall deliver the certificates (if any) representing such Capital Stock to the applicable Grantor. 8.17 Conflict. In the event there is a conflict between the terms of -------- this Agreement and the Credit Agreement, the Credit Agreement shall control. [SIGNATURE PAGES FOLLOW] 26 IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Collateral Agreement to be duly executed and delivered as of the date first above written. P&L COAL HOLDINGS CORPORATION, a Delaware corporation /s/ Henry E. Lentz By:___________________________ Name: Henry E. Lentz Title: Accepted on behalf of the Agents and the Lenders as of the date first above written LEHMAN COMMERCIAL PAPER INC., as Administrative Agent /s/ William J. Gallagher By: _______________________________ Name: William J. Gallagher Title: Authorized Signatory Schedule 1 ---------- NOTICE ADDRESSES OF GRANTORS Schedule 2 ---------- DESCRIPTION OF PLEDGED SECURITIES PLEDGED CAPITAL STOCK: Issuer Class of Stock Stock Certificate No. No. of Shares --------- ------------------ ------------------------- ------------------ PLEDGED NOTES: Issuer Payee Principal Amount ----------------------- --------------- ------------------------------ MEMBER INTERESTS: Issuer Certificate No. No. of Interests ----------------------- ----------------- ------------------------------ Schedule 3 ---------- FILINGS AND OTHER ACTIONS REQUIRED TO PERFECT SECURITY INTERESTS Uniform Commercial Code Filings (including fixture filings) ----------------------------------------------------------- [List each office where a financing statement is to be filed] Patent and Trademark Filings ---------------------------- [List all filings] Actions with respect to Pledged Shares -------------------------------------- Other Actions ------------- [Describe other actions to be taken] Schedule 4 ---------- LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE Grantor Location ------- -------- Schedule 5 ---------- LOCATION OF INVENTORY AND EQUIPMENT Grantor Locations ------- --------- Schedule 6 ---------- COPYRIGHTS AND COPYRIGHT LICENSES None. PATENTS AND PATENT LICENSES TRADEMARKS AND TRADEMARK LICENSES Schedule 7 ---------- CONTRACTS ACKNOWLEDGEMENT AND CONSENT The undersigned hereby acknowledges receipt of a copy of the Guarantee and Collateral Agreement dated as of ______________ ___, 1998 (the "Agreement"), --------- made by the Grantors parties thereto for the benefit of Lehman Brothers Commercial Paper Inc., as Administrative Agent. The undersigned agrees for the benefit of the Administrative Agent and the Lenders as follows: 1. The undersigned will be bound by the terms of the Agreement and will comply with such terms insofar as such terms are applicable to the undersigned. 2. The undersigned will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 5.8(a) of the Agreement. 3. The terms of Sections 5.5(d), 6.3 and 6.7 of the Agreement shall apply to it, mutatis mutandis, with respect to all actions that may be required ------- -------- of it pursuant to Section 5.5(d), 6.3 or 6.7 of the Agreement. [NAME OF ISSUER] By________________________________________________ Title_____________________________________________ Address for Notices: __________________________________________________ __________________________________________________ Fax:______________________________________________ Annex 1 to Guarantee and Collateral Agreement ---------------------------------- ASSUMPTION AGREEMENT, dated as of ________________, 199_, made by _______________________, a ______________ corporation (the "Additional ---------- Grantor"), in favor of Lehman Commercial Paper Inc., as administrative agent (in - ------- such capacity, the "Administrative Agent") for the other Agents and the banks -------------------- and other financial institutions (the "Lenders") parties to the Credit Agreement ------- referred to below. All capitalized terms not defined herein shall have the meaning ascribed to them in such Credit Agreement. W I T N E S S E T H : - - - - - - - - - - WHEREAS, P&L Coal Holdings Corporation, a Delaware corporation (the "Borrower"), the Lenders, Lehman Commercial Paper Inc. ("LCPI"), as -------- ---- Documentation Agent, LCPI, as Syndication Agent, Lehman Brothers Inc., as Arranger, and the Administrative Agent have entered into a Credit Agreement, dated as of _____________ __, 1998, (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"); ---------------- WHEREAS, in connection with the Credit Agreement, the Borrower and certain of its Subsidiaries (other than the Additional Grantor) have entered into the Guarantee and Collateral Agreement, dated as of _______ __, 1998 (as amended, supplemented or otherwise modified from time to time, the "Guarantee --------- and Collateral Agreement") in favor of the Administrative Agent for the benefit - ------------------------ of the Lenders; WHEREAS, the Credit Agreement requires the Additional Grantor to become a party to the Guarantee and Collateral Agreement; and WHEREAS, the Additional Grantor has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee and Collateral Agreement; NOW, THEREFORE, IT IS AGREED: 1. Guarantee and Collateral Agreement. By executing and delivering ---------------------------------- this Assumption Agreement, the Additional Grantor, as provided in Section 8.15 of the Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and Collateral Agreement as a Grantor thereunder with the same force and effect as if originally named therein as a Grantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Grantor thereunder. The information set forth in Annex 1-A hereto is hereby added to the information set forth in Schedules ____________* to the Guarantee and Collateral Agreement. The Additional Grantor hereby represents and warrants that each of the representations and warranties contained in Section 4 of the Guarantee and Collateral Agreement is true and correct on and as the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such date. ________________________________ * Refer to each Schedule which needs to be supplemented. 2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, ------------- AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written. [ADDITIONAL GRANTOR] By:________________________________ Name: Title: EX-10.3 116 FED COAL LEASE WYW0321779: NORTH ANTELOPE/ROCHELLE EXHIBIT 10.3 United States Department of the Interior In Reply Refer To: BUREAU OF LAND MANAGEMENT Wyoming State Office 3452 P.O. Box 1828 WYW0321779 Cheyenne, Wyoming 82003-1828 (921MLove) PHONE NO: 307-775-6258 FAX NO: 307-775-6203 D E C I S I O N Powder River Coal Company : Attn: Victor E. Garber : Federal Coal Lease Caller Box 3034 : North Antelope/Rochelle Mine Gillette, Wyoming 82717-3034 : Partial Relinquishment Accepted ------------------------------- On February 17, 1998, we received a partial relinquishment of Federal coal lease WYW0321779 as to the following lands: T. 41 N., R. 70 W., 6th P.M., Wyoming Sec. 3: Lots 17 (S2), 18, 19, 20 (W2); Sec. 10: Lots 1-10; Sec. 11: Lots 2 (W2), 3-6, 7 (W2), 12. Containing 758.875 acres, more or less. The Casper District Office has determined that the public interest shall not be impaired by acceptance of the relinquishment, as maximum economic recovery of the recoverable resource shall be achieved and adequate reclamation has occurred in accordance with the policy outlined in Instruction Memorandum No. WY-98-35. That office has recommended that the partial relinquishment be accepted. Therefore, the partial relinquishment of Federal coal lease WYW0321779 is hereby accepted effective February 17, 1998, the date the relinquishment was filed. Acceptance of this partial relinquishment does not relieve Powder River Coal Company, or its successors, from complying with the reclamation requirements of 30 CFR Chapter VII, Subchapter K, or an approved State program. (43 CFR 3480.0- 6(d)(8)) The following-described lands are remaining in Federal coal lease WYW0321779: T. 41 N., R. 69 W., 6th P.M., Wyoming Sec. 6: Lots 8-23; Sec. 7: Lots 5-12, 14-19; Sec. 18: Lots 6, 7, 10, 11; T. 42 N., R. 69 W., 6th P.M., Wyoming Sec. 19: Lots 8, 13, 14; Sec. 30: Lots 8-20; Sec. 31: Lots 5-20; T. 41 N., R. 70 W., 6th P.M., Wyoming Sec. 1: Lots 5-7, 10-15, 17-20; Sec. 2: Lots 17-20; Sec. 3: Lots 17 (N2), 20 (E2); Sec. 11: Lots 1, 2 (E2), 7 (E2), 8, 9; Sec. 12: Lots 1-14, 16; T. 42 N., R. 70 W., 6th P.M., Wyoming Sec. 13: Lots 13-16 Sec. 14: Lots 9-16; Sec. 15: Lots 9-16; Sec. 22: Lots 1, 2, 7, 8; Sec. 23: Lots 1-16; Sec. 24: Lots 1-16; Sec. 25: Lots 1-16; Sec. 26: Lots 1, 2, 7, 8. Containing 7,286.745 acres, more or less. Attached to this Decision is an acreage calculation worksheet, which lists the acreage amounts for the lands remaining in the lease. The new rental amount due each year for this lease beginning December 1, 1998, will be $21,861.00. If you have any questions concerning this matter, please contact Mavis Love in the Minerals and Lands Authorization Group at 307-775-6258. Alan R. Pierson State Director Attachment cc: Department of Environmental Quality, Land Quality Division, 122 West 25th Street, Cheyenne, WY 82002 Department of Environmental Quality, Land Quality Division, Attn: Bob Giurgevich, 1043 Coffeen Avenue, Suite D, Sheridan, WY 82801 Office of Surface Mining, Attn: Mr. Peter Rutledge, Western Regional Coordinating Center, 1999 Broadway, Suite 3320, Denver, CO 80202-5733 MMS, REP, Reporting & Valuation Division, Solid Minerals Reporting Staff, P.O. Box 5760, MS3153, Denver CO 80217 WO (320), Room 501, LS DM, Casper ACREAGE CALCULATIONS FOR LANDS REMAINING IN FEDERAL COAL LEASE WYW0321779 AFTER ACCEPTANCE OF PARTIAL RELINQUISHMENT EFFECTIVE FEBRUARY 17, 1998 T. 41 N., R. 69 W., 6th P.M., Wyoming - ------------------------------------- Sec. 6: Lots 8-23 649.410 Sec. 7: Lots 5-12, 14-19 559.850 Sec. 18: Lots 6, 7, 10, 11 160.770 T. 42 N., R. 69 W., 6th P.M. Wyoming - ------------------------------------ Sec. 19: Lots 8, 13, 14 120.540 Sec. 30: Lots 8-20 529.050 Sec. 31: Lots 5-20 657.650 T. 41 N., R. 70 W., 6th P.M. Wyoming - --------------------------------------- Sec. 1: Lots 5-7, 10-15, 17-20 525.800 Sec. 2: Lots 17-20 157.520 Sec. 3: Lot 17 (N2) 19.425 Lot 20 (E2) 19.150 Sec. 11: Lot 1 40.590 Lot 2 (E2) 20.285 Lot 7 (E2) 20.215 Lot 8 40.450 Lot 9 40.350 Sec. 12: Lots 1-14, 16 608.870 T. 42 N., R. 70 W., 6th P.M. Wyoming - ------------------------------------ Sec. 13: Lots 13-16; 162.990 Sec. 14: Lots 9-16 326.480 Sec. 15: Lots 9-16 332.010 Sec. 22: Lots 1, 2, 7, 8 164.540 Sec. 23: Lots 1-16 653.520 Sec. 24: Lots 1-16 651.400 Sec. 25: Lots 1-16 660.410 Sec. 26: Lots 1, 2, 7, 8 165.470 TOTAL ACREAGE 7,286.745 Serial Number UNITED STATES DEPARTMENT OF THE INTERIOR BUREAU OF LAND MANAGEMENT WYW0321779 Date Lease Issued COAL LEASE READJUSTMENT 12-01-66 - -------------------------------------------------------------------------------- PART 1: LEASE RIGHTS GRANTED This lease, entered into by and between the United States of America, hereinafter called the lessor, through the Bureau of Land Management, and (Name and Address) Powder River Coal Company Caller Box 3034 Gillette, WY 82717-3034 hereinafter called the lessee, is readjusted, effective 12-01-96, for a period of 10 years and for so long thereafter as coal is produced in commercial quantities from the leased lands, subject to readjustment of lease terms at the end of each 10-year period. Sec. 1. This lease readjustment is subject to the terms and provisions of the: XXX Mineral Lands Leasing Act of 1920, Act of February 25, 1920, as amended, 41 Stat. 437, 30 U.S.C. 181-287, hereinafter referred to as the Act; as to 8005.12 A XXX Mineral Leasing Act for Acquired Lands, Act of August 7, 1947, 61 Stat. 913, 30 U.S.C. 351-359; as to 40.05 A and to the regulations and formal orders of the Secretary of the Interior which are now or hereafter in force, when not inconsistent with the express and specific provisions herein. Sec. 2. Lessor, in consideration of any rents and royalties to be paid, and the conditions and covenants to be observed as herein set forth, hereby grants to lessee the exclusive right and privilege to drill for, mine, extract, remove or otherwise process and dispose of the coal deposits in, upon, or under the following described lands in Campbell County, Wyoming: T. 41 N., R. 69 W., 6th P.M., Wyoming Sec. 6: Lots 8-23; Sec. 7: Lots 5-12, 14-19; Sec. 18: Lots 6, 7, 10, 11; T. 42 N., R. 69 W., 6th P.M., Wyoming Sec. 19: Lots 8, 13, 14; Sec. 30: Lots 8-20; Sec. 31: Lots 5-20; WYW0321779 12-01-96 Readjustment Page 2 of 4 T. 41 N., R. 70 W., 6th P.M., Wyoming Sec. 1: Lots 5-7, 10-15, 17-20; Sec. 2: Lots 17-20; Sec. 3: Lots 17-20; Sec. 11: Lots 1-9, 12 Sec. 12: Lots 1-13, 14 (ALQ Min); 16 T. 42 N., R. 70 W., 6th P.M., Wyoming Sec. 13: Lots 13-16 Sec. 14: Lots 9-16; Sec. 15: Lots 9-16; Sec. 22: Lots 1, 2, 7, 8; Sec. 23: Lots 1-16; Sec. 24: Lots 1-16; Sec. 25: Lots 1-16; Sec. 26: Lots 1, 2, 7, 8. Containing 8045.620 acres, more or less, together with the right to construct such works, buildings, plants, structures, equipment and appliances and the right to use such on-lease rights-of-way which may be necessary and convenient to the exercise of the rights and privileges granted, subject to the conditions herein provided. PART II. TERMS AND CONDITIONS Sec. 1. (a) RENTAL RATE - Lessee shall pay lessor rental annually and in advance for each acre or fraction thereof during the continuance of the use at the rate of $3.00 for each lease year. (b) RENTAL CREDITS - Rental shall not be credited against either production or advance royalties for any year. Sec. 2. (a) PRODUCTION ROYALTIES - The royalty shall be 12 1/2 percent of the value of the coal produced by strip or auger methods and 8 percent of the value of the coal produced by underground mining methods. The value of the coal shall be determined as set forth in 43 CFR 3480. Royalties are due to lessor the final day of the month succeeding the calendar month on which the royalty obligation accrues. (b) ADVANCE ROYALTIES - Upon request by lessee, the Authorized Officer may accept, for a total of not more than 10 years, the payment of advance royalties in lieu of continued operation, consistent with the regulations. The advance royalty shall be based on a percent of the value of a minimum number of tons determined in the manner established by the advance royalty regulations in effect at the time the lessee requests approval to pay advance royalties in lieu of continued operation. WYW0321779 12-01-96 Readjustment Page 3 of 4 Sec. 3. BONDS - Lessee shall maintain in the proper office a lease bond in the amount of $1,192,000.00. The Authorized Officer may require an increase in this amount when additional coverage is determined appropriate. Sec. 4. DILIGENCE - This lease is subject to the conditions of diligent development and continued operation, except that these conditions are excused when operations under the lease are interrupted by strikes, the elements, or casualties not attributable to the lessee. The lessor, in the public interest, may suspend the condition of continued operation upon payment of advance royalties in accordance with the regulations in existence at the time of the suspension. Lessee's failure to produce coal in commercial quantities at the end of the 10 years shall terminate the lease. If not submitted already, lessee shall submit an operation and reclamation plan pursuant to Section 7 of the Act no later than 3 years after the effective date of this lease readjustment. The lessor reserves the power to assent to or under the suspension of the terms and conditions of this lease in accordance with, inter alia, Section 39 of the Mineral Leasing Act, 30 U.S.C. 209. Sec. 5. LOGICAL MINING UNIT (LMU) - Either upon approval by the lessor of the lessee's application or at the direction of the lessor, this lease shall become an LMU or part of an LMU, subject to the provisions set forth in the regulations. The stipulation established in an LMU approval in effect at the time of LMU approval will supersede the relevant inconsistent terms of this lease so long as the lease remains committed to the LMU. If the LMU of which this lease is a part is dissolved, the lease shall then be subject to the lease terms which would have been applied if the lease had not been included in an LMU. Sec. 6. DOCUMENTS, EVIDENCE AND INSPECTION - At such times and in such form as lessor may prescribe, lessee shall furnish detailed statements showing the amounts and quality of all products removed and sold from the lease, the proceeds therefrom, and the amount used for production purposes or unavoidably lost. Lessee shall keep open at all reasonable times for the inspection of any duly Authorized Officer of the lessor, the leased premises and all surface and underground improvements, works, machinery, ore stockpits, equipment, and all books, accounts, maps and records relative to operations, surveys, or investigations on or under the leased lands. Lessee shall allow lessor access to and copying of documents reasonably necessary to verify lessee compliance with terms and conditions of the lease. WYW0321779 12-01-96 Readjustment Page 4 of 4 While this lease remains in effect, information obtained under this section shall be closed to inspection by the public in accordance with the Freedom of Information Act (5 U.S.C. 552). Sec. 7. DAMAGES TO PROPERTY AND CONDUCT OF OPERATIONS - Lessee shall comply at its own expense with all reasonable orders of the Secretary, respecting diligent operations, prevention of waste, and protection of other resources. Lessee shall not conduct exploration operations, other than casual use, without an approved exploration plan. All exploration plans prior to the commencement of mining operations within an approved mining permit area shall be submitted to the Authorized Officer. Lessee shall carry on all operations in accordance with approved methods and practices as provided in the operating regulations, having due regard for the prevention of injury to life, health, or property, and prevention of waste, damage, or degradation to any land, air, water, cultural, biological, visual, and other resources, including mineral deposits and formations of mineral deposit not leased hereunder, and to other land uses or users. Lessee shall take measures deemed necessary by lessor to accomplish the intent of this lease term. Such measures may include, but are not limited to modification to proposed siting or design of facilities, timing of operations, to itself the right to lease, sell or otherwise dispose of the surface or other mineral deposits in the lands and the right to continue existing uses and to authorize future uses upon or in the leased lands, including issuing leases for minerals deposits not covered hereunder, and approving easements or rights-of-way. Lessor shall condition such uses to prevent unnecessary or unreasonable interference with rights of lessee as may be consistent with concepts of multiple use and multiple mineral development. Sec. 8. PROTECTION OF DIVERSE INTEREST, AND EQUAL OPPORTUNITY -Lessee shall: pay when due all taxes legally assessed and levied under the laws of the State or the United States; accord all employees complete freedom of purchase; pay all wages at least twice each month in lawful money of the United States; maintain a safe working environment in accordance with standard industry practices; restrict the workday to not more than 8 hours in any one day for underground workers except in emergencies; and take measure necessary to protect the health and safety of the public. No person under the age of 16 years shall be employed in any mine below the surface. To the extent that laws of the State in which the lands are situated are more restrictive than the provisions in the paragraph, then the State laws apply. Lessee will comply with all provisions of Executive Order No. 11246 of September 24, 1965, as amended, and the rules, regulations, and relevant orders of the Secretary of Labor. WYW0321779 12-01-96 Readjustment Page 5 of 4 Neither lessee nor lessee's subcontractors shall maintain segregated facilities. Sec. 9. (a) TRANSFERS XXX This lease may be transferred in whole or in part to any person, association or corporation qualified to hold such lease interest. [ ] This lease may be transferred in whole or in part to another public body, or to a person who will mine the coal on behalf of, and for the use of, the public body or to a person who for the limited purpose of creating a security interest in favor of a lender agrees to be obligated to mine the coal on behalf of the public body. [ ] This lease may only be transferred in whole or in part to another small business qualified under 13 CFR 121. Transfers of record title, working or royalty interest must be approved in accordance with the regulations. (b) RELINQUISHMENT - The lessee may relinquish in writing at any time all rights under this lease or any portion thereof as provided in the regulations. Upon lessor's acceptance of the relinquishment, lessee shall be relieved of all future obligations under the lease or the relinquished portion thereof, whichever is applicable. Sec. 10 DELIVERY OF PREMISES, REMOVAL OF MACHINERY, EQUIPMENT, ETC. - At such times as all portions of this lease are returned to lessor, lessee shall deliver up to lessor the land leased, underground timbering, and such other supports and structures necessary for the preservation of the mine workings on the leased premises or deposits and place all workings in condition for suspension or abandonment. Within 180 days thereof, lessee shall remove from the premises all other structures, machinery, equipment, tools, and materials that it elects to or as required by the Authorized Officer. Any such structures, machinery, equipment, tools and materials remaining on the leased lands beyond 180 days or approved extension thereof, shall become the property of the lessor, but lessee shall either remove any or all such property or shall continue to be liable for the cost of removal and disposal in the amount actually incurred by the lessor. If the surface is owned by third parties, lessor shall waive the requirement for removal, provided the third parties do not object to such waiver. Lessee shall, prior to the termination of bond liability or at any other time when required and in accordance with all applicable laws and regulations reclaim all lands the surface of which has been disturbed, dispose of all debris or solid waste, repair the offsite and WYW0321779 12-01-96 Readjustment Page 6 of 4 onsite damage caused by lessee's activity or activities incidental thereto, and reclaim access roads or trails. Sec. 11. PROCEEDINGS IN CASE OF DEFAULT - If lessee fails to comply with applicable laws, existing regulations, or the terms, conditions and stipulations of this lease, and the noncompliance continues for 30 days after written notice thereof, this lease shall be subject to cancellation by the lessor only by judicial proceedings. This provision shall not be construed to prevent the exercise by lessor of any other legal and equitable remedy, including waiver of the default. Any such remedy or waiver shall not prevent later cancellation for the same default occurring at any other time. Sec. 12. HEIRS AND SUCCESSORS-IN-INTEREST - Each obligation of this lease shall extend to and be binding upon, and every benefit hereof shall inure to, the heirs, executors, administrators, successors, or assigns of the respective parties hereto. Sec. 13. INDEMNIFICATION - Lessee shall indemnify and hold harmless the United States from any and all claims arising out of the lessee's activities and operations under this lease. Sec. 14. SPECIAL STATUTES - This lease is subject to the Federal Water Pollution Control Act (33 U.S.C. 1151-1175), the Clean Air Act (42 U.S.C. 1857, et. seq.), and to all other applicable laws pertaining to exploration activities, mining operations and reclamation, including the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1201 et. seq.). Sec. 15. SPECIAL STIPULATIONS - In addition to observing the general obligations and standards of performance set out in the current regulations, the lessee shall comply with and be bound by the following special stipulations. These stipulations are also imposed upon the lessee's agents and employees. The failure or refusal of any of these persons to comply with these stipulations shall be deemed a failure of the lessee to comply with the terms of this lease. The lessee shall require his agents, contractors and subcontractors involved in activities concerning this lease to include these stipulations in the contracts between and among them. These stipulations may be revised or amended, in writing, by the mutual consent of the lessor and the lessee at any time to adjust to changed conditions or to correct an oversight. (a) CULTURAL RESOURCES (1) Before undertaking any activities that may disturb the surface of the leased lands, the lessee shall conduct a cultural resource intensive field inventory in a manner specified by the Authorized Officer of the BLM or of the surface managing agency, if different, on portions of the mine plan area and adjacent areas, or exploration plan area, that may be adversely affected WYW0321779 12-01-96 Readjustment Page 7 of 4 by lease-related activities and which were not previously inventoried at such a level of intensity. The inventory shall be conducted by a qualified professional cultural resource specialist (i.e., archeologist, historian, historical architect, as appropriate), approved by the Authorized Officer of the surface managing agency (BLM if the surface is privately owned), and a report of the inventory and recommendations for protecting any cultural resources identified shall be submitted to the Assistant Director of the Western Support Center of the Office of Surface Mining, the Authorized Officer of the BLM, if activities are associated with coal exploration outside an approved mining permit area (hereinafter called Authorized Officer), and the Authorized Officer of the surface managing agency, if different. The lessee shall undertake measures, in accordance with instructions from the Assistant Director, or Authorized Officer, to protect cultural resources on the leased lands. The lessee shall not commence the surface disturbing activities until permission to proceed is given by the Assistant Director or Authorized Officer. (2) The lessee shall protect all cultural resource properties within the lease area from lease-related activities until the cultural resource mitigation measures can be implemented as part of an approved mining and reclamation plan or exploration plan. (3) The cost of conducting the inventory, preparing reports, and carrying out mitigation measures shall be borne by the lessee. (4) If cultural resources are discovered during operations under this lease, the lessee shall immediately bring them to the attention of the Assistant Director or Authorized Officer, or the Authorized Officer of the surface managing agency, if the Assistant Director is not available. The lessee shall not disturb such resources except as may be subsequently authorized by the Assistant Director or Authorized Officer. Within two (2) working days of notification, the Assistant Director or Authorized Officer will evaluate or have evaluated any cultural resources discovered and will determine if any action may be required to protect or preserve such discoveries. The cost of data recovery for cultural resources discovered during lease operations shall be borne by the surface managing agency unless otherwise specified by the Authorized Officer of the BLM or of the surface managing agency, if different. (5) All cultural resources shall remain under the jurisdiction of the United States until ownership is determined under applicable law. (b) PALEONTOLOGICAL RESOURCES - If paleontological resources, either large and conspicuous, and/or of significant scientific value are discovered during mining operations, the find will be reported to the Authorized Officer immediately. Mining WYW0321779 12-01-96 Readjustment Page 8 of 4 operations will be suspended within 250 feet of said find. An evaluation of the paleontological discovery will be made by a BLM approved professional paleontologist within five (5) working days, weather permitting, to determine the appropriate action(s) to prevent the potential loss of any significant paleontological value. Operations within 250 feet of such discovery will not be resumed until written authorization to proceed is issued by the Authorized Officer. The lessee will bear the cost of any required paleontological appraisals, surface collection of fossils, or salvage of any large conspicuous fossils of significant scientific interest discovered during the mining operations. (c) MULTIPLE MINERAL DEVELOPMENT - Operations will not be approved which, in the opinion of the Authorized Officer, would unreasonably interfere with the orderly development and/or production from a valid existing mineral lease issued prior to this one for the same lands. Lessor reserves the right in accordance with applicable coal regulations administered by Lessor to require the Operator/Lessee to modify the Resource Recovery and Protection Plan (R2P2) to minimize conflicts with other resources and to maximize recovery of all resources. (d) OIL AND GAS/COAL RESOURCES - The BLM realizes that coal mining operations conducted on Federal coal leases issued within producing oil and gas fields may interfere with the economic recovery of oil and gas; just as Federal oil and gas leases issued in a Federal coal lease area may inhibit coal recovery. BLM retains the authority to alter and/or modify the Resource Recovery and Protection Plans for coal operations and/or oil and gas operations on those lands covered by Federal mineral leases so as to obtain maximum resource recovery. (e) RESOURCE RECOVERY AND PROTECTION - Any bypass of Federal coal previously determined to be economically recoverable under an approved Resource Recovery and Protection Plan (R2P2), must have the written approval of the Authorized Officer of the BLM in the form of an approved modification to the R2P2 prior to the Federal coal being bypassed. (43 CFR 3482.2(e)(2)) Failure to comply with this requirement shall result in the issuance of a Notice of Noncompliance by the Authorized Officer. The Notice of Noncompliance will include the amount of damages to be assessed for the unauthorized bypass of Federal coal as determined by the Authorized Officer. Lessee shall pay royalty for all coal not recovered which was available for mining and was economically recoverable by mining operations under an R2P2 approved by the Authorized Officer. The royalty shall be determined in accordance with Section 2.(a), PRODUCTION ROYALTIES, of this lease, and the value of the coal shall be determined as set forth in the applicable coal regulations administered by the Lessor. Federal coal not recovered, but which was available for recovery, WYW0321779 12-01-96 Readjustment Page 9 of 4 will be volumetrically determined by the Authorized Officer using standard industry practices. (f) RECORDS OF PRODUCTION AND SALES - Lessee will accurately determine the weight of all leased coal deposits mined (produced) and sold, will keep accurate records of such, and make those available to the Authorized Officer for inspection. (g) PUBLIC LAND SURVEY PROTECTION - The lessee will protect all survey monuments, witness corners, reference monuments, and bearing trees against destruction, obliteration, or damage during operations on the lease areas. If any monuments, corners or accessories are destroyed, obliterated, or damaged by this operation, the lessee will hire an appropriate county surveyor or registered land surveyor to reestablish or restore the monuments, corners, or accessories at the same location, using surveying procedures in accordance with the "Manual of Surveying Instructions for the Survey of the Public Lands of the -------------------------------------------------------------------------- United States." The survey will be recorded in the appropriate county records, - ------------- with a copy sent to the Authorized Officer. EX-10.4 117 FEDERAL COAL LEASE WYW119554: NORTH ANTELOPE/ROCHELLE EXHIBIT 10.4 United States Department of the Interior BUREAU OF LAND MANAGEMENT In Reply Refer To: Wyoming State Office P.O. Box 1828 3452 Cheyenne, Wyoming 82003-1828 WYW119554 (921MLove) PHONE NO: 307-775-6258 FAX NO: 307-775-6203 D E C I S I O N Powder River Coal Company : Attn: Victor E. Garber : Federal Coal Lease Caller Box 3034 : North Antelope/Rochelle Mine Gillette, Wyoming 82717-3034 : Partial Relinquishment Accepted ------------------------------- On February 17, 1998, we received a partial relinquishment of Federal coal lease WYW119554 as to the following lands: T. 41 N., R. 70 W., 6th P.M., Wyoming Sec. 3: Lots 5 (SW), 6 (S2), 7 (S2), 10, 11, 12 (W2), 13 (W2), 14, 15. Containing 245.418 acres, more or less. The Casper District Office has determined that the public interest shall not be impaired by acceptance of the relinquishment, as maximum economic recovery of the recoverable resource shall be achieved and adequate reclamation has occurred in accordance with the policy outlined in Instruction Memorandum No. WY-98-35. That office has recommended that the partial relinquishment be accepted. Therefore, the partial relinquishment of Federal coal lease WYW119554 is hereby accepted effective February 17, 1998, the date the relinquishment was filed. Acceptance of this partial relinquishment does not relieve Powder River Coal Company, or its successors, from complying with the reclamation requirements of 30 CFR Chapter VII, Subchapter K, or an approved State program. (43 CFR 3480.0- 6(d)(8)) The following-described lands are remaining in Federal coal lease WYW119554: T. 41 N., R. 70 W., 6th P.M., Wyoming Sec. 1: Lots 8, 9, 16; Sec. 2: Lots 5-16; 2 Sec. 3: Lots 5 (N2 & SE), 6 (N2), 7 (N2), 8, 9, 12 (E2), 13 (E2), 16; Sec. 4: Lots 5-15, SWNE; Sec. 5: Lots 5-18; Sec. 6: Lots 8, 9, 14-17, 22, 23; Sec. 7: Lots 5, 12, 13, 20; Sec. 8: Lots 4, 10, 11, SWNW; Sec. 17: Lots 3-6, 11-14. Containing 2,818.622 acres, more or less. Attached to this Decision is an acreage calculation worksheet, which lists the acreage amounts for the lands remaining in the lease. The new rental amount due each year for this lease beginning October 1, 1998, will be $8,457.00. If you have any questions concerning this matter, please contact Mavis Love in the Minerals and Lands Authorization Group at 307-775-6258. Alan R. Pierson State Director Attachment cc: Department of Environmental Quality, Land Quality Division, 122 West 25th Street, Cheyenne, WY 82002 Department of Environmental Quality, Land Quality Division, Attn: Bob Giurgevich, 1043 Coffeen Avenue, Suite D, Sheridan, WY 82801 Office of Surface Mining, Attn: Mr. Peter Rutledge, Western Regional Coordinating Center, 1999 Broadway, Suite 3320, Denver, CO 80202-5733 MMS, REP, Reporting & Valuation Division, Solid Minerals Reporting Staff, P.O. Box 5760, MS3153, Denver CO 80217 WO (320), Room 501, LS DM, Casper ACREAGE CALCULATIONS FOR LANDS REMAINING IN FEDERAL COAL LEASE WYW119554 AFTER ACCEPTANCE OF PARTIAL RELINQUISHMENT EFFECTIVE FEBRUARY 17, 1998 T. 41 N., R. 70 W., 6th P.M., Wyoming - ------------------------------------- Sec. 1: Lots 8, 9, 16 120.130 Sec. 2: Lots 5-16 473.560 Sec. 3: Lots 5 (N2 & SE) 29.497 Lot 6 (N2) 19.850 Lot 7 (N2) 20.040 Lots 8, 9 80.120 Lot 12 (E2) 19.560 Lot 13 (E2) 19.355 Lot 16 39.260 Sec. 4: Lots 5-15, SWNE 482.000 Sec. 5: Lots 5-18 565.520 Sec. 6: Lots 8, 9, 14-17, 22, 23 309.400 Sec. 7: Lots 5, 12, 13, 20 160.010 Sec. 8: Lots 4, 10, 11, SWNW 160.040 Sec. 17: Lots 3-6, 11-14 320.280 TOTAL ACREAGE 2,818.622 UNITED STATES Serial Number DEPARTMENT OF THE INTERIOR BUREAU OF LAND MANAGEMENT WYW119554 COAL LEASE - ------------------------------------------------------------------- PART 1: LEASE RIGHTS GRANTED This lease, entered into by and between the United States of America, hereinafter called lessor, through the Bureau of Land Management, and (Name and Address) Powder River Coal Company Caller Box 3034 Gillette, Wyoming 82717-3034 hereinafter called lessee, is effective (date) 10-1-92, for a period of 20 years and for so long thereafter as coal is produced in commercial quantities from the leased lands, subject to readjustment of lease terms at the end of the 20th lease year and each 10-year period thereafter. Sec. 1. This lease is issued pursuant and subject to the terms and provisions of the: [X] Mineral Lands Leasing Act of 1920, Act of February 25, 1920, as amended, 41 Stat. 437, 30 U.S.C. 181-287, hereinafter referred to as the Act; [ ] Mineral Leasing Act for Acquired Lands, Act of August 7, 1947, 61 Stat. 913, 30 U.S.C. 351-359; and to the regulations and formal orders of the Secretary of the Interior which are now or hereafter in force, when not inconsistent with the express and specific provisions herein. Sec. 2. Lessor, in consideration of any bonuses, rents, and royalties to be paid, and the conditions and covenants to be observed as herein set forth, hereby grants and leases to lessee the exclusive right and privilege to drill for, mine, extract, remove or otherwise process and dispose of the coal deposits in, upon, or under the following described lands: T. 41 N., R. 70 W., 6th P.M., Wyoming Sec. 1: Lots 8, 9, 16; Sec. 2: Lots 5 thru 16; Sec. 3: Lots 5 thru 16; Sec. 4: Lots 5 thru 15, SWNE; Sec. 5: Lots 5 thru 18; Sec. 6: Lots 8, 9, 14 thru 17, 22, 23; Sec. 7: Lots 5, 12, 13, 20; Sec. 8: Lots 4, 10, 11, SWNW; Sec. 17: Lots 3 thru 6, 11 thru 14. WYW119554 Page 2 Containing 3064.04 acres, more or less, together with the right to construct such works, buildings, plants, structures, equipment and appliances and the right to use such on-lease rights-of-way which may be necessary and convenient in the exercise of the rights and privileges granted, subject to the conditions herein provided. PART II. TERMS AND CONDITIONS Sec. 1. (a) RENTAL RATE - Lessee shall pay lessor rental annually and in advance for each acre or fraction thereof during the continuance of the use at the rate of $3.00 for each lease year. (b) RENTAL CREDITS - Rental shall not be credited against either production or advance royalties for any year. Sec. 2. (a) PRODUCTION ROYALTIES - The royalty shall be 12.5 percent of the value of the coal as set forth in the regulations. Royalties are due to lessor the final day of the month succeeding the calendar month in which the royalty obligation accrues. (b) ADVANCE ROYALTIES - Upon request by lessee, the Authorized Officer may accept, for a total of not more than 10 years, the payment of advance royalties in lieu of continued operation, consistent with the regulations. The advance royalty shall be based on a percent of the value of a minimum number of tons determined in the manner established by the advance royalty regulations in effect at the time the lessee requests approval to pay advance royalties in lieu of continued operation. Sec. 3. BONDS - Lessee shall maintain in the proper office a lease bond in the amount of $ . The Authorized Officer may require an increase in this amount when additional coverage is determined appropriate. Sec. 4. DILIGENCE - This lease is subject to the conditions of diligent development and continued operation, except that these conditions are excused when operations under the lease are interrupted by strikes, the elements, or casualties not attributable to the lessee. The lessor, in the public interest, may suspend the condition of continued operation upon payment of advance royalties in accordance with the regulations in existence at the time of the suspension. Lessee's failure to produce coal in commercial quantities at the end of 10 years shall terminate the lease. Lessee shall submit an operation and reclamation plan pursuant to Section 7 of the Act not later than 3 years after lease issuance. The lessor reserves the power to assent to or order the suspension of the terms and conditions of this lease in WYW119554 Page 3 accordance with, inter alia, Section 39 of the Mineral Leasing Act, 30 U.S.C. 209. Sec. 5. LOGICAL MINING UNIT (LMU) - Either upon approval by the lessor of the lessee's application or at the direction of the lessor, this lease shall become an LMU or part of an LMU, subject to the provisions set forth in the regulations. The stipulations established in an LMU approval in effect at the time of LMU approval will supersede the relevant inconsistent terms of this lease so long as the lease remains committed to the LMU. If the LMU of which this lease is a part is dissolved, the lease shall then be subject to the lease terms which would have been applied if the lease had not been included in an LMU. Sec. 6. DOCUMENTS, EVIDENCE AND INSPECTION - At such times and in such form as lessor may prescribe, lessee shall furnish detailed statements showing the amounts and quality of all products removed and sold from lease, the proceeds therefrom, and the amount used for production purposes or unavoidably lost. Lessee shall keep open at all reasonable times for the inspection of any duly Authorized Officer of lessor, the leased premises and all surface and underground improvements, works, machinery, ore stockpits, equipment, and all books, accounts, maps, and records relative to operations, surveys, or investigations on or under the leased lands. Lessee shall allow lessor access to and copying of documents reasonably necessary to verify lessee compliance with terms and conditions of the lease. While this lease remains in effect, information obtained under this section shall be closed to inspection by the public in accordance with the Freedom of Information Act (5 U.S.C. 552). Sec. 7. DAMAGES TO PROPERTY AND CONDUCT OF OPERATIONS - Lessee shall comply at its own expense with all reasonable orders of the Secretary, respecting diligent operations, prevention of waste, and protection of other resources. Lessee shall not conduct exploration operations, other than casual use, without an approved exploration plan. All exploration plans prior to the commencement of mining operations within an approved mining permit area shall be submitted to the Authorized Officer. Lessee shall carry on all operations in accordance with approved methods and practices as provided in the operating regulations, having due regard for the prevention of injury to life, health, or property, and prevention of waste, damage or degradation to any land, air, water, cultural, biological, visual, and other resources, including mineral deposits and formations of mineral WYW119554 Page 4 deposits not leased hereunder, and to other land uses or users. Lessee shall take measures deemed necessary by lessor to accomplish the intent of this lease term. Such measures may include, but are not limited to, modification to proposed siting or design of facilities, timing of operations, and specification of interim and final reclamation procedures. Lessor reserves to itself the right to lease, sell or otherwise dispose of the surface or other mineral deposits in the lands and the right to continue existing uses and to authorize future uses upon or in the leased lands, including issuing leases for minerals deposits not covered hereunder and approving easements or rights-of-way. Lessor shall condition such uses to prevent unnecessary or unreasonable interference with rights of lessee as may be consistent with concepts of multiple use and multiple mineral development. Sec. 8. PROTECTION OF DIVERSE INTEREST, AND EQUAL OPPORTUNITY -Lessee shall: pay when due all taxes legally assessed and levied under the laws of the State or the United States; accord all employees complete freedom of purchase; pay all wages at least twice each month in lawful money of the United States; maintain a safe working environment in accordance with standard industry practices; restrict the workday to not more than 8 hours in any one day for underground workers, except in emergencies; and take measures necessary to protect the health and safety of the public. No person under the age of 16 years shall be employed in any mine below the surface. To the extent that laws of the State in which the lands are situated are more restrictive than the provisions in this paragraph, then the State laws apply. Lessee will comply with all provisions of Executive Order No. 11246 of September 24, 1965, as amended, and the rules, regulations, and relevant orders of the Secretary of Labor. Neither lessee nor lessee's subcontractors shall maintain segregated facilities. Sec. 9. (a) TRANSFERS [X] This lease may be transferred in whole or in part to any person, association or corporation qualified to hold such lease interest. [ ] This lease may be transferred in whole or in part to another public body or to a person who will mine the coal on behalf of, and for the use of, the public body or to a person who for the limited purpose of creating a security interest in favor of a lender agrees to be obligated to mine the coal on behalf of the public body. [ ] This lease may only be transferred in whole or in part to another small business qualified under 13 CFR 121. WYW119554 Page 5 Transfers of record title, working or royalty interest must be approved in accordance with the regulations. (b) RELINQUISHMENT - The lessee may relinquish in writing at any time all rights under this lease or any portion thereof as provided in the regulations. Upon lessor's acceptance of the relinquishment, lessee shall be relieved of all future obligations under the lease or the relinquished portion thereof, whichever is applicable. Sec. 10. DELIVERY OF PREMISES, REMOVAL OF MACHINERY, EQUIPMENT, ETC. - At such times as all portions of this lease are returned to lessor, lessee shall deliver up to lessor the land leased, underground timbering, and such other supports and structures necessary for the preservation of the mine workings on the leased premises or deposits and place all workings in condition for suspension or abandonment. Within 180 days thereof, lessee shall remove from the premises all other structures, machinery, equipment, tools, and materials that it elects to or as required by the Authorized Officer. Any such structures, machinery, equipment, tools and materials remaining on the lease lands beyond 180 days, or approved extension thereof, shall become the property of the lessor, but lessee shall either remove any or all such property or shall continue to be liable for the cost of removal and disposal in the amount actually incurred by the lessor. If the surface is owned by third parties, lessor shall waive the requirement for removal, provided the third parties do not object to such waiver. Lessee shall, prior to the termination of bond liability or at any other time when required and in accordance with all applicable laws and regulations reclaim all lands the surface of which has been disturbed, dispose of all debris or solid waste, repair the offsite and onsite damage caused by lessee's activity or activities incidental thereto, and reclaim access roads or trails. Sec. 11. PROCEEDINGS IN CASE OF DEFAULT - If lessee fails to comply with applicable laws, existing regulations, or the terms, conditions and stipulations of this lease, and the noncompliance continues for 30 days after written notice thereof, this lease shall be subject to cancellation by the lessor only by judicial proceedings. This provision shall not be construed to prevent the exercise by lessor of any other legal and equitable remedy, including waiver of the default. Any such remedy or waiver shall not prevent later cancellation for the same default occurring at any other time. Sec. 12. HEIRS AND SUCCESSORS-IN-INTEREST - Each obligation of this lease shall extend to and be binding upon, and every benefit hereof shall inure to, the heirs, executors, administrators, successors, or assigns of the respective parties hereto. WYW119554 Page 6 Sec. 13. INDEMNIFICATION - Lessee shall indemnify and hold harmless the United States from any and all claims arising out of the lessee's activities and operations under this lease. Sec. 14. SPECIAL STATUTES - This lease is subject to the Clean Water Act (33 U.S.C. 1252 et. seq.), the Clean Air Act (42 U.S.C. 4274 et. seq.), and to all other applicable laws pertaining to exploration activities, mining operations and reclamation, including the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1201 et. seq.). Sec. 15. SPECIAL STIPULATIONS - In addition to observing the general obligations and standards of performance set out in the current regulations, the lessee shall comply with and be bound by the following special stipulations. These stipulations are also imposed upon the lessee's agents and employees. The failure or refusal of any of these persons to comply with these stipulations shall be deemed a failure of the lessee to comply with the terms of this lease. The lessee shall require his agents, contractors and subcontractors involved in activities concerning this lease to include these stipulations in the contracts between and among them. These stipulations may be revised or amended, in writing, by the mutual consent of the lessor and the lessee at any time to adjust to changed conditions or to correct an oversight. (a) CULTURAL RESOURCES (1) Before undertaking any activities that may disturb the surface of the leased lands, the lessee shall conduct a cultural resource intensive field inventory in a manner specified by the Authorized Officer of the BLM or of the surface managing agency, if different, on portions of the mine plan area and adjacent areas, or exploration plan area, that may be adversely affected by lease-related activities and which were not previously inventoried at such a level of intensity. The inventory shall be conducted by a qualified professional cultural resource specialist (i.e., archeologist, historian, historical architect, as appropriate), approved by the Authorized Officer of the surface managing agency (BLM, if the surface is privately owned), and a report of the inventory and recommendations for protecting any cultural resources identified shall be submitted to the Assistant Director of the Western Support Center of the Office of Surface Mining, the Authorized Officer of the BLM, if activities are associated with coal exploration outside an approved mining permit area (hereinafter called Authorized Officer), and the Authorized Officer of the surface managing agency, if different. The lessee shall undertake measures, in accordance with instructions from the Assistant Director, or Authorized Officer, to protect cultural resources on the leased lands. The lessee shall not commence the surface disturbing activities until permission to proceed is given by the Assistant Director or Authorized Officer. WYW119554 Page 7 (2) The lessee shall protect all cultural resource properties within the lease area from lease-related activities until the cultural resource mitigation measures can be implemented as part of an approved mining and reclamation plan or exploration plan. (3) The cost of conducting the inventory, preparing reports, and carrying out mitigation measures shall be borne by the lessee. (4) If cultural resources are discovered during operations under this lease, the lessee shall immediately bring them to the attention of the Assistant Director or Authorized Officer, or the Authorized Officer of the surface managing agency, if the Assistant Director is not available. The lessee shall not disturb such resources except as may be subsequently authorized by the Assistant Director or Authorized Officer. Within two (2) working days of notification, the Assistant Director or Authorized Officer will evaluate or have evaluated any cultural resources discovered and will determine if any action may be required to protect or preserve such discoveries. The cost of data recover for cultural resources discovered during lease operations shall be borne by the surface managing agency unless otherwise specified by the Authorized Officer of the BLM or of the surface managing agency, if different. (5) All cultural resources shall remain under the jurisdiction of the United States until ownership is determined under applicable law. (b) PALEONTOLOGICAL RESOURCES - If paleontological resources, either large and conspicuous, and/or of significant scientific value are discovered during construction, the find will be reported to the Authorized Officer immediately. Construction will be suspended within 250 feet of said find. An evaluation of the paleontological discovery will be made by a BLM approved professional paleontologist within five (5) working days, weather permitting, to determine the appropriate action(s) to prevent the potential loss of any significant paleontological value. Operations within 250 feet of such discovery will not be resumed until written authorization to proceed is issued by the Authorized Officer. The lessee will bear the cost of any required paleontological appraisals, surface collection of fossils, or salvage of any large conspicuous fossils of significant scientific interest discovered during the operations. (c) OIL AND GAS/COAL RESOURCES - The BLM realizes that coal mining operations conducted on Federal coal leases issued within producing oil and gas fields may interfere with the economic recovery of oil and gas; just as Federal oil and gas leases issued in a Federal coal lease area may inhibit coal recovery. BLM retains the authority to alter and/or modify the resource recovery and protection plans for coal operations and/or oil and gas operations on those lands covered by Federal mineral leases so as to obtain maximum resource recovery. WYW119554 Page 8 (d) RESOURCE RECOVERY AND PROTECTION - Proposed modifications to the approved resource recovery and protection plan for any requirements under the MLA may be submitted in writing for approval/disapproval by the Authorized Officer. Failure to comply with this requirement shall result in the issuance of a Notice of Noncompliance by the Authorized Officer. The Notice of Noncompliance may include the amount of royalty to be assessed for Federal coal leased to the operator that was not mined, in violation of the approved resource recovery and protection plan. (e) PUBLIC LAND SURVEY PROTECTION - The lessee will protect all survey monuments, witness corners, reference monuments, and bearing trees against destruction, obliteration, or damage during operations on the lease areas. If any monuments, corners or accessories are destroyed, obliterated, or damaged by this operation, the lessee will hire an appropriate county surveyor or registered land surveyor to reestablish or restore the monuments, corners, or accessories at the same location, using surveying procedures in accordance with the "Manual of Surveying Instructions for the Survey of the Public Lands of the -------------------------------------------------------------------------- United States." The survey will be recorded in the appropriate county records, - ------------- with a copy sent to the Authorized Officer. WYW119554 Page 9 FOREST SERVICE STIPULATION 1 STIPULATION FOR LANDS OF THE NATIONAL FOREST SYSTEM UNDER JURISDICTION OF DEPARTMENT OF AGRICULTURE The licensee/permittee/lessee must comply with all the rules and regulations of the Secretary of Agriculture set forth at Title 36, Chapter II, of the Code of Federal Regulations governing the use and management of the National Forest System (NFS) when not inconsistent with the rights granted by the Secretary of the Interior in the license/prospecting permit/lease. The Secretary of Agriculture's rules and regulations must be complied with for (1) all use and occupancy of the NFS prior to approval of a permit/operation plan by the Secretary of the Interior, (2) uses of all existing improvements, such as Forest development roads, within and outside the area licensed, permitted or leased by the Secretary of the Interior; and (3) use and occupancy of the NFS not authorized by a permit/operating plan approved by the Secretary of the Interior. All matters related to this stipulation are to be addressed to District Ranger at Douglas Ranger District (Thunder Basin NG) Medicine Bow National Forest 809 South 9th Street Douglas, Wyoming 82633 Telephone No.: (307) 358-4690 who is the authorized representative of the Secretary of Agriculture. /s/ Larry H. Fox -------------------------------------- Larry H. Fox EX-10.5 118 FEDERAL COAL LEASE WYW5036: RAWHIDE MINE EXHIBIT 10.5 United States Department of the Interior BUREAU OF LAND MANAGEMENT In Reply Refer To: Wyoming State Office P.O. Box 1828 3452 Cheyenne, Wyoming 82003-1828 WYW5036 (921MLove) PHONE NO: 307-775-6258 FAX NO: 307-775-6203 D E C I S I O N Caballo Coal Company : Attn: Victor E. Garber : Federal Coal Lease Caller Box 3037 : Rawhide Mine Gillette, Wyoming 82717-3037 : Partial Relinquishments Accepted -------------------------------- On February 17, 1998, we received a partial relinquishment of Federal coal lease WYW5036 as to the following lands: T. 51 N., R. 72 W., 6th P.M., Wyoming Sec. 3: Lots 9 (N2), 10, 15, 18 (N2); Sec. 4: Lots 5, 6, 7 (E2 & E2SW), 9 (S2N2), 10 (N2), 11 (N2), 12 (N2); Sec. 10: Lots 13, 14 (SW); Sec. 11: Lots 15 (E2), 16; Sec. 14: Lots 1, 2 (E2 & SW), 3 (S2), 4 (SE), 5 (E2), 6-11, 12 (NE), 14-16; Sec. 15: Lots 1 (S2), 2 (S2), 3 (W2 & SE), 4-8, 9 (W2 & NE), 10-12. Containing 1,216.329 acres, more or less. Thereafter, on March 17, 1998, we received an additional partial relinquishment of the lease as to the following lands: T. 51 N., R. 72 W., 6th P.M., Wyoming Sec. 14: Lots 4 (SW), 5 (W2), 12 (W2 & SE), 13; Sec. 15: Lot 9 (SE). Containing 101.258 acres, more or less. The Casper District Office has determined that the public interest shall not be impaired by acceptance of the relinquishments, as maximum economic recovery of the recoverable resource shall be achieved and adequate reclamation has occurred in accordance with the policy outlined in Instruction Memorandum No. WY-98-35. That office has recommended that the partial relinquishments be accepted. 2 Therefore, the partial relinquishments of Federal coal lease WYW5036 are hereby accepted effective February 17, 1998, and March 17, 1998, respectively, the dates the relinquishments were filed. Acceptance of these partial relinquishments does not relieve Caballo Coal Company, or its successors, from complying with the reclamation requirements of 30 CFR Chapter VII, Subchapter K, or an approved State program. (43 CFR 3480.0- 6(d)(8)) The following-described lands are remaining in Federal coal lease WYW5036: T. 51 N., R. 72 W., 6th P.M., Wyoming Sec. 3: Lots 9 (S2), 16, 17, 18 (S2); Sec. 4: Lots 9 (S2), 10 (S2), 11 (S2), 12 (S2), 13-20; Sec. 5: Lots 8-19; Sec. 6 Lots 8-22; Sec. 9: Lots 1-15, SWNW; Sec. 10: Lots 1-12, 14 (N2 & SE), 15, 16; Sec. 11: Lots 1-14; 15 (W2); Sec. 14: Lots 2 (NW), 3 (N2), 4 (N2); Sec. 15: Lots 1 (N2), 2 (N2), 3 (NE); T. 52 N., R. 72 W., 6th P.M., Wyoming Sec. 31: Lots 19, 20. Containing 3,683.748 acres, more or less. Attached to this Decision is an acreage calculation worksheet, which lists the acreage amounts for the lands remaining in the lease. The new rental amount due each year for this lease beginning December 26, 1998, will be $11,052.00. If you have any questions concerning this matter, please contact Mavis Love in the Minerals and Lands Authorization Group at 307-775-6258. Alan R. Pierson State Director Attachment cc: Department of Environmental Quality, Land Quality Division, 122 West 25th Street, Cheyenne, WY 82002 Department of Environmental Quality, Land Quality Division, Attn: Bob Giurgevich, 1043 Coffeen Avenue, Suite D, Sheridan, WY 82801 3 Office of Surface Mining, Attn: Mr. Peter Rutledge, Western Regional Coordinating Center, 1999 Broadway, Suite 3320, Denver, CO 80202-5733 MMS, RMP, Reporting & Valuation Division, Solid Minerals Reporting Staff, P.O. Box 5760, MS3153, Denver CO 80217 WO (320), Room 501, LS DM, Casper ACREAGE CALCULATIONS FOR LANDS REMAINING IN FEDERAL COAL LEASE WYW5036 AFTER ACCEPTANCE OF PARTIAL RELINQUISHMENT EFFECTIVE FEBRUARY 17, 1998 AND MARCH 17, 1998 T. 51 N., R. 72 W., 6th P.M. Wyoming - ------------------------------------ Sec. 3: Lot 9 (S2) 19.665 Lots 16 & 17 72.850 Lot 18 (S2) 17.975 Sec. 4: Lot 9 (S2) 20.285 Lot 10 (S2) 20.285 Lot 11 (S2) 20.130 Lot 12 (S2) 20.130 Lots 13-20 319.100 Sec. 5: Lots 8-19 501.100 Sec. 6: Lots 8-22 777.310 Sec. 9: Lots 1-15, SWNW 635.920 Sec. 10: Lots 1-12 433.450 Lot 14 (N2 & SE) 27.488 Lots 15 & 16 73.450 Sec. 11: Lots 1-14 507.370 Lot 15(W2) 18.350 Sec. 14: Lot 2 (NW) 9.205 Lot 3 (N2) 18.415 Lot 4 (N2) 18.425 Sec. 15: Lot 1 (N2) 18.450 Lot 2 (N2) 18.435 Lot 3 (NE) 9.210 T. 52 N., R. 72 W., 6th P.M. Wyoming - ------------------------------------ Sec. 31: Lots 19 & 20 106.750 TOTAL ACREAGE 3,683.748 UNITED STATES Serial Number DEPARTMENT OF THE INTERIOR BUREAU OF LAND MANAGEMENT WYW5036 COAL LEASE READJUSTMENT Date Lease Issued December 1, 1967 ======================================================== PART 1: LEASE RIGHTS GRANTED This lease, entered into by and between the United States of America, hereinafter called the lessor, through the Bureau of Land Management, and (Name and Address) Caballo Coal Company Caller Box 3037 Gillette, Wyoming 82717 hereinafter called the lessee, is readjusted effective December 1, 1997, for a period of 10 years and for so long thereafter as coal is produced in commercial quantities from the leased lands, subject to readjustment of lease terms at the end of each 10-year period. Sec. 1. This lease readjustment is subject to the terms and provisions of the: XX Mineral Lands Leasing Act of 1920, Act of February 25, 1920, as amended, 41 Stat. 437, 30 U.S.C. 181-287, hereinafter referred to as the Act; [ ] Mineral Leasing Act for Acquired Lands, Act of August 7, 1947, 61 Stat. 913, 30 U.S.C. 351-359; and to the regulations and formal orders of the Secretary of the Interior which are now or hereafter in force, when not inconsistent with the express and specific provisions herein. Sec. 2. Lessor, in consideration of any rents and royalties to be paid, and the conditions and covenants to be observed as herein set forth, hereby grants to lessee the exclusive right and privilege to drill for, mine, extract, remove or otherwise process and dispose of the coal deposits in, upon, or under the following described lands in Campbell County, Wyoming: T. 52 N., R. 72 W., 6th P.M., Wyoming T. 51 N., R. 72 W., 6th P.M., Wyoming ------------------------------------- ------------------------------------- Sec. 3: Lots 9, 10, 15-18; Sec. 31: Lots 19, 20. Sec. 4: Lots 5, 6, 7 (E 1/2, E 1/2SW) 9 (S 1/2N 1/2, S 1/2), 10-20; Sec. 5: Lots 8-19; Sec. 6: Lots 8-22; Sec. 9: Lots 1-15, SWNW; Sec. 10: Lots 1-16; Sec. 11: Lots 1-16; Sec. 14: Lots 1-16; Sec. 15: Lots 1-12; WYW5036 Page 2 Containing 5,001.340 acres, more or less, together with the right to construct such works, buildings, plants, structures, equipment and appliances and the right to use such on-lease rights-of-way which may be necessary and convenient in the exercise of the rights and privileges granted, subject to the conditions herein provided. PART II. TERMS AND CONDITIONS Sec. 1. (a) RENTAL RATE - Lessee shall pay lessor rental annually and in advance for each acre or fraction thereof during the continuance of the lease at the rate of $3.00 for each lease year. (b) RENTAL CREDITS - Rental shall not be credited against either production or advance royalties for any year. Sec. 2. (a) PRODUCTION ROYALTIES - The royalty shall be 12 1/2 per cent of the value of the coal produced by strip or auger methods and 8 per cent of the value of the coal produced by underground mining methods. The value of the coal shall be determined as set forth in 43 CFR 3480. Royalties are due to lessor the final day of the month succeeding the calendar month in which the royalty obligation accrues. (b) ADVANCE ROYALTIES - Upon request by lessee, the Authorized Officer may accept, for a total of not more than 10 years, the payment of advance royalties in lieu of continued operation, consistent with the regulations. The advance royalty shall be based on a percent of the value of a minimum number of tons determined in the manner established by the advance royalty regulations in effect at the time the lessee requests approval to pay advance royalties in lieu of continued operation. Sec. 3. BONDS - Lessee shall maintain in the proper office a lease bond in the amount of $2,192,000. The Authorized Officer may required an increase in this amount when additional coverage is determined appropriate. Sec. 4. DILIGENCE - This lease is subject to the conditions of diligent development and continued operation, except that these conditions are excused when operations under the lease are interrupted by strikes, the elements, or casualties not attributable to the lessee. The lessor, in the public interest, may suspend the condition of continued operation upon payment of advance royalties in accordance with the regulations in existence at the time of the suspension. Lessee's failure to produce coal in commercial quantities at the end of 10 years shall terminate the lease. If not submitted already, lessee shall submit an operation and reclamation plan pursuant to Section 7 of the Act WYW5036 Page 3 no later than 3 years after the effective date of this lease readjustment. The lessor reserves the power to assent to or under the suspension of the terms and conditions of this lease in accordance with, inter alia, Section 39 of the Mineral Leasing Act, 30 U.S.C. 209. Sec. 5. LOGICAL MINING UNIT (LMU) - Either upon approval by the lessor of the lessee's application or at the direction of the lessor, this lease shall become an LMU or part of an LMU, subject to the provisions set forth in the regulations. The stipulation established in an LMU approval in effect at the time of LMU approval will supersede the relevant inconsistent terms of this lease so long as the lease remains committed to the LMU. If the LMU of which this lease is a part is dissolved, the lease shall then be subject to the lease terms which would have been applied if the lease had not been included in an LMU. Sec. 6. DOCUMENTS, EVIDENCE AND INSPECTION - At such times and in such form as lessor may prescribe, lessee shall furnish detailed statements showing the amounts and quality of all products removed and sold from the lease, the proceeds therefrom, and the amount used for production purposes or unavoidably lost. Lessee shall keep open at all reasonable times for the inspection of any duly Authorized Officer of the lessor, the leased premises and all surface and underground improvements, works, machinery, ore stockpits, equipment, and all books, accounts, maps and records relative to operations, surveys, or investigations on or under the leased lands. Lessee shall allow lessor access to and copying of documents reasonably necessary to verify lessee compliance with terms and conditions of the lease. While this lease remains in effect, information obtained under this section shall be closed to inspection by the public in accordance with the Freedom of Information Act (5 U.S.C. 552). Sec. 7. DAMAGES TO PROPERTY AND CONDUCT OF OPERATIONS - Lessee shall comply at its own expense with all reasonable orders of the Secretary, respecting diligent operations, prevention of waste, and protection of other resources. Lessee shall not conduct exploration operations, other than casual use, without an approved exploration plan. All exploration plans prior to the commencement of mining operations within an approved mining permit area shall be submitted to the Authorized Officer. WYW5036 Page 4 Lessee shall carry on all operations in accordance with approved methods and practices as provided in the operating regulations, having due regard for the prevention of injury to life, health, or property, and prevention of waste, damage, or degradation to any land, air, water, cultural, biological, visual, and other resources, including mineral deposits and formations of mineral deposit not leased hereunder, and to other land uses or users. Lessee shall take measures deemed necessary by lessor to accomplish the intent of this lease term. Such measures may include, but are not limited to, modification to proposed siting or design of facilities, timing of operations, to itself the right to lease, sell or otherwise dispose of the surface or other mineral deposits in the lands and the right to continue existing uses and to authorized future uses upon or in the leased lands, including issuing leases for minerals deposits not covered hereunder, and approving easements or rights-of-way. Lessor shall condition such uses to prevent unnecessary or unreasonable interference with rights of lessee as may be consistent with concepts of multiple use and multiple mineral development. Sec. 8. PROTECTION OF DIVERSE INTEREST, AND EQUAL OPPORTUNITY -Lessee shall: pay when due all taxes legally assessed and levied under the laws of the State or the United States; accord all employees complete freedom of purchase; pay all wages at least twice each month in lawful money of the United States; maintain a safe working environment in accordance with standard industry practices; restrict the workday to not more than 8 hours in any one day for underground workers except in emergencies; and take measures necessary to protect the health and safety of the public. No person under the age of 16 years shall be employed in any mine below the surface. To the extent that laws of the State in which the lands are situated are more restrictive than the provisions in this paragraph, then the State laws apply. Lessee will comply with all provisions of Executive Order No. 11246 of September 24, 1965, as amended, and the rules, regulations, and relevant orders of the Secretary of Labor. Neither lessee nor lessee's subcontractors shall maintain segregated facilities. Sec. 9. (a) TRANSFERS XX This lease may be transferred in whole or in part to any person, association or corporation qualified to hold such lease interest. [ ] This lease may be transferred in whole or in part to another public body, or to a person who will mine the coal on behalf of, and for the use of, the public body or to a person who for the limited purpose of creating a security interest in favor of a lender agrees to be obligated to mine the coal on behalf of the public body. WYW5036 Page 5 [ ] This lease may only be transferred in whole or in part to another small business qualified under 13 CFR 121. Transfers of record title, working or royalty interest must be approved in accordance with the regulations. (b) RELINQUISHMENT - The lessee may relinquish in writing at any time all rights under this lease or any portion thereof as provided in the regulations. Upon lessor's acceptance of the relinquishment, lessee shall be relieved of all future obligations under the lease or the relinquished portion thereof, whichever is applicable. Sec. 10 DELIVERY OF PREMISES, REMOVAL OF MACHINERY, EQUIPMENT, ETC. - At such time as all portions of this lease are returned to lessor, lessee shall deliver up to lessor the land leased, underground timbering, and such other supports and structures necessary for the preservation of the mine workings on the leased premises or deposits and place all workings in condition for suspension or abandonment. Within 180 days thereof, lessee shall remove from the premises all other structures, machinery, equipment, tools, and materials that it elects to or as required by the Authorized Officer. Any such structures, machinery, equipment, tools and materials remaining on the leased lands beyond 180 days or approved extension thereof, shall become the property of the lessor, but lessee shall either remove any or all such property or shall continue to be liable for the cost of removal and disposal in the amount actually incurred by the lessor. If the surface is owned by third parties, lessor shall waive the requirement for removal, provided the third parties do not object to such waiver. Lessee shall, prior to the termination of bond liability or at any other time when required and in accordance with all applicable laws and regulations, reclaim all lands the surface of which has been disturbed, dispose of all debris or solid waste, repair the offsite and onsite damage caused by lessee's activity or activities incidental thereto, and reclaim access roads or trails. Sec. 11. PROCEEDINGS IN CASE OF DEFAULT - If lessee fails to comply with applicable laws, existing regulations, or the terms, conditions and stipulations of this lease, and the noncompliance continues for 30 days after written notice thereof, this lease shall be subject to cancellation by the lessor only by judicial proceedings. This provision shall not be construed to prevent the exercise by lessor of any other legal and equitable remedy, including waiver of the default. Any such remedy or waiver shall not prevent later cancellation for the same default occurring at any other time. Sec. 12. HEIRS AND SUCCESSORS-IN-INTEREST - Each obligation of this lease shall extend to and be binding upon, and every benefit hereof shall inure to, the heirs, executors, administrators, successors, or assigns of the respective parties hereto. WYW5036 Page 6 Sec. 13. INDEMNIFICATION - Lessee shall indemnify and hold harmless the United States from any and all claims arising out of the lessee's activities and operations under this lease. Sec. 14. SPECIAL STATUTES - This lease is subject to the Federal Water Pollution Control Act (33 U.S.C. 1151-1175), the Clean Air Act (42 U.S.C. 1857, et. seq.), and to all other applicable laws pertaining to exploration activities, mining operations and reclamation, including the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1201 et. seq.). Sec. 15. SPECIAL STIPULATIONS - In addition to observing the general obligations and standards of performance set out in the current regulations, the lessee shall comply with and be bound by the following special stipulations. These stipulations are also imposed upon the lessee's agents and employees. The failure or refusal of any of these persons to comply with these stipulations shall be deemed a failure of the lessee to comply with the terms of the lease. The lessee shall require his agents, contractors and subcontractors involved in activities concerning this lease to include these stipulations in the contracts between and among them. These stipulations may be revised or amended, in writing, by the mutual consent of the lessor and the lessee at any time to adjust to changed conditions or to correct an oversight. (a) CULTURAL RESOURCES - (1) Before undertaking any activities that may disturb the surface of the leased lands, the lessee shall conduct a cultural resource intensive field inventory in a manner specified by the Authorized Officer of the BLM or of the surface managing agency, if different, on portions of the mine plan area and adjacent areas, or exploration plan area, that may be adversely affected by lease-related activities and which were not previously inventoried at such a level of intensity. The inventory shall be conducted by a qualified professional cultural resource specialist (i.e., archeologist, historian, historical architect, as appropriate), approved by the Authorized Officer of the surface managing agency (BLM if the surface is privately owned), and a report of the inventory and recommendations for protecting any cultural resources identified shall be submitted to the Assistant Director of the Western Support Center of the Office of Surface Mining, the Authorized Officer of the BLM, if activities are associated with coal exploration outside an approved mining permit area (hereinafter called Authorized Officer), and the Authorized Officer of the surface managing agency, if different. The lessee shall undertake measures, in accordance with instructions from the Assistant Director, or Authorized Officer, to protect cultural resources on the leased lands. WYW5036 Page 7 The lessee shall not commence the surface disturbing activities until permission to proceed is given by the Assistant Director or Authorized Officer. (2) The lessee shall protect all cultural resource properties within the lease area from lease-related activities until the cultural resource mitigation measures can be implemented as part of an approved mining and reclamation plan or exploration plan. (3) The cost of conducting the inventory, preparing reports, and carrying out mitigation measures shall be borne by the lessee. (4) If cultural resources are discovered during operations under this lease, the lessee shall immediately bring them to the attention of the Assistant Director or Authorized Officer, or the Authorized Officer of the surface managing agency, if the Assistant Director is not available. The lessee shall not disturb such resources except as may be subsequently authorized by the Assistant Director or Authorized Officer. Within two (2) working days of notification, the Assistant Director or Authorized Officer will evaluate or have evaluated any cultural resources discovered and will determine if any action may be required to protect or preserve such discoveries. The cost of data recovery for cultural resources discovered during lease operations shall be borne by the surface managing agency unless otherwise specified by the Authorized Officer of the BLM or of the surface managing agency, if different. (5) All cultural resources shall remain under the jurisdiction of the United States until ownership is determined under applicable law. (b) PALEONTOLOGICAL RESOURCES - If paleontological resources, either large and conspicuous, and/or of significant scientific value are discovered during construction, the find will be reported to the Authorized Officer immediately. Construction will be suspended within 250 feet of said find. An evaluation of the paleontological discovery will be made by a BLM approved professional paleontologist within five (5) working days, weather permitting, to determine the appropriate action(s) to prevent the potential loss of any significant paleontological value. Operations within 250 feet of such discovery will not be resumed until written authorization to proceed is issued by the Authorized Officer. The lessee will bear the cost of any required paleontological appraisals, surface collection of fossils, or salvage of any large conspicuous fossils of significant scientific interest discovered during the operations. WYW5036 Page 8 (c) MULTIPLE MINERAL DEVELOPMENT - Operations will not be approved which, in the opinion of the Authorized Officer, would unreasonably interfere with the orderly development and/or production from a valid existing mineral lease issued prior to this one for the same lands. (d) OIL AND GAS/COAL RESOURCES - The BLM realizes that coal mining operations conducted on Federal coal leases issued within producing oil and gas fields may interfere with the economic recovery of oil and gas; just as Federal oil and gas leases issued in a Federal coal lease area may inhibit coal recovery. BLM retains the authority to alter and/or modify the resource recovery and protection plans for coal operations and/or oil and gas operations on those lands covered by Federal mineral leases so as to obtain maximum resource recovery. (e) RESOURCE RECOVERY AND PROTECTION - Notwithstanding the approval of a resource recovery and protection plan (R2P2) by the BLM, lessor reserves the right to seek damages against the operator/lessee in the event (i) the operator/lessee fails to achieve maximum economic recovery (MER) (as defined at 43 CFR 3480.0-5(21)) of the recoverable coal reserves or (ii) the operator/lessee is determined to have caused a wasting of recoverable coal reserves. Damages shall be measured on the basis of the royalty that would have been payable on the wasted or unrecovered coal. The parties recognize that under an approved R2PS, conditions may require a modification by the operator/lessee of that plan. In the event a coalbed or portion thereof is not to be mined or is rendered unmineable by the operation, the operator/lessee shall submit appropriate justification to obtain approval by the Authorized Officer (AO) to leave such reserves unmined. Upon approval by the AO, such coalbeds or portions thereof shall not be subject to damages as described above. Further, nothing in this section shall prevent the operator/lessee from exercising its right to relinquish all or portion of the lease as authorized by statute and regulation. In the event the AO determines that the R2P2, as approved, will not attain MER as the result of changed conditions, the AO will give proper notice to the operator/lessee as required under applicable regulations. The AO will order a modification if necessary, identifying additional reserves to be mined in order to attain MER. Upon a final administrative or judicial ruling upholding such an ordered modification, any reserves left unmined (wasted) under the plan will be subject to damages as described in the first paragraph under this section. Subject to the right to appeal hereinafter set forth, payment of the value of the royalty on such unmined recoverable coal reserves shall become due and payable upon determination by the AO that the coal reserves have been rendered unmineable or at WYW5036 Page 9 such time that the operator/lessee has demonstrated an unwillingness to extract the coal. The BLM may enforce this provision either by issuing a written decision requiring payment of the MMS demand for such royalties, or by issuing a notice of non-compliance. A decision or notice of non-compliance issued by the lessor that payment is due under this stipulation is appealable as allowed by law. (f) PUBLIC LAND SURVEY PROTECTION - The lessee will protect all survey monuments, witness corners, reference monuments, and bearing trees against destruction, obliteration, or damage during operations on the lease areas. If any monuments, corners or accessories are destroyed, obliterated, or damaged by this operation, the lessee will hire an appropriate county surveyor or registered land surveyor to reestablish or restore the monuments, corners, or accessories at the same location, using surveying procedures in accordance with the "Manual of Surveying Instructions for the Survey of the ------------------------------------------------------ Public Lands of the United States." The survey will be recorded in the --------------------------------- appropriate county records, with a copy sent to the Authorized Officer. UNITED STATES Serial Number DEPARTMENT OF THE INTERIOR BUREAU OF LAND MANAGEMENT WYW5036 ---------------------- BOND/*/ UNDER LEASE FOR Bond Number MINING COAL DEPOSITS =============================================================================== Know All Men By These Presents, that of , as principal, and of , as suret , are held and firmly bound unto the United States in the sum of dollars ($ ), lawful money of the United States, for the payment of which, well and truly to be made, we bind ourselves, and each of us, and each of our heirs, executors, administrators, and successors, jointly and severally, firmly by these presents. The conditions of this obligation are such, that whereas the said principal entered into a lease of the lands described therein and upon conditions therein expressed, which lease bears the above serial number. Now Therefore, if the said principal, his heirs, executors, administrators, or successors, shall faithfully carry out the obligations and observe the requirements of said lease, and shall duly keep, perform, and abide by each and every term and provision of said lease as therein stipulated and agreed, then this obligation shall be null and void; otherwise to remain in full force and effect. Signed on this day of , 19 , in the presence of: - ------------------------------------ ------------------------------------ (Signature of Witness) (Signature of Principal) - ------------------------------------ ------------------------------------ (Address of Witness) (Address of Principal) - ------------------------------------ ------------------------------------ (Signature of Witness) (Signature of Surety) - ------------------------------------ ------------------------------------ (Address of Witness) (Address of Surety) - ------------------------------------ ------------------------------------ (Signature of Witness) (Signature of Surety) - ------------------------------------ ------------------------------------ (Address of Witness) (Address of Surety) =============================================================================== /*/ This form of bond may be used in connection with coal, phosphate, and sodium leases, Act of/ February 25, 1920, as amended (30 U.S.C. 181 et seq./); potassium leases, Act of February 7, 1927, as amended (30 U.S.C. 281 et seq./); sulphur leases, Act of April 17, 1926, as amended (30 U.S.C. 271 et seq./); all such leases involving acquired lands, Act of August 7, 1947 (30 U.S.C. 351), and asphalt leases, Act of June 28, 1944 (58 Stat. 463, 483-485),by inserting the particular mineral applicable in the space provided therefor. If this bond is executed by a corporation, it must bear the corporate seal. UNITED STATES DEPARTMENT OF THE INTERIOR BUREAU OF LAND MANAGEMENT INFORMATION ON TAKING APPEALS TO THE BOARD OF LAND APPEALS DO NOT APPEAL UNLESS 1. This decision is adverse to you, AND 2. You believe it is incorrect IF YOU APPEAL, THE FOLLOWING PROCEDURES MUST BE FOLLOWED 1. NOTICE OF APPEAL.................. Within 30 days file a Notice of Appeal in the office which issued this decision (see 43 CFR Secs. 4.411 and 4.413). You may state your reasons for appealing, if you desire. 2. WHERE TO FILE NOTICE OF APPEAL................ Wyoming State Office, Bureau of Land Management 5353 Yellowstone Rd., P.O. Box 1828 Cheyenne, Wyoming 82009/82003- 1828 SOLICITOR ALSO COPY TO.................... The Regional Solicitor, Rocky Mountain Region U.S. Department of the Interior 755 Parfet Street, Suite 151 Lakewood, CO 80215 3. STATEMENT OF REASONS.............. Within 30 days after filing the Notice of Appeal, file a complete statement of the reasons why you are appealing. This must be filed with the United States Department of the Interior. Office of the Secretary, Board of Land Appeals, 4015 Wilson Blvd., Arlington, Virginia 22203 (see 43 CFR Sec. 4.412 and 4.413). If you fully stated your reasons for appealing when filing the Notice of Appeal, no additional statement is necessary. SOLICITOR ALSO COPY TO.................... The Regional Solicitor, Rocky Mountain Region U.S. Department of the Interior 755 Parfet Street, Suite 151 Lakewood, CO 80215 4. ADVERSE PARTIES................... Within 15 days after each document is filed, each adverse party named in the decision and the Regional Solicitor or Field Solicitor having jurisdiction over the State in which the appeal arose must be served with a copy of: (a) the Notice of Appeal, (b) the Statement of Reasons, and (c) any other documents filed (see 43 CFR Sec. 4.413). Service will be made upon the Associate Solicitor, Division of Energy and Resources, Washington, D.C. 20240, instead of the Field or Regional Solicitor when appeals are taken from decisions of the Director (WO-100). 5. PROOF OF SERVICE.................. Within 15 days after any document is served on an adverse party, file proof of that service with the United States Department of the Interior, Office of the Secretary, Board of Land Appeals, 4015 Wilson Blvd., Arlington, Virginia 22203. This may consist of a certified or registered mail Return Receipt Card" signed by the adverse party (see 43 CFR Sec. 4.401(c)(2)). Unless these procedures are followed your appeal will be subject to dismissal (see 43 CFR Sec. 4.402). Be certain that all communications are identified by serial number of the case being appealed. NOTE: A document is not filed until it is actually received in the proper office (see 43 CFR Sec. 4.401(a)) SUBPART 1821.2 -- OFFICE HOURS; TIME AND PLACE FOR FILING Sec. 1821.2-1 Office hours of State Sec. 1821.2-2(d) Any document required or Offices. (a) State Offices and the permitted to be filed under the regulations Washington Office of the Bureau of Land of this chapter, which is received in the Management are open to the public for the State Office or the Washington Office, filing of documents and inspection of either in the mail or by personal delivery records during the hours specified in when the office is not open to the public this paragraph on Monday through Friday shall be deemed to be filed as of the day of each week, with the exception of those and hour the office next opens to the days where the office may be closed public. because of a national holiday or Presidential or other administrative (e) Any document required by law, order. The hours during which the State regulation, or decision to be filed within a Offices and the Washington Office are stated period, the last day of which falls open to the public for the filing of on a day the State Office or the Washington documents and inspection of records are Office is officially closed, shall be deemed from 9 a.m. to 4 p.m., standard time or to be timely filed if it is received in the daylight saving time, whichever is in appropriate office on the next day the effect at the city in which each office office is open to the public. is located.
* * * * * This decision may be appealed to the Interior Board of Land Appeals, Office of the Secretary, in accordance with the regulations contained in 43 CFR, Part 4. If an appeal is taken, your notice of appeal must be filed in this office (at the above address) within 30 days from receipt of this decision. The appellant has the burden of showing that the decision appealed from is in error. If you wish to file a petition (pursuant to regulation 43 CFR 4.21 (58 FR 4939, January 19, 1993) (request) for a stay (suspension) of the effectiveness of this decision during the time that your appeal is being reviewed by the Board, the petition for a stay must accompany your notice of appeal. A petition for a stay is required to show sufficient justification based on the standards listed below. Copies of the notice of appeal and petition for a stay must also be submitted to each party named in this decision and to the Interior Board of Land Appeals and to the appropriate Office of the Solicitor (see 43 CFR 4.413) at the same time the original documents are filed with this office. If you request a stay, you have the burden of proof to demonstrate that a stay should be granted. Standard for Obtaining a Stay ----------------------------- Except as otherwise provided by law or other pertinent regulation, a petition for a stay of a decision pending appeal shall show sufficient justification based on the following standards: (1) The relative harm to the parties if the stay is granted or denied, (2) The likelihood of the appellant's success on the merits, (3) The likelihood of immediate and irreparable harm if the stay is not granted, and (4) Whether the public interest favors granting the stay. EX-10.6 119 FEDERAL COAL LEASE WYW3397: CABALLO MINE EXHIBIT 10.6 United States Department of the Interior BUREAU OF LAND MANAGEMENT In Reply Refer To: Wyoming State Office P.O. Box 1828 3452 Cheyenne, Wyoming 82003-1828 WYW3397 (921MLove) PHONE NO: 307-775-6258 FAX NO: 307-775-6203 D E C I S I O N Caballo Coal Company : Attn: Victor E. Garber : Federal Coal Lease Caller Box 3037 : Caballo Mine Gillette, Wyoming 82717-3037 : Partial Relinquishment Withdrawn; -------------------------------- Partial Relinquishments Accepted -------------------------------- On February 17, 1998, we received a partial relinquishment of Federal coal lease WYW3397 as to the following lands: T. 48 N., R.71 W., 6th P.M., Wyoming Sec. 14: Lots 2 (S2), 3 (S2), 4 (SE), 5 (E2), 6, 7, 8 (W2), 9-11, 12 (E2), 13 (SW & E2), 14-16; Sec. 15: Lots 15 (SE), 16 (S2); Sec. 22: Lots 1, 2 (E2), 7 (E2), 8, 9, 10 (E2), 15 (E2), 16; Sec. 27: Lots 1, 2 (E2), 7 (E2), 8. Containing 856.515 acres, more or less. Thereafter, on March 6, 1998, we received an additional partial relinquishment of the lease as to the following lands: T. 48 N., R. 70 W., 6th P.M., Wyoming Sec. 18: Lots 15-18; T. 48 N., R. 71 W., 6th P.M., Wyoming Sec. 12: Lots 13-15; Sec. 13: Lots 3-6. Containing 442.370 acres, more or less. May 7, 1998, we received correspondence from Caballo Coal Company withdrawing the above-described partial relinquishment filed March 6, 1998. The Casper District Office has determined that the public interest shall not be impaired by acceptance of the relinquishments, as maximum economic 2 recovery of the recoverable resource shall be achieved and adequate reclamation has occurred in accordance with the policy outlined in Wyoming Instruction Memorandum No. 98-35. That office has recommended that the partial relinquishment be accepted. Therefore, the partial relinquishment of Federal coal lease WYW3397 is hereby accepted effective February 17, 1998, the date the relinquishment was filed. Acceptance of this partial relinquishment does not relieve Caballo Coal Company, or its successors, from complying with the reclamation requirements of 30 CFR Chapter VII, Subchapter K, or an approved State program. (43 CFR 3480.0-6(d)(8)) The following-described lands are remaining in Federal coal lease WYW3397: T. 48 N., R. 70 W., 6th P.M., Wyoming Sec. 7: Lots 5-20; Sec. 18: Lots 5-12, 15-18; T. 48 N., R. 71 W., 6th P.M., Wyoming Sec. 11: Lots 1-16; Sec. 12: Lots 1-16; Sec. 13: Lots 3-7; Sec. 14: Lots 1, 2 (N2), 3 (N2), 4 (N2 & SW), 5 (W2), 8 (E2), 12 (W2), 13 (NW); Sec. 15: Lots 1-14, 15 (N2 & SW), 16 (N2); Sec. 21: Lots 1, 2, 7-10, 15, 16: Sec. 22: Lots 2 (W2), 3-6, 7 (W2), 10 (W2), 11-14, 15 (W2); Sec. 27: Lots 2 (W2), 3-6, 7 (W2); Sec. 28: Lots 1, 2, 7, 8. Containing 4,456.495 acres, more or less. Attached to this Decision is an acreage calculation worksheet, which lists the acreage amounts for the lands remaining in the lease. The new rental amount due each year for this lease beginning December 26, 1998, will be $13,371.00. If you have any questions concerning this matter, please contact Mavis Love in the Minerals and Lands Authorization Group at 307-775-6258. Alan R. Pierson State Director Attachment 3 cc: DEQ, Land Quality Division, 122 West 25th Street, Cheyenne, WY 82002 DEQ, Land Quality Division, Attn: Bob Giurgevich, 1043 Coffeen Avenue, Suite D, Sheridan, WY 82801 Office of Surface Mining, Attn: Mr. Peter Rutledge, Western Regional Coordinating Center, 1999 Broadway, Suite 3320, Denver, CO 80202-5733 MMS, RMP, Reporting & Valuation Division, Solid Minerals Reporting Staff, P.O. Box 5760, MS3153, Denver CO 80217 WO (320), Room 501, LS DM, Casper ACREAGE CALCULATIONS FOR LANDS REMAINING IN FEDERAL COAL LEASE WYW3397 AFTER ACCEPTANCE OF PARTIAL RELINQUISHMENT EFFECTIVE FEBRUARY 17, 1998 T. 48 N., R. 70 W., 6th P.M. Wyoming - ------------------------------------ Sec. 7: Lots 5-20 637.850 Sec. 18: Lots 5-12, 15-18 454.540 T. 48 N., r. 71 W., 6th P.M. Wyoming - -------------------------------------- Sec. 11: Lots 1-16 641.770 Sec. 12: Lots 1-16 650.980 Sec. 13: Lots 3-6 164.130 Sec. 14: Lot 1 40.200 Lot 2 (N2) 20.095 Lot 3 (N2) 20.115 Lot 4 (N2 & SW) 30.165 Lot 5 (W2) 20.105 Lot 8 (E2) 20.035 Lot 12 (W2) 20.105 Lot 13 (NW) 10.050 Sec. 15: Lots 1-14 561.300 Lots 15 (N2 & SW) 30.120 Lot 16 (N2) 20.075 Sec. 21: Lots 1, 2, 7-10, 15, 16; 324.150 Sec. 22: Lot 2 (W2) 20.215 Lots 3-6 161.830 Lot 7 (W2) 20.240 Lot 10 (W2) 20.270 Lots 11-14 162.330 Lot 15 (W2) 20.295 Sec. 27: Lot 2 (W2) 20.275 Lots 3-6 161.970 Lot 7 (W2) 20.245 Sec. 28: Lots 1, 2, 7, 8 162.040 TOTAL ACREAGE 4,456.495 5 UNITED STATES Serial Number DEPARTMENT OF THE INTERIOR BUREAU OF LAND MANAGEMENT WYW3397 COAL LEASE READJUSTMENT Date Lease Issued December 1, 1967 ================================================================= PART 1: LEASE RIGHTS GRANTED This lease, entered into by and between the United States of America, hereinafter called the lessor, through the Bureau of Land Management, and (Name and Address) Caballo Coal Company Caller Box 3037 Gillette, Wyoming 82717 hereinafter called lessee, is readjusted. effective December 1, 1997, for a period of 10 years and for so long thereafter as coal is produced in commercial quantities from the leased lands, subject to readjustment of lease terms at the end of 10-year period. Sec. 1. This lease readjustment is subject to the terms and provisions of the: XX Mineral Lands Leasing Act of 1920, Act of February 25, 1920, as amended, 41 Stat. 437, 30 U.S.C. 181-287, hereinafter referred to as the Act; [ ] Mineral Leasing Act for Acquired Lands, Act of August 7, 1947, 61 Stat. 913, 30 U.S.C. 351-359; and to the regulations and formal orders of the Secretary of the Interior which are now or hereafter in force, when not inconsistent with the express and specific provisions herein. Sec. 2. Lessor, in consideration of any rents and royalties to be paid, and the conditions and covenants to be observed as herein set forth, hereby grants to lessee the exclusive right and privilege to drill for, mine, extract, remove or otherwise process and dispose of the coal deposits in, upon, or under the following described lands in Campbell County, Wyoming: T. 48 N., R. 70 W., 6th P.M., Wyoming T. 48 N., R. 71 W., 6th P.M., Wyoming - ------------------------------------- ------------------------------------- Sec. 7: Lots 5-20; Sec. 11: Lots 1-16; Sec. 18: Lots 5-12, 15-18 Sec. 12: Lots 1-16; Sec. 13: Lots 3-6; Sec. 14: Lots 1-16; Sec. 15: Lots 1-16; Sec. 21: Lots 1, 2, 7-10, 15, 16; Sec. 22: Lots 1-16; Sec. 27: Lots 1-8; Sec. 28: Lots 1, 2, 7, 8. Containing 5,313.01 acres, more or less, together with the right to construct such works, buildings, plants, structures, equipment and appliances and the right to use such on-lease rights-of-way which may be necessary and convenient in the exercise of the rights and privileges granted, subject to the conditions herein provided. PART II. TERMS AND CONDITIONS Sec. 1. (a) RENTAL RATE - Lessee shall pay lessor rental annually and in advance for each acre or fraction thereof during the continuance of the lease at the rate of $3.00 for each lease year. (b) RENTAL CREDITS - Rental shall not be credited against either production or advance royalties for any year. Sec. 2. (a) PRODUCTION ROYALTIES - The royalty shall be 12 1/2 per cent of the value of the coal produced by strip or auger methods and 8 per cent of the value of the coal produced by underground mining methods. The value of the coal shall be determined as set forth in 43 CFR 3480. Royalties are due to lessor the final day of the month succeeding the calendar month on which the royalty obligation accrues; (b) ADVANCE ROYALTIES - Upon request by lessee, the Authorized Officer may accept, for a total of not more than 10 years, the payment of advance royalties in lieu of continued operation, consistent with the regulations. The advance royalty shall be based on a percent of the value of a minimum number of tons determined in the manner established by the advance royalty regulations in effect at the time the lessee requests approval to pay advance royalties in lieu of continued operation. Sec. 3. BONDS - Lessee shall maintain in the proper office a lease bond in the amount of $2,969,000. The Authorized Officer may required an increase in this amount when additional coverage is determined appropriate. Sec. 4. DILIGENCE - This lease is subject to the conditions of diligent development and continued operation, except that these conditions are excused when operations under the lease are interrupted by strikes, the elements, or casualties not attributable to the lessee. The lessor, in the public interest, may suspend the condition of continued operation upon payment of advance royalties in accordance with the regulations in existence at the time of the suspension. Lessee's failure to produce coal in commercial quantities at the end of 10 years shall terminate the lease. If not submitted already, lessee shall submit an operation and reclamation plan pursuant to Section 7 of the Act no later than 3 years after the effective date of this lease readjustment. The lessor reserves the power to assent to or under the suspension of the terms and conditions of this lease in accordance with, inter alia, Section 39 of the Mineral Leasing Act, 30 U.S.C. 209. Sec. 5. LOGICAL MINING UNIT (LMU) - Either upon approval by the lessor of the lessee's application or at the direction of the lessor, this lease shall become an LMU or part of an LMU, subject to the provisions set forth in the regulations. The stipulations established in an LMU approval in effect at the time of LMU approval will supersede the relevant inconsistent terms of this lease so long as the lease remains committed to the LMU. If the LMU of which this lease is a part is dissolved, the lease shall then be subject to the lease terms which would have been applied if the lease had not been included in an LMU. Sec. 6. DOCUMENTS, EVIDENCE AND INSPECTION -At such times and in such form as lessor may prescribe, lessee shall furnish detailed statements showing the amounts and quality of all products removed and sold from the lease, the proceeds therefrom, and the amount used for production purposes or unavoidably lost. Lessee shall keep open at all reasonable times for the inspection of any duly Authorized Officer of the lessor, the leased premises and all surface and underground improvements, works, machinery, ore stockpits, equipment, and all books, accounts, maps and records relative to operations, surveys, or investigations on or under the leased lands. Lessee shall allow lessor access to and copying of documents reasonably necessary to verify lessee compliance with terms and conditions of the lease. While this lease remains in effect, information obtained under this section shall be closed to inspection by the public in accordance with the Freedom of Information Act (5 U.S.C. 552). Sec. 7. DAMAGES TO PROPERTY AND CONDUCT OF OPERATIONS - Lessee shall comply at its own expense with all reasonable orders of the Secretary, respecting diligent operations, prevention of waste, and protection of other resources. Lessee shall not conduct exploration operations, other than casual use, without an approved exploration plan. All exploration plans prior to the commencement of mining operations within an approved mining permit area shall be submitted to the Authorized Officer. WYW3397 Page 3 Lessee shall carry on all operations in accordance with approved methods and practices as provided in the operating regulations, having due regard for the prevention of injury to life, health, or property, and prevention of waste, damage, or degradation to any land, air, water, cultural, biological, visual, and other resources, including mineral deposits and formations of mineral deposit not leased hereunder, and to other land uses or users. Lessee shall take measures deemed necessary by lessor to accomplish the intent of this lease term. Such measures may include, but are not limited to, modification to proposed siting or design of facilitiesto itself the right to lease, sell or otherwise dispose of the surface or other mineral deposits in the lands and the right to continue existing uses and to authorized future uses upon or in the leased lands, including issuing leases for minerals deposits not covered hereunder, and approving easements or rights-of-way. Lessor shall condition such uses to prevent unnecessary or unreasonable interference with rights of lessee as may be consistent with concepts of multiple use and multiple mineral development. Sec. 8. PROTECTION OF DIVERSE INTEREST, AND EQUAL OPPORTUNITY - Lessee shall: pay when due all taxes legally assessed and levied under the laws of the State or the United States; accord all employees complete freedom of purchase; pay all wages at least twice each month in lawful money of the United States; maintain a safe working environment in accordance with standard industry practices; restrict the workday to not more than 8 hours in any one day for underground workers except in emergencies; and take measures necessary to protect the health and safety of the public. No person under the age of 16 years shall be employed in any mine below the surface. To the extent that laws of the State in which the lands are situated are more restrictive than the provisions in this paragraph, then the State laws apply. Lessee will comply with all provisions of Executive Order No. 11246 of September 24, 1965, as amended, and the rules, regulations, and relevant orders of the Secretary of Labor. Neither lessee nor lessee's subcontractors shall maintain segregated facilities. Sec. 9. (a) TRANSFERS XX This lease may be transferred in whole or in part to any person, association or corporation qualified to hold such lease interest. [ ] This lease may be transferred in whole or in part to another public body, or to a person who will mine the coal or on behalf of, and for the use of, the public body and to behalf of, and for the use of, the public body or to a person who for the limited purpose of creating a security interest in favor of a lender agrees to be obligated to mine the coal on behalf of the public body. [ ] This lease may only be transferred in whole or in part to another small business qualified under 13 CFR 121. Transfers of record title, working or royalty interest must be approved in accordance with the regulations. (b) RELINQUISHMENT - The lessee may relinquish in writing at any time all rights under this lease or any portion thereof as provided in the regulations. Upon lessor's acceptance of the relinquishment, lessee shall be relieved of all future obligations under the lease or the relinquished portion thereof, whichever is applicable. Sec. 10 DELIVERY OF PREMISES, REMOVAL OF MACHINERY, EQUIPMENT, ETC. - At such times as all portions of this lease are returned to lessor, lessee shall deliver up to lessor the land leased, underground timbering, and such other supports and structures necessary for the preservation of the mine workings on the lease premises or deposits and place all workings in condition for suspension or abandonment. Within 180 days thereof, lessee shall remove from the premises all other structures, machinery, equipment, tools, and materials that it elects to or as required by the Authorized Officer. Any such structures, machinery, equipment, tools and materials remaining on the leased lands beyond 180 days or approved extension thereof, shall become the property of the lessor, but lessee shall either remove any or all such property or shall continue to be liable for the cost of removal and disposal in the amount actually incurred by the lessor. If the surface is owned by third parties, lessor shall waive the requirement for removal, provided the third parties do not object to such waiver. Lessee shall, prior to the termination of bond liability or at any other time when required and in accordance with all applicable laws and regulations reclaim all lands the surface of which has been disturbed, dispose of all debris or solid waste, repair the offsite and onsite damage caused by lessee's activity or activities incidental thereto, and reclaim access roads or trails. Sec. 11. PROCEEDINGS IN CASE OF DEFAULT - If lessee fails to comply with applicable laws, existing regulations, or the terms, conditions and stipulations of this lease, and the noncompliance continues for 30 days after written notice thereof, this lease shall be subject to cancellation by the lessor only by judicial proceedings. This provision shall not be construed to prevent the exercise by lessor of any other legal and equitable remedy, including waiver of the WYW3397 Page 4 Sec. 12. HEIRS AND SUCCESSORS-IN-INTEREST -Each obligation of this lease shall extend to and be binding upon, and every benefit hereof shall inure to, the heirs, executors, administrators, successors, or assigns of the respective parties hereto. Sec. 13. INDEMNIFICATION - Lessee shall indemnify and hold harmless the United States from any and all claims arising out of the leasee's activities and operations under this lease. Sec. 14. SPECIAL STATUTES - This lease is subject to the Federal Water Pollution Control Act (33 U.S.C. 1151-1175), the Clean Air Act (42 U.S.C. 1957 et. seq.), and to all other applicable laws pertaining to exploration activities, mining operations and reclamation, including the surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1201 et. seq.) Sec. 15. SPECIAL STIPULATIONS In addition to observing the general obligations and standards of performance set out in the current regulations, the lessee shall comply with and be bound by the following special stipulations. These stipulations are also imposed upon the lessee's agents and employees. The failure or refusal of any of these persons to comply with these stipulations shall be deemed a failure of the lessee to comply with the terms of the lease. The lessee shall require his agents, contractors and subcontractors involved in activities concerning this lease to include these stipulations in the contracts between and among them. These stipulations may be revised or amended, in writing, by the mutual consent of the lessor and the lessee at any time to adjust to changed conditions or to correct an oversight. (a) CULTURAL RESOURCES - (1) Before undertaking any activities that may disturb the surface of the leased lands, the lessee shall conduct a cultural resource intensive field inventory in a manner specified by the Authorized Officer of the BLM or of the surface managing agency, if different, on portions of the mine plan area and adjacent areas, or exploration plan area, that may be adversely affected by lease-related activities and which were not previously inventoried at such a level of intensity. The inventory shall be conducted by a qualified professional cultural resource specialist (i.e., archeologist, historian, historical architect, as appropriate), approved by the Authorized Officer of the surface managing agency (BLM if the surface is privately owned), and a report of the inventory and recommendations for protecting any cultural resources identified shall be submitted to the Assistant Director of the Western Support Center of the Office of Surface Mining, the Authorized Officer of the BLM, if activities are associated with coal exploration outside an approved mining permit WYW3397 Page 5 area (hereinafter called Authorized Officer), and the Authorized Officer of the surface managing agency, if different. The lessee shall undertake measures, in accordance with instructions from the Assistant Director, or Authorized Officer, to protect cultural resources on the leased lands. The lessee shall not commence the surface disturbing activities until permission to proceed is given by the Assistant Director or Authorized Officer. (2) The lessee shall protect all cultural resource properties within the lease area from lease-related activities until the cultural resource mitigation measures can be implemented as part of an approved mining and reclamation or exploration plan. (3) The cost of conducting the inventory, preparing reports, and carrying out mitigation measures shall be borne by the lessee. (4) If cultural resources are discovered during operations under this lease, the lessee shall immediately bring them to the attention of the Assistant Director or Authorized Officer, or the Authorized Officer of the surface managing agency, if the Assistant Director is not available. The lessee shall not disturb such resources except as may be subsequently authorized by the Assistant Director or Authorized Officer. Within two (2) working days of notification, the Assistant Director or Authorized Officer will evaluate or have evaluated any cultural resources discovered and will determine if any action may be required to protect or preserve such discoveries. The cost of data recovery for cultural resources discovered during lease operations shall be borne by the surface managing agency unless otherwise specified by the Authorized Officer of the BLM or of the surface managing agency, if different. (5) All cultural resources shall remain under the jurisdiction of the United States until ownership is determined under applicable law. (b) PALEONTOLOGICAL RESOURCES - If paleontological resources, either large and conspicuous, and/or of significant scientific value are discovered during mining operations, the find will be reported to the Authorized Officer immediately. Mining operations will be suspended within 250 feet of said find. An evaluation of the paleontological discovery will be made by a BLM approved professional paleontologist within five (5) working days, weather permitting, to determine the appropriate action(s) to prevent the potential loss of any significant paleontological value. Operations within 250 feet of such discovery will not be resumed until written authorization to proceed is issued by the Authorized Officer. The lessee will bear the cost of any required paleontological appraisals, surface collection of fossils, or salvage of any large conspicuous fossils of significant scientific interest discovered during the operations. (c) MULTIPLE MINERAL DEVELOPMENT - Operations will not be approved which, in the opinion of the Authorized Officer, would WYW3397 Page 6 unreasonably interfere with the orderly development and/or production from a valid existing mineral lease issued prior to this one for the same lands. (d) OIL AND GAS/COAL RESOURCES - The BLM realizes that coal consturciotn conducted on Federal coal leases issued within producing oil and gas fields may interfere with the economic recovery of oil and gas; just as Federal oil and gas leases issued in a Federal coal lease area may inhibit coal recovery. BLM retains the authority to alter and/or modify the resource recovery and protection plans for coal operations and/or oil and gas operations on those lands covered by Federal mineral leases so as to obtain maximum resource recovery. (e) RESOURCE RECOVERY AND PROTECTION - Notwithstanding the approval of a resource recovery and protection plan (R2P2) by the BLM, lessor reserves the right to seek damages against the operator/lessee in the event (i) the operator/lessee fails to achieve maximum economic recovery (MER) (as defined at 43 CFR 3480.0-5(21)) of the recoverable coal reserves or (ii) the operator/lessee is determined to have caused a wasting of recoverable coal reserves. Damages shall be measured on the basis of the royalty that would have been payable on the wasted or unrecovered coal. The parties recognize that under an approved R2P2, conditions may require a modification by the operator/lessee of that plan. In the event a coalbed or portion thereof is not to be mined or is rendered unmineable by the operation, the operator/lessee shall submit appropriate justification to obtain approval by the Authorized Officer (AO) to leave such reserves unmined. Upon approval by the AO, such coalbeds or portions thereof shall not be subject to damages as described above. Further, nothing in this section shall prevent the operator/lessee from exercising its right to relinquish all or portion of the lease as authorized by statute and regulation. In the event the AO determines that the R2P2, as approved, will not attain MER as the result of changed conditions, the AO will give proper notice to the operator/lessee as required under applicable regulations. The AO will order a modification if necessary, identifying additional reserves to be mined in order to attain MER. Upon a final administrative or judicial ruling upholding such an ordered modification, any reserves left unmined (wasted) under that plan will be subject to damages as described in the first paragraph under this section. Subject to the right to appeal hereinafter set forth, payment of the value of the royalty on such unmined recoverable coal reserves shall become due and payable upon determination by the AO that the coal reserves have been rendered unmineable or at such time that the operator/lessee has demonstrated an unwillingness to extract the coal. The BLM may enforce this provision either by issuing a written decision requiring payment of the MMS demand for such royalties, or by issuing a notice of non-compliance. A decision or notice of non-compliance issued by the lessor that payment is due under this stipulation is appealable as allowed by law. WYW3397 Page 7 Sec 15. SPECIAL STIPULATIONS, Continued - (f) PUBLIC LAND SURVEY PROTECTION - The lessee will protect all survey monuments, witness corners, reference monuments, and bearing trees against destruction, obliteration, or damage during operations on the lease areas. If any monuments, corners or accessories are destroyed, obliterated, or damaged by this operation, the lessee will hire an appropriate county surveyor or registered land surveyor to reestablish or restore the monuments, corners, or accessories at the same location, using surveying procedures in accordance with the "Manual of Surveying Instructions for the Survey of the Public Lands of the -------------------------------------------------------------------------- United States." The survey will be recorded in the appropriate county records, - ------------- with a copy sent to the Authorized Officer. in order to attain MER. Upon a final administrative or judicial ruling upholding such an ordered modification, any reserves left unmined (wasted) under that plan will be subject to damages as described in the first paragraph under this section. Subject to the right to appeal hereinafter set forth, payment of the value of the royalty on such unmined recoverable coal reserves shall become due and payable upon determination by the AO that the coal reserves have been rendered unmineable or at such time that the operator/lessee has demonstrated an unwillingness to extract the coal.. The BLM may enforce this provision either by issuing a written decision requiring payment of the MMS demand for such royalties, or by issuing a notice of non-compliance. A decision or notice of non-compliance issued by the lessor that payment is due under this stipulation is appealable as allowed by UNITED STATES DEPARTMENT OF THE INTERIOR BUREAU OF LAND MANAGEMENT INFORMATION ON TAKING APPEALS TO THE BOARD OF LAND APPEALS DO NOT APPEAL UNLESS 1. This decision is adverse to you, AND 2. You believe it is incorrect IF YOU APPEAL, THE FOLLOWING PROCEDURES MUST BE FOLLOWED 1. NOTICE OF APPEAL.................. Within 30 days file a Notice of Appeal in the office which issued this decision (see 43 CFR Secs. 4.411 and 4.413). You may state your reasons for appealing, if you desire. 2. WHERE TO FILE NOTICE OF APPEAL................ Wyoming State Office, Bureau of Land Management 5353 Yellowstone Rd., P.O. Box 1828 Cheyenne, Wyoming 82009/82003- 1828 SOLICITOR ALSO COPY TO.................... The Regional Solicitor, Rocky Mountain Region U.S. Department of the Interior 755 Parfet Street, Suite 151 Lakewood, CO 80215 3. STATEMENT OF REASONS.............. Within 30 days after filing the Notice of Appeal, file a complete statement of the reasons why you are appealing. This must be filed with the United States Department of the Interior. Office of the Secretary, Board of Land Appeals, 4015 Wilson Blvd., Arlington, Virginia 22203 (see 43 CFR Sec. 4.412 and 4.413). If you fully stated your reasons for appealing when filing the Notice of Appeal, no additional statement is necessary. SOLICITOR ALSO COPY TO.................... The Regional Solicitor, Rocky Mountain Region U.S. Department of the Interior 755 Parfet Street, Suite 151 Lakewood, CO 80215 4. ADVERSE PARTIES................... Within 15 days after each document is filed, each adverse party named in the decision and the Regional Solicitor or Field Solicitor having jurisdiction over the State in which the appeal arose must be served with a copy of: (a) the Notice of Appeal, (b) the Statement of Reasons, and (c) any other documents filed (see 43 CFR Sec. 4.413). Service will be made upon the Associate Solicitor, Division of Energy and Resources, Washington, D.C. 20240, instead of the Field or Regional Solicitor when appeals are taken from decisions of the Director (WO-100). 5. PROOF OF SERVICE.................. Within 15 days after any document is served on an adverse party, file proof of that service with the United States Department of the Interior, Office of the Secretary, Board of Land Appeals, 4015 Wilson Blvd., Arlington, Virginia 22203. This may consist of a certified or registered mail "Return Receipt Card" signed by the adverse party (see 43 CFR Sec. 4.401(c)(2)). Unless these procedures are followed your appeal will be subject to dismissal (see 43 CFR Sec. 4.402). Be certain that all communications are identified by serial number of the case being appealed. NOTE: A document is not filed until it is actually received in the proper office (see 43 CFR Sec. 4.401(a)) SUBPART 1821.2 -- OFFICE HOURS; TIME AND PLACE FOR FILING Sec. 1821.2-1 Office hours of State Sec. 1821.2-2(d) Any document required or Offices. (a) State Offices and the permitted to be filed under the regulations Washington Office of the Bureau of Land of this chapter, which is received in the Management are open to the public for the State Office or the Washington Office, filing of documents and inspection of either in the mail or by personal delivery records during the hours specified in when the office is not open to the public this paragraph on Monday through Friday shall be deemed to be filed as of the day of each week, with the exception of those and hour the office next opens to the days where the office may be closed public. because of a national holiday or Presidential or other administrative (e) Any document required by law, order. The hours during which the State regulation, or decision to be filed within a Offices and the Washington Office are stated period, the last day of which falls open to the public for the filing of on a day the State Office or the Washington documents and inspection of records are Office is officially closed, shall be deemed from 9 a.m. to 4 p.m., standard time or to be timely filed if it is received in the daylight saving time, whichever is in appropriate office on the next day the effect at the city in which each office office is open to the public. is located.
* * * * * This decision may be appealed to the Interior Board of Land Appeals, Office of the Secretary, in accordance with the regulations contained in 43 CFR, Part 4. If an appeal is taken, your notice of appeal must be filed in this office (at the above address) within 30 days from receipt of this decision. The appellant has the burden of showing that the decision appealed from is in error. If you wish to file a petition (pursuant to regulation 43 CFR 4.21 (58 FR 4939, January 19, 1993) (request) for a stay (suspension) of the effectiveness of this decision during the time that your appeal is being reviewed by the Board, the petition for a stay must accompany your notice of appeal. A petition for a stay is required to show sufficient justification based on the standards listed below. Copies of the notice of appeal and petition for a stay must also be submitted to each party named in this decision and to the Interior Board of Land Appeals and to the appropriate Office of the Solicitor (see 43 CFR 4.413) at the same time the original documents are filed with this office. If you request a stay, you have the burden of proof to demonstrate that a stay should be granted. Standard for Obtaining a Stay ----------------------------- Except as otherwise provided by law or other pertinent regulation, a petition for a stay of a decision pending appeal shall show sufficient justification based on the following standards: (1) The relative harm to the parties if the stay is granted or denied, (2) The likelihood of the appellant's success on the merits, (3) The likelihood of immediate and irreparable harm if the stay is not granted, and (4) Whether the public interest favors granting the stay. EX-10.7 120 FEDERAL COAL LEASE WYW83394: CABALLO MINE EXHIBIT 10.7 United States Department of the Interior BUREAU OF LAND MANAGEMENT In Reply Refer To: Wyoming State Office P.O. Box 1828 3452 Cheyenne, Wyoming 82003-1828 WYW83394 (921MLove) PHONE NO: 307-775-6258 FAX NO: 307-775-6203 D E C I S I O N Caballo Coal Company : Attn: Victor E. Garber : Federal Coal Lease Caller Box 3037 : Caballo Mine Gillette, Wyoming 82717-3037 : Readjusted Terms and Conditions Corrected; ----------------------------------------- Partial Relinquishment Withdrawn; -------------------------------- Partial Relinquishment Accepted ------------------------------- On February 17, 1998, we received a partial relinquishment of Federal coal lease WYW83394 as to the following lands: T. 48 N., R.71 W., 6th P.M., Wyoming Sec. 23: Lots 1-4, 7-10 Containing 324.06 acres, more or less. Thereafter, on March 6, 1998, we received an additional partial relinquishment of the following lands: T. 48 N., R. 71 W., 6th P.M., Wyoming Sec. 13: Lots 2, 7, 8, 11, 12 (E2), 14. Containing 224.715 acres, more or less. On May 7, 1998, we received correspondence from Caballo Coal Company withdrawing the above-described partial relinquishment filed March 6, 1998. As a preliminary mater, we are correcting the readjusted lease terms and conditions that become effective December 1, 1997, which were transmitted to you by our Decision dated May 14, 1997. The terms and conditions indicated that the above-mentioned lease included Lots 9 and 15, Section 9, T. 48 N., R. 71 W., 6th P.M., Wyoming. The terms and conditions should have indicated that the lease included lot 16, and not lot 15, in Section 9. The Casper District Office has determined that the public interest shall not be impaired by acceptance of the relinquishment, as maximum economic recovery of the recoverable resource shall be achieved and adequate 2 reclamation has occurred in accordance with the policy outlined in Wyoming Instruction Memorandum No. 98-35. That office has recommended that the partial relinquishment be accepted. Therefore, the partial relinquishment of Federal coal lease WYW83394 is hereby accepted effective February 17, 1998, the date the relinquishment was filed. Acceptance of this partial relinquishment does not relieve Caballo Coal Company, or its successors, from complying with the reclamation requirements of 30 CFR Chapter VII, Subchapter K, or an approved State program. (43 CFR 3480.0-6(d)(8)) The following-described lands are remaining in Federal coal lease WYW83394: T. 48 N., R. 71 W., 6th P.M., Wyoming Sec. 9: Lots 9, 16; Sec. 10: Lots 1-16; Sec. 13: Lots 1, 2, 7, 8, 11-14; Sec. 21: Lots 3-6; Sec. 24: Lots 1-3. Containing 1,333.640 acres, more or less. Attached to this Decision is an acreage calculation worksheet, which lists the acreage figures for the lands remaining in the lease. The new rental amount due each year on this lease beginning December 26, 1998, will be $4,002.00. If you have any questions concerning this matter, please contact Mavis Love in the Minerals and Lands Authorization Group at 307-775-6258. Alan R. Pierson State Director Attachment cc: DEQ, Land Quality Division, 122 West 25th Street, Cheyenne, WY 82002 DEQ, Land Quality Division, Attn: Bob Giurgevich, 1043 Coffeen Ave., Suite D, Sheridan, WY 82801 Office of Surface Mining, Attn: Mr. Peter Rutledge, Western Regional Coordinating Center, 1999 Broadway, Suite 3320, Denver, CO 80202-5733 MMS, RMP, Reporting & Valuation Division, Solid Minerals Reporting Staff, P.O. Box 5760, MS3153, Denver CO 80217 WO (320), Room 501, LS DM, Casper ACREAGE CALCULATIONS FOR LANDS REMAINING IN FEDERAL COAL LEASE WYW83394 AFTER ACCEPTANCE OF PARTIAL RELINQUISHMENT EFFECTIVE FEBRUARY 17, 1998 T. 48 N., R. 71 W., 6th P.M. Wyoming - ------------------------------------ Sec. 9: Lots 9, 16 81.030 Sec. 10: Lots 1-16 641.390 Sec. 13: Lot 1, 2, 7, 8, 11-14 327.360 Sec. 21: Lots 3-6 161.660 Sec. 24: Lots 1-3 122.200 TOTAL ACREAGE 1,333.640 UNITED STATES Serial Number DEPARTMENT OF THE INTERIOR BUREAU OF LAND MANAGEMENT WYW83394 COAL LEASE READJUSTMENT Date Lease Issued December 1, 1967 =========================================================== PART 1: LEASE RIGHTS GRANTED This lease, entered into by and between the United States of America, hereinafter called lessor, through the Bureau of Land Management, and (Name and Address) Caballo Coal Company Caller Box 3037 Gillette, Wyoming 82717 hereinafter called the lessee, is effective December 1, 1997, for a period of 10 years and for so long thereafter as coal is produced in commercial quantities from the leased lands, subject to readjustment of lease terms at the end of each 10-year period. Sec. 1. This lease readjustment is subject to the terms and provisions of the: XX Mineral Lands Leasing Act of 1920, Act of February 25, 1920, as amended, 41 Stat. 437, 30 U.S.C. 181-287, hereinafter referred to as the Act; [ ] Mineral Leasing Act for Acquired Lands, Act of August 7, 1947, 61 Stat. 913, 30 U.S.C. 351-359; and to the regulations and formal orders of the Secretary of the Interior which are now or hereafter in force, when not inconsistent with the express and specific provisions herein. Sec. 2. Lessor, in consideration of any rents and royalties to be paid, and the conditions and covenants to be observed as herein set forth, hereby grants to lessee the exclusive right and privilege to drill for, mine, extract, remove or otherwise process and dispose of the coal deposits in, upon, or under the following described lands in Campbell County, Wyoming: T. 48 N., R. 71 W., 6th P.M., Wyoming ------------------------------------- Sec. 9: Lots 9, 16; Sec. 10: Lots 1-16; Sec. 13: Lots 1, 2, 7, 8, 11-14; Sec. 21: Lots 3-6; Sec. 23: Lots 1-4, 7-10; Sec. 24: Lots 1-3. Containing 1,657.70 acres, more or less, together with the right to construct such works, buildings, plants, structures, equipment and appliances and the right to use such on-lease rights-of-way which may be necessary and convenient in the exercise of the rights and privileges granted, subject to the conditions herein provided. WYW83394 Page 2 PART II. TERMS AND CONDITIONS Sec. 5. LOGICAL MINING UNIT (LMU) - Either upon approval by the lessor of the lessee's Sec. 1. (a) RENTAL RATE - Lessee shall pay application or at the direction of the lessor, lessor rental annually and in advance for this lease shall become an LMU or part of an LMU, each acre or fraction thereof during the subject to the provisions set forth in the continuance of the lease at the rate of $3.00 regulations. for each lease year. The stipulation established in an LMU approval in (b) RENTAL CREDITS - Rental shall not be effect at the time of LMU approval will supersede credited against either production or advance the relevant inconsistent terms of this lease so royalties for any year. long as the lease remains committed to the LMU. If the LMU of which this lease is a part is Sec. 2. (a) PRODUCTION ROYALTIES - The dissolved, the lease shall then be subject to the royalty shall be 12 1/2 per cent of the value of lease terms which would have been applied if the the coal produced by strip or auger methods lease had not been included in an LMU. and 8 per cent of the value of the coal produced by underground mining methods. The Sec. 6. DOCUMENTS, EVIDENCE AND INSPECTION - At value of the coal shall be determined as set such times and in such form as lessor may forth in 43 CFR 3480. Royalties are due to prescribe, lessee shall furnish detailed lessor the final day of the month succeeding statements showing the amounts and quality of all the calendar month in which the royalty products removed and sold from the lease, the obligation accrues. proceeds therefrom, and the amount used for production purposes or unavoidably lost. (b) ADVANCE ROYALTIES - Upon request by lessee, the Authorized Officer may accept, Lessee shall keep open at all reasonable times for a total of not more than 10 years, the for the inspection of any duly Authorized Officer payment of advance royalties in lieu of of the lessor, the leased premises and all continued operation, consistent with the surface and underground improvements, works, regulations. The advance royalty shall be machinery, ore stockpits, equipment, and all based on a percent of the value of a minimum books, accounts, maps and records relative to number of tons determined in the manner operations, surveys, or investigations on or established by the advance royalty under the leased lands. regulations in effect at the time the lessee requests approval to pay advance royalties in Lessee shall allow lessor access to and copying lieu of continued operation. of documents reasonably necessary to verify lessee compliance with terms and conditions of Sec. 3. BONDS - Lessee shall maintain in the the lease. proper office a lease bond in the amount of $5,000. The Authorized Officer may required While this lease remains in effect, information an increase in this amount when additional obtained under this section shall be closed to coverage is determined appropriate. inspection by the public in accordance with the Freedom of Information Act (5 U.S.C. 552). Sec. 4. DILIGENCE - This lease is subject to the conditions of diligent development and Sec. 7. DAMAGES TO PROPERTY AND CONDUCT OF continued operation, except that these OPERATIONS - Lessee shall comply at its own conditions are excused when operations under expense with all reasonable orders of the the lease are interrupted by strikes, the Secretary, respecting diligent operations, elements, or casualties not attributable to prevention of waste, and protection of other the lessee. The lessor, in the public resources. interest, may suspend the condition of continued operation upon payment of advance Lessee shall not conduct exploration operations, royalties in accordance with the regulations other than casual use, without an approved in existence at the time of the suspension. exploration plan. All exploration plans prior to Lessee's failure to produce coal in the commencement of mining operations within an commercial quantities at the end of the 10 approved mining permit area shall be submitted to years shall terminate the lease. If not the Authorized Officer. submitted already, lessee shall submit an operation and reclamation plan pursuant to Lessee shall carry on all operations in Section 7 of the Act no later than 3 years accordance with approved methods and practices as after the effective date of this lease provided in the operating regulations, having due readjustment. regard for the prevention of injury to life, health, or property, and prevention of waste, The lessor reserves the power to assent to or damage, or degradation to any land, air, water, under the suspension of the terms and cultural, biological, visual, and other conditions of this lease in accordance with, resources, including mineral deposits and inter alia, Section 39 of the Mineral Leasing formations of mineral deposit not leased Act, 30 U.S.C. 209.
WYW83394 Page 3 hereunder, and to other land uses or users. [ ] This lease may only be transferred in whole Lessee shall take measures deemed necessary or in part to another small business by lessor to accomplish the intent of this qualified under 13 CFR 121. lease term. Such measures may include, but are not limited to, modification to proposed Transfers of record title, working or royalty siting or design of facilities, timing of interest must be approved in accordance with the operations, to itself the right to lease, regulations. sell or otherwise dispose of the surface or other mineral deposits in the lands and the (b) RELINQUISHMENT - The lessee may relinquish right to continue existing uses and to in writing at any time all rights under this authorized future uses upon or in the leased lease or any portion thereof as provided in the lands, including issuing leases for minerals regulations. Upon lessor's acceptance of the deposits not covered hereunder, and approving relinquishment, lessee shall be relieved of all easements or rights-of-way. Lessor shall future obligations under the lease or the condition such uses to prevent unnecessary or relinquished portion thereof, whichever is unreasonable interference with rights of applicable. lessee as may be consistent with concepts of multiple use and multiple mineral Sec. 10 DELIVERY OF PREMISES, REMOVAL OF development. MACHINERY, EQUIPMENT, ETC. - At such times as all portions of this lease are returned to lessor, Sec. 8. PROTECTION OF DIVERSE INTEREST, AND lessee shall deliver up to lessor the land EQUAL OPPORTUNITY - Lessee shall: pay when leased, underground timbering, and such other due all taxes legally assessed and levied supports and structures necessary for the under the laws of the State or the United preservation of the mine workings on the lease States; accord all employees complete freedom premises or deposits and place all workings in of purchase; pay all wages at least twice condition for suspension or abandonment. Within each month in lawful money of the United 180 days thereof, lessee shall remove from the States; maintain a safe working environment premises all other structures, machinery, in accordance with standard industry equipment, tools, and materials that it elects to practices; restrict the workday to not more or as required by the Authorized Officer. Any than 8 hours in any one day for underground such structures, machinery, equipment, tools and workers except in emergencies; and take materials remaining on the leased lands beyond measures necessary to protect the health and 180 days or approved extension thereof, shall safety of the public. No person under the become the property of the lessor, but lessee age of 16 years shall be employed in any mine shall either remove any or all such property or below the surface. To the extent that laws shall continue to be liable for the cost of of the State in which the lands are situated removal and disposal in the amount actually are more restrictive than the provisions in incurred by the lessor. If the surface is owned this paragraph, then the State laws apply. by third parties, lessor shall waive the requirement for removal, provided the third Lessee will comply with all provisions of parties do not object to such waiver. Lessee Executive Order No. 11246 of September 24, shall, prior to the termination of bond liability 1965, as amended, and the rules, regulations, or at any other time when required and in and relevant orders of the Secretary of accordance with all applicable laws and Labor. Neither lessee nor lessee's regulations reclaim all lands the surface of subcontractors shall maintain segregated which has been disturbed, dispose of all debris facilities. or solid waste, repair the offsite and onsite damage caused by lessee's activity or activities Sec. 9. (a) TRANSFERS incidental thereto, and reclaim access roads or trails. XX This lease may be transferred in whole or in part to any person, association Sec. 11. PROCEEDINGS IN CASE OF DEFAULT - If or corporation qualified to hold such lessee fails to comply with applicable laws, lease interest. existing regulations, or the terms, conditions and stipulations of this lease, and the [ ] This lease may be transferred in whole noncompliance continues for 30 days after written or in part to another public body, or notice thereof, this lease shall be subject to to a person who will mine the coal on cancellation by the lessor only by judicial behalf of, and for the use of, the proceedings. This provision shall not be public body or to a person who for the construed to prevent the exercise by lessor of limited purpose of creating a security any other legal and equitable remedy, including interest in favor of a lender agrees waiver of the default. Any such remedy or waiver to be obligated to mine the coal on shall not prevent later cancellation for the same behalf of the public body. default occurring at any other time. Sec. 12. HEIRS AND SUCCESSORS-IN-INTEREST - Each obligation of this lease shall extend to and be binding upon, and every benefit hereof shall inure to, the heirs, executors, administrators, successors, or assigns of the respective parties hereto.
WYW83394 Page 4 Sec. 13. INDEMNIFICATION - Lessee shall indemnify and hold harmless the United States from any and all claims arising out of the lessee's activities and operations under this lease. Sec. 14. SPECIAL STATUTES - This lease is subject to the Federal Water Pollution Control Act (33 U.S.C. 1151-1175), the Clean Air Act (42 U.S.C. 1987 et. seq.), and to all other applicable laws pertaining to exploration activities, mining operations and reclamation, including the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1201 et. seq.) Sec. 15. SPECIAL STIPULATIONS In addition to observing the general obligations and standards of performance set out in the current regulations, the lessee shall comply with and be bound by the following special stipulations. These stipulations are also imposed upon the lessee's agents and employees. The failure or refusal of any of these persons to comply with these stipulations shall be deemed a failure of the lessee to comply with the terms of the lease. The lessee shall require his agents, contractors and subcontractors involved in activities concerning this lease to include these stipulations in the contracts between and among them. These stipulations may be revised or amended, in writing, by the mutual consent of the lessor and the lessee at any time to adjust to changed conditions or to correct an oversight. (a) CULTURAL RESOURCES - (1) Before undertaking any activities that may disturb the surface of the leased lands, the lessee shall conduct a cultural resource intensive field inventory in a manner specified by the Authorized Officer of the BLM or of the surface managing agency, if different, on portions of the mine plan area and adjacent areas, or exploration plan area, that may be adversely affected by lease-related activities and which were not previously inventoried at such a level of intensity. The inventory shall be conducted by a qualified professional cultural resource specialist (i.e., archeologist, historian, historical architect, as appropriate), approved by the Authorized Officer of the surface managing agency (BLM if the surface is privately owned), and a report of the inventory and recommendations for protecting any cultural resources identified shall be submitted to the Assistant Director of the Western Support Center of the Office of Surface Mining, the Authorized Officer of the BLM, if activities are associated with coal exploration outside an approved mining permit area (hereinafter called Authorized Officer), and the Authorized Officer of the surface managing agency, if different. The lessee shall undertake measures, in accordance with instructions from the Assistant Director, or Authorized Officer, to protect cultural resources on the leased lands. The lessee shall not commence the WYW83394 Page 5 surface disturbing activities until permission to proceed is given by the Assistant Director or Authorized Officer. (2) The lessee shall protect all cultural resource properties within the lease area from lease-related activities until the cultural resource mitigation measures can be implemented as part of an approved mining and reclamation plan or exploration plan. (3) The cost of conducting the inventory, preparing reports, and carrying out mitigation measures shall be borne by the lessee. (4) If cultural resources are discovered during operations under this lease, the lessee shall immediately bring them to the attention of the Assistant Director or Authorized Officer, or the Authorized Officer of the surface managing agency, if the Assistant Director is not available. The lessee shall not disturb such resources except as may be subsequently authorized by the Assistant Director or Authorized Officer. Within two (2) working days of notification, the Assistant Director or Authorized Officer will evaluate or have evaluated any cultural resources discovered and will determine if any action may be required to protect or preserve such discoveries. The cost of data recovery for cultural resources discovered during lease operations shall be borne by the surface managing agency unless otherwise specified by the Authorized Officer of the BLM or of the surface managing agency, if different. (5) All cultural resources shall remain under the jurisdiction of the United States until ownership is determined under applicable law. (b) PALEONTOLOGICAL RESOURCES - If paleontological resources, either large and conspicuous, and/or of significant scientific value are discovered during construction, the find will be reported to the Authorized Officer immediately. Construction will be suspended within 250 feet of said find. An evaluation of the paleontological discovery will be made by a BLM approved professional paleontologist within five (5) working days, weather permitting, to determine the appropriate action(s) to prevent the potential loss of any significant paleontological value. Operations within 250 feet of such discovery will not be resumed until written authorization to proceed is issued by the Authorized Officer. The lessee will bear the cost of any required paleontological appraisals, surface collection of fossils, or salvage of any large conspicuous fossils of significant scientific interest discovered during the operations. (c) MULTIPLE MINERAL DEVELOPMENT - Operations will not be approved which, in the opinion of the Authorized Officer, would unreasonably interfere with the orderly development and/or production from a valid existing mineral lease issued prior to this one for the same lands. (d) OIL AND GAS/COAL RESOURCES - The BLM realizes that coal mining operations conducted on Federal coal leases issued within producing oil and gas fields may interfere with the economic recovery of oil and gas; just as WYW83394 Page 6 Federal oil and gas leases issued in a Federal coal lease area may inhibit coal recovery. BLM retains the authority to alter and/or modify the resource recovery and protection plans for coal operations and/or oil and gas operations on those lands covered by Federal mineral leases so as to obtain maximum resource recovery. (e) RESOURCE RECOVERY AND PROTECTION - Notwithstanding the approval of a resource recovery and protection plan (R2P2) by the BLM, lessor reserves the right to seek damages against the operator/lessee in the event (i) the operator/lessee fails to achieve maximum economic recovery (MER) (as defined at 43 CFR 3480.0-5(21)) of the recoverable coal reserves or (ii) the operator/lessee is determined to have caused a wasting of recoverable coal reserves. Damages shall be measured on the basis of the royalty that would have been payable on the wasted or unrecovered coal. The parties recognize that under an approved R2P2, conditions may require a modification by the operator/lessee of that plan. In the event a coalbed or portion thereof is not to be mined or is rendered unmineable by the operation, the operator/lessee shall submit appropriate justification to obtain approval by the Authorized Officer (AO) to leave such reserves unmined. Upon approval by the AO, such coalbeds or portions thereof shall not be subject to damages as described above. Further, nothing in this section shall prevent the operator/lessee from exercising its right to relinquish all or portion of the lease as authorized by statute and regulation. In the event the AO determines that the R2P2, as approved, will not attain MER as the result of changed conditions, the AO will give proper notice to the operator/lessee as required under applicable regulations. The AO will order a modification if necessary, identifying additional reserves to be mined in order to attain MER. Upon a final administrative or judicial ruling upholding such an ordered modification, any reserves left unmined (wasted) under that plan will be subject to damages as described in the first paragraph under this section. Subject to the right to appeal hereinafter set forth, payment of the value of the royalty on such unmined recoverable coal reserves shall become due and payable upon determination by the AO that the coal reserves have been rendered unmineable or at such time that the operator/lessee has demonstrated an unwillingness to extract the coal. The BLM may enforce this provision either by issuing a written decision requiring payment of the MMS demand for such royalties, or by issuing a notice of non-compliance. A decision or notice of non-compliance issued by the lessor that payment is due under this stipulation is appealable as allowed by law. (f) PUBLIC LAND SURVEY PROTECTION - The lessee will protect all survey monuments, witness corners, reference monuments, and bearing trees against destruction, obliteration, or damage during operations on the lease areas. If any monuments, corners or accessories are destroyed, obliterated, or damaged by this operation, the lessee will hire an appropriate county surveyor or registered land surveyor to reestablish or restore the WYW83394 Page 7 monuments, corners, or accessories at the same location, using surveying procedures in accordance with the "Manual of Surveying Instructions for the ---------------------------------------- Survey of the Public Lands of the United States." The survey will be recorded - ----------------------------------------------- in the appropriate county records, with a copy sent to the Authorized Officer. in order to attain MER. Upon a final administrative or judicial ruling upholding such an ordered modification, any reserves left unmined (wasted) under that plan will be subject to damages as described in the first paragraph under this section. Subject to the right to appeal hereinafter set forth, payment of the value of the royalty on such unmined recoverable coal reserves shall become due and payable upon determination by the AO that the coal reserves have been rendered unmineable or at such time that the operator/lessee has demonstrated an unwillingness to extract the coal. The BLM may enforce this provision either by issuing a written decision requiring payment of the MMS demand for such royalties, or by issuing a notice of non-compliance. A decision or notice of non-compliance issued by the lessor that payment is due under this stipulation is appealable as allowed by UNITED STATES DEPARTMENT OF THE INTERIOR BUREAU OF LAND MANAGEMENT INFORMATION ON TAKING APPEALS TO THE BOARD OF LAND APPEALS DO NOT APPEAL UNLESS 1. This decision is adverse to you, AND 2. You believe it is incorrect IF YOU APPEAL, THE FOLLOWING PROCEDURES MUST BE FOLLOWED 1. NOTICE OF APPEAL.................. Within 30 days file a Notice of Appeal in the office which issued this decision (see 43 CFR Secs. 4.411 and 4.13). You may state your reasons for appealing, if you desire. 2. WHERE TO FILE NOTICE OF APPEAL................ Wyoming State Office, Bureau of Land Management 5353 Yellowstone Rd., P.O. Box 1828 Cheyenne, Wyoming 82009/82003- 1828 SOLICITOR ALSO COPY TO.................... The Regional Solicitor, Rocky Mountain Region U.S. Department of the Interior 755 Parfet Street, Suite 151 Lakewood, CO 80215 3. STATEMENT OF REASONS.............. Within 30 days after filing the Notice of Appeal, file a complete statement of the reasons why you are appealing. This must be filed with the United States Department of the Interior. Office of the Secretary, Board of Land Appeals, 4015 Wilson Blvd., Arlington, Virginia 22203 (see 43 CFR Sec. 4.412 and 4.413). If you fully stated your reasons for appealing when filing the Notice of Appeal, no additional statement is necessary. SOLICITOR ALSO COPY TO.................... The Regional Solicitor, Rocky Mountain Region U.S. Department of the Interior 755 Parfet Street, Suite 151 Lakewood, CO 80215 4. ADVERSE PARTIES................... Within 15 days after each document is filed, each adverse party named in the decision and the Regional Solicitor or Field Solicitor having jurisdiction over the State in which the appeal arose must be served with a copy of: (a) the Notice of Appeal, (b) the Statement of Reasons, and (c) any other documents filed (see 43 CFR Sec. 4.413). Service will be made upon the Associate Solicitor, Division of Energy and Resources, Washington, D.C. 20240, instead of the Field or Regional Solicitor when appeals are taken from decisions of the Director (WO-100). 5. PROOF OF SERVICE.................. Within 15 days after any document is served on an adverse party, file proof of that service with the United States Department of the Interior, Office of the Secretary, Board of Land Appeals, 4015 Wilson Blvd., Arlington, Virginia 22203. This may consist of a certified or registered mail "Return Receipt Card" signed by the adverse party (see 43 CFR Sec. 4.401(c)(2)). Unless these procedures are followed your appeal will be subject to dismissal (see 43 CFR Sec. 4.402). Be certain that all communications are identified by serial number of the case being appealed. NOTE: A document is not filed until it is actually received in the proper office (see 43 CFR Sec. 4.401(a)) SUBPART 1821.2 -- OFFICE HOURS; TIME AND PLACE FOR FILING Sec. 1821.2-1 Office hours of State Sec. 1821.2-2(d) Any document required or Offices. (a) State Offices and the permitted to be filed under the regulations Washington Office of the Bureau of Land of this chapter, which is received in the Management are open to the public for the State Office or the Washington Office, filing of documents and inspection of either in the mail or by personal delivery records during the hours specified in when the office is not open to the public this paragraph on Monday through Friday shall be deemed to be filed as of the day of each week, with the exception of those and hour the office next opens to the days where the office may be closed public. because of a national holiday or Presidential or other administrative (e) Any document required by law, order. The hours during which the State regulation, or decision to be filed within a Offices and the Washington Office are stated period, the last day of which falls open to the public for the filing of on a day the State Office or the Washington documents and inspection of records are Office is officially closed, shall be deemed from 9 a.m. to 4 p.m., standard time or to be timely filed if it is received in the daylight saving time, whichever is in appropriate office on the next day the effect at the city in which each office office is open to the public. is located.
* * * * * This decision may be appealed to the Interior Board of Land Appeals, Office of the Secretary, in accordance with the regulations contained in 43 CFR, Part 4. If an appeal is taken, your notice of appeal must be filed in this office (at the above address) within 30 days from receipt of this decision. The appellant has the burden of showing that the decision appealed from is in error. If you wish to file a petition (pursuant to regulation 43 CFR 4.21 (58 FR 4939, January 19, 1993) (request) for a stay (suspension) of the effectiveness of this decision during the time that your appeal is being reviewed by the Board, the petition for a stay must accompany your notice of appeal. A petition for a stay is required to show sufficient justification based on the standards listed below. Copies of the notice of appeal and petition for a stay must also be submitted to each party named in this decision and to the Interior Board of Land Appeals and to the appropriate Office of the Solicitor (see 43 CFR 4.413) at the same time the original documents are filed with this office. If you request a stay, you have the burden of proof to demonstrate that a stay should be granted. Standard for Obtaining a Stay ----------------------------- Except as otherwise provided by law or other pertinent regulation, a petition for a stay of a decision pending appeal shall show sufficient justification based on the following standards: (1) The relative harm to the parties if the stay is granted or denied, (2) The likelihood of the appellant's success on the merits, (3) The likelihood of immediate and irreparable harm if the stay is not granted, and (4) Whether the public interest favors granting the stay. STATEMENT OF COMPLIANCE ----------------------- (As required by Bureau of Land Management Instruction Memorandum No. WY-98-35) This Statement of Compliance is submitted in conjunction with Caballo Coal Company's request for the partial relinquishment of federal coal lease number WYW-83394. To the best of its knowledge, information and belief, Caballo Coal Company is in full compliance with the provisions and terms of federal coal lease WYW-83394 and all laws, rules and regulations applicable thereto. Dated this 2nd day of March 1998. Respectfully Submitted, CABALLO COAL COMPANY ------------------------------ Larry H. Fox, President EX-12.1 121 COMPUTATION OF RATIO OF EARINGS TO FIXED CHARGES P & L COAL HOLDINGS CORPORATION RATIO OF EARNINGS TO FIXED CHARGES (IN THOUSANDS)
Pro Forma Fiscal Fiscal Six Months Fiscal Fiscal Fiscal Fiscal Year Ended Year Ended Ended Year Ended Year Ended Year Ended Year Ended March 1998 March 1998 March 1997 Sept. 1996 Sept. 1995 Sept. 1994 Sept. 1993 ------------ ------------ ------------ ------------ ----------- ----------- ----------- Income (Loss) Before Income Taxes $ 12,588 $ 250,529 $ 85,985 $ (702,467) $ 192,739 $ 86,943 $ (21,816) Interest Expense 207,745 33,635 24,700 62,526 58,355 63,404 62,425 Interest Portion of Rental Expense 18,910 18,910 8,002 17,069 14,981 13,637 14,729 ----------- ----------- ----------- ----------- ---------- ---------- --------- Adjusted Earnings (Loss) $ 239,241 $ 303,074 $ 118,687 $ (622,872) $ 266,075 $ 163,984 $ 55,338 =========== =========== =========== =========== ========== ========== ========= Interest Expense $ 207,745 $ 33,635 $ 24,700 $ 62,526 $ 58,355 $ 63,404 $ 62,425 Interest Portion of Rental Expense 18,910 18,910 8,002 17,069 14,961 13,637 14,729 ----------- ----------- ----------- ----------- ---------- ---------- --------- Adjusted fixed charges $ 226,655 $ 52,545 $ 32,702 $ 79,595 $ 73,336 $ 77,041 $ 77,154 =========== =========== =========== =========== ========== ========== ========= Ratio of Earnings to Fixed Charges 1.06 5.77 3.63 N/A 3.63 2.13 N/A =========== =========== =========== =========== ========== ========== =========
EX-21 122 LIST OF SUBSIDIARIES EXHIBIT 21 LIST OF SUBSIDIARIES OF P&L COAL HOLDINGS CORPORATION Carbones Peabody de Venezuela, C.A. Darex Capital Inc. Dolphin Properties Pty Limited Peabody Australasia Pty Limited Peabody Australia Limited Peabody Bengalla Investments Pty Limited Peabody Bengalla Pty Limited Peabody Coal Limited Peabody Finance Limited Peabody Investments (Australia) Pty Limited Peabody Minerals Pty. Limited Peabody Mining Investments Pty Limited Peabody Mining Services Pty Limited Peabody Mount Arthur North Pty Limited Peabody Resources Corporation (Malaysia) Sdn.Bdn. Peabody Resources Holdings Pty. Limited Peabody Resources Limited Peabody Resources Staff Retirement Fund Pty Limited Peabody Sub Holdings Pty Limited Peabody Turkish Investments Limited Ravensworth Coal Trust Ravensworth Pastoral Co. Pty Limited Rylandes Insurance Co. Pty Limited Survga Limited The Energy Group Australia Pty Limited CL Funding, L.L.C. CL Hartford, L.L.C. CL Power Sales One, L.L.C. CL Power Sales Two, L.L.C. CL Power Sales Three, L.L.C. CL Power Sales Four, L.L.C. CL Power Sales Five, L.L.C. CL Power Sales Six, L.L.C. CL Power Sales Seven, L.L.C. CL Power Sales Eight, L.L.C. CL Power Sales Nine, L.L.C. CL Power Sales Ten, L.L.C. Citizens Power L.L.C. Citizens Power Sales Hartford Power Sales, L.L.C. Arid Operations, Inc. Darius Gold Mine, Inc. Gold Fields Chile, S.A. Gold Fields Mining Corporation Peabody America, Inc. Peabody Holding Company, Inc. Affinity Mining Company Big Sky Coal Company Blackrock First Capital Corporation 1 Bluegrass Coal Company Caballo Coal Company Charles Coal Company Coal Properties Corp. Cook Mountain Coal Company Cottonwood Land Company EACC Camps, Inc. Eastern Associated Coal Corp. Eastern Royalty Corp. Grand Eagle Mining, Inc. Hayden Gulch Terminal, Inc. Independence Material Holding Company Interior Holdings Corp. James River Coal Terminal Company Juniper Coal Company Kayenta Mobile Home Park, Inc. Martinka Coal Company Midco Supply and Equipment Corporation Midwest Coal Resources, Inc. Mountain View Coal Company North Page Coal Corp. Ohio County Coal Company Patriot Coal Company L.P. Peabody COALSALES Company Peabody COALTRADE, Inc. Peabody Coal Company Peabody Development Company Peabody Energy Solutions, Inc. Peabody Natural Resources Company Peabody Terminals, Inc. Peabody Venezuela Coal Corp. Peabody Western Coal Company Pine Ridge Coal Company Powder River Coal Company Rio Escondido Coal Corp. Seneca Coal Company Sentry Mining Company Snowberry Land Company Sterling Smokeless Coal Company Thoroughbred, L.L.C. 2 EX-23.2 123 CONSENT OF ERNST & YOUNG LLP EXHIBIT 23.2 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-4) and the related Prospectus of P&L Coal Holdings Corporation for the registration of 8 7/8% series B Senior Notes due 2008 and 9 5/8% series B Senior Subordinated Notes due 2008, and to the inclusion of our report dated April 24, 1998, with respect to the combined financial statements and schedule of P&L Coal Group for the year ended March 31, 1998, the six months ended March 31, 1997, and each of the two years ended September 30, 1996, filed with the Securities and Exchange Commission. St. Louis, MO /Ernst & Young LLP/ July 10, 1998 EX-23.3 124 CONSENT OF ERNST & YOUNG LLP EXHIBIT 23.3 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-4) and the related Prospectus of P&L Coal Holdings Corporation for the registration of 8 7/8% series B Senior Notes due 2008 and 9 5/8% series B Senior Subordinated Notes due 2008, and to the inclusion of our report dated July 9, 1998, with respect to the balance sheet of P&L Coal Holdings Corporation as of March 31, 1998, filed with the Securities and Exchange Commission. St. Louis, MO /Ernst & Young LLP/ July 10, 1998 EX-23.4 125 CONSENT OF JOHN T. BOYD COMPANY EXHIBIT 23.4 CONSENT OF EXPERT We hereby consent to the use by P&L Coal Holdings Corporation in their Registration Statement on Form S-4 dated July 14,1998, and any amendments thereto, our report dated November 8,1996, addressed to The Energy Group PLC relating to certain coal reserve information. We also consent to the reference to John T. Boyd Company under the headings "Prospectus Summary" and "Experts" in the Prospectus contained in such Registration Statement. /s/ James W. Boyd ----------------------------- By: James W. Boyd President July 9, 1998 EX-25.1 126 FORM T-1 STMT OF ELIGIBILITY UNDER TRUST INDEN EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 _________ STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) STATE STREET BANK AND TRUST COMPANY (Exact name of trustee as specified in its charter) Massachusetts 04-1867445 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national bank) Identification No.) 225 Franklin Street, Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel 225 Franklin Street, Boston, Massachusetts 02110 (617) 654-3253 (Name, address and telephone number of agent for service) P&L COAL HOLDINGS CORPORATION (Exact name of obligor as specified in its charter) DELAWARE 13-4004153 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 701 MARKET STREET ST. LOUIS, MISSOURI 63101-1826 (Address of principal executive offices) (Zip Code) 8-7/8% SENIOR NOTES DUE 2008 (Title of indenture securities) GENERAL ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH IT IS SUBJECT. Department of Banking and Insurance of The Commonwealth of Massachusetts, 100 Cambridge Street, Boston, Massachusetts. Board of Governors of the Federal Reserve System, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C. (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. The obligor is not an affiliate of the trustee or of its parent, State Street Corporation. (See note on page 2.) ITEM 3. THROUGH ITEM 15. NOT APPLICABLE. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY. 1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN EFFECT. A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION. A copy of a Statement from the Commissioner of Banks of Massachusetts that no certificate of authority for the trustee to commence business was necessary or issued is on file with the Securities and Exchange Commission as Exhibit 2 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22- 17940) and is incorporated herein by reference thereto. 3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE. A copy of the authorization of the trustee to exercise corporate trust powers is on file with the Securities and Exchange Commission as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS CORRESPONDING THERETO. A copy of the by-laws of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 4 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Eastern Edison Company (File No. 33-37823) and is incorporated herein by reference thereto. 1 5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN DEFAULT. Not applicable. 6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY SECTION 321(B) OF THE ACT. The consent of the trustee required by Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a part hereof. 7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof. NOTES In answering any item of this Statement of Eligibility which relates to matters peculiarly within the knowledge of the obligor or any underwriter for the obligor, the trustee has relied upon information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer furnished to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, a corporation organized and existing under the laws of The Commonwealth of Massachusetts, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Boston and The Commonwealth of Massachusetts, on the 15th day of June. STATE STREET BANK AND TRUST COMPANY By: /s/ Philip G. Kane, Jr. ------------------------------ NAME PHILIP G. KANE, JR. TITLE VICE PRESIDENT 2 EXHIBIT 6 CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by P&L COAL HOLDINGS CORPORATION, of its 9-5/8% SENIOR SUBORDINATED NOTES DUE 1008, we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY By: /s/ Philip G. Kane, Jr. ------------------------------------- NAME PHILIP G. KANE, JR. TITLE VICE PRESIDENT DATED: JUNE 15, 1998 3 EXHIBIT 7 Consolidated Report of Condition of State Street Bank and Trust Company, Massachusetts and foreign and domestic subsidiaries, a state banking institution organized and operating under the banking laws of this commonwealth and a member of the Federal Reserve System, at the close of business March 31, 1998, -------------- published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act and in accordance with a call made by the Commissioner of Banks under General Laws, Chapter 172, Section 22(a).
Thousands of ASSETS Dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin...................................................... 1,144,309 Interest-bearing balances............................................................................... 9,914,704 Securities................................................................................................... 10,062,052 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge subsidiary..................................................................... 8,073,970 Loans and lease financing receivables: Loans and leases, net of unearned income ............................................................... 6,433,627 Allowance for loan and lease losses..................................................................... 88,820 Allocated transfer risk reserve......................................................................... 0 Loans and leases, net of unearned income and allowances................................................. 6,344,807 Assets held in trading accounts.............................................................................. 1, 117,547 Premises and fixed assets.................................................................................... 453,576 Other real estate owned...................................................................................... 100 Investments in unconsolidated subsidiaries................................................................... 44,985 Customers' liability to this bank on acceptances outstanding................................................. 66,149 Intangible assets............................................................................................ 263,249 Other assets................................................................................................. 1,066,572 ---------- Total assets................................................................................................. 38,552,020 ========== LIABILITIES Deposits: In domestic offices..................................................................................... 9,266,492 Noninterest-bearing................................................................................ 6,824,432 Interest-bearing................................................................................... 2,442,060 In foreign offices and Edge subsidiary.................................................................. 14,385,048 Noninterest-bearing................................................................................ 75,909 Interest-bearing................................................................................... 14,309,139 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge subsidiary..................................................................... 9,949,994 Demand notes issued to the U.S. Treasury and Trading Liabilities............................................. 171,783 Trading liabilities........................................................................................ 1,078,189 Other borrowed money......................................................................................... 406,583 Subordinated notes and debentures............................................................................ 0 Bank's liability on acceptances executed and outstanding..................................................... 66,149 Other liabilities............................................................................................ 878,947 Total liabilities............................................................................................ 36,203,185 ---------- EQUITY CAPITAL Perpetual preferred stock and related surplus...................................................................................................... 0 Common stock................................................................................................. 29,931 Surplus...................................................................................................... 450,003 Undivided profits and capital reserves/Net unrealized holding gains (losses)................................. 1,857,021 Net unrealized holding gains (losses) on available-for-sale securities....................................... 18,136 Cumulative foreign currency translation adjustments.......................................................... (6,256) Total equity capital......................................................................................... 2,348,835 ---------- Total liabilities and equity capital......................................................................... 38,552,020 ----------
4 I, Rex S. Schuette, Senior Vice President and Comptroller of the above named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Rex S. Schuette We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. David A. Spina Marshall N. Carter Truman S. Casner 5 5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS INDEFAULT. Not applicable. 6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY SECTION 321(B) OF THE ACT. The consent of the trustee required by Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a part hereof. 7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof. NOTES In answering any item of this Statement of Eligibility which relates to matters peculiarly within the knowledge of the obligor or any underwriter of the obligor, the trustee has relied upon the information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, a corporation duly organized and existing under the laws of The Commonwealth of Massachusetts, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Boston and The Commonwealth of Massachusetts, on the 15TH OF JUNE, 1998. STATE STREET BANK AND TRUST COMPANY By: /s/ Philip G. Kane, Jr. /s/ NAME ----------------------------------- NAME: PHILIP G. KANE, JR. TITLE: VICE PRESIDENT 2 EXHIBIT 6 CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by P&L COAL HOLDINGS CORPORATION, of its 8-7/8% SENIOR NOTES DUE 2008, we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY By: Philip G. Kane, Jr. /s/ NAME ----------------------------------- NAME: Philip G. Kane, Jr. TITLE: VICE PRESIDENT DATED: JUNE 15, 1998 3 EX-25.2 127 FORM T-1 STMT OF ELIGIBILITY UNDER TRUST INDEN EXHIBIT 25.2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 _________ STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) STATE STREET BANK AND TRUST COMPANY (Exact name of trustee as specified in its charter) Massachusetts 04-1867445 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national bank) Identification No.) 225 Franklin Street, Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel 225 Franklin Street, Boston, Massachusetts 02110 (617) 654-3253 (Name, address and telephone number of agent for service) P&L COAL HOLDINGS CORPORATION (Exact name of obligor as specified in its charter) DELAWARE 13-4004153 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 701 MARKET STREET ST. LOUIS, MISSOURI 63101-1826 (Address of principal executive offices) (Zip Code) 9-5/8% SENIOR SUBORDINATED NOTES DUE 2008 (Title of indenture securities) GENERAL ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH IT IS SUBJECT. Department of Banking and Insurance of The Commonwealth of Massachusetts, 100 Cambridge Street, Boston, Massachusetts. Board of Governors of the Federal Reserve System, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C. (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. The obligor is not an affiliate of the trustee or of its parent, State Street Corporation. (See note on page 2.) ITEM 3. THROUGH ITEM 15. NOT APPLICABLE. ITEM 16.LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY. 1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN EFFECT. A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION. A copy of a Statement from the Commissioner of Banks of Massachusetts that no certificate of authority for the trustee to commence business was necessary or issued is on file with the Securities and Exchange Commission as Exhibit 2 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE. A copy of the authorization of the trustee to exercise corporate trust powers is on file with the Securities and Exchange Commission as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22- 17940) and is incorporated herein by reference thereto. 4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS CORRESPONDING THERETO. A copy of the by-laws of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 4 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Eastern Edison Company (File No. 33-37823) and is incorporated herein by reference thereto. 1 5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN DEFAULT. Not applicable. 6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY SECTION 321(B) OF THE ACT. The consent of the trustee required by Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a part hereof. 7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof. NOTES In answering any item of this Statement of Eligibility which relates to matters peculiarly within the knowledge of the obligor or any underwriter for the obligor, the trustee has relied upon information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer furnished to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, a corporation organized and existing under the laws of The Commonwealth of Massachusetts, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Boston and The Commonwealth of Massachusetts, on the 15th day of June. STATE STREET BANK AND TRUST COMPANY By: Philip G. Kane, Jr. /s/ NAME ------------------------------------ NAME: PHILIP G. KANE, JR. TITLE: VICE PRESIDENT 2 EXHIBIT 6 CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by P&L COAL HOLDINGS CORPORATION, of its 9-5/8% SENIOR SUBORDINATED NOTES DUE 1008, we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY By: Philip G. Kane, Jr. /s/ NAME ------------------------------------ NAME: PHILIP G. KANE, JR. TITLE: VICE PRESIDENT DATED: JUNE 15, 1998 3 EXHIBIT 7 Consolidated Report of Condition of State Street Bank and Trust Company, Massachusetts and foreign and domestic subsidiaries, a state banking institution organized and operating under the banking laws of this commonwealth and a member of the Federal Reserve System, at the close of business March 31, 1998, -------------- published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act and in accordance with a call made by the Commissioner of Banks under General Laws, Chapter 172, Section 22(a).
Thousands of ASSETS Dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin...................................................... 1,144,309 Interest-bearing balances............................................................................... 9,914,704 Securities................................................................................................... 10,062,052 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge subsidiary.................................................................. 8,073,970 Loans and lease financing receivables: Loans and leases, net of unearned income ............................................................ 6,433,627 Allowance for loan and lease losses.................................................................. 88,820 Allocated transfer risk reserve...................................................................... 0 Loans and leases, net of unearned income and allowances.............................................. 6,344,807 Assets held in trading accounts........................................................................... 1, 117,547 Premises and fixed assets................................................................................. 453,576 Other real estate owned................................................................................... 100 Investments in unconsolidated subsidiaries................................................................ 44,985 Customers' liability to this bank on acceptances outstanding.............................................. 66,149 Intangible assets......................................................................................... 263,249 Other assets.............................................................................................. 1,066,572 ---------- Total assets.............................................................................................. 38,552,020 ========== LIABILITIES Deposits: In domestic offices.................................................................................. 9,266,492 Noninterest-bearing............................................................................. 6,824,432 Interest-bearing................................................................................ 2,442,060 In foreign offices and Edge subsidiary............................................................... 14,385,048 Noninterest-bearing............................................................................. 75,909 Interest-bearing................................................................................ 14,309,139 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge subsidiary.................................................................. 9,949,994 Demand notes issued to the U.S. Treasury and Trading Liabilities.......................................... 171,783 Trading liabilities....................................................................................... 1,078,189 Other borrowed money...................................................................................... 406,583 Subordinated notes and debentures......................................................................... 0 Bank's liability on acceptances executed and outstanding.................................................. 66,149 Other liabilities......................................................................................... 878,947 Total liabilities......................................................................................... 36,203,185 ---------- EQUITY CAPITAL Perpetual preferred stock and related surplus............................................................. 0 Common stock.............................................................................................. 29,931 Surplus................................................................................................... 450,003 Undivided profits and capital reserves/Net unrealized holding gains (losses).............................. 1,857,021 Net unrealized holding gains (losses) on available-for-sale securities.................................... 18,136 Cumulative foreign currency translation adjustments....................................................... (6,256) Total equity capital...................................................................................... 2,348,835 ---------- Total liabilities and equity capital...................................................................... 38,552,020 ----------
4 I, Rex S. Schuette, Senior Vice President and Comptroller of the above named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Rex S. Schuette We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. David A. Spina Marshall N. Carter Truman S. Casner 5 EX-27.1 128 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM COMBINED BALANCE SHEETS AND STATEMENTS OF OPERATIONS AS OF MARCH 31, 1998 AND FOR THE YEAR THEN ENDED, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS MAR-31-1998 APR-01-1997 MAR-31-1998 96,821 0 326,540 9,100 197,480 2,126,152 5,238,939 1,565,397 6,355,234 1,590,181 0 0 0 0 1,687,842 6,355,234 2,244,462 2,244,462 1,975,275 1,975,275 0 0 33,635 250,529 90,193 0 0 0 0 160,336 0 0
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