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AMENDMENT NO. 1 TO LOAN DOCUMENTS
August __, 1999
Foothill Capital Corporation
11111 Santa Monica Boulevard
Suite 1500
Los Angeles, California 90025
Gentlemen:
Foothill Capital Corporation, as agent ("Agent"), the financial
institutions party to the Loan Agreement referred to herein (each, individually
a "Lender" and collectively, "Lenders") and certain Subsidiaries of Anker Coal
Group, Inc. (each, individually, a "Borrower" and collectively "Borrowers") have
entered into certain financing arrangements as set forth in the Loan and
Security Agreement, dated as of November 21, 1998, by and among Borrowers,
Lenders and Agent (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement"),
and all other agreements, documents and instruments referred to therein or at
any time executed and/or delivered in connection therewith or related thereto,
including, but not limited to, this Amendment (as all of the foregoing now
exist, are modified hereby or are hereafter amended, modified, supplemented,
extended, renewed, restated or replaced, collectively, the "Loan Documents").
Borrowers have requested that Agent and Lenders consent to Juliana
Mining Company, Inc. ("Juliana") no longer being a Borrower under the Loan
Agreement, agree to amend certain provisions of the Loan Agreement and waive
certain Events of Default and Agent and Lenders are willing to consent to
Juliana no longer being a Borrower under the Loan Agreement and to such
amendments and waive such Events of Default, subject to the terms and conditions
contained herein.
In consideration of the foregoing and the respective agreements and
covenants herein, the parties hereto agree as follows:
1. Termination as Borrower. Effective as of the Amendment No. 1 Closing
Date (as hereinafter defined), Juliana shall cease to be a "Borrower" under the
Loan Agreement and the other Loan Documents and shall be deemed to be solely a
"Guarantor" under the Loan Agreement and the other Loan Documents. From and
after the Amendment No. 1 Closing Date, Juliana shall not be permitted to
receive or request Advances under Section 2 of the Loan Agreement, and Lenders,
Agent and Foothill shall have no obligation to make any Advances to Juliana
under the Loan Documents. Any Advances (including, without limitation, Agent
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Advances and Foothill Loans) or Term Loans made to or on behalf of Juliana
outstanding on the Amendment No. 1 Closing Date shall be repaid in full in cash
or other immediately available funds, together with any accrued interest
thereon, on or before the Amendment No. 1 Closing Date.
2. Definitions.
2.1 Amendments to Definitions.
(a) The definition of "Borrower" and "Borrowers" contained
in the Loan Agreement and the other Financing Documents are each hereby amended
to delete any reference to Juliana.
(b) The definition of "Guarantors" set forth in Section 1.1
of the Loan Agreement is hereby deleted in its entirety and the following
substituted therefor:
"'Guarantor' means, individually and collectively, jointly
and severally, the Parent and Anker Group, Inc., a Delaware
corporation, Simba Group, Inc., a Delaware corporation, Anker
Power Services, Inc., a West Virginia corporation, Bronco Mining
Company, Inc., a West Virginia corporation, Vantrans, Inc., a West
Virginia corporation, King Knob Coal Co., Inc., a West Virginia
corporation, Heather Glen Reserves, Inc., a West Virginia
corporation, Hawthorne Coal Company, Inc., a West Virginia
corporation, Upshur Property, Inc., a West Virginia corporation,
Melrose Coal Company, Inc., a West Virginia corporation, New
Allegheny Land Holding Company, Inc., a West Virginia corporation,
and Juliana Mining Company, Inc., a West Virginia corporation, and
any other Subsidiary of Parent that shall now or hereafter
guarantee the payment and performance of the Obligations to Lender
Group."
(c) The definition of "Security Agreement" set forth in
Section 1.1 of the Loan Agreement is hereby deleted in its entirety and the
following substituted therefor:
"'Security Agreement' means, individually and collectively,
(i) the General Security Agreement separately executed and
delivered on the Closing Date by each Guarantor (other than
Juliana) in favor of Foothill and (ii) the General Security
Agreement executed and delivered by Juliana on the Amendment No. 1
Closing Date in favor of Foothill, in each case in form and
substance satisfactory to Agent, for the benefit of Lender Group,
pursuant to which, among other things, such Guarantor shall grant
to Agent, for the benefit of Lender Group, a first priority lien
on all of its Guarantor Collateral more particularly described
therein."
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(d) The definition of Eligible Accounts is hereby amended by
deleting clause (ii) of Section (i) thereof in its entirety and substituting the
following therefor:
"(ii) owing by Courtney Foos and/or Potomac Electric Power Company
evidencing total obligations collectively owing to Borrowers by
such Account Debtors in excess of: (A) 40% of all Eligible
Accounts during the period commencing on August __, 1999 and
ending on December 31, 1999; (B) 35% of all Eligible Accounts
during the period commencing January 1, 2000 and ending on
September 30, 2000; (C) 30% of all Eligible Accounts during the
period commencing on October 1, 2000 and ending on November 30,
2000; and (D) 25% of all Eligible Accounts thereafter".
2.2 Additional Definitions. Section 1.1 of the Loan Agreement is
hereby amended by adding the following new definitions in the appropriate
alphabetical order:
"'Amendment No.1' means Amendment No. 1 to Loan Documents,
dated August __, 1999, by and among Borrowers, Guarantors, Agent
and Lenders."
"'Amendment No. 1 Closing Date' means the date that each of
the conditions set forth in Section 8 of Amendment No. 1 have been
satisfied in a manner satisfactory to Agent."
"'Juliana' means Juliana Mining Company, Inc., a West
Virginia corporation, and a Guarantor of the Obligations."
2.3 Construction. All capitalized terms used herein shall have the
meanings assigned thereto in the Loan Agreement, unless otherwise defined
herein.
3. Investments; Loans. Section 7.13(c)(ix) of the Loan Agreement is
hereby amended by adding to the chart set forth therein the following new clause
(10):
"(10) Juliana Mining Company, Inc. $7,000,000 for fiscal year
1999 and $500,000 for each
fiscal year thereafter"
4. Schedule of Litigation. Schedule 5.10 of the Loan Agreement is
hereby deleted in its entirety and Schedule 4 to this Amendment substituted
therefor.
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5. Continuing Guaranty. The Continuing Guaranty by Juliana in favor of
Agent is hereby amended by deleting Juliana from the definitions of "Borrower"
and "Borrowers" set forth in Recital A thereto.
6. Mortgages. Juliana shall execute and deliver to Agent on behalf of
Lender Group amendments to the Mortgages executed and delivered by Juliana, in
form and substance satisfactory to Agent ("Mortgage Amendments"), amending the
Mortgages executed and delivered by Juliana to reflect that from and after the
Amendment No. 1 Closing Date Juliana shall be solely a Guarantor and not a
Borrower.
7. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrowers to Lender Group pursuant to the Loan Documents, each Borrower
and each Guarantor hereby jointly and severally represents, warrants and
covenants with and to Lender Group as follows (which representation, warranties
and covenants are continuing and shall survive the execution and delivery hereof
and shall be incorporated into and made a part of the Loan Documents):
7.1 No Default or Event of Default exists as of the date of this
Amendment No. 1 after giving effect to the amendments and waivers set forth
herein.
7.2 This Amendment has been duly executed and delivered by each
Borrower and each Guarantor and is in full force and effect as of the date
hereof, and the agreements and obligations of each Borrower and each Guarantor
contained herein and therein constitute legal, valid and binding obligations of
Borrowers enforceable against each Borrower and each Guarantor in accordance
with their respective terms.
7.3 All of the representations and warranties set forth in the
Loan Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date hereof as if made on the date hereof, except to
the extent any such representation or warranty is made as of a specified date,
in which case such representation or warranty shall have been true and correct
as of such date.
8. Conditions Precedent. The amendments herein shall be effective as of
March 1, 1999 upon the satisfaction of each of the following conditions
precedent in a manner satisfactory to Agent (the date of satisfaction of such
conditions, the "Amendment No. 1 Closing Date"):
8.1 Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has valid perfected and first priority
security interests in and liens upon the Collateral owned by Juliana and any
other property of Juliana which is intended to be security for the Obligations
or the liability of any Obligor in respect thereof, subject only to the security
interests and liens permitted herein or in the other Loan Documents;
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8.2 the receipt by Agent of an original of this Amendment, duly
authorized, executed and delivered by each Borrower, each Guarantor and each
Lender;
8.3 the receipt by Agent of an original of the Security Agreement
to be executed by Juliana, duly authorized, executed and delivered by the
Juliana;
8.4 the receipt by Agent of originals of the Mortgage Amendments
to be executed by Juliana, each duly authorized, executed and delivered by the
Juliana;
8.5 the receipt by Agent of Solvency Certificates in respect of
Borrowers and Parent and Compliance Certificates in each case for each of March,
April, May and June, 1999 including a calculation in reasonable detail showing
compliance with the covenants set forth in Section 7.20 of the Loan Agreement;
8.6 all requisite corporate action and proceedings in connection
with this Amendment and the other Loan Documents to be executed and delivered in
connection herewith shall be satisfactory in form and substance to Agent, and
Agent shall have received all information and copies of all documents, including
records of requisite corporate action and proceedings which Agent may have
requested in connection therewith, such documents where requested by Agent or
its counsel to be certified by appropriate corporate officers or governmental
authorities; and
8.7 except as set forth in Section 9 hereof, no Event of Default
shall have occurred and be continuing and no event shall have occurred or
condition be existing and continuing which, with notice or passage of time or
both, would constitute an Event of Default.
9. Waiver. Borrowers hereby acknowledge, confirm and agree that (a)
Parent and Borrowers have failed to deliver the Solvency Certificates for March,
April, May and June, 1999 required to be delivered pursuant to Section 6.2(a)(i)
of the Loan Agreement, the Compliance Certificates as of the last day of March,
April, May and June of 1999 required to be delivered pursuant to Section 6.3 of
the Loan Agreement and (b) as a result of the foregoing, an Event of Default has
occurred and is continuing under Section 8.2(a) of the Loan Agreement (the
"Subject Default"). At the request of Borrowers and Guarantors, Agent, at the
written request of the Required Lenders, hereby waives the Subject Default,
provided, however, that (x) Parent and Borrowers deliver to Agent on the date
hereof such Solvency Certificates (which, in the case of Parent, may reflect
that Parent, in the event it is unable to obtain certain additional financing
and restructure the Senior Notes, will be unable to pay certain of its
obligations as they mature) and such Compliance Certificates and (y) nothing
contained herein shall constitute a waiver of any other existing Event of
Default or any future noncompliance with Section 6.2(a)(i) or Section 6.3 of the
Loan Agreement or any other term, condition or agreement contained in the Loan
Agreement or any Loan Document. Nothing contained herein shall limit, impair,
waive or otherwise affect any other term, provision or condition of the Loan
Agreement or any other Loan Document, all of which remain in full force and
effect in accordance with all of their respective existing terms and conditions.
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10. Fee. As partial consideration for Lender Group's entering into this
Amendment, Borrowers shall pay to Agent for the ratable benefit of Lender Group
a fee in the amount of $10,000, which shall be fully earned and payable as of
the date hereof.
11. Miscellaneous.
11.1 Headings. The headings listed herein are for convenience only
and do not constitute matters to be considered in interpreting this Amendment.
11.2 Effect of this Amendment. Except as modified pursuant hereto,
the Loan Documents are hereby specifically ratified, restated and confirmed by
all parties hereto as of the effective date hereof. To the extent of a conflict
between the terms of this Amendment and the other Loan Documents, the terms of
this Amendment shall control.
11.3 Governing Law. The validity, interpretation and enforcement
of this Amendment shall be governed by the internal laws of the State of New
York (without giving effect to principles of conflicts of law).
11.4 Further Assurances. Borrowers and Guarantors shall execute
and deliver such additional documents and take such additional action as may be
necessary or desirable, as determined by Agent, to effectuate the provisions and
purposes of this Amendment.
11.5 Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement.
Please sign the enclosed counterpart of this Amendment in the space
provided below, whereby this Amendment, as accepted by Agent and Lenders, shall
become a binding agreement among Borrowers, Guarantors and Lender Group.
Very truly yours,
ANKER ENERGY CORPORATION
By:________________________
Title:_____________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRIOR PAGE]
MARINE COAL SALES COMPANY
By:_____________________________
Title:__________________________
ANKER WEST VIRGINIA MINING
COMPANY, INC.
By:_____________________________
Title:__________________________
PATRIOT MINING COMPANY, INC.
By:_____________________________
Title:__________________________
VINDEX ENERGY CORPORATION
By:_____________________________
Title:__________________________
ANKER VIRGINIA MINING COMPANY, INC.
By:_____________________________
Title:__________________________
JULIANA MINING COMPANY, INC.
By:_____________________________
Title:__________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRIOR PAGE]
ANKER COAL GROUP, INC.,
as Guarantor and Borrower Agent
By:_____________________________
Title:__________________________
ANKER GROUP, INC.
By:_____________________________
Title:__________________________
SIMBA GROUP, INC.
By:_____________________________
Title:__________________________
ANKER POWER SERVICES, INC.
By:_____________________________
Title:__________________________
BRONCO MINING COMPANY, INC.
By:_____________________________
Title:__________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRIOR PAGE]
VANTRANS, INC.
By:_____________________________
Title:__________________________
KING KNOB COAL CO., INC.
By:_____________________________
Title:__________________________
HEATHER GLEN RESOURCES, INC.
By:_____________________________
Title:__________________________
HAWTHORNE COAL COMPANY, INC.
By:_____________________________
Title:__________________________
UPSHUR PROPERTY, INC.
By:_____________________________
Title:__________________________
MELROSE COAL COMPANY, INC.
By:_____________________________
Title:__________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRIOR PAGE]
NEW ALLEGHENY LAND HOLDING
COMPANY, INC.
By:________________________
Title:_____________________
AGREED AND ACKNOWLEDGED:
FOOTHILL CAPITAL CORPORATION
as Agent and as a Lender
By:__________________________
Title:_______________________
CONGRESS FINANCIAL CORPORATION
By:__________________________
Title:_______________________
SUNROCK CAPITAL CORP.
By:__________________________
Title:_______________________
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