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EXHIBIT10.28
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT ("Pledge Agreement"), dated as of
October 1, 1999, is by ANKER WEST VIRGINIA MINING COMPANY, INC., a West Virginia
corporation with its chief executive office at 2708 Cranberry Square,
Morgantown, West Virginia 26505 ("Pledgor"), to and in favor of The Bank of New
York, as collateral agent (in such capacity, "Collateral Agent"), for the
holders of the Notes in their capacity as such ("Holders") under the Indenture
referred to below, having an office at One State Street, 10th Floor, New York,
New York 10004 ("Pledgee"). Unless otherwise defined herein, terms defined in
the Indenture and used herein shall have the meanings given to them in the
Indenture.
W I T N E S S E T H:
WHEREAS, pursuant to an indenture dated as of October 1, 1999, as the
same may be amended, supplemented or otherwise modified from time to time (the
"Indenture"), among Anker Coal Group, Inc. (the "Company"), the Guarantors
signatory thereto The Bank of New York, as trustee (the "Trustee"), the Company
has provided for, among other things, the authentication and delivery of the
Company's 14.25% Second Priority Senior Secured Notes due 2007 (PIK though April
1, 2000) (the "Notes", as further defined in the Indenture) up to $119,200,000
aggregate principal amount of which may be outstanding at any time except for
the issuance of Secondary Notes and Optional Notes; and
WHEREAS, Pledgor is now the direct and beneficial owner of (i) fifty
(50%) percent of the issued and outstanding membership interests of The Sycamore
Group, LLC, a West Virginia limited liability company ("Sycamore"), and (ii)
forty-nine (49%) percent of the issued and outstanding membership interests of
Summit Energy Group, LLC, a West Virginia limited liability company ("Summit,"
and together with Sycamore, individually and collectively, "Issuer"); and
WHEREAS, in connection with a Loan and Security Agreement dated
November 21, 1998 (as heretofore amended and as it may hereafter be amended,
modified, supplemented, restated, replaced, renewed or refinanced, the "Loan
Agreement"), the Company and certain of its subsidiaries (collectively, the
"Borrowers") entered into several pledge and security agreements (as heretofore
amended and as they may hereafter be amended, modified, supplemented, restated,
replaced, renewed or refinanced, collectively, the "Senior Pledge Agreements")
pursuant to which the Pledged Securities (as hereinafter defined) and the
Pledged Collateral (as hereinafter defined) were pledged to Foothill Capital
Corporation, as agent for the Senior Secured Lenders and as pledgee under the
Senior Pledge Agreements (the "Senior Pledgee"); and
WHEREAS, simultaneously herewith the Company and certain of its other
Subsidiaries (collectively, the "Stock Pledgors") have entered into a Pledge and
Security Agreement (the "Stock Pledge Agreement"), pursuant to which the Stock
Pledgors have pledged certain
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securities (the "Pledged Securities") as collateral security for the prompt
performance, observance and indefeasible payment in full of all of the
Obligations (as hereinafter defined); and
WHEREAS, the Pledged Securities and the Pledged Collateral secure the
payment and performance of the Borrowers' obligations under the Loan Agreement
and the other agreements, documents and instruments referred to therein and
executed and/or delivered in connection therewith; and
WHEREAS, the Pledged Securities and the Pledged Collateral also
constitute a portion of the Collateral under the Indenture, and it is a
condition precedent to the issuance of the Notes under the Indenture, that the
Pledgor and the Stock Pledgors shall have executed this Pledge Agreement and the
Stock Pledge Agreement, respectively, and made the pledge and assignment
contemplated hereby and thereby; and
WHEREAS, among other things, the relative rights of the Pledgee and the
Senior Pledgee with respect to the Pledged Securities and the Pledged Collateral
are set forth in that certain Intercreditor Agreement dated the date hereof
between the Stock Pledgors, the Pledgor, the Pledgee and the Senior Pledgee (the
"Intercreditor Agreement"); and
WHEREAS, the parties hereto acknowledge that the Pledgee's rights in
and to the Pledged Securities and the Pledged Collateral hereunder shall rank in
priority after the Lien of the Senior Pledgee to the extent provided in the
Intercreditor Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgor hereby agrees as follows:
1. GRANT OF SECURITY INTEREST
As collateral security for the prompt performance, observance and
indefeasible payment in full of all of the Obligations, Pledgor hereby assigns,
pledges, hypothecates, transfers and sets over to Pledgee, for the benefit of
Pledgee and the Holders, and grants to Pledgee, for the benefit of Pledgee and
the Holders, to the extent of Pledgor's right, title and interest therein, a
security interest in and lien upon the following (collectively, the "Pledged
Collateral"):
(a) the ownership interests of Pledgor in Issuer and (i) all right,
title and interest in, to and under (A) the Second Amended and Restated
Operating Agreement, dated October 3, 1997 and effective as of July 1, 1997, by
and between Pledgor and Emily Gibson Coal Co., Inc., with respect to Sycamore
(as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated, or replaced, the "Sycamore LLC Agreement"), and (B)
the Operating Agreement of Summit Energy Group, LLC, a West Virginia Limited
Liability Company, dated May 6, 1997, by and among Patriot Mining Company, Inc.
("Patriot"), Ever Systems, Inc. and Black Diamond Industries, Inc., Patriot
having thereafter assigned to Pledgor all of Patriot's right, title and interest
therein and thereunder (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, the "Summit LLC
Agreement" and together with the Sycamore LLC Agreement, collectively, the "LLC
Agreement"); including, without limitation, all of the right, title and interest
(if any) of
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Pledgor as a member to participate in the operation or management of Issuer and
all of its ownership interests under the LLC Agreement, and (ii) all present and
future rights of Pledgor to receive payment of money or other distribution of
payments arising out of or in connection with its ownership interests and its
rights under the LLC Agreement, now or hereafter owned by Pledgor (collectively,
the "Pledged LLC Interests"); and
(b) all proceeds of and rights to any of the property of Pledgor
described above, including, without limitation, all causes of action, claims and
warranties now or hereafter held by Pledgor in respect of any of the items
listed above, and to the extent related to any property described above or such
proceeds, all books, correspondence, credit files, records, invoices and other
papers.
2. OBLIGATIONS SECURED
The security interest, lien and other interests granted to Pledgee, for
the benefit of Pledgee and the Holders, pursuant to this Pledge Agreement shall
secure the prompt performance and payment in full of any and all obligations,
liabilities and indebtedness of every kind, nature and description owing by
Pledgor to Pledgee in connection with its duties as Collateral Agent, the
Trustee in connection with the Indenture, the Notes and the Security Documents
and the Holders, including principal, premium, interest, charges, fees, costs
and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether arising under the Indenture, this Pledge
Agreement, the Stock Pledge Agreement or the other Security Documents, whether
now existing or hereafter arising, or after the commencement of any case with
respect to Pledgor under the United States Bankruptcy Code or any similar
statute (including, without limitation, the payment of interest and other
amounts which would accrue and become due but for the commencement of such
case), whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, (all of the foregoing being collectively referred to herein as the
"Obligations").
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
Pledgor hereby represents, warrants and covenants with and to Pledgee,
for the benefit of Pledgee and the Holders, the following (all of such
representations, warranties and covenants being continuing so long as any of the
Obligations are outstanding):
(a) The ownership interests of Pledgor in Issuer now or hereafter owned
by Pledgor, are duly authorized, validly issued, fully paid and non-assessable
and constitute such Pledgor's entire interest in Issuer and Pledgor is the
registered owner of all such ownership interests and Pledgor is one of the
"Members" of Issuer (as such term is defined in the LLC Agreement).
(b) The Pledged Collateral is directly, legally and beneficially owned
by Pledgor, free and clear of all claims, liens, pledges and encumbrances of any
kind, nature or description, except for the pledge and security interest created
hereunder and Permitted Liens.
(c) The Pledged Collateral is not subject to any restrictions relative
to the transfer thereof other than any such restrictions under applicable
Federal or state laws, as set forth in the
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LLC Agreement or pursuant to the Senior Pledge Agreements and Pledgor has the
right to transfer and hypothecate the Pledged Collateral free and clear of any
liens, encumbrances or restrictions, except for the lien created by the Senior
Pledge Agreements and restrictions and limitations as to transfer set forth in
the LLC Agreement.
(d) The Pledged Collateral is duly and validly pledged to Pledgee, for
the benefit of Pledgee and the Holders, and no consent or approval of any
governmental or regulatory authority or of any securities exchange or the like,
nor any consent or approval of any other third party other than the Senior
Pledgee, was or is necessary to the validity and enforceability of this Pledge
Agreement other than as required under the LLC Agreement.
(e) Pledgor authorizes Pledgee to: (i) subject to Section 6(f) below,
store, deposit and safeguard the Pledged Collateral, (ii) perform any and all
other acts which Pledgee in good faith deems reasonable and/or necessary for the
protection and preservation of the Pledged Collateral or its value or the
security interest therein, including, without limitation, transferring,
registering or arranging for the transfer or registration of the Pledged
Collateral to or in Pledgee's own name and, after an Event of Default (as
hereinafter defined) has occurred and is continuing, receiving the income
therefrom as additional security for the Obligations and (iii) pay any charges
or expenses which Pledgee deems necessary for the foregoing purpose, but without
any obligation to do so. Any obligation of Pledgee for reasonable care for the
Pledged Collateral in Pledgee's possession shall be limited to the same degree
of care which Pledgee uses for similar property pledged to Pledgee by other
Persons.
(f) If Pledgor shall become entitled to receive or acquire, or shall
receive any certificate, or option or right with respect to any membership
interest of Issuer (including without limitation, any certificate representing a
dividend or a distribution or exchange of or in connection with reclassification
of the Pledged LLC Interests) whether as an addition to, in substitution of, or
in exchange for any of the Pledged Collateral or otherwise, Pledgor agrees,
subject to Section 6(f) below, to accept same as Pledgee's agent, to hold same
in trust for Pledgee and to deliver same forthwith to Pledgee or Pledgee's agent
or bailee in the form received, with the endorsement(s) of Pledgor where
necessary and/or appropriate powers and/or assignments duly executed to be held
by Pledgee or Pledgee's agent or bailee subject to the terms hereof, as further
security for the Obligations.
(g) Pledgor shall keep full and accurate books and records relating to
the Pledged Collateral and stamp or otherwise mark such books and records in
such manner as Pledgee may require in order to reflect the security interests
granted by this Pledge Agreement.
(h) With respect to the ownership interests in Issuer held by Pledgor,
Pledgor shall execute and deliver written instructions to the Issuer in the form
of EXHIBIT A-1 OR EXHIBIT A-2 hereto, as applicable to register the pledge,
security interest and lien arising hereunder in such ownership interests in the
registration books maintained by Issuer for such purpose and Pledgor shall
promptly execute and deliver to Pledgee a written confirmation in the form of
EXHIBIT B-1 OR EXHIBIT B-2 hereto, as applicable to the effect that the pledge,
security interest and lien granted to Pledgee hereunder in such ownership
interests has been duly registered in such registration books.
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(i) Pledgor shall not, subject to Section 6(f) below, without the prior
consent of Pledgee, directly or indirectly, sell, assign, transfer, or otherwise
dispose of, or grant any option with respect to the Pledged Collateral, nor
shall Pledgor create, incur or permit any further pledge, hypothecation,
encumbrance, lien, mortgage or security interest with respect to the Pledged
Collateral other than Permitted Liens.
(j) So long as no Event of Default has occurred and is continuing,
Pledgor shall have the right including, without limitation, with respect to any
Pledged LLC Interests registered in the name of Pledgee, to vote and exercise
all limited liability company rights with respect to the Pledged LLC Interests,
except as expressly prohibited herein, and to receive any cash distributions
payable in respect of the Pledged LLC Interests.
(k) Prior to or concurrently with the execution and delivery of this
Pledge Agreement, Pledgor shall (i) register the pledge hereunder of its
ownership interests in Issuer for purposes of Article 8 of the Uniform
Commercial Code and (ii) subject to Section 6(f) below, deliver to Pledgee any
certificates representing the Pledged LLC Interests, accompanied by undated
powers duly executed in blank.
(l) Pledgor has delivered to Pledgee true, correct and complete copies
of the LLC Agreements and the articles of organization for Issuer. There are no
other agreements governing the formation, organization or terms of the
membership interests with respect to Issuer.
(m) Pledgor shall not permit Issuer, directly or indirectly, to (i)
issue, sell, grant, assign, transfer or otherwise dispose of, any additional
membership interests of such Issuer or any option or warrant with respect to, or
other right or security convertible into, any additional membership interests,
now or hereafter authorized, unless all such additional membership interests,
options, warrants, rights or other such securities are made and shall remain
part of the Pledged Collateral subject to the pledge and security interest
granted herein, (ii) amend the articles of organization or LLC Agreement of
Issuer to limit or restrict the permissible activities in which Issuer may
engage, without the prior written consent of Pledgee, (iii) take any action to
withdraw the authority of or to limit or restrict the authority of Issuer's
managers or officers to deal and contract with Pledgee (if applicable) and to
bind and obligate such Issuer, or (iv) pay any interim distribution in cash or
other assets to any member, except as permitted in the LLC Agreement, this
Pledge Agreement and the Indenture. Any distribution by Issuer other than as
permitted in the LLC Agreement, this Pledge Agreement and the Indenture shall
constitute a "wrongful distribution" for purposes of applicable law.
(n) Pledgor shall promptly notify Pledgee in writing of the occurrence
of any event specified in Issuer's articles of organization or LLC Agreement
that could reasonably be expected to result in such Issuer's dissolution or
liquidation.
(o) Pledgor has caused or will cause the LLC Agreement of Issuers to be
amended to the extent necessary: (i) to permit Pledgor to pledge and assign any
and all of its membership interests in (or other ownership interest of) Issuer
(including, without limitation, the Pledged Collateral) to Pledgee hereunder and
(ii) to permit Pledgee or its successor or assign to be admitted to Issuer as a
member thereof upon transfer of the applicable membership interests to Pledgee
as provided in Section 6 hereof. Pledgor agrees to take such other action and
execute
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such further documents as Pledgee may reasonably request from time to time in
order to give effect to the foregoing provisions of this Section 3(o). Pledgor
shall not amend, modify or supplement any of the provisions of the LLC Agreement
without the prior written consent of the Pledgee if any such amendment,
modification or supplement would or could affect any rights of Pledgee hereunder
or under any of the other Security Documents.
(p) Pledgor shall pay all charges and assessments of any nature against
the Pledged Collateral or with respect thereto prior to said charges and/or
assessments being delinquent, subject to any right of Pledgor to protest any
Lien (other than any such Lien that secures the Obligations), tax (other than
payroll taxes or taxes that are the subject of a United States federal tax
lien), or rental payment, provided that (i) a reserve with respect to such
obligation is established on the books of Pledgor in an amount reasonably
satisfactory to Pledgee, (ii) any such protest is instituted and diligently
prosecuted by Pledgor in good faith, and (iii) Pledgee is satisfied that, while
any such protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of the Pledgee's Liens in and to the Pledged
Collateral.
(q) Pledgor shall promptly reimburse Pledgee on demand for any
reasonable charges, assessments or expenses paid or incurred by Pledgee in its
reasonable discretion for the protection, preservation and maintenance of the
Pledged Collateral and the enforcement of the Holders' rights hereunder,
including, without limitation, reasonable attorneys' fees and legal expenses
incurred by Pledgee in seeking to protect, collect or enforce Pledgee's rights
in the Pledged Collateral or otherwise hereunder.
(r) Pledgor shall furnish, or cause to be furnished, to Pledgee such
information concerning the Issuer and the Pledged Collateral as Pledgee may from
time to time reasonably request in good faith, including, without limitation,
current financial statements.
(s) Pledgee may notify Issuer or the appropriate transfer agent of the
Pledged Collateral to register the security interest and pledge granted herein
and honor the rights of Pledgee with respect thereto.
(t) Pledgor waives: (i) all rights to require Pledgee to proceed
against any other Person, entity or collateral or to exercise any remedy, (ii)
the defense of the statute of limitations in any action upon any of the
Obligations, (iii) any right of subrogation or interest in the Obligations or
Pledged Collateral until all Obligations have been paid in full, (iv) any rights
to notice of any kind or nature whatsoever, unless specifically required in this
Pledge Agreement or non-waivable under any applicable law, and (v) to the extent
permissible, its rights under Section 9-112 and 9-207 of the Uniform Commercial
Code. Pledgor agrees that the Pledged Collateral, any other collateral, or any
other guarantor or endorser may be released, substituted or added with respect
to the Obligations, in whole or in part, without releasing or otherwise
affecting the liability of Pledgor, the pledge and security interests granted
hereunder, or this Pledge Agreement. Pledgee is entitled to all of the benefits
of a secured party set forth in Section 9-207 of the New York Uniform Commercial
Code.
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4. NO ASSUMPTION OF LIABILITIES
(a) Nothing herein shall be construed to make Pledgee liable as a
member of Issuer and Pledgee by virtue of this Pledge Agreement or otherwise
shall not have any of the duties, obligations or liabilities of a member of the
Issuer. The parties hereto expressly agree that this Pledge Agreement shall not
be construed as creating a partnership or joint venture among the Pledgee and
Pledgor and/or Issuer.
(b) By accepting this Pledge Agreement, Pledgee does not intend to
become a member of Issuer or otherwise be deemed to be a co-venturer with
respect to Pledgor or Issuer either before or after an Event of Default shall
have occurred. Pledgee shall have only those powers set forth herein and shall
assume none of the duties, obligations or liabilities of Pledgor or of a member
of Issuer. Pledgee shall not be obligated to perform or discharge any obligation
of Pledgor as a result of the pledge hereby effected.
(c) The acceptance by Pledgee of this Pledge Agreement, with all of the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate Pledgee to appear in or defend any action or proceeding
relating to the Pledged Collateral to which it is not a party, or to take any
action hereunder or thereunder, or to expend any money or incur any expense or
perform or discharge any obligation, duty or liability hereunder or otherwise
with respect to the Pledged Collateral.
5. EVENTS OF DEFAULT
The occurrence or existence of any Event of Default under the Indenture
shall be individually an "Event of Default," and collectively "Events of
Default" hereunder.
6. RIGHTS AND REMEDIES
Subject to Section 6(f) below, at any time an Event of Default exists
or has occurred and is continuing, in addition to all other rights and remedies
of Pledgee, whether provided under this Pledge Agreement, the Stock Pledge
Agreement, the Indenture, the other Security Documents, applicable law or
otherwise, Pledgee shall have the following rights and remedies which may be
exercised without notice to, or consent by, Pledgor except as such notice or
consent is expressly provided for hereunder or required by applicable law:
(a) Pledgee, at its option, shall be empowered to exercise its
continuing right to instruct Issuer (or the appropriate transfer agent of the
Pledged LLC Interests) to register any or all of the Pledged LLC Interests in
the name of Pledgee or in the name of Pledgee's nominee and Pledgee may
complete, in any manner Pledgee may deem expedient, any and all stock powers,
assignments or other documents heretofore or hereafter executed in blank by
Pledgor and delivered to Pledgee. After said instruction, and without further
notice, Pledgee shall have the exclusive right to exercise all voting and
limited liability company rights with respect to the Pledged Collateral, and
exercise any and all rights of conversion, redemption, exchange, subscription or
any other rights, privileges, or options pertaining to any shares of the Pledged
Collateral as if Pledgee were the absolute owner thereof, including, without
limitation, the right to exchange, in its discretion, any and all of the Pledged
Collateral upon any merger,
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consolidation, reorganization, recapitalization or other readjustment with
respect thereto. Upon the exercise of any such rights, privileges or options by
Pledgee, Pledgee shall have the right to deposit and deliver any and all of the
Pledged Collateral to any committee, depository, transfer agent, registrar or
other designated agency upon such terms and conditions as Pledgee may determine,
all without liability but subject to Pledgee's obligations under the Uniform
Commercial Code, except to account for property actually received by Pledgee.
However, Pledgee shall have no duty to exercise any of the aforesaid rights,
privileges or options (all of which are exercisable in the sole discretion of
Pledgee) and shall not be responsible for any failure to do so or delay in doing
so.
(b) Upon prior written notice thereof to Issuer and Pledgor, (i)
Pledgee may transfer the membership interests of Pledgor into the name of
Pledgee or its successor or assign and (ii) Pledgee shall be admitted as a
member of Issuer in the place of Pledgor.
(c) In addition to all the rights and remedies of a secured party under
the Uniform Commercial Code or other applicable law, Pledgee shall have the
right, at any time and without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon Pledgor or any other Person (all
and each of which demands, advertisements and/or notices are hereby expressly
waived to the extent permitted by applicable law), to proceed forthwith to
collect, redeem, recover, receive, appropriate, realize, sell, or otherwise
dispose of and deliver said Pledged Collateral or any part thereof in one or
more lots at public or private sale or sales at any exchange, broker's board or
at any of Pledgee's offices or elsewhere at such prices and on such terms as
Pledgee may deem best in the exercise of its business judgment. The foregoing
disposition(s) may be for cash or on credit or for future delivery without
assumption of any credit risk, with Pledgee having the right to purchase all or
any part of said Pledged Collateral so sold at any such sale or sales, public or
private, free of any right or equity of redemption in Pledgor, which right or
equity is hereby expressly waived or released by Pledgor, subject to the terms
of the immediately succeeding sentence. The proceeds of any such collection,
redemption, recovery, receipt, appropriation, realization, sale or other
disposition, after deducting all costs and expenses of every kind incurred
relative thereto or incidental to the care, safekeeping or otherwise of any and
all Pledged Collateral or in any way relating to the rights of Pledgee
hereunder, including reasonable attorneys' fees and legal expenses, shall be
applied in accordance with the terms of the Indenture with Pledgor to be and
remain liable for any deficiency, and Pledgor to receive any sums remaining
after indefeasible payment in full of the Obligations. Pledgor shall be liable
to Pledgee for the payment on demand of all such costs and expenses, and any
reasonable attorneys' fees and legal expenses. Pledgors agree that ten (10) days
prior written notice by Pledgee designating the place and time of any public
sale or of the time after which any private sale or other intended disposition
of any or all of the Pledged Collateral is to be made, is reasonable
notification of such matters.
(d) Pledgor recognizes that Pledgee may be unable to effect a public
sale of all or part of the Pledged Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, as now or hereafter in
effect or in applicable Blue Sky or other state securities law, as now or
hereafter in effect, but may be compelled to resort to one or more private sales
to a restricted group of purchasers who will be obliged to agree, among other
things, to acquire
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such Pledged Collateral for their own account for investment and not with a view
to the distribution or resale thereof. If at the time of any sale of the Pledged
Collateral or any part thereof, the same shall not, for any reason whatsoever,
be effectively registered (if required) under the Securities Act of 1933 (or
other applicable state securities law), as then in effect, Pledgee in its sole
and absolute discretion is authorized to sell such Pledged Collateral or such
part thereof by private sale in such manner and under such circumstances as
Pledgee or its counsel may deem necessary or advisable in order that such sale
may legally be effected without registration. Each Pledgor agrees that private
sales so made may be at prices and other terms less favorable to the seller than
if such Pledged Collateral were sold at public sale, and that Pledgee has no
obligation to delay the sale of any such Pledged Collateral for the period of
time necessary to permit Issuer, even if Issuer would agree, to register such
Pledged Collateral for public sale under such applicable securities laws.
Pledgor agrees that any private sales made in good faith under the foregoing
circumstances shall be deemed to have been in a commercially reasonable manner.
(e) All of the Pledgee's rights and remedies, including, but not
limited to, the foregoing and those otherwise arising under this Pledge
Agreement, the Stock Pledge Agreement, the Indenture and the other Security
Documents, the instruments comprising the Pledged Collateral, applicable law or
otherwise, shall be cumulative and not exclusive and shall be enforceable
alternatively, successively or concurrently as Pledgee may deem expedient, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by Pledgor of this
Pledge Agreement, the Stock Pledge Agreement, the Indenture or any of the other
Security Documents. No failure or delay on the part of Pledgee in exercising any
of its respective options, powers or rights or partial or single exercise
thereof, shall constitute a waiver of such option, power or right.
(f) The parties hereto agree that the Pledged Collateral has been
pledged to the Senior Pledgee to secure the Senior Secured Indebtedness.
Notwithstanding anything to the contrary contained in any agreement of the
Pledgor or otherwise, the parties hereto acknowledge and agree that, as more
fully set forth in the Intercreditor Agreement, the Senior Pledgee's rights in
and to the Pledged Collateral will be first and prior to the rights of the
Pledgee on behalf of the Holders in and to the Pledged Collateral, which rights
of the Pledgee are subject in all respects to the terms and conditions of the
Intercreditor Agreement. Pursuant to the Intercreditor Agreement, the Senior
Pledgee will hold the Pledged Collateral for itself and, as agent, for the
Pledgee. To the extent that deliveries of Pledged Collateral are required to be
made to the Pledgee under this Pledge Agreement, the prior delivery of such
Pledged Collateral to the Senior Pledgee to secure the Senior Secured
Indebtedness shall be deemed to constitute delivery of such Pledged Collateral
to the Pledgee hereunder.
(g) The parties hereto agree that in the event the Foothill Loan
Agreement is substituted, replaced, or refinanced with any credit facility as
permitted by the Indenture (a "Replacement Credit Facility"), the Trustee shall
enter into an intercreditor agreement with the issuer of any such Replacement
Credit Facility on terms which taken as a whole are not materially less
favorable to the Holders than the terms of the Foothill Intercreditor Agreement.
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7. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
(a) The validity, interpretation and enforcement of this Pledge
Agreement, and any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by the
laws of the State of New York.
(b) Pledgor irrevocably consents and submits to the non-exclusive
jurisdiction of Supreme Court of the State of New York in and for the County of
New York and the United States District Court for the Southern District of New
York and waives any objection based on venue or forum non conveniens with
respect to any action instituted therein arising under this Pledge Agreement or
in any way connected with or related or incidental to the dealings of the
parties hereto in respect of this Pledge Agreement or the transactions related
hereto, in each case whether now existing or hereafter arising, and whether in
contract, tort, equity or otherwise, and agrees that any dispute with respect to
any such matters shall be heard only in the courts described above (except that
Pledgee shall have the right to bring any action or proceeding against Pledgor
or its property in the courts of any other jurisdiction which Pledgee deems
necessary or appropriate in order to realize on the Pledged Collateral or to
otherwise enforce its rights against Pledgor or its property).
(c) Pledgor hereby waives personal service of any and all process upon
it and consents that all such service of process may be made by certified mail
(return receipt requested) directed to its address set forth herein and service
so made shall be deemed to be completed five (5) days after the same shall have
been so deposited in the U.S. mails, or, at Pledgee's option, by service upon
Pledgor in any other manner provided under the rules of any such courts. Within
thirty (30) days after such service, Pledgor shall appear in answer to such
process, failing which Pledgor shall be deemed in default and judgment may be
entered by Pledgee against Pledgor for the amount of the claim and other relief
requested.
(d) PLEDGOR AND PLEDGEE HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS PLEDGE AGREEMENT
OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
PLEDGOR, PLEDGEE, THE TRUSTEE AND THE HOLDERS IN RESPECT OF THIS PLEDGE
AGREEMENT OR THE TRANSACTIONS RELATED HERETO IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
PLEDGOR AND PLEDGEE HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT
PLEDGOR OR PLEDGEE MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS PLEDGE
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) None of Pledgee, the Trustee or any of the Holders shall have any
liability to Pledgor (whether in tort, contract, equity or otherwise) for losses
suffered by Pledgor in connection with, arising out of, or in any way related to
the transactions or relationships contemplated by this Pledge Agreement, or any
act, omission or event occurring in connection
10
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herewith, unless it is determined by a final and non-appealable judgment or
court order binding on Pledgee, that the losses were the result of acts or
omissions constituting gross negligence or willful misconduct of Pledgee. In any
such litigation, Pledgee shall be entitled to the benefit of the rebuttable
presumption that Pledgee acted in good faith and with the exercise of ordinary
care in the performance by it of the terms of this Pledge Agreement.
8. MISCELLANEOUS
(a) Pledgor agrees that at any time and from time to time upon the
written request of Pledgee, Pledgor shall execute and deliver such further
documents, including, but not limited to, irrevocable proxies or stock powers,
in form satisfactory to counsel for Pledgee, and will take or cause to be taken
such further acts as Pledgee may reasonably request in order to effect the
purposes of this Pledge Agreement and perfect or continue the perfection of the
security interest in the Pledged Collateral granted hereunder to Pledgee, for
the benefit of the Holders.
(b) Beyond the exercise of reasonable care to assure the safe custody
and preservation of the Pledged Collateral (whether such custody is exercised by
Pledgee, or Pledgee's nominee, agent or bailee) Pledgee or Pledgee's nominee,
agents or bailees shall have no duty or liability to protect or preserve any
rights pertaining thereto and shall be relieved of all responsibility for the
Pledged Collateral upon surrendering it to Pledgor or foreclosure with respect
thereto.
(c) All notices, requests and demands to or upon the respective parties
hereto shall be in writing and shall be deemed to have been duly given or made:
if delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with instructions
to deliver the next business day, one (1) business day after sending; and if by
registered or certified mail, return receipt requested, five (5) days after
mailing. All notices, requests and demands upon the parties are to be given to
the parties at the following addresses (or to such other address as any party
may designate by notice in accordance with this Section):
If to Pledgor:
Anker West Virginia Mining Company, Inc.
2708 Cranberry Square
Morgantown, WV 26505
Attention: President
If to Pledgee:
The Bank of New York
101 Barclay Street
Corporate Finance Unit - 21st Floor
New York, NY 10286
Attention: Steve Giurlando
(d) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural. All references to Pledgor, Stock
Pledgors, Pledgee, Trustee, Holders
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and Issuers pursuant to the definitions set forth in the recitals hereto, or to
any other Person herein, shall include their respective successors and assigns.
The words "hereof," "herein," "hereunder," "this Pledge Agreement" and words of
similar import when used in this Pledge Agreement shall refer to this Pledge
Agreement as a whole and not any particular provision of this Pledge Agreement
and as this Pledge Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. An Event of Default shall
exist or continue or be continuing until such Event of Default is waived in
accordance with Section 8(g) hereof.
(e) This Pledge Agreement and any other document referred to herein
shall be binding upon Pledgor and its successors and assigns and inure to the
benefit of and be enforceable by Pledgee and its successors and assigns.
(f) If any provision of this Pledge Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this
Pledge Agreement as a whole, but this Pledge Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
(g) Neither this Pledge Agreement nor any provision hereof shall be
amended, modified, waived or discharged orally or by course of conduct, but only
by a written agreement signed by an authorized officer of Pledgee and in
accordance with the amendment provisions of the Indenture. Pledgee shall not, by
any act, delay, omission or otherwise be deemed to have expressly or impliedly
waived any of its rights, powers and/or remedies unless such waiver shall be in
writing and signed by an authorized officer of Pledgee. Any such waiver shall be
enforceable only to the extent specifically set forth therein. A waiver by
Pledgee of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which
Pledgee would otherwise have on any future occasion, whether similar in kind or
otherwise.
(h) This Pledge Agreement and the security interest and pledge
hereunder shall automatically terminate upon full and final payment and
performance of all Obligations or release of all Collateral in accordance with
the provisions of the Indenture. At such time, the Pledgee shall reassign and
redeliver to Pledgor all of the Pledged Collateral hereunder which has not been
sold, disposed of, retained or applied by the Pledgee in accordance with the
terms hereof. Such reassignment and redelivery shall be without warranty by or
recourse to the Pledgee, and shall be at the expense of Pledgor. At such time,
this Pledge Agreement shall no longer constitute a lien upon or grant any
security interest in any of the Pledged Collateral, and the Pledgee shall, at
Pledgor's expense, deliver to Pledgor written acknowledgment thereof and
cancellation of this Pledge Agreement in a form reasonably requested by Pledgor.
Without limiting the generality of the foregoing, the security interest and
pledge hereunder shall not be terminated by the transfer of any of the Pledged
Collateral hereunder from the Pledgee to Pledgor, or any person designated by
Pledgor, for the purpose of ultimate sale, exchange, presentation, collection,
renewal or registration of transfer or for any other purpose. The Pledgee hereby
appoints Pledgor as its attorney-in-fact to execute and record all documents
necessary to acknowledge, memorialize or effect cancellation of the security
interests created hereby, effective as of the termination of this Pledge
Agreement.
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(i) On demand of the Pledgee, Pledgor agrees to pay or satisfactorily
provide for all expenses incurred by the Pledgee under this Pledge Agreement.
For the repayment of such advances the Pledgee shall have the right to use and
apply any Trust Moneys held by it in its capacity as Collateral Agent under
Article X of the Indenture as part of the Collateral.
IN WITNESS WHEREOF, Pledgor has executed this Pledge Agreement as of
the day and year first above written.
ANKER WEST VIRGINIA MINING COMPANY, INC.
By: /s/ B. Judd Hartman
--------------------------
Title: Secretary
-----------------------
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EXHIBIT A-1
TO
PLEDGE AND SECURITY AGREEMENT
Instruction to Register Pledge
The undersigned ("Pledgor") hereby irrevocably instructs The Sycamore
Group, LLC (the "Company") to register the pledge and collateral assignment by
Pledgor to and in favor of The Bank of New York, as Collateral Agent for the
benefit of the holders of 14.25% Second Priority Senior Secured Notes due 2007
issued by Anker Coal Group, Inc. ("Anker Coal") pursuant to an Indenture dated
as of October 1, 1999 among Anker Coal, as Issuer, certain subsidiaries of Anker
Coal signatory thereto and The Bank of New York, as Trustee, as such Indenture
may be amended or supplemented from time to time ("Pledgee") pursuant to the
Pledge and Security Agreement, dated of even date herewith, by and between
Pledgor and Pledgee (the "Pledge Agreement") of all of its right, title and
interests in and to the Company as described in the Pledge Agreement. In giving
this instruction, Pledgor advises the Company that no revocation or modification
of the instructions contained herein shall be effective until Pledgee shall have
given its prior written consent thereto.
Dated: , 1999
-----------------
ANKER WEST VIRGINIA MINING COMPANY, INC.
By:
-------------------------------------
Title:
----------------------------------
A-1
15
EXHIBIT A-2
TO
PLEDGE AND SECURITY AGREEMENT
Instruction to Register Pledge
The undersigned ("Pledgor") hereby irrevocably instructs Summit Energy,
LLC (the "Company") to register the pledge and collateral assignment by Pledgor
to and in favor The Bank of New York, as Collateral Agent for the benefit of the
holders of 14.25% Second Priority Senior Secured Notes due 2007 issued by Anker
Coal Group, Inc. ("Anker Coal") pursuant to an Indenture dated as of October 1,
1999 among Anker Coal, as Issuer, certain subsidiaries of Anker Coal signatory
thereto and The Bank of New York, as Trustee, as such Indenture may be amended
or supplemented from time to time ("Pledgee") pursuant to the Pledge and
Security Agreement, dated of even date herewith, by and between Pledgor and
Pledgee (the "Pledge Agreement") of all of its right, title and interests in and
to the Company as described in the Pledge Agreement. In giving this instruction,
Pledgor advises the Company that no revocation or modification of the
instructions contained herein shall be effective until Pledgee shall have given
its prior written consent thereto.
Dated: , 1999
-----------------
ANKER WEST VIRGINIA MINING COMPANY, INC.
By:
-------------------------------------
Title:
----------------------------------
A-2
16
EXHIBIT B-1
TO
PLEDGE AND SECURITY AGREEMENT
Confirmation of Registration of Pledge
The Sycamore Group, LLC, a West Virginia limited liability company (the
"Company"), hereby confirms to The Bank of New York (the "Pledgee") as follows:
(i) The pledge and collateral assignment by Anker West
Virginia Mining Company, Inc. (the "Pledgor"), of all of its interests in the
Company pursuant to the Pledge and Security Agreement, dated as of October 1,
1999, by and between Pledgor and Pledgee, was registered by the Company on
____________, 1999.
(ii) The registered owners of all of the outstanding
membership interests in the Company (the "Interests") are as follows:
Owner Interest
[Name]
[Address]
[Taxpayer ID No.]
(iii) The registered pledgee of all of the Interests is:
(iv) There are no liens or restrictions of the Company nor any
adverse claim to which the Interests are or may be subject other than the Pledge
and Security Agreement dated as of November 21, 1998 by the Pledgor, to and in
favor of Foothill Capital Corporation, as Agent.
Dated: THE SYCAMORE GROUP, LLC
---------------------
By:
----------------------------------
Name:
Title:
B-1
17
EXHIBIT B-2
TO
PLEDGE AND SECURITY AGREEMENT
Confirmation of Registration of Pledge
Summit Energy Group, LLC, a West Virginia limited liability company
(the "Company"), hereby confirms to The Bank of New York (the "Pledgee") as
follows:
(i) The pledge and collateral assignment by Anker West
Virginia Mining Company, Inc. (the "Pledgor"), of all of its interests in the
Company pursuant to the Pledge and Security Agreement, dated as of October 1,
1999, by and between Pledgor and Pledgee, was registered by the Company on
____________, 1999.
(ii) The registered owners of all of the outstanding
membership interests in the Company (the "Interests") are as follows:
Owner Interest
[Name]
[Address]
[Taxpayer ID No.]
(iii) The registered pledgee of all of the Interests is:
(iv) There are no liens or restrictions of the Company nor any
adverse claim to which the Interests are or may be subject other than the Pledge
and Security Agreement dated as of November 21, 1998 by the Pledgor, to and in
favor of Foothill Capital Corporation, as Agent.
Dated: SUMMIT ENERGY GROUP, LLC
------------------
By:
-------------------------------
Name:
Title:
B-2