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Exhibit 10.14
AMENDMENT NO. 4 TO LOAN DOCUMENTS AND WAIVER
September 26, 2000
FOOTHILL CAPITAL CORPORATION
2450 Colorado Avenue
Suite 3000 West
Santa Monica, California 90404
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, Anker
Coal Group, Inc., Lenders and Agent, as amended by Amendment No. 1 to Loan
Documents, dated August 4, 1999, by and among Borrowers, Borrowers' Agent,
Guarantors, Lenders and Agent and Amendment No. 2 to Loan Documents, dated
August 27, 1999, by and among Borrowers, Borrowers' Agent, Guarantors, Lenders
and Agent, and Amendment No. 3 to Loan Documents, dated as of October 1, 1999,
by and among Borrowers, Borrowers' Agent, Guarantors, Lenders and Agent (as the
same may hereafter be further amended, modified, supplemented, extended,
renewed, restated or replaced, the "Loan Agreement"), and all other Loan
Documents referred to therein or at any time executed and/or delivered in
connection therewith or related thereto. All capitalized terms used herein shall
have the meanings assigned thereto in the Loan Agreement, unless other defined
herein.
Borrowers have requested that Lenders agree to (a) make to Borrowers,
within the limits of the Maximum Revolving Amount, an Advance in the amount of
$6,300,000 for the purpose and to be repaid on the terms and conditions set
forth herein, extend the Termination Date and make various other amendments to
the Loan Agreement, and waive certain Events of Default that have occurred and
are continuing as of the date hereof, and Lenders are willing to agree to the
foregoing on and subject to the terms and conditions contained in this Amendment
No. 4 to Loan Documents (this "Amendment").
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In consideration of the foregoing and the respective agreements and
covenants herein, the parties hereto agree as follows:
1. Existing Definitions. All capitalized terms used herein shall have
the meanings given to them in the Loan Agreement, unless otherwise defined
herein.
2. Additional Definitions. As used herein, the following terms shall
have the respective meanings given to them below and Section 1 of the Loan
Agreement shall be deemed and is hereby amended to include, in addition and not
in limitation, each of the following definitions:
"(a) "Supplemental Term Loan" means the Advance made,
or to be made, by Lenders to Borrowers in the principal amount
of $6,300,000 pursuant to, and payable by Borrowers in
accordance with, Section 2.1(a) of the Loan Agreement."
"'Amendment No. 4' means Amendment No. 4 to Loan
Documents, dated as of September 26, 2000, executed by and
among Borrowers, Borrowers' Agent, Guarantors, Agent and
Lenders."
"'Amendment No. 4 Closing Date' means the date that
each of the conditions set forth in Section 17 of Amendment
No. 4 have been satisfied in full in a manner satisfactory to
Agent."
"'Supplemental Term Loan Repayment Date' means
January 1, 2004."
3. Amendments to Definitions. A. The definition of "Availability" set
forth in Section 1.1 of the Loan Agreement is hereby amended and restated in its
entirety to read as follows:
""Availability" means, as to each Borrower, at any time, the
amount that such Borrower is entitled to borrow as Advances
under Section 2.1, such amount being the difference derived
when (a) the sum of the principal amount of Advances
(including Agent Advances and Foothill Loans, but expressly
excluding the Supplemental Term Loan) then outstanding to such
Borrower (including any amounts that the Lender Group may have
paid for the account of such Borrower pursuant to any of the
Loan Documents and that have not been reimbursed by such
Borrower) is subtracted from (b) the lesser of (i) the Maximum
Revolving Amount, less the aggregate principal amount of
Advances (including Agent Advances and Foothill Loans, but
expressly excluding the Supplemental Term Loan) then
outstanding to all other Borrowers, less the then outstanding
Letter of
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Credit Usage of all Borrowers, or (ii) the Borrowing Base for
such Borrower less the Letter of Credit Usage for such
Borrower."
(a) Subsection (i) of the definition of "Eligible Accounts"
set forth in Section 1.1 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
"(i) Accounts (i) owing by an Affiliate of AES
Corporation evidencing total obligations collectively owing to
Borrowers by such Account Debtors in excess of 25% of all
Eligible Accounts, (ii) owing by AK Steel Corporation
evidencing total obligations collectively owing to Borrowers
by such Account Debtors in excess of 25% of all Eligible
Accounts, (iii) owing by Potomac Electric Power Company
evidencing total obligations collectively owing to Borrowers
by such Account Debtor in excess of 45% of all Eligible
Accounts, and (iv) with respect to all other Account Debtors,
Accounts owing by such Account Debtors evidencing total
obligations owing to Borrowers in excess of 10% of all
Eligible Accounts, in all cases to the extent of the
obligations owing by such Account Debtors in excess of such
applicable percentages;
(b) The definition of "Permitted Disposition" set forth in
Section 1.1 of the Loan Agreement is hereby amended by deleting clause (b)(ii)
in its entirety and substituting the following therefor:
"(b)(ii) $1,800,000 in the aggregate from and after
the first anniversary of the Closing Date through and
including December 31, 2000, (iii) $750,000 in the aggregate
from and after January 1, 2001 through and including December
31, 2001, and (iv) $500,000 in the aggregate for each calendar
year thereafter during the term of this Agreement," ; and
(c) Schedule R-2 presently attached to the Loan Agreement is
hereby deleted in its entirety and Schedule R-2 attached to this Amendment is
hereby substituted therefor.
4. Supplemental Term Loan. Section 2.1(a) of the Loan Agreement is
hereby amended as follows:
(a) The following sentences are hereby inserted in Section
2.1(a) immediately after clause (z) of the definition of Borrowing Base:
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"In addition to Advances requested by Borrowers
pursuant to Section 2.1(c), each Lender agrees to make to
Borrowers' Agent, on behalf of Borrowers, on the Amendment No.
4 Closing Date, such Lender's Pro Rata Share of the
Supplemental Term Loan. Notwithstanding anything to the
contrary contained in the Loan Agreement or in any of the
other Loan Documents, the Supplemental Term Loan shall be paid
to Agent, in accordance with Section 2.4, in thirty-six (36)
consecutive monthly installments (or earlier, as otherwise
provided in this Agreement), commencing on January 1, 2001 and
on the first day of each month thereafter, of which (a) the
first eighteen (18) installments shall each be in the amount
of $140,000, (b) the nineteenth (19th) through thirty-fifth
(35th) installments shall each be in the amount of $210,000,
and (c) the last and thirty-sixth (36th) installment shall be
paid on the Supplemental Term Loan Repayment Date and shall be
in the amount of the entire unpaid balance of the Supplemental
Term Loan outstanding on the Supplemental Term Loan Repayment
Date. Each such principal installment shall be accompanied by
a payment of interest in accordance with Section 2.6(a)(i).
The Supplemental Term Loan is, and shall be deemed for all
purposes to, constitute an Advance and, as such, is being made
within the limits of the Maximum Revolving Amount and shall be
secured (together with all other Advances) by all of the
Collateral and Guarantor Collateral. Notwithstanding the
foregoing, solely for the purposes of determining Availability
and the amount of Advances that may by borrowed by Borrowers
pursuant to this Section 2.1(a), the principal amount of the
Supplemental Term Loan at any time outstanding shall be
excluded from then outstanding Advances for purposes of
determining the amount of Advances that may be made against
the Borrowing Base limitation set forth in clause (ii) of this
Section 2.1(a)."
(b) The last sentence of Section 2.1(a) is hereby amended and
restated in its entirety to read as follows:
"Amounts borrowed pursuant to this Section 2.1 may be
(i) repaid and, subject to the terms and conditions of this
Agreement, reborrowed at any time during the term of this
Agreement, except that, any amounts repaid in respect of the
Supplemental Term Loan cannot be reborrowed as part of the
Supplemental Term Loan, and will not be re-advanced by Lenders
as part of the Supplemental Term Loan, and (ii) re-advanced by
Anker Energy or Marine to other Borrowers and/or to Guarantors
if and to the extent permitted by Section 7.13."
5. Interest.
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(a) Section 2.6(a)(i) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
"(i) Except as provided in clause (ii) and (vii)
below for Loans other than the Term Loan and the
Supplemental Term Loan, (A) all Loans (except for the
Term Loan and the Supplemental Term Loan) shall bear
interest at a per annum rate of one percentage point
(1%) above the Reference Rate and (B) the Term Loan
and the Supplemental Term Loan shall each bear
interest at a per annum rate of two and one-half
percentage points (2 1/2%) above the Reference Rate."
(b) Section 2.6(c) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"(c) Default Rate. Upon the occurrence and
during the continuation of an Event of Default, (i)
all Loans (except for the Term Loan and the
Supplemental Term Loan) shall each bear interest at a
per annum rate equal to three (3) percentage points
above the Reference Rate, (ii) the Term Loan and the
Supplemental Term Loan shall each bear interest at a
rate equal to four and one-half (4 1/2) percentage
points above the Reference Rate, and (iii) the Letter
of Credit fee provided in Section 2.6(b) shall be
increased to four (4%) per annum times the amount of
the undrawn Letters of Credit from and after the
occurrence of an Event of Default."
(c) Section 2.6(d) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"(d) Minimum Interest. In no event shall the
rate of interest chargeable under Section 2.6(a)(i)
for any day be less than (i) seven (7%) percent per
annum for all Loans other than the Supplemental Term
Loan and (ii) eight (8%) percent per annum for the
Supplemental Term Loan. To the extent that interest
accrued hereunder at the rate set forth in such
section would be less than the foregoing minimum
daily rate, the interest rate chargeable hereunder
for such day automatically shall be deemed increased
to the minimum rate."
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6. Term Extension. Section 3.4(a) of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
"(a) This Agreement shall become effective
upon the execution and delivery hereof by Borrowers,
Borrowers' Agent and the Lender Group and shall
continue in full force and effect for a term ending
on November 21, 2005 (the "Termination Date"), unless
sooner terminated pursuant to the terms hereof."
7. Early Termination Premium. Section 3.6 of the Loan Agreement is
hereby amended and restated in its entirety to read as follows:
"3.6 Early Termination by Borrowers. The
provisions of Section 3.4 that provides for
termination of this Agreement by Borrowers only on
the Termination Date thereof notwithstanding,
Borrowers have the option, at any time upon 45 days
prior written notice to Agent, to terminate this
Agreement by paying to Agent, for the ratable benefit
of the Lender Group, in cash, the Obligations
(including an amount equal to 105% of the undrawn
amount of the Letters of Credit), in full, together
with a premium (the "Early Termination Premium")
equal to (a) three and one-half (3 1/2%) percent of
the Maximum Amount, as then in effect, if such
termination occurs at any time on or prior to
November 20, 2001, (b) two and one-half (2 1/2%)
percent of the Maximum Amount, as then in effect, if
such termination occurs at any time from and after
November 21, 2001 through and including November 20,
2002, (c) one and one half (1 1/2%) percent of the
Maximum Amount, as then in effect, if such
termination occurs at any time from and after
November 21, 2002 through and including November 20,
2003, and (d) one half (1/2%) percent of the Maximum
Amount, as then in effect, if such termination occurs
at any time from and after November 21, 2003 through
and including the day immediately prior to the
Termination Date; provided, however, that no Early
Termination Premium shall be due and payable if this
Agreement is terminated solely by reason of
replacement of the financing arrangements provided to
Borrowers hereunder pursuant to new financing
arrangements entered into between Borrowers and Wells
Fargo Bank, or its successors."
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8. Schedule of Litigation. Schedule 5.10 of the Loan Agreement is
hereby deleted in its entirety and Schedule 5.10 attached to this Amendment is
hereby substituted therefor.
9. Automated Collateral Monitoring Project. Section 6.2 of the Loan
Agreement is hereby amended by adding the following new sentence at the end of
such Section:
"In addition to, and not in limitation of
the foregoing, Borrowers will promptly implement and
thereafter at all times comply with the requirements
of Agent's Automated Collateral Monitoring Project in
order to automate Borrowers' submission of its
Borrowing Base Certificate to Agent through
electronic data files."
10. Intercompany Loans. Section 7.13(c)(ix) of the Loan Agreement is
hereby amended by amending and restating in their entirety clauses (1) and (10)
to read as follows:
"(1) Parent $18,100,000, plus the aggregate
amount of costs and expenses
(including, without limitation,
federal, state and local taxes)
paid by Parent for its own account
and for the account of its
Subsidiaries as consolidated group
expenses and the aggregate amount
of distributions permitted to be
made by Parent pursuant to Section
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"(10) Juliana Mining
Company, Inc. $5,800,000 for fiscal
year 1999,
$3,000,000 for
fiscal year 2000
and $500,000 for
each fiscal year
thereafter"
11. Parent's Use of Proceeds of Supplemental Term Loan. By its
signature hereinbelow, Parent covenants and agrees that it will use the proceeds
of the Supplemental Term
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Loan (loaned to Parent by Anker Energy and/or by Marine as an Intercompany Loan
pursuant to Section 7.13(c)(ix)), solely for the purpose of paying interest
owing by Parent on the Senior Notes and the 1999 Notes on October 1, 2000.
12. Use of Proceeds. Section 7.17 of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
"7.17 Use of Proceeds. Use the proceeds of
the Advances and the Term Loan made hereunder for any
purpose other than (a) on the Closing Date, (i) to
repay in full the outstanding Indebtedness owing to
the Existing Lenders, and (ii) to pay transactional
costs and expenses incurred in connection with this
Agreement, (b) subsequent to the Closing Date, for
all Loans other than the Supplemental Term Loan,
consistent with the terms and conditions hereof, for
their working capital and their lawful general
corporate purposes in the ordinary course of their
respective businesses, and (c) in the case of Anker
Energy and Marine, to make Intercompany Loans
permitted by Section 7.13, including, without
limitation, the loan to Parent of the proceeds of the
Supplemental Term Loan for the sole purpose of
enabling Parent to fund in part the interest payment
owing by Parent on the Senior Notes and the 1999
Notes on October 1, 2000."
13. Acknowledgment and Waiver of Existing Defaults.
(a) Acknowledgment of Events of Default. Borrowers and
Guarantors hereby acknowledge and agree that (a) the aggregate value of
obsolete, worn-out and/or non-productive Equipment sold and transferred by
Borrowers during the current fiscal year has exceeded the amount permitted by
Section 7.4(b) of the Loan Agreement and (b) Anker Energy and/or Marine have
made Intercompany Loans to Juliana during the current fiscal year in excess of
the amount permitted by Section 7.13(c)(ix) of the Loan Agreement, in each case
prior to giving effect to the amendments to such Sections contained in this
Amendment. As a result of the foregoing, Events of Default (the "Existing
Defaults") have occurred and are continuing under the Loan Agreement.
(b) Waiver of Existing Defaults. At the request of Borrowers
and Guarantors, the Required Lenders hereby waive the Existing Defaults,
provided, however, that nothing contained herein shall constitute a waiver of
any other Default or Event of Default that may presently exist or any other
Default or Event of Default that may hereafter occur under the Loan Agreement or
any other Loan Document, including, without limitation, any Default or Event of
Default occurring under Sections 7.4 and/or 7.13(c)(ix) of the Loan Agreement.
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14. Consents. At the request of Borrowers and Guarantors, A. the
Required Lenders hereby consent to the liquidation by Anker West Virginia of its
ownership interest in Summit Energy Group, LLC ("Summit"), and the purchase by
Anker West Virginia of the real property in Harrison County, West Virginia
previously subleased by Summit from Energysystems, Inc., a West Virginia
corporation (the "Harrison County Property"), provided that, Anker West Virginia
covenants and agrees that it shall, promptly upon Agent's request, execute and
deliver to Agent a Mortgage covering the Harrison County Property, or at Agent's
election, an amendment to the existing Mortgage previously granted by Anker West
Virginia to the Agent, for the purpose of granting a Lien thereon to Agent, in
form and substance satisfactory to Agent, and B. Agent hereby consents to the
retention of KPMG by Borrowers and Guarantors as their independent certified
public accountants.
15. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrowers and Guarantors to Lender Group pursuant to the Loan Documents,
each Borrower and 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):
(a) No Default or Event of Default exists as of the date of
this Amendment after giving effect to the amendments set forth herein.
(b) This Amendment has been duly executed and delivered by
each Borrower and each Guarantor, and the agreements and obligations of each
Borrower and each Guarantor contained herein constitute legal, valid and binding
obligations of Borrowers and Guarantors enforceable against each Borrower and
each Guarantor in accordance with their respective terms.
(c) 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.
16. Fees. In consideration of the Supplemental Term Loan, Borrowers
shall pay on the Amendment No. 4 Closing Date A. to Agent, for its own account,
an agency fee in the amount of $50,000 and B. to Agent, for the ratable benefit
of Lenders, a commitment fee in the amount of $250,000; which fees were earned
in full upon execution and delivery by Parent to Agent of the Agent's commitment
letter for the Supplemental Term Loan, dated August 23, 2000, and which fees may
be charged by Agent, at its option, to any accounts of Borrowers maintained by
Agent.
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17. Conditions Precedent. The consent, waiver and amendments herein
shall be effective 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. 4 Closing Date"):
(a) Agent shall have received an original of this Amendment,
duly authorized, executed and delivered by each Borrower, each Guarantor and
each Lender;
(b) No Default or Event of Default shall have occurred or be
continuing;
(c) Agent's receipt of an opinion letter of counsel to
Borrowers and Guarantors, in form and substance satisfactory to Agent in its
sole discretion, including, without limitation, an opinion that the consummation
of the transactions contemplated by this Amendment do not violate the terms and
conditions of the 1999 Notes, the 1999 Note Indenture or the Intercreditor
Agreement executed between the Agent and the 1999 Note Trustee under the 1999
Note Indenture; and
(d) The transactions contemplated by this Amendment shall have
been consummated on or before October 2, 2000.
18. Miscellaneous.
(a) Headings. The headings listed herein are for convenience
only and do not constitute matters to be considered in interpreting this
Amendment.
(b) 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.
(c) Governing Law. The validity, interpretation and
enforcement of this Amendment shall be governed by the laws of the State of New
York.
(d) 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.
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(e) 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.
[SIGNATURE PAGES FOLLOW]
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Very truly yours,
ANKER ENERGY CORPORATION ANKER POWER SERVICES, INC.
By: /s/ Bruce Sparks By: /s/ B. Judd Hartman
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Title: President Title: Secretary
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MARINE COAL SALES COMPANY BRONCO MINING COMPANY, INC.
By: /s/ B. Judd Hartman By: /s/ Bruce Sparks
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Title: Secretary Title: President
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ANKER WEST VIRGINIA MINING VANTRANS, INC.
COMPANY, INC.
By: /s/ B. Judd Hartman By: /s/ B. Judd Hartman
---------------------------------------- ---------------------------------
Title: Secretary Title: Secretary
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PATRIOT MINING COMPANY, INC. KING KNOB COAL CO., INC.
By: /s/ B. Judd Hartman By: /s/ B. Judd Hartman
---------------------------------------- ---------------------------------
Title: Secretary Title: Secretary
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VINDEX ENERGY CORPORATION HEATHER GLEN RESOURCES, INC.
By: /s/ B. Judd Hartman By: /s/ B. Judd Hartman
---------------------------------------- ---------------------------------
Title: Secretary Title: Secretary
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ANKER VIRGINIA MINING COMPANY, INC. HAWTHORNE COAL COMPANY, INC.
By: /s/ B. Judd Hartman By: /s/ B. Judd Hartman
---------------------------------------- ---------------------------------
Title: Secretary Title: Secretary
------------------------------------- ------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
JULIANA MINING COMPANY, INC. UPSHUR PROPERTY, INC.
By: /s/ B. Judd Hartman By: /s/ B. Judd Hartman
-------------------------------------- ---------------------------------
Title: Secretary Title: Secretary
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ANKER COAL GROUP, INC., as Guarantor MELROSE COAL COMPANY, INC.
and Borrowers' Agent
By: /s/ Bruce Sparks By: /s/ B. Judd Hartman
-------------------------------------- ---------------------------------
Title: President Title: Secretary
----------------------------------- ------------------------------
ANKER GROUP, INC. NEW ALLEGHENY LAND HOLDING
COMPANY, INC.
By: /s/ Bruce Sparks By: /s/ B. Judd Hartman
-------------------------------------- ---------------------------------
Title: President Title: Secretary
----------------------------------- ------------------------------
SIMBA GROUP, INC.
By: /s/ Bruce Sparks
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Title: President
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[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
AGREED AND ACKNOWLEDGED:
FOOTHILL CAPITAL CORPORATION as
Agent and as a Lender
By: /s/ Peter Drooff
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Title: Vice President
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CONGRESS FINANCIAL CORPORATION
By: /s/ Cindy B. Denbaum
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Title: Vice President
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SUNROCK CAPITAL CORP.
By: Signature illegible
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Title: Vice President
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