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EXHIBIT 10.25
OPTION AGREEMENT
October 26, 1999
Rothschild Recovery Fund L.P.
c/o Rothschild, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Foothill Capital Corporation, as agent ("Senior Agent"), the financial
institutions party to the Loan Agreement hereinafter referred to (each,
individually a "Lender" and collectively, "Lenders") and certain subsidiaries of
Anker Coal Group, Inc. ("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 Senior Agent, as amended
by Amendment No. 1 to Loan Documents, dated August 4, 1999, by and among
Borrowers, Anker Coal Group, Inc. ("Parent") and certain of its subsidiaries as
guarantors ("Guarantors"), Lenders and Senior Agent, Amendment No. 2 to Loan
Documents, dated August 27, 1999, by and among Borrowers, Guarantors, Lenders
and Senior Agent and Amendment No. 3 to Loan Documents, dated as of October 1,
1999, by and among Borrowers, Guarantors, Lenders and Senior Agent (as the same
may hereafter be further 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
Agreement (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").
Parent has issued or is about to issue its 14.25% Second Priority
Senior Secured Notes (the "Notes") pursuant to the Indenture, dated as of
October 1, 1999 (the "Note Indenture"), by and among Parent, certain
subsidiaries of Parent and The Bank of New York, as trustee (in such capacity,
the "Note Trustee"), which notes are or will be secured by certain assets and
properties of Borrowers and Guarantors (the "Shared Collateral"). Senior Agent
and The Bank of New York, as collateral agent under the Note Indenture (in such
capacity, the "Note Collateral Agent"), have entered or are about to enter into
an Intercreditor Agreement, dated as of October 1, 1999 (the "Intercreditor
Agreement"), by and between Senior Agent and the Note Collateral Agent, pursuant
to which Agent and the Note Collateral Agent confirmed or will confirm the
relative priority of the security interests of Agent and the Note Collateral
Agent in the Shared Collateral and provide for the orderly sharing among them,
in accordance with such priorities, of proceeds of such assets and properties
upon any foreclosure thereon or other disposition thereof.
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On the date hereof, Rothschild Recovery Fund L.P. ("RRF") is the holder
of $40,935,000 of Notes and RRF has requested that Agent and Lenders grant for
due and adequate consideration, the receipt and sufficiency of which is hereby
acknowledged, to RRF or its designee on its own behalf or as agent ("Purchaser")
an option to purchase the Senior Debt and Agent and Lenders are willing to grant
to Purchaser such an option on the terms and conditions set forth herein.
Terms not otherwise defined herein shall have the respective meanings
ascribed thereto in the Intercreditor Agreement.
In consideration of the foregoing and the respective agreements and
covenants herein, the parties hereto agree as follows:
1. Purchase Option.
1.1 Election. Prior to the exercise by Senior Agent of any of its
remedies under the Loan Documents or applicable law in respect of the Shared
Collateral, Senior Agent shall deliver to Note Collateral Agent a written notice
(the "Option Trigger Notice") of its intention to exercise such remedies. Upon
receipt of the Option Trigger Notice, Purchaser shall have the option, but not
the obligation, within ten (10) days after receipt by Purchaser of the Option
Trigger Notice, to elect to purchase all, but not less than all, of the Senior
Debt from Lenders by delivery to Senior Agent within such ten (10) day period a
written notice of such election (the "Election Notice").
1.2 Purchase Date. Unless the Election Notice shall have been
previously revoked, on the date that is not later than thirty days after the
date of receipt by Senior Agent of the Election Notice (the "Closing Date"),
Lenders and Agent shall, subject to any required approval of any court or other
regulatory or governmental authority or any participants, sell to Purchaser and
Purchaser shall purchase from Lenders, all but not less than all of the Senior
Debt, together with Senior Agent's interests in the Lender Collateral.
1.3 Closing. On the Closing Date, Purchaser shall (i) pay to
Senior Agent as the purchase price thereof the full amount of all Senior Debt
then outstanding and unpaid (including principal, interest, early termination
and other fees and expenses, including reasonable attorneys' fees and legal
expenses), (ii) furnish (A) substitute letters of credit (which shall be issued
by banks, and be in form and substance, reasonably acceptable to Senior Agent)
or (B) cash collateral to Lenders in such amounts as Senior Agent determines is
reasonably necessary to secure Lenders in connection with any issued and
outstanding letters of credit provided by Lenders (or letters of credit that
Lenders have arranged to be provided by third parties pursuant to the Loan
Documents) to Debtors and (iii) agree to reimburse Senior Agent and Lenders for
any loss, cost, damage or expense (including reasonable attorneys' fees and
legal expenses) in connection with (x) any commissions, fees, costs or expenses
related to any issued and outstanding letters of credit described above as to
which Lenders have not yet received final and indefeasible payment, (y) any
checks or other payments provisionally credited the Senior Debt
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and/or as to which Lenders have not yet received final and indefeasible payment
and (z) all other contingent obligations of Debtors under the Senior Creditor
Agreements. Such purchase price and any cash collateral shall be remitted on the
Closing Date by wire transfer in Federal funds to the bank account of Senior
Agent described on Schedule A attached hereto, or such other bank account as
Senior Agent may designate in writing for such purpose to Purchaser not less
than two business days prior to the Closing Date. Interest shall be calculated
to but excluding the business day on which such purchase and sale shall occur if
the amounts so paid by Purchaser to the bank account designated by Senior Agent
are received in such bank account prior to 1:00 p.m., New York City time and
interest shall be calculated to and including such business day if the amounts
so paid by Purchaser to the bank account designated by Lenders are received in
such bank account later than 1:00 p.m., New York City time. Senior Agent shall
deliver to Purchaser on the Closing Date duly executed assignments of the Loan
Documents and all Mortgages and security interests, including assignment of UCC
Financing Statements on Form UCC-3 or such other forms as may be necessary or
appropriate and all promissory notes evidencing the Senior Debt duly endorsed.
1.4 No Representation or Warranty. Such purchase shall be
expressly made without representation or warranty of any kind by Senior Agent or
Lenders as to the Senior Debt, the Lender Collateral or otherwise and without
recourse to Senior Agent or Lenders, except that Lenders shall represent and
warrant: (i) that Lenders own the Senior Debt free and clear of any liens or
encumbrances created by Senior Agent or Lenders and (ii) Lenders have the right
to assign the Senior Debt (subject to the consents referred to above) and the
assignment is duly authorized. Upon the purchase by Purchaser of the Senior
Debt, Purchaser shall indemnify and hold Senior Agent and Lenders harmless from
and against all loss, cost, damage or expenses (including reasonable attorneys'
fees and legal expenses) suffered or incurred by Senior Agent or Lenders arising
from or in any way relating to the act or omissions of Purchaser after the
purchase. Purchaser shall acknowledge that (i) Agent and Lenders have made no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of Borrowers
or Guarantors, or the validity or enforceability of the Senior Debt and (ii)
Purchaser has, independently of and without reliance on Agent or any Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to purchase the Senior Debt.
2. Exercise of Remedies. Upon receipt by Senior Agent of an Election
Notice in accordance with the provisions of Section 1.1 hereof, Senior Agent and
Lenders shall forbear from exercising their rights and remedies under the Loan
Documents or applicable law in respect of the Shared Collateral other than
Accounts and Inventory for the period (the "Forbearance Period") commencing on
the date of receipt by Senior Agent of the Election Notice and ending on the
earlier to occur of (x) the date of the purchase and sale and (y) the date that
is thirty (30) days after receipt by Senior Agent of the Election Notice;
provided, that, nothing herein shall prohibit Senior Agent or Lenders from
acting to protect the value of any Shared Collateral or Senior Agent's or
Lenders' interest therein. Nothing herein shall prohibit Senior Agent or Lenders
from exercising any of their respective rights or remedies set forth in the Loan
Documents or under
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applicable law with respect to the Accounts and Inventory of Borrowers and
Guarantors provided that any sale or other disposition of Accounts and Inventory
conducted by Senior Agent or Lenders shall be conducted in a commercially
reasonable manner in accordance with applicable law. Upon the termination of the
Forbearance Period, the agreement of Senior Agent and Lenders to forbear shall
automatically and without further action terminate and be of no force and
effect, it being expressly agreed that the effect of such termination will be to
permit Senior Agent and Lenders to exercise all such rights and remedies without
any further notice, passage of time or forbearance of any kind.
3. Miscellaneous.
3.1 Notices. All notices, requests and demands to or upon the
respective parties hereto shall be in writing and shall be deemed duly given,
made or received: 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 mailed by certified mail, return receipt requested, five (5)
days after mailing to the parties at their addresses set forth below (or to such
other addresses as the parties may designate in accordance with the provisions
of this Section 3.1):
To Senior Agent
and Lenders: Foothill Capital Corporation
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Business Finance
Division Manager
Fax No. (000) 000-0000
and to: Foothill Capital Corporation
00 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Loan Portfolio Manager
Fax No.: (000) 000-0000
To Purchaser: Rothschild Recovery Fund L.P.
c/o Rothschild, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx
Fax No.: (000) 000-0000
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with a copy to: Coudert Brothers
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxx, Esq.
Fax No.: (000) 000-0000
Any party hereto may change the address(es) to which all notices, requests and
other communications are to be sent by giving written notice of such address
change to the other parties hereto in conformity with this Section 3.1, but such
change shall not be effective until notice of such change has been received by
the other parties.
3.2 Headings. The headings listed herein are for convenience only
and do not constitute matters to be considered in interpreting this Agreement.
3.3 Governing Law; Choice of Forum.
(a) The validity, interpretation and enforcement of this
Agreement shall be governed by the laws of the State of New York.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK AND THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS INTERCREDITOR
AGREEMENT.
3.4 Further Assurances. Agent, Lenders, RRF and Purchaser shall
execute and deliver such additional documents and take such additional action as
may be necessary or desirable, as determined by Agent, RRF and Purchaser, to
effectuate the provisions and purposes of this Agreement.
3.5 Assignment. RRF may assign its rights under this Agreement to
any Affiliate of RRF and to any Person that may be a co-lender or participant in
the Senior Debt from and after the Closing Date.
3.6 Counterparts. This Agreement may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement.
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Please sign the enclosed counterpart of this Agreement in the space
provided below, whereby this Agreement, as accepted by RRF, shall become a
binding agreement among Agent, Lenders and RRF.
Very truly yours,
FOOTHILL CAPITAL CORPORATION as Agent and as
a Lender
By: /s/ Xxxxxxx Xxxx
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Title: Vice President
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CONGRESS FINANCIAL CORPORATION
By: /s/ Xxxxx Xxxxxxx
--------------------------
Title: Vice President
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SUNROCK CAPITAL CORP.
By: /s/ illegible
--------------------------
Title: Senior Vice President
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AGREED TO:
ROTHSCHILD RECOVERY FUND X.X.
Xxxxxxxxxx Recovery Associates LLC, its General Partner
By: /s/ Xxxxx X. Xxxxxxx
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Title: Principal Member
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SCHEDULE A
TO
OPTION AGREEMENT
Wire Transfer Instructions
The Chase Manhattan Bank
New York, New York
ABA 000000000
Credit: Foothill Capital Corporation
Account: 323-266193
Re: Anker Coal Group, Inc.
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