<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 25, 1998
ANKER COAL GROUP, INC.
(Exact Name Of Registrant As Specified in Its Charter)
Delaware 333-39643 52-1990183
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
2708 Cranberry Square 26505
Morgantown, West Virginia (Zip Code)
(Address Of Principal Executive Offices)
Registrant's telephone number, including area code: (304) 594-1616
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ANKER COAL GROUP, INC.
FORM 8-K
TABLE OF CONTENTS
<TABLE>
<S> <C>
ITEM 5. OTHER EVENTS. . . . . . . . . . . . . . . . . . . .. . . . . . . 1
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. . . . . . . . . . . . . . . . 1
SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
</TABLE>
<PAGE> 3
ITEM 5. OTHER EVENTS
MATTERS RELATING TO MR. FALTIS' ESTATE
On August 12, 1996, Anker Coal Group, Inc. (the "Company"), John J.
Faltis (former President and Chief Executive Officer of the Company, "Faltis"),
JJF Group Limited Liability Company, a West Virginia limited liability company
formerly controlled by Faltis and is now controlled by his estate ("JJF Group"),
First Reserve Corporation ("First Reserve"), P. Bruce Sparks (current President
and Chief Executive Officer of the Company), PPK Group Limited Liability
Company, Anker Holding B.V. and others entered into a Stockholders' Agreement
(the "Stockholders' Agreement"). The Stockholders' Agreement provides, among
other things, that the Company would purchase, own and maintain a keyman life
insurance policy on the life of Faltis in the amount of $15 million (the "Key
Man Policy").
On October 12, 1997, Faltis and his wife Kathleen Faltis were
tragically killed in a helicopter accident in West Virginia. At the time of
Faltis' death, the Key Man Policy was owned by the Company. Subsequently, the
Company received the proceeds payable under the Key Man Policy.
In lieu of certain provisions in the Stockholders' Agreement
regarding the purchase and sale of the Company's common stock owned by JJF Group
upon the death of Faltis, the Company and JJF Group entered into a Put Agreement
dated as of August 25, 1998 (the "Put Agreement") pursuant to which the Company
granted to JJF Group the right to require the Company to purchase such common
stock in accordance with the following schedule:
<TABLE>
<CAPTION>
MAXIMUM NUMBER OF
SHARES SUBJECT TO PUT PER SHARE
PUT OPTION DATE OPTION NOTICE PUT OPTION PRICE TOTAL PURCHASE PRICE
--------------- --------------------- ---------------- --------------------
<S> <C> <C> <C>
September 15, 1998 1,013 $4,935.83 $ 4,999,995.79
August 1, 1999 305 4,935.83 1,505,428.15
August 1, 2000 325 4,935.83 1,604,144.75
August 1, 2001 1,396 4,935.83 6,890,418.68
----- -------- ------------
TOTALS 3,039 $4,935.83 $14,999,987.37
</TABLE>
Under the Put Agreement, if JJF Group fails or elects not to put any
of its common stock to the Company on or before the applicable date, JJF Group
shall not have the right to put those shares to the Company after that date. The
Put Agreement also requires the Company to pay interest on the outstanding
balance of the total purchase price at the "blended annual rate" established by
the Internal Revenue Service under Revenue Ruling 86-17. The interest rate will
be adjusted on July 25 of each year during the term of the Put Agreement based
on the blended annual rate in effect as of that time. For the first year of the
Put Agreement, the rate is 5.63%.
Item 7. Financial Statements and Exhibits
(c) Exhibits
(10.15) Put Agreement dated as of August 25, 1998 between Anker Coal
Group, Inc. and JJF Group Limited Liability Company.
1
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ANKER COAL GROUP, INC.
/s/ Michael Matesic
-------------------------------------
Michael Matesic
Treasurer and Chief Financial Officer
Date: September 16, 1998
2
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
(10.15) Put Agreement dated as of August 25, 1998
between Anker Coal Group, Inc. and JJF Group
Limited Liability Company.
3
<PAGE> 1
PUT AGREEMENT
THIS PUT AGREEMENT ("Agreement") is made and entered into as of the 25th
day of August, 1998, by and between ANKER COAL GROUP, INC., a corporation
organized and existing under the laws of Delaware ("Anker") and JJF GROUP
LIMITED LIABILITY COMPANY, a limited liability company organized and existing
under the laws of West Virginia ("JJF Group").
WITNESSETH
WHEREAS, JJF Group owns 3,039 shares of Anker's common stock (the "JJF
Shares").
WHEREAS, John J. Faltis ("Faltis") was the majority member and manager of
JJF Group, and Faltis' wife, Kathleen A. Faltis, was a minority member of JJF
Group.
WHEREAS, on August 12, 1996, Faltis, JJF Group, Anker, First Reserve
Corporation, P. Bruce Sparks, PPK Group Limited Liability Company, Anker Holding
B.V., and the Funds (as defined in the Stockholders Agreement) entered into a
Stockholders Agreement (the "Stockholders Agreement").
WHEREAS, on October 12, 1997, John J. Faltis and Kathleen A. Faltis
tragically and suddenly died.
WHEREAS, James W. Boyd was appointed as executor of the estate of John J.
Faltis and the Administrator c.t.a. of the Estate of Kathleen A. Faltis
(collectively, the "Estates").
WHEREAS, James W. Boyd has been appointed as Manager of JJF Group.
WHEREAS, the Stockholders Agreement provides, among other things, that
Anker would purchase, own and maintain a "key man" life insurance policy on the
life of Faltis in the amount of
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$15 million (the "Key Man Policy"), and such Key Man Policy was in fact
purchased and owned by Anker at the time of Faltis' death.
WHEREAS, Anker has received the proceeds payable under the Key Man Policy.
WHEREAS, in lieu of the provisions in the Stockholders Agreement regarding
the purchase and sale of the JJF Shares upon the death of Faltis, JJF Group and
Anker entered into an Agreement dated as of December 1, 1997, pursuant to which
Anker and JJF Group, among other things, engaged Chase Securities Inc. to
determine a range for the Fair Market Value (as defined in the Stockholders
Agreement) of the JJF Shares.
WHEREAS, Anker and JJF Group agree that the Fair Market Value per share
for the JJF Shares was Four Thousand Nine Hundred Thirty-Five and 83/100 Dollars
($4,935.83) as of October 31, 1997.
WHEREAS, Anker is willing to grant to JJF Group certain rights to require
Anker to purchase JJF Shares, pursuant to the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and covenants herein
contained and intending to be legally bound hereby, the parties agree as
follows:
1. Put Right.
1.1 Grant of the Put Option. Anker hereby grants to JJF Group an
option to require Anker to purchase on each of the dates set forth below (each
date being referred to as a "Put Option Date") up to, but no more than, the
number of JJF Shares (each a "Put Option") set opposite the applicable Put
Option Date set forth below at the Put Option Price (as hereinafter defined) in
accordance with the following schedule:
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<TABLE>
<CAPTION>
Maximum Number of
JJF Shares Subject to Put
Put Option Date Put Option Notice Option Price Total Purchase Price
- --------------- ----------------- ------------ --------------------
<S> <C> <C> <C>
September 15, 1998 1,013 $4,935.83 $4,999,995.79
August 1, 1999 305 4,935.83 1,505,428.15
August 1, 2000 325 4,935.83 1,604,144.75
August 1, 2001 1,396 4,935.83 6,890,418.68
----- --------- --------------
TOTALS 3,039 N/A $14,999,987.37
</TABLE>
The foregoing schedule and the number of JJF Shares which JJF Group
has the right to put, together with the Put Option Price, shall be adjusted for
any stock split, stock dividend or other similar transaction.
The period from the date hereof through the earlier of (i) August 1,
2001, or (ii) the date on which JJF Group no longer owns any JJF Shares shall be
referred to herein as the "Put Option Period".
1.2 Exercise of the Put Option. During the Put Option Period, if JJF
Group desires to exercise a Put Option, JJF Group shall do so by delivering to
Anker written notice of such exercise in the form of Exhibit "A" attached hereto
(the "Put Option Notice") on or before the applicable Put Option Date.
1.3 Put Option Price. The price to be paid by Anker to JJF Group
(the "Put Option Price") for the purchase of each of the JJF Shares upon the
exercise of each Put Option shall be Four Thousand Nine Hundred Thirty-Five and
83/100 Dollars ($4,935.83), subject to Section 7 hereof.
1.4 Acceleration of Put Options. If for any calendar year (beginning
after December 31, 1997) during the Put Option Period Anker has Free Cash Flow
(as hereinafter
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defined), Anker shall notify JJF Group of the amount of Free Cash Flow for said
calendar year and provide JJF Group with the documentation to support the
calculation of the same (the "Free Cash Flow Notice"). In that event, subject to
the provisions of this Section 1.4, JJF Group shall have the right to require
Anker to purchase the number of JJF Shares (the "Accelerated Put Shares") equal
to forty percent (40%) of the Free Cash Flow divided by the Put Option Price
(Accelerated Put Shares = (0.40 x Free Cash Flow)/Put Option Price), rounded to
the nearest whole share. JJF Group shall exercise the right to require Anker to
purchase the Accelerated Put Shares by delivering to Anker written notice of
such exercise in the form of Exhibit "B" attached hereto (the "Accelerated Put
Notice") within 30 days of the date of the Free Cash Flow Notice. Following the
closing of the purchase and sale of the Accelerated Put Shares under Section 2
hereof the schedule in Section 1.1 above shall be adjusted by first reducing the
number of JJF Shares subject to the next succeeding Put Option by the number of
the Accelerated Put Shares purchased at said closing. If the number of
Accelerated Put Shares purchased at said closing exceeds the number of JJF
Shares subject to said next succeeding Put Option, then the schedule in Section
1.1 shall be further adjusted by reducing the number of JJF Shares subject to
the next successive Put Option(s). For purposes of this Section 1.4, Free Cash
Flow shall mean the Operating Income of Anker (i) plus depreciation,
amortization, depletion and non-operational cash income items (excluding gross
proceeds from asset sales) and (ii) less principal and interest payments, cash
income taxes, cash dividends, capital expenditures and non-operational cash
expenses (including, without limitation, payments made to purchase JJF Shares
hereunder). For purposes of this Section 1.4, Operating Income of Anker shall
mean the line item entitled "Operating Income" in the audited consolidated
financial statements of Anker. Notwithstanding anything herein to the contrary,
Anker shall have no obligation to purchase Accelerated Put Shares under this
Section 1.4 if such purchase would, directly or indirectly, result
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in or give rise to a default under (i) that certain Amended and Restated Credit
Agreement dated September 22, 1997, among Anker, The Chase Manhattan Bank, and
others, as heretofore and hereafter amended, or (ii) the Senior Note Documents
(as defined in said Amended and Restated Credit Agreement), as heretofore and
hereafter amended.
1.5 Interest. Interest shall accrue on the outstanding balance of
the total purchase price set forth in Section 1.1 for the Put Options, which
outstanding balance equals $14,999,987.37 as of the date hereof (the "Put Option
Balance"). The Put Option Balance shall be adjusted as hereinafter set forth.
Interest shall accrue on the Put Option Balance, as adjusted, beginning on
August 1, 1998, at the "blended annual rate" published annually pursuant to
Revenue Ruling 86-17, without compounding. The blended annual rate shall be
fixed as of the date of the execution of this Agreement and shall be adjusted on
July 25 of each year during the Put Option Period based on the blended annual
rate in effect as of July 25 of that year. The blended annual rate as of the
date hereof is 5.63%. The Put Option Balance shall be reduced from time to time
by the total purchase price paid by Anker for any JJF Shares (including
Accelerated Put Shares) purchased and sold hereunder on the date of the closing
of such purchase and sale. In addition, if JJF Group fails or elects not to
exercise all or any part of a Put Option, then for purposes of determining the
interest accrued hereunder, the Put Option Balance shall be reduced effective as
of August 1, 1998, by an amount equal to the total purchase price that would
have been paid for the JJF Shares that JJF Group failed or elected not to put to
Anker hereunder.
1.6 Unexercised Puts. In the event JJF Group fails or elects not to
exercise all or any part of a Put Option on or before the applicable Put Option
Date, then JJF Group shall not have any right under this Agreement, the
Stockholders Agreement or otherwise to require Anker to
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<PAGE> 6
purchase the JJF Shares which JJF Group failed or elected not to put to Anker
pursuant to this Agreement.
1.7 Release. In consideration for executing and delivering this
Agreement, granting JJF Group the right to require Anker to purchase the JJF
Shares as set forth herein, and the other terms and conditions of this
Agreement, upon execution of this Agreement
(i) JJF Group shall execute and deliver to Anker a release in
the form of Exhibit "C" attached hereto and
(ii) JJF Group, Anker and the other parties hereto shall
execute and deliver an Amendment to the Stockholders Agreement in the form of
Exhibit "D" attached hereto.
2. Closing of Purchases and Sales.
(a) Each closing of the purchase and sale of the JJF Shares
(including Accelerated Put Shares) shall take place within fifteen (15) days
after the date of the Put Option Notice or the Accelerated Put Notice, as the
case may be, at the principal office of Anker, or at such other location as may
be agreed between Anker and JJF Group. The Put Option Price, together with
interest accrued and unpaid on the Put Option Balance up to the date of the
closing, shall be payable by Anker in certified funds or by wire transfer at the
closing.
(b) At the closing, JJF Group shall deliver the following items to
Anker:
(i) Stock Certificate(s) representing that number of the JJF
Shares being purchased by Anker, duly endorsed in blank, or accompanied by valid
stock powers duly executed in blank in proper form for transfer.
(ii) Such other documents or instruments as may reasonably be
requested by counsel for Anker to effect the transfer of the JJF Shares being
purchased by Anker.
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(iii) A certificate of a manager of JJF Group, dated as of the
date of closing, certifying that the representations and warranties set forth in
Section 3(b) hereof are true and correct, with the same force and effect as if
made on the date of closing.
(c) At each closing, Anker shall provide to JJF Group:
(i) A certificate of a corporate officer, dated as of the date
of closing, certifying that the representations and warranties set forth in
Section 3 hereof are true and correct, with the same force and effect as if made
on the date of closing.
(ii) If less than all of the JJF Shares are being purchased by
Anker, a share certificate representing that number of JJF Shares still owned by
JJF Group after the closing, with the following legend printed thereon:
"The shares represented by this certificate have not been registered
under the United States Securities Act of 1933 and have not been
acquired with a view to, or in connection with, the sale or
distribution thereof. No such sale or distribution may be effected
without an effective registration statement relating thereto or an
opinion of counsel reasonably satisfactory to the Board of Directors
of the issuer that such registration is not required. In addition,
said shares are subject to the provisions of an Agreement dated
August 12, 1996 among the Stockholders of Anker Coal Group, Inc.,
and a Put Agreement dated August 25, 1998, between Anker Coal Group,
Inc. and JJF Group Limited Liability Company, and may not be sold,
transferred, pledged, hypothecated or otherwise disposed of except
in accordance with such Agreements. A copy of each of said
Agreements is on file at the office of the Secretary of Anker Coal
Group, Inc."
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3. Representations and Warranties.
(a) Anker represents and warrants to JJF Group, which
representations and warranties are true and correct as of the date hereof and
will be true as of each Put Option Date, as follows:
(i) Anker has the full right, power, and authority to execute,
deliver and carry out the terms of this Agreement and all documents, agreements
and transactions contemplated hereby. This Agreement has been duly authorized
(including, without limitation, obtaining the requisite approval of its Board of
Directors), executed and delivered by Anker and constitutes the valid and
binding obligation of it, enforceable against it in accordance with its terms
except to the extent limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to creditor's rights generally, or general
principles of equity. The execution, delivery and performance by Anker of this
Agreement and the consummation of the transactions contemplated hereby has been
authorized by all necessary corporate and other action and will not with or
without notice or the lapse of time or both, result in any material and adverse
conflict with, or material and adverse breach, violation or termination of, or
default under, any charter, by-law, law, statute, rule, regulation, judgment,
order, decree, mortgage, loan, contract, agreement, deed of trust, indenture or
other instrument to which Anker is a party or by which it is bound.
(ii) There are no actions, suits, arbitrations, proceedings at
law or in equity or other administrative or governmental proceedings pending or
threatened against Anker which would have a material adverse effect on the
transactions contemplated hereby.
(b) JJF Group represents and warrants to Anker, which
representations and warranties are true and correct as of the date hereof and
will be true and correct as of each Put Option Date, as follows:
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(i) JJF Group has the full right, power and authority to
execute, deliver and carry out the terms of this Agreement and all documents and
agreements necessary to give effect to the provisions of this Agreement. This
Agreement has been duly authorized (including, without limitation, obtaining the
approvals of all of the managers and members of JJF Group and the Estates),
executed and delivered by JJF Group and constitutes the valid and binding
obligation of it enforceable against it in accordance with its terms except to
the extent limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to creditor's rights generally, or general principles of
equity. The execution, delivery and performance by JJF Group of this Agreement
and the consummation of the transactions contemplated hereby will not with or
without notice or the lapse of time or both, result in any material and adverse
conflict with, or material and adverse breach, violation or termination of, or
default under, any charter, by-law, law, statute, rule, regulation, judgment,
order, decree, mortgage, agreement, deed of trust, indenture or other instrument
to which JJF Group is a party or by which it is bound.
(ii) There are no actions, suits, arbitrations, proceedings at
law or in equity or other administrative or governmental proceedings pending or
threatened against JJF Group which would have a material and adverse effect on
the transactions contemplated hereby.
(iii) Except for the approvals of the managers and members of
JJF Group and the Estates, no consents, approvals or authorizations of any
person or entity are required in connection with the execution, delivery and
performance of this Agreement by JJF Group or the consummation by JJF Group of
the transactions contemplated hereby.
(iv) JJF Group is the record owner of the JJF Shares. JJF
Group owns and holds the JJF Shares free and clear of any and all liens,
security interests, pledges, charges, encumbrances, claims, rights, options and
restrictions of any kind or nature.
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<PAGE> 10
4. Specific Performance. The covenants made in, and the rights conveyed
by, this Agreement are of a unique and special nature. Any violation of this
Agreement by JJF Group or Anker will result in immediate and irreparable harm to
the other party. In such event, the non-breaching party shall be entitled to a
decree of specific performance from a court of equity in addition to other
rights or remedies which they may have at law or in equity. The parties hereto
waive the right to assert the defense that any such breach or violation can be
adequately compensated in damages in an action at law. Should any court find any
provision of this Agreement to be less than fully enforceable due to its breadth
or restrictiveness, or for any other reason, the parties hereto intend that the
court shall enforce the provision to the full extent permissible.
5. Covenants.
(a) By Anker.
During the Put Option Period, Anker shall not declare or pay
dividends or other distributions upon any common stock of Anker if the same
would have a material adverse effect on the ability of Anker to perform its
obligations under this Agreement.
(b) By JJF Group.
JJF Group hereby covenants and agrees with Anker as follows:
(i) So long as JJF Group is entitled to nominate and elect one
director of Anker under the Stockholders Agreement, JJF Group agrees that it
will nominate and cause to be elected as a director of Anker such person who is
otherwise qualified, is knowledgeable of the coal industry in the Eastern United
States and who is acceptable to all of the stockholders of Anker, which
acceptance shall not be unreasonably withheld.
(ii) Notwithstanding the provisions of Section 4.l(b)(v) of
the Stockholders Agreement, JJF Group hereby agrees that, so long as JJF Group
owns any JJF Shares,
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Anker shall have a right of first refusal to purchase any of the JJF Shares
owned by JJF Group on the terms and conditions set forth below. If JJF Group
receives a bona fide offer (a "Purchase Offer") to purchase any or all of its
JJF Shares and wishes to accept such offer, JJF Group shall notify Anker of the
terms of the offer in writing ( the "Sale Notice"). The Sale Notice shall be
dated the date it is mailed or otherwise transmitted and shall specify the
number of JJF Shares to be sold (the "Sale Shares"), the name, address and
telephone number of the prospective purchaser and the terms of the Purchase
Offer. Once given, no Sale Notice shall be withdrawn. Anker shall have an option
for a period of 30 days after the date of the Sale Notice to purchase the Sale
Shares on the terms and conditions set forth in the Sale Notice and in this
Section 5(b)(ii). If Anker wishes to purchase the Sale Shares, it shall give
irrevocable written notice of such desire to JJF Group within the 30-day period,
and JJF Group shall sell such Sale Shares to Anker and Anker shall purchase such
Sale Shares on the terms and conditions set forth in the Sale Notice, and such
purchase and sale shall be effected within 60 days after the date of the Sale
Notice; provided that the consummation of such purchase and sale shall be
delayed to the extent necessary to comply with any regulatory filings or other
regulatory requirements applicable to the purchase and sale. If Anker does not
give notice within the 30-day period of its desire to purchase the Sale Shares,
JJF Group shall be free for a period of 120 days after the expiration of the
30-day period to sell the Sale Shares to the prospective purchaser set forth in
the Sale Notice on the terms and conditions set forth therein. If JJF Group
fails to complete the sale of the Sale Shares on the terms of the Sale Notice
and within such 120-day period, the Sale Shares shall again become subject to
the restrictions of this Section 5(b)(ii).
6. Default. In the event of a default by Anker in the performance of its
obligations to purchase the JJF Shares under this Agreement, JJF Group shall
provide Anker with written notice specifying the default and date thereof. Anker
shall have 30 days from receipt of the notice from JJF
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<PAGE> 12
Group to cure the default. If the default has not been cured by Anker within the
said 30-day period, JJF Group shall have the right to immediately require Anker
to purchase at the Put Option Price those JJF Shares, and only those JJF Shares,
which are subject to Put Options for which the applicable Put Option Dates are
after the date of the default. JJF Group shall exercise such right by providing
Anker with written notice thereof. The closing of the purchase and sale of such
JJF Shares under this Section 6 shall be held within 15 days of Anker's receipt
of such notice. At the closing, JJF Group shall deliver to Anker the items
required to be delivered under Section 2(b) hereof, and Anker shall deliver to
JJF Group (i) the purchase price for the JJF Shares, together with the interest
accrued on the Put Option Balance under Section 1.5 through the closing date, in
certified funds or by wire transfer, and (ii) the certificate contemplated by
Section 2(c)(i).
7. Appreciation. During the Put Option Period and for a period of one (1)
year thereafter (the "Appreciation Period"), if (a) any present or future
shareholder of Anker (other than JJF Group and its successors, permitted assigns
and transferees), sells more than one hundred (100) shares of common stock of
Anker or any interest in said shares in a bona fide arm's length transaction, or
(b) if Anker reorganizes, sells or issues common stock or any interest therein
(whether by warrant, option or otherwise), sells substantially all of its assets
(in one transaction or a series of transactions), merges or consolidates with
any other entity or entities, or liquidates (each of the events referred to in
Section 7(a) and (b) being referred to as a "Fundamental Transaction"), Anker
shall immediately notify JJF Group thereof. If the price per share received by
Anker or any or all of its shareholders (other than JJF Group and its
successors, permitted assigns and transferees), or the equivalent value per
share received in an asset transfer, merger, consolidation or liquidation,
arising out of Fundamental Transaction (the "Sales Price") is greater than the
Put Option Price, then (i) Anker shall, within 15 days of the closing of the
Fundamental Transaction, pay JJF Group an
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amount equal to the difference between the Sales Price and the Put Option Price
for each JJF Share put to Anker by JJF Group under this Agreement prior to the
date of the closing of the Fundamental Transaction and (ii) the Put Option Price
with respect to all Put Options arising after the date of the closing of the
Fundamental Transaction shall equal the Sales Price.
In the event (i) a Fundamental Transaction is closed within the one year
period following the expiration of the Appreciation Period and (ii) substantial
and material negotiations regarding said Fundamental Transaction had commenced
prior to the expiration of the Appreciation Period and were continuous and
on-going up to the closing of said Fundamental Transaction, then the provisions
of this Section 7 shall apply to said Fundamental Transaction as if it were
closed on or before the expiration of the Appreciation Period.
8. Liquidation or Dissolution. In the event of the liquidation or
dissolution of Anker, JJF Group acknowledges and agrees that all of its rights
under this Agreement shall be superior only to the rights of the holders of the
common stock of Anker, and shall be subject and subordinate in all respects to
the rights of the holders of any preferred stock of Anker and the rights of any
creditors of Anker.
9. Indemnification.
(a) By Anker.
Anker hereby agrees to indemnify, hold harmless and defend JJF
Group, its successors and permitted assigns, from, against and in respect of any
and all claims, demands, losses, costs (including court costs and costs of
appeal), expenses, obligations, fees (including reasonable attorneys' fees),
liabilities, damages, fines, penalties, suits, actions, recoveries and
deficiencies which JJF Group may incur or suffer, directly, indirectly or
consequentially, which arise out of, are based upon or result from the breach of
any covenant, representation or warranty made by Anker
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under this Agreement; provided, however, that Anker shall not be required to
indemnify, hold harmless or defend JJF Group if, or to the extent that, any such
claim, demand, loss, cost, liability, damage, fine, penalty, suit, action,
recovery or deficiency directly or indirectly arises from, relates to, is caused
by, or is based upon any act or omission of JJF Group or Faltis prior to or
after the date of this Agreement.
(b) By JJF Group.
JJF Group hereby agrees to indemnify, hold harmless and defend
Anker, its successors and permitted assigns, and its and their past, present and
future stockholders, directors, officers, employees and agents (the "Anker
Indemnified Persons") from, against and in respect of any and all claims,
demands, losses, costs (including court costs and costs of appeal), expenses,
obligations, fees (including reasonable attorneys' fees), liabilities, damages,
fines, penalties, suits, actions, recoveries and deficiencies which Anker may
incur or suffer, directly, indirectly or consequentially, which arise out of,
are based upon or result from the breach of any covenant, representation or
warranty made by JJF Group under this Agreement; provided, however, that JJF
Group shall not be required to indemnify, hold harmless or defend Anker if, or
to the extent that, any such claim, demand, loss, cost, liability, damage, fine,
penalty, suit, action, recovery or deficiency directly or indirectly arises
from, relates to, is caused by, or is based upon any act or omission of an Anker
Indemnified Person prior to or after the date of this Agreement.
10. Notices. Any notice or other communication required or permitted to be
made under this Agreement shall be in writing and shall be delivered in person,
by overnight courier, by telefax or by registered or certified mail, postage
prepaid, return receipt requested, to the following addresses, unless such
address is changed by written notice from one party to the other party:
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<PAGE> 15
(a) If to JJF Group: With a copy to:
JJF Group Limited Liability Company Charles L. Potter, Jr., Esquire
c/o James W. Boyd Rose, Schmidt, Hasley & DiSalle, P.C.
Four Gateway Ctr., Suite 1900 900 Oliver Building
444 Liberty Avenue Pittsburgh, PA 15222-2310
Pittsburgh, PA 15222-1212
(b) If to Anker:
Anker Coal Group, Inc.
2708 Cranberry Square
Morgantown, WV 26505
Attention: President
All notices and other communications shall be deemed effective when
delivered in person, one day after being delivered to the overnight courier, one
day after being deposited in the United States mail for delivery by registered
or certified mail, return receipt requested, or when refused by the addressee,
whichever the case may be.
11. Financials. During the Put Option Period, Anker shall deliver to JJF
Group the same information which it is required to provide to the Securities and
Exchange Commission.
12. Entire Agreement. The parties agree that this Agreement, together with
the exhibits appended hereto constitutes the entire agreement by and between JJF
Group and Anker with respect to the subject matter hereof and may not be changed
or amended except by a subsequent writing signed by the parties hereto. This
Agreement supersedes all of the provisions of the Stockholders Agreement
directly or indirectly relating to the obligation of Anker to purchase the JJF
Shares from JJF Group or the right of JJF Group to put the JJF Shares to Anker
following the death of Faltis. All other provisions of the Stockholders
Agreement not superseded by this Agreement shall remain in full force and
effect. JJF Group hereby waives and releases any and all rights it may
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<PAGE> 16
have under the Stockholders Agreement relating to the purchase of the JJF Shares
by Anker following the death of Faltis.
13. Governing Law. This Agreement and all of the transactions contemplated
in connection herewith shall be governed, construed and interpreted in
accordance with the internal laws of the State of Delaware.
14. Binding Effect; Assignment. This Agreement shall be binding upon the
parties hereto, and their respective heirs, legal representatives, successors
and permitted assigns. Neither party may assign any rights or delegate any
duties hereunder without the prior written consent of the other party.
15. Waivers. The failure of any party hereto to insist, in any one or more
instances, on performance of any of the terms and conditions of this Agreement,
shall not be construed as a waiver or relinquishment by any such party of any
rights guaranteed hereunder or of the future performance of any such term,
covenant or condition.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed an
original, but all of such counterparts shall constitute one and the same
instrument.
17. Headings. The headings contained in this Agreement are for convenience
of reference only and shall in no way restrict or modify any of the terms or
provisions hereof.
18. Severability. The parties agree that (a) the provisions of this
Agreement shall be severable in the event that any of the provisions hereof are
held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, (b) such invalid, void or otherwise unenforceable provisions
shall be automatically replaced by other provisions which are as similar as
possible in
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<PAGE> 17
terms to such invalid, void or otherwise unenforceable provisions but are valid
and enforceable and (c) the remaining provisions shall remain enforceable to the
fullest extent permitted by law.
19. Recitals. The recitals set forth at the beginning of this Agreement
are incorporated herein as fully set forth.
IN WITNESS WHEREOF, the parties hereto have executed this Put
Agreement as of the day and year first above written.
WITNESS: JJF Group Limited Liability Company
/s/ Charles Potter, Jr. By: /s/ James W. Boyd (SEAL)
- -------------------------------- -------------------------------
Name: James W. Boyd
Title: Manager
ATTEST: Anker Coal Group, Inc.
By: /s/ B. Judd Hartman By: /s/ John Shober (SEAL)
- -------------------------------- -------------------------------
Name: B. Judd Hartman Name: John Shober
Title: Secretary Title: Chairman
CONSENTED AND AGREED TO BY:
FIRST RESERVE CORPORATION
By: /s/ Jonathan Linker
----------------------------
Its: Managing Director
----------------------------
AMERICAN GAS & OIL INVESTORS, LIMITED PARTNERSHIP
By First Reserve Corporation, its general partner
By: /s/ Jonathan Linker
----------------------------
Its: Managing Director
----------------------------
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<PAGE> 18
AMIGO II, LIMITED PARTNERSHIP
By First Reserve Corporation, its general partner
By: /s/ Jonathan Linker
--------------------------------------
Its: Managing Director
--------------------------------------
FIRST RESERVE FUND V, LIMITED PARTNERSHIP
By First Reserve Corporation, its general partner
By: /s/ Jonathan Linker
--------------------------------------
Its: Managing Director
--------------------------------------
FIRST RESERVE FUND V-2, LIMITED PARTNERSHIP
By First Reserve Corporation, its general partner
By: /s/ Jonathan Linker
--------------------------------------
Its: Managing Director
--------------------------------------
FIRST RESERVE FUND VI, LIMITED PARTNERSHIP
By First Reserve Corporation, its general partner
By: /s/ Jonathan Linker
--------------------------------------
Its: Managing Director
--------------------------------------
FIRST RESERVE FUND VII, LIMITED PARTNERSHIP
By First Reserve Corporation, its general partner
By: /s/ Jonathan Linker
--------------------------------------
Its: Managing Director
--------------------------------------
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<PAGE> 19
ANKER HOLDING B.V.
By: /s/ Willem Rottier
--------------------------------------
Its: President
--------------------------------------
PPK GROUP LIMITED LIABILITY COMPANY
By: /s/ Bruce Sparks
--------------------------------------
Its: Manager
--------------------------------------
/s/ P. Bruce Sparks
- ------------------------------------------
P. BRUCE SPARKS
THE ESTATE OF JOHN J. FALTIS
By: /s/ James Boyd
--------------------------------------
James W. Boyd, Its Executor
THE ESTATE OF KATHLEEN A. FALTIS
By: /s/ James Boyd
--------------------------------------
James W. Boyd, Its Administrator c.t.a
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<PAGE> 20
EXHIBIT "A"
EXERCISE OF PUT OPTION
TO: Anker Coal Group, Inc.
Attn: President
In accordance with the terms and conditions of that certain Put
Agreement dated __________________________________, 1998 by and among JJF Group
Limited Liability Company and Anker Coal Group, Inc. (the "Agreement"), JJF
Group hereby irrevocably exercises the Put Option to sell to Anker Coal Group,
Inc. _________ shares of the JJF Shares presently owned by JJF Group. Please
notify JJF Group of the date of closing of such sale which, in accordance with
the provisions of Section 2(a) of the Agreement, shall be no later than fifteen
(15) days from the date hereof. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Agreement.
JJF Group Limited Liability Company
Date: By:
------------------------- --------------------------------
Name:
------------------------------
Title:
-----------------------------
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<PAGE> 21
EXHIBIT "B"
ACCELERATED PUT NOTICE
TO: Anker Coal Group, Inc.
Attn: President
Reference is hereby made to that certain Put Agreement dated
____________, 1998 (the "Agreement") by and between JJF Group Limited Liability
Company ("JJF Group") and Anker Coal Group, Inc. ("Anker"). Capitalized terms
used herein and not otherwise defined shall have the meaning ascribed thereto in
the Agreement.
JJF Group is in receipt of the notice from Anker under Section 1.4
of the Agreement regarding Free Cash Flow. Pursuant to Section 1.4, JJF Group
hereby irrevocably exercises the option to sell to Anker ______ shares of the
JJF Shares presently owned by JJF Group. Please notify JJF Group of the date of
closing of such sale which, in accordance with the provisions in Section 2(a) of
the Agreement, shall be no later than fifteen days from the date hereof.
JJF Group Limited Liability Company
Date: By:
------------------------- --------------------------------
Name:
------------------------------
Title:
-----------------------------
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<PAGE> 22
EXHIBIT "C"
RELEASE
THIS RELEASE is made, entered into, effective and delivered as of the ____
day of August, 1998, by JJF GROUP LIMITED LIABILITY COMPANY, a West Virginia
limited liability company ("JJF Group"), THE ESTATE OF JOHN J. FALTIS (the "John
Faltis Estate"), and ESTATE OF KATHLEEN A. FALTIS (the "Kathleen Faltis
Estate"), to ANKER COAL GROUP, INC., a Delaware corporation ("Anker"), pursuant
to Section 1.7 of that certain Put Agreement dated August ___, 1998, between
Anker and JJF Group (the "Put Agreement"). This Release is executed and
delivered by JJF Group, the John Faltis Estate and the Kathleen Faltis Estate
for and in consideration of Anker executing and delivering the Put Agreement,
granting JJF Group the right to require Anker to purchase the JJF Shares (as
defined in the Put Agreement) from JJF Group as set for in the Put Agreement,
and the other covenants and agreements contained therein.
JJF Group, the John Faltis Estate and the Kathleen Faltis Estate, for and
on behalf of themselves, their respective successors and assigns, and any other
person or entity claiming by, through or under them, including, without
limitation, (i) JJF Group's past, present and future members, owners, managers,
officers, attorneys, principals, agents, servants, representatives, employees,
insurers, affiliates, partners and predecessors, and (ii) the beneficiaries of
the John Faltis Estate and the Kathleen Faltis Estate, hereby RELEASE, ACQUIT,
and FOREVER DISCHARGE Anker, its direct and indirect subsidiaries, and its and
their respective officers, directors, stockholders, attorneys, principals,
agents, representatives, employees, insurers, successors and assigns, of and
from any and all past and present claims, demands, obligations, actions and
causes of action of whatever kind or nature seeking damages (including, without
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<PAGE> 23
limitation, compensatory and punitive damages) for all costs, losses, expenses,
lost income, property damage, personal injuries, attorney's fees, or any other
losses of any nature whatsoever, whether such claims be based on tort, contract,
federal or state statute, or any other theory of recovery, which JJF Group, the
John Faltis Estate or the Kathleen Faltis Estate, or all or any combination of
them, now have or which may accrue in the future, whether known or unknown,
contingent or otherwise, directly or indirectly relating to or arising from
either of the following: (i) any breach of or failure to perform prior to the
date of this Release, any provision, term, condition, covenant or agreement of
the Stockholders Agreement (as defined in the Put Agreement) relating to the
purchase by Anker of the JJF Shares (as defined in the Put Agreement) from JJF
Group; or (ii) any act or omission of John J. Faltis prior to the date of his
death, whether in his capacity as an individual, as a director or officer of
Anker, as the majority member and manager of JJF Group, or otherwise.
It is the intention of the parties that any cause of action in connection
with the death of John or Kathleen Faltis which the John Faltis Estate or
Kathleen Faltis Estate may have against Anker, its direct and indirect
subsidiaries, successors or assigns, is not limited in any respect by this
Release, the Put Agreement or related documents. Accordingly, Anker hereby
expressly acknowledges and represents that the provisions of this Release, the
Put Agreement and related documents between the parties are not intended and
shall not be construed as releasing or otherwise impacting in any manner
whatsoever, any claim or cause of action that the John Faltis Estate or the
Kathleen Faltis Estate may have against Anker, its direct and indirect
subsidiaries, successors or assigns, for the death of John Faltis and Kathleen
Faltis.
JJF Group, the John Faltis Estate and the Kathleen Faltis Estate hereby
acknowledge and agree to expressly waive and assume the risk for all claims for
damages released hereunder which
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<PAGE> 24
which exist as of this date, but which are not known or suspected to exist,
whether through ignorance, oversight, error, negligence or otherwise, and which,
if known, would materially affect its or their decision to execute this Release.
JJF Group, the John Faltis Estate and the Kathleen Faltis Estate further
acknowledge and agree that the consideration for this Release is valid and
sufficient and has been received and accepted, and that this Release is hereby
delivered voluntarily with full knowledge of its legal effect.
If any provision of this Release or the application thereof to any person
or circumstance shall to any extent be held in any proceeding to be
unenforceable, the remainder of this Release or the application of such
provisions to any person or circumstance other than those to which it was held
to be invalid or unenforceable shall not be affected thereby, and shall be valid
and enforceable to the fullest extent permitted by law.
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<PAGE> 25
IN WITNESS WHEREOF, Anker, JJF Group, the John Faltis Estate and the
Kathleen Faltis Estate have caused this Release to be executed and properly
delivered by their respective duly authorized representatives as of the date
first above written.
JJF GROUP LIMITED LIABILITY COMPANY
By:
--------------------------------------
James W. Boyd, Its Manager
THE ESTATE OF JOHN J. FALTIS
By:
--------------------------------------
James W. Boyd, Its Executor
THE ESTATE OF KATHLEEN A. FALTIS
By:
--------------------------------------
James W. Boyd, Its Administrator c.t.a
ANKER COAL GROUP, INC.
By:
--------------------------------------
John Shober, Chairman
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<PAGE> 26
EXHIBIT "D"
AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT
THIS AMENDMENT NO. I TO STOCKHOLDERS AGREEMENT (the "Amendment"), is made
and entered into this 25th day of August, 1998, by and among ANKER COAL GROUP,
INC., a Delaware corporation ("Anker"), FIRST RESERVE CORPORATION, a Delaware
corporation ("First Reserve"), AMERICAN GAS & OIL INVESTORS, LIMITED
PARTNERSHIP, a New York limited partnership, AMGO II, LIMITED PARTNERSHIP, a New
York limited partnership, FIRST RESERVE FUND V, LIMITED PARTNERSHIP, a Delaware
limited partnership, FIRST RESERVE FUND V-2 LIMITED PARTNERSHIP, a Delaware
limited partnership, FIRST RESERVE FUND VI, LIMITED PARTNERSHIP, a Delaware
limited partnership, FIRST RESERVE FUND VII, LIMITED PARTNERSHIP, a Delaware
limited partnership (collectively, the "Funds"), JJF GROUP LIMITED LIABILITY
COMPANY, a West Virginia limited liability company ("JJF Group"), ANKER HOLDING
B.V., a Netherlands corporation ("Anker Holding"), PPK GROUP LIMITED LIABILITY
COMPANY, a West Virginia limited liability company ("PPK Group"), THE ESTATE OF
JOHN J. FALTIS (the "Estate"), and P. BRUCE SPARKS, an individual residing in
Morgantown, West Virginia ("Sparks").
WHEREAS, Anker, First Reserve, the Funds, JJF Group, Anker Holding, PPK
Group, Sparks and John J. Faltis entered into that certain Stockholders
Agreement dated August 12, 1996 (the "Stockholders Agreement"); and
WHEREAS, pursuant to that certain Put Agreement of even date herewith
between Anker Coal Group, Inc. and JJF Group Limited Liability Company (the "Put
Agreement"), the parties have agreed to execute and deliver this Amendment.
NOW, THEREFORE, in consideration of the foregoing recitals, the execution
and delivery of the Put Agreement and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. Amendment. Section 3.4 of the Stockholders Agreement is hereby stricken
and replaced in full by the following:
3.4 Lock-Up Period
Prior to the fifth anniversary of the date hereof, except as
set forth in Section 3.1(b), Section 3.5, or Article IV, no
Stockholder shall Transfer any Shares without the prior written
approval of all of the other Stockholders (other than JJF Group).
2. Effect. Except as herein amended and except as superceded by the Put
Agreement, the Stockholders Agreement shall continue in full force and effect.
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<PAGE> 27
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
as of the date first above written.
WITNESS: JJF Group Limited Liability Company
By: (SEAL)
- -------------------------------- -------------------------------
Name: James W. Boyd
Title: Manager
ATTEST: Anker Coal Group, Inc.
By: By: (SEAL)
----------------------------- -------------------------------
Name: B. Judd Hartman Name: John Shober
Title: Secretary Title: Chairman
FIRST RESERVE CORPORATION
By:
----------------------------
Its:
----------------------------
AMERICAN GAS & OIL INVESTORS, LIMITED PARTNERSHIP
By First Reserve Corporation, its general partner
By:
----------------------------
Its:
----------------------------
AMGO II, LIMITED PARTNERSHIP
By First Reserve Corporation, its general partner
By:
--------------------------------------
Its:
--------------------------------------
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<PAGE> 28
FIRST RESERVE FUND V, LIMITED PARTNERSHIP
By First Reserve Corporation, its general partner
By:
--------------------------------------
Its:
--------------------------------------
FIRST RESERVE FUND V-2, LIMITED PARTNERSHIP
By First Reserve Corporation, its general partner
By:
--------------------------------------
Its:
--------------------------------------
FIRST RESERVE FUND VI, LIMITED PARTNERSHIP
By First Reserve Corporation, its general partner
By:
--------------------------------------
Its:
--------------------------------------
FIRST RESERVE FUND VII, LIMITED PARTNERSHIP
By First Reserve Corporation, its general partner
By:
--------------------------------------
Its:
--------------------------------------
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<PAGE> 29
ANKER HOLDING B.V.
By:
--------------------------------------
Its:
--------------------------------------
PPK GROUP LIMITED LIABILITY COMPANY
By:
--------------------------------------
Its:
--------------------------------------
- ------------------------------------------
P. BRUCE SPARKS
THE ESTATE OF JOHN J. FALTIS
By:
--------------------------------------
James W. Boyd, Its Executor
THE ESTATE OF KATHLEEN A. FALTIS
By:
--------------------------------------
James W. Boyd, Its Administrator c.t.a
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