EXHIBIT 10.2
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SECOND AMENDMENT TO CREDIT AGREEMENT
EFFECTIVE AS OF DECEMBER 31, 2004
among
NATIONAL COAL CORPORATION
as Borrower,
X. X. XXXXX SPECIAL OPPORTUNITIES FUND, L.P.,
as Administrative Agent,
AND
THE LENDERS PARTY HERETO
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SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement (this "SECOND AMENDMENT") is
entered into on March 29, 2005, but shall be effective as of December 31, 2004
(the "SECOND AMENDMENT EFFECTIVE DATE"), by and among National Coal Corporation,
a Tennessee corporation (the "BORROWER"), each of the lenders from time to time
party hereto (the "LENDERS"), and X.X. Xxxxx Special Opportunities Fund, L.P., a
Delaware limited partnership (as administrative agent for the Lenders, in such
capacity, together with its successors in such capacity, the "ADMINISTRATIVE
AGENT").
RECITALS:
A. The Borrower entered into a Credit Agreement dated as of
November 26, 2004, among the Borrower, the Administrative Agent, and the Lenders
party thereto, as amended by that certain First Amendment to Credit Agreement
dated January 11, 2005, among the Borrower, the Administrative Agent, and the
Lenders party thereto (the "CREDIT AGREEMENT").
B. The Borrower has requested that certain provisions of the
Credit Agreement be modified and amended.
C. The Borrower, the Administrative Agent, and the Lenders have
agreed to amend the Credit Agreement on the terms and conditions contained
herein.
AGREEMENT:
In consideration of the premises and the mutual covenants contained
herein and in the Credit Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
SECTION 1. TERMS DEFINED IN THE CREDIT AGREEMENT. Each term defined in
the Credit Agreement (as amended hereby) and used herein without definition
shall have the meaning assigned to such term in the Credit Agreement, unless
expressly provided to the contrary. Unless otherwise indicated, all section and
article references in this Second Amendment refer to the Credit Agreement.
SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT. Section 10.01 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
Section 10.01 FINANCIAL COVENANTS. Except as otherwise provided each of
the following covenants using an EBITDA component shall be calculated by (i)
using actual EBITDA for the fourth calendar quarter of 2004, (ii) adding the
actual EBITDA for each calendar quarter thereafter until a full four quarters is
established and (iii) for each period thereafter using a trailing four quarters
of actual EBITDA.
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(a) MINIMUM EBITDA. Parent will not, at any time, permit
its EBITDA as of the last day of any period set forth below to be less
than the amount set forth below opposite such period:
PERIOD AMOUNT
------------------------------------------------------------- -------------
Three month period ending December 31, 2004 ($1,603,110)
Three month period ending March 31, 2005 $110,000
Six month period ending June 30, 2005 $2,250,000
Nine month period ending September 30, 2005 $6,500,000
Four consecutive quarters ending December 31, 2005 $11,000,000
Four consecutive quarters ending March 31, 2006 $16,000,000
Four consecutive quarters ending June 30, 2006 and thereafter $18,000,000
(b) RATIO OF CERTAIN DEBT TO EBITDA. Parent will not, at
any time, permit its ratio of (i) the sum of (A) Indebtedness plus (B)
all obligations of Parent, Borrower and their Subsidiaries under the
Debt set forth as items 4, 5, 6 and 7 on Schedule 10.02 and any and all
renewals, extensions and rearrangements thereof to (ii) EBITDA as of
the last day of any period set forth below to be greater than the ratio
set forth below opposite such period:
PERIOD RATIO
------------------------------------------------------------- ----------
*Three month period December 31, 2004 applicable
*Three month period ending March 31, 2005 applicable
*Six month period ending June 30, 2005 6.0:1.00
Nine month period ending September 30, 2005 3.4:1.00
Four consecutive quarters ending December 31, 2005 2.5:1.00
Four consecutive quarters ending March 31, 2006 2.0:1.00
Four consecutive quarters ending June 30, 2006 and thereafter 2.0:1.00
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*EBITDA for such period to be annualized based on available three, six and nine
month periods.
(c) RATIO OF EBITDA TO INTEREST. Parent will not permit
Parent's ratio of EBITDA to Consolidated Interest Expense as of the
last day of any period set forth below to be less than the ratio set
forth below opposite such period.
PERIOD RATIO
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Three month period ending December 31, 2004 Not applicable
Three month period ending March 31, 2005 Not applicable
Six month period ending June 30, 2005 1.5:1.00
Nine month period ending September 30, 2005 3.0:1.00
Four consecutive quarters ending December 31, 2005 3.5:1.00
Four consecutive quarters ending March 31, 2006 3.5:1.00
Four consecutive quarters ending June 30, 2006 and thereafter 3.5:1.00
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(d) FIXED CHARGE COVERAGE RATIO. Parent will not permit
the Fixed Charge Coverage Ratio of the Parent and its Consolidated
Subsidiaries as of the last day of each fiscal quarter to be less than
the ratio set forth below opposite such period.
PERIOD RATIO
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Three month period ending March 31, 2005 Not applicable
Six month period ending June 30, 2005 0.4:1.00
Nine month period ending September 30, 2005 0.9:1.00
Four consecutive quarters ending December 31, 2005 1.3:1.00
Four consecutive quarters ending March 31, 2006 1.8:1.00
Four consecutive quarters ending June 30, 2006 and thereafter 2.0:1.00
(e) SALES VOLUME. The Parent and the Borrower will not
permit, as of the last day of any period set forth below the sales of
Coal volume from the Coal Properties to be less than the amount set
forth opposite such period.
PRODUCTION
PERIOD (TONS)
------------------------------------------------------------- -----------
Three month period ending March 31, 2005 203,697
Six month period ending June 30, 2005 270,725
Nine month period ending September 30, 2005 359,975
Four consecutive quarters ending December 31, 2005 364,225
Four consecutive quarters ending March 31, 2006 355,725
Four consecutive quarters ending June 30, 2006 and thereafter 355,725
SECTION 3. Section 10.04 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
Section 10.04 RESTRICTED PAYMENTS. Neither Parent nor the Borrower
will, nor permit any of its Subsidiaries to, (i) declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, return any capital
to its stockholders or make any distribution of its Property to its Equity
Interest holders, (ii) make any payment to retire, or to obtain the surrender
of, any outstanding warrants, options or other rights for the purchase or
acquisition of shares of any Equity Interests of Parent, Borrower or any
Subsidiary, now or hereafter outstanding or (iii) other than payments under
employment agreements in existence on the Effective Date and which are set forth
on Schedule 10.04, pay any management fees or any other fees or expenses
(including the reimbursement thereof by Parent, Borrower or any of their
Subsidiaries) pursuant to any management, consulting or other services agreement
to any Affiliates of the Borrower (excluding any Subsidiaries of the Borrower)
or (iv) increase the total compensation paid or payable to the officers and
directors of the Parent, Borrower and their Subsidiaries taken as a whole by
more than five percent (5%) per annum in excess of the total compensation paid
for the twelve month period ending on October 31, 2004; provided, however, (A)
any Subsidiary may pay dividends to the Borrower, (B) the Parent may pay
dividends in the form of common stock, provided that no such payment shall be
made if an Event of Default shall have occurred and be continuing or would
result from the making of any such payment, (C) the exercise price of any
options, interests or other rights to purchase common stock of the Parent may be
paid in common stock of
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the Parent, (D) any Subsidiary may make any payment or transfer any of its
property to Borrower upon 15 days prior written notice to the Administrative
Agent and subject to Liens in favor of the Administrative Agent, if any, (E)
Parent may pay up to $25,000 per year in compensation to a total of three
outside directors and an additional $25,000 per director per year to such
directors if such directors are the chairperson on a committee of the Board,
(such payments to be made in twelve equal monthly installments) and (F) so long
as no Event of Default has occurred or is continuing, Parent may pay cash
dividends in respect of its Series A Preferred Stock as currently in effect on
the Effective Date. Notwithstanding the preceding, the Parent shall be entitled
to pay a total of three outside directors a single one-time payment of $25,000
per outside director on or before April 1, 2005.
SECTION 4. Section 10.21 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
Section 10.21 G&A COSTS. Without the prior consent of the Lenders
neither the Parent nor Borrower shall incur and, shall not permit any of their
Subsidiaries to incur General and Administrative Costs (excluding Borrower's
reasonable insurance expenses) on an annualized basis as of the end of any
period set forth below in excess of an amount equal to the percentage of
proceeds from the sale of Coal from Parents', Borrowers' and their subsidiaries
Coal properties for the periods indicated in the table below.
PERCENTAGE
OF ANNUALIZED
SALES PROCEEDS
OF COAL
FROM COAL
PERIOD PROPERTIES
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Three month period ending March 31, 2005 7.3%
Six month period ending June 30, 2005 6.3%
Nine month period ending September 30, 2005 5.5%
Four consecutive quarters ending December 31, 2005 5.0%
Four consecutive quarters ending March 31, 2006 5.0%
Four consecutive quarters ending June 30, 2006 and thereafter 5.0%
SECTION 5. LIMITATIONS. The amendments set forth herein are limited
precisely as written and shall not (a) be deemed to be a consent to, or a waiver
or modification of, any other term or condition of the Credit Agreement or (b)
prejudice any right or rights which the Lenders may now have or may have in the
future under or in connection with the Credit Agreement or any of the other
documents or instruments referred to therein. Except as expressly modified
hereby or by express written amendments thereof, the Credit Agreement and each
of the other documents and instruments executed in connection with any of the
foregoing are and shall remain in full force and effect. In the event of a
conflict between this Second Amendment and any of the foregoing documents, the
terms of this Second Amendment shall be controlling.
SECTION 6. ADOPTION, RATIFICATION AND CONFIRMATION OF CREDIT AGREEMENT.
The Borrower hereby adopts, ratifies and confirms the Credit Agreement, as
amended hereby, and acknowledges and agrees that the Credit Agreement, as
amended hereby, is and remains in full force and effect.
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SECTION 7. GOVERNING LAW. THIS SECOND AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 8. DESCRIPTIVE HEADINGS, ETC. The descriptive headings of the
several sections of this Second Amendment are inserted for convenience only and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
SECTION 9. ENTIRE AGREEMENT. This Second Amendment and the documents
referred to herein represent the entire understanding of the parties hereto
regarding the subject matter hereof and supersede all prior and contemporaneous
oral and written agreements of the parties hereto with respect to the subject
matter hereof.
SECTION 10. AMENDMENT FEE. The Borrower agrees to pay to the
Administrative Agent and the Lenders as of the date of execution hereof an
amendment fee of $120,000.00 in connection with the execution of this Second
Amendment.
SECTION 11. COUNTERPARTS. This Second Amendment may be executed in any
number of counterparts (including by telecopy) and by different parties on
separate counterparts and all of such counterparts shall together constitute one
and the same instrument.
In witness whereof, the parties hereto have caused this Second
Amendment to be duly executed and delivered by their respective duly authorized
officers as of the Second Amendment Effective Date.
[SIGNATURES BEGIN NEXT PAGE]
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BORROWER: NATIONAL COAL CORPORATION
By: /S/ XXX X. XXX
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Name: XXX X. XXX
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Title: CHIEF EXECUTIVE OFFICER
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Address: National Coal Corporation
0000 Xxxxxx Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxx Xxx
[Signature Page to Second Amendment to Credit Agreement]
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ADMINISTRATIVE AGENT: X.X. XXXXX SPECIAL OPPORTUNITIES FUND, L.P.
By: X.X. Xxxxx Partners, LLC, its general
partner
By: /S/ XXXXX X. XXXXX
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Name: XXXXX X. XXXXX
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Title: CHIEF FINANCIAL OFFICER
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Address: 000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
[Signature Page to Second Amendment to Credit Agreement]
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LENDER: X.X. XXXXX SPECIAL OPPORTUNITIES FUND, L.P.
By: X.X. Xxxxx Partners, LLC, its general
partner
By: /S/ XXXXX X. XXXXX
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Name: XXXXX X. XXXXX
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Title: CHIEF FINANCIAL OFFICER
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Address: 000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
[Signature Page to Second Amendment to Credit Agreement]
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