<PAGE>   1
                                                           Execution Counterpart

                                 AMENDMENT NO. 1

            AMENDMENT NO. 1 dated as of December 26, 1997, between ANKER COAL
GROUP, INC., a corporation duly organized and validly existing under the laws of
the State of Delaware (the "Company") each of the Subsidiaries of the Company
identified under the caption "SUBSIDIARY GUARANTORS" on the signature pages
hereto (individually, a "Subsidiary Guarantor" and, collectively, the
"Subsidiary Guarantors" and, together with the Company, the "Obligors"); each of
the lenders that is a signatory hereto (individually, a "Bank" and,
collectively, the "Banks"); and THE CHASE MANHATTAN BANK, as agent for the Banks
(in such capacity, together with its successors in such capacity, the
"Administrative Agent").

            The Company, the Subsidiary Guarantors, the Banks and the
Administrative Agent are parties to an Amended and Restated Credit Agreement
dated as of September 22, 1997 (as heretofore modified and supplemented and in
effect on the date hereof, the "Credit Agreement"), providing, subject to the
terms and conditions thereof, for loans to be made by said Banks to the Company
in an aggregate principal amount not exceeding $75,000,000. The Company, the
Subsidiary Guarantors, the Banks and the Administrative Agent wish to amend the
Credit Agreement in certain respects, and accordingly, the parties hereto hereby
agree as follows:

            Section 1. Definitions. Except as otherwise defined in this
Amendment No. 1, terms defined in the Credit Agreement (as amended hereby) are
used herein as defined therein.

            Section 2. Amendments. Subject to the satisfaction of the conditions
precedent specified in Section 4 below, but effective as of the date hereof; the
Credit Agreement shall be amended as follows:

            2.01. References in the Credit Agreement (including references to
the Credit Agreement as amended hereby) to "this Agreement" (and indirect
references such as "hereunder", "hereby", "herein" and "hereof") shall be deemed
to be references to the Credit Agreement as amended hereby.

            2.02. Section 1.01 of the Credit Agreement shall be amended by
adding the following new definitions (to the extent not already included in said
Section 1.01) and inserting the same in the appropriate alphabetic locations and
amending the following definitions (to the extent already included in said
Section 1.01), as follows:


                                 Amendment No. 1
<PAGE>   2

                                      -2-


      "Anker Capital Developmental Authority Approval" shall mean approval by
the West Virginia Economic Development Authority (the "Authority") of the
application of Anker Capital Corporation to have its capital base increased and
the issuance by the Authority of a certificate of tax credit which entitles
investors in Anker Capital Corporation to West Virginia tax credits upon the
issuance by Anker Capital Corporation of a proper certificate setting forth the
amount of the investors tax credit.

      "Anker Capital Disposition" shall mean the purchase of all of the capital
stock of Anker Capital Corporation by the Purchasers (directly, or indirectly
through an entity owned by the Purchasers) from Anker Group, Inc. pursuant to
the Purchase Agreement.

      "Applicable Percentage" shall mean: (a) with respect to Base Rate Loans,
2% per annum; (b) with respect to Eurodollar Loans, 3% per annum and (c) with
respect to commitment fees, 1/2 of 1% per annum; provided that (i) during the
period commencing on the Effective Date and ending on December 31, 1997, the
Applicable Percentage for Base Rate Loans, Eurodollar Loans and commitment fees
shall be 3/4 of 1%, 1-3/4% and 3/8 of 1%, respectively, (ii) during the period
commencing on January 1, 1998 and ending on the first Rate Reset Date (as
defined below), the Applicable Percentage for Base Rate Loans, Eurodollar Loans
and commitment fees shall be 1-3/4%, 2-3/4% and 1/2 of 1%, respectively and
(iii) subject to the foregoing clauses (i) and (ii), if the Net Leverage Ratio
as at the last day of any fiscal quarter of the Company shall fall within any of
the ranges set forth below then, upon the delivery 10 the Administrative Agent
of a certificate (a "Leverage Certificate") of a Responsible Officer
substantially in the form of Exhibit C hereto demonstrating such fact prior to
the end of the next succeeding fiscal quarter, the "Applicable Percentage" for
Revolving Credit Loans and commitment fees shall be reduced to the rate for the
respective Type of Loan and commitment fees set forth below opposite such range
during the period commencing on the third Business Day after the date of receipt
of such Leverage Certificate to but not including the first Rate Reset Date
thereafter (except that, notwithstanding the foregoing, the Applicable
Percentage for any such Loan or commitment fee shall not as a consequence of
this proviso be so reduced for any period during which an Event of Default shall
have occurred and be continuing following notice by the Administrative Agent to
the Company upon the instruction of the Majority Banks that such reduction shall
not be made):


                                 Amendment No. 1
<PAGE>   3

                                      -3-


<TABLE>
<CAPTION>
     Range                     Applicable Percentage 
      of                      Base Rate      Eurodollar          Commitment
Net Leverage Ratio              Loans          Loans                Fee
------------------            ---------      ----------          ----------
<S>                           <C>                 <C>            <C>
Greater than 6.50 to 1               2%               3%         1/2 of 1%
                                                                          
Greater than or                                                  
  equal to 6.00 to 1             1-3/4%           2-3/4%         1/2 of 1%
  but less than or                                                        
  equal to 6.50 to 1                                             
                                                                 
Greater than or                                                  
  equal to 5.50 to 1             1-1/2%           2-1/2%         1/2 of 1%
  but less than                                                           
  6.00 to 1                                                      
                                                                 
Greater than or                                                  
  equal to 5.00 to 1             1-1/4%           2-1/4%         1/2 of 1%
  but less than                                                           
  5.50 to 1                                                      
                                                                 
Greater than or                                                  
  equal to 4.50 to 1                 1%               2%         1/2 of 1%
  but less than 5.00                                                      
  to 1                                                           
                                                                 
Greater than or                                                  
  equal to 3.75 to 1          3/4 of 1%           1-3/4%         3/8 of 1%
  but less than 4.50                                                      
  to 1                                                           
                                                                          
Greater than or                                                           
  equal to 3.00 to 1          1/2 of 1%           1-1/2%         3/8 of 1%
  but less than 3.75
  to 1
</TABLE>


                                 Amendment No. 1
<PAGE>   4

                                      -4-


<TABLE>

<S>                           <C>                 <C>            <C>
Greater than or
  equal to 1.50 to 1          1/4 of 1%           1-1/4%        3/10 of 1%
  but less than 3.00
  to 1

Less than 1.50 to 1                  0%               1%         1/4 of 1%
</TABLE>

      For purposes hereof, (a) the first "Rate Reset Date" shall mean the
earlier of (i) the third Business Day after the date on which the Administrative
Agent receives a Leverage Certificate as at December 31, 1997, and (ii) March
31, 1998: and (b) each subsequent Rate Reset Date shall mean the earlier of (i)
the third Business Day after the date on which the Administrative Agent receives
a Leverage Certificate as at the last day of the fiscal quarter of the Company
then most recently ended, and (ii) the date falling 45 days after such last day.

      "Available Supplemental Amount" shall mean, at any time, the sum of (i)
$17,750,000 plus (ii) the aggregate amount of cash theretofore received by the
Company in consideration for the issuance by the Company of its capital stock
after the Closing Date (a) to any Person that is a shareholder of the Company on
the Closing Date after giving effect to the Acquisition or (b) to any fund
managed by First Reserve plus (iii) the Net Available Proceeds of any Equity
Issuance in respect of which the Supermajority Banks have agreed not to require
a prepayment or reduction of Commitments under Section 2.10 hereof plus (iv) the
aggregate amount of Net Available Proceeds received in cash by the Company or
any of its Restricted Subsidiaries from the Permitted Joint Venture in
consideration for the sale by the Company or any of its Restricted Subsidiaries
to the Permitted Joint Venture of Eligible Properties in excess of the
respective Stipulated Values for such Eligible Properties plus (v) subject to
consummation of the Anker Capital Disposition, the dollar amount of the tax
credits to which Anker Group, Inc. is entitled (whether or not utilized) in
association with the Anker Capital Developmental Authority Approval, in an
aggregate amount not to exceed $1,800,000 minus (vi) Investments theretofore
made by the Company or any of its Restricted Subsidiaries out of the Available
Supplemental Amount as permitted by Section 9.08(g) hereof.

      "Purchase Agreement" shall mean the Stock Purchase Agreement dated as of
December 18, 1997 between P. Rodney Jackson, Donald L. Berg and Anker Group,
Inc., as the same shall be modified and supplemented and in effect from time to
time.

      "Purchasers" shall mean P. Rodney Jackson and Donald L. Berg.


                                 Amendment No. 1
<PAGE>   5

                                       -5-


            2.03. Section 9.05 of the Credit Agreement is hereby amended by (i)
deleting "and" at the end of clause (c)(iii) thereof, (ii) inserting "and" in
lieu of the period at the end of clause (d) thereof and (iii) inserting a new
clause (e) thereto reading as follows:

            "(e) the consummation of the Anker Capital Disposition, provided
      that such Disposition is made immediately following, and in connection
      with, the Anker Capital Developmental Authority Approval."

            2.04. Section 9.08 of the Credit Agreement is hereby amended by (i)
deleting "and" at the end of clause (j) thereof, (ii) inserting "and" in lieu of
the period at the end of clause (k) thereof and (iii) inserting a new clause (1)
thereto reading as follows:

            "(I) a contribution to Anker Capital Corporation in an aggregate
      amount not exceeding $4,000,000, provided that (i) the contribution is
      made immediately following, and in connection with, the Anker Capital
      Developmental Authority Approval and (ii) the Anker Capital Disposition
      shall be consummated immediately after such contribution."

            2.05. Section 9.10(a) of the Credit Agreement is hereby amended to
read as follows:

            "(a) Net Leverage Ratio. The Company will not permit the Net
      Leverage Ratio on any date to exceed the ratio set forth below opposite
      the period during which such date falls:

<TABLE>
<CAPTION>
                      Period                            Ratio
                      ------                            -----
            <S>                                       <C>    
            From October 1, 1997
              through December 31, 1997               6.95 to 1
            
            From January 1, 1998
              through March 31, 1998                  7.25 to 1
            
            From April 1, 1998
              through June 30, 1998                   7.00 to 1
            
            From July 1, 1998
              through September 30, 1998              6.50 to 1
            
            From October 1, 1998
</TABLE>


                                 Amendment No. 1
<PAGE>   6

                                     -6-


<TABLE>
            <S>                                       <C>    
              through December 31, 1998               5.75 to 1
        
            From January 1, 1999
              through December 31, 1999               5.50 to 1
        
            From January 1, 2000
              through December 31, 2000               4.75 to 1
        
            From January 1, 2001
              through December 31, 2001               4.50 to 1
        
            From January 1, 2002
              through December 31, 2002               4.25 to 1

            Thereafter                                4.00 to 1"
</TABLE>

            2.06. Section 9.10(b) of the Credit Agreement is hereby amended to
read as follows:

            "(b) Net Interest Coverage Ratio. The Company will not permit the
      Net Interest Coverage Ratio on any date to be less than the ratio set
      forth below opposite the period during which such date falls:

<TABLE>
<CAPTION>
                      Period                            Ratio
                      ------                            -----
            <S>                                       <C>    
            From October 1, 1997            
              through December 31, 1997               2.00 to 1
            
            From January 1, 1998
              through June 30, 1998                   1.50 to 1
            
            From July 1, 1998
              through September 30, 1998              1.65 to 1
            
            From October 1, 1998
              through September 30, 1999              2.00 to 1
            
            From October 1, 1999
              through September 30, 2000              2.35 to 1
</TABLE>


                                 Amendment No. 1
<PAGE>   7

                                      -7-


<TABLE>
            <S>                                       <C>    
            From October 1, 2000
              through September 30, 2001              2.50 to 1
           
            From October 1, 2001
              through December 31, 2001               2.75 to 1
           
            Thereafter                                3.00 to 1"
</TABLE>

            2.07. Section 9.11 of the Credit Agreement is hereby amended to read
as follows:

            "9.11 Capital Expenditures. The Company will not permit the
      aggregate amount of Capital Expenditures by the Company and its Restricted
      Subsidiaries to exceed $24,000,000 for fiscal year 1998. The Company will
      not permit Capital Expenditures for the purchase and development of any
      reserves acquired after the Effective Date to exceed in the aggregate for
      any single project (other than Big Creek (a "Permitted Capital
      Expenditure")) (i) $5,000,000 for fiscal year 1998 and (ii) $10,000,000
      for any fiscal year thereafter."

            Section 3. Representations and Warranties. The Company represents
and warrants to the Banks that the representations and warranties set forth in
Section 8 of the Credit Agreement are true and complete on the date hereof as if
made on and as of the date hereof (or, if any representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date) and as if each reference in said Section 8 to "this Agreement" included
reference to this Amendment No. 1.

            Section 4. Conditions Precedent. As provided in Section 2 above, the
amendments to the Credit Agreement set forth in said Section 2 shall become
effective, as of the date hereof, upon the satisfaction of the following
conditions precedent:

            4.01. Execution by All Parties. This Amendment No. 1 shall have been
executed and delivered by the Company, the Subsidiary Guarantors and the
Majority Banks.

            4.02. Documents. The Administrative Agent shall have received the
following documents, each of which shall be satisfactory to the Administrative
Agent in form and substance:

            (1) Corporate Documents. Certified copies of the charter and by-laws
      (or equivalent documents) of each Obligor (or, in the alternative, a
      certification to the effect that none of such documents has been modified
      since delivery thereof on the


                                 Amendment No. 1
<PAGE>   8

                                       -8-


      Effective Date pursuant to the Credit Agreement) and of all corporate
      authority for each Obligor (including, without limitation, board of
      director resolutions and evidence of the incumbency of officers for each
      Obligor) with respect to the execution, delivery and performance of this
      Amendment No. 1 and the Credit Agreement as amended hereby and the loans
      under the Credit Agreement as amended hereby and each other document to be
      delivered by each Obligor from time to time in connection with the Credit
      Agreement as amended hereby (and the Administrative Agent and each Bank
      may conclusively rely on such certificate until it receives notice in
      writing from each Obligor to the contrary).

            (2) Opinions of Counsel to the Obligors. Opinions of counsel to the
      Obligors as follows:

                  (i) Klett Lieber Rooney & Schorling, special Pennsylvania
            counsel to the Obligors, as to (x) the due authorization (as to
            Delaware Obligors), execution and delivery of this Amendment No. 1,
            (y) the enforceability of the Credit Agreement as amended hereby and
            (z) the absence of any conflict with other agreements by reason of
            this Amendment No. 1 or the transactions contemplated hereby and

                  (ii) Spilman, Thomas & Battle, special West Virginia counsel
            to the Obligors as to (w) the due authorization as to West Virginia
            Obligors, (x) the absence of any conflict with other agreements by
            reason of this Amendment No. 1 or the transactions contemplated
            hereby, (y) the Anker Capital Developmental Authority Approval
            having been finalized, and that Anker Group Inc. shall, as a result
            thereof, be entitled to tax credits in the amount of 50% of the
            Investment permitted under Section 9.08(1) of the Credit Agreement
            as amended hereby and (z) the tax credits claimed by Anker Group,
            Inc. not being subject to recapture nor the entitlement to such tax
            credits being lost, as a result of the Anker Capital Disposition or
            the failure of the Purchasers to comply with any requirements of the
            West Virginia Capital Company Act, Code ss.5E-1-1, et seq. after the
            date of the Anker Capital Disposition,

      each of which opinions shall be in form and substance satisfactory to the
      Administrative Agent (and each Obligor hereby instructs such counsel to
      deliver such opinions to the Administrative Agent).

            (3) Officer's Certificate. A Certificate of a Responsible Officer
      prepared in good faith and based on reasonable estimates evidencing, as of
      the date hereof, the projected utilization of the tax credits received by
      Anker Group, Inc. as a result of the


                                 Amendment No. 1
<PAGE>   9

                                      -9-


      Anker Capital Developmental Authority Approval, and which shall be
      satisfactory in form and substance to the Administrative Agent.

            (4) Other Documents. Such other documents as the Administrative
      Agent or special New York counsel to Chase may reasonably request.

            The effectiveness of the amendments to the Credit Agreement set
forth in Section 2 above is also subject to the payment or delivery by the
Company of the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy,
special New York counsel to Chase, in connection with the negotiation,
preparation, execution and delivery of this Amendment No. 1 and of the Credit
Agreement.

            Section 5. Miscellaneous. Except as herein provided, the Credit
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 1 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 1 by signing any such counterpart. This
Amendment No. 1 shall be governed by, and construed in accordance with, the law
of the State of New York.


                                 Amendment No. 1
<PAGE>   10

                                     - 10 -


            IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed and delivered as of the day and year first above
written.


                                       ANKER COAL GROUP, INC.


                                       By /s/ Bruce Sparter
                                          --------------------------------------
                                          Title: President


                                       SUBSIDIARY GUARANTORS

                                       ANKER ENERGY CORPORATION


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer



                                       ANKER GROUP, INC.


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                       ANKER POWER SERVICES, INC.


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                 Amendment No. 1
<PAGE>   11

                                     - 11 -


                                       ANKER WEST VIRGINIA MINING
                                        COMPANY, INC.

                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                       BRONCO MINING COMPANY, INC.


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                       HAWTHORNE COAL COMPANY, INC.
                                       (formerly known as Anker
                                       Development, Inc.)


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                       HEATHER GLEN RESOURCES, INC.


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                 Amendment No. 1
<PAGE>   12

                                     - l2 -


                                       JULIANA MINING COMPANY, INC.


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                       KING KNOB COAL CO., INC.


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                       MARINE COAL SALES COMPANY


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                       PATRIOT MINING COMPANY, INC.


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                       VANTRANS, INC.

                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                       MELROSE COAL COMPANY, INC.


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                 Amendment No. 1
<PAGE>   13

                                     - 13 -


                                       NEW ALLEGHENY LAND HOLDING
                                        COMPANY, INC


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                       UPSHUR PROPERTY, INC.


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                       VINDEX ENERGY CORPORATION


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                       ANKER VIRGINIA MINING COMPANY, INC.


                                       By /s/ Michael M. Matesic
                                          --------------------------------------
                                          Title: Treasurer


                                 Amendment No. 1
<PAGE>   14

                                     - 14 -


                                       BANKS


                                       THE CHASE MANHATTAN BANK


                                       By /s/ Michael D. Peist
                                          --------------------------------------
                                          Title: Vice President


                                       BANK OF MONTREAL


                                       By 
                                          --------------------------------------
                                          Title: 


                                       THE FIRST NATIONAL BANK OF CHICAGO


                                       By 
                                          --------------------------------------
                                          Title: 


                                       MELLON BANK, N.A.


                                       By 
                                          --------------------------------------
                                          Title: 


                                       THE BANK OF NOVA SCOTIA


                                       By 
                                          --------------------------------------
                                          Title: 


                                 Amendment No. 1
<PAGE>   15

                                     - 14 -


                                       BANKS


                                       THE CHASE MANHATTAN BANK


                                       By 
                                          --------------------------------------
                                          Title: Treasurer


                                       BANK OF MONTREAL


                                       By 
                                          --------------------------------------
                                          Title: 


                                       THE FIRST NATIONAL BANK OF CHICAGO


                                       By /s/ William V. Clifford
                                          --------------------------------------
                                          Title: Vice President


                                       MELLON BANK, N.A.


                                       By 
                                          --------------------------------------
                                          Title: 


                                       THE BANK OF NOVA SCOTIA


                                       By 
                                          --------------------------------------
                                          Title: 


                                 Amendment No. 1
<PAGE>   16

                                     - 14 -


                                       BANKS


                                       THE CHASE MANHATTAN BANK


                                       By 
                                          --------------------------------------
                                          Title: 


                                       BANK OF MONTREAL


                                       By 
                                          --------------------------------------
                                          Title: 


                                       THE FIRST NATIONAL BANK OF CHICAGO


                                       By 
                                          --------------------------------------
                                          Title: 


                                       MELLON BANK, N.A.


                                       By /s/ Robert Heuler
                                          --------------------------------------
                                          Title: VP


                                       THE BANK OF NOVA SCOTIA


                                       By 
                                          --------------------------------------
                                          Title: 


                                 Amendment No. 1
<PAGE>   17

                                     - 14 -


                                       BANKS


                                       THE CHASE MANHATTAN BANK


                                       By 
                                          --------------------------------------
                                          Title: 


                                       BANK OF MONTREAL


                                       By 
                                          --------------------------------------
                                          Title: 


                                       THE FIRST NATIONAL BANK OF CHICAGO


                                       By 
                                          --------------------------------------
                                          Title: 


                                       MELLON BANK, N.A.


                                       By 
                                          --------------------------------------
                                          Title: 


                                       THE BANK OF NOVA SCOTIA


                                       By /s/ J. Alan Edwards
                                          --------------------------------------
                                          Title: AUTHORIZED SIGNATORY


                                 Amendment No. 1