**EXHIBIT 10.11**

 

SUPPLEMENT NO. 1 dated as of September 2, 2005(this “Supplement”), to the Guarantee and Collateral Agreement dated asof July 30, 2004 (the “Guarantee and Collateral Agreement”), amongFC 2 CORP., a Delaware corporation (“Holdings”), FOUNDATION COALCORPORATION, a Delaware Corporation (“Acquisition Corp.”), S2ACQUISITION CORP., a Delaware Corporation (which, on the Closing Date, shall bemerged with and into, Foundation PA Coal Company, the “Borrower”), eachDomestic Subsidiary of Borrower identified herein (each, a “Subsidiary Party”)and CITICORP NORTH AMERICA, INC. (“CNAI”), as collateral agent (in suchcapacity, the “Collateral Agent”) for the Secured Parties.

 

A. Reference is made to the Credit Agreement dated as of July 30, 2004(as amended, supplemented, waived or otherwise modified from time to time, the “CreditAgreement”), among Holdings, Acquisition Corp., the Borrower, the lendersparty thereto from time to time (the “Lenders”), CNAI as AdministrativeAgent and as Collateral Agent for the Lenders, UBS AG, STAMFORD BRANCH, BEARSTEARNS CORPORATE LENDING INC. and NATEXIS BANQUES POPULAIRES, each a Co-DocumentationAgent, CITIGROUP GLOBAL MARKETS, INC. (“CGMI”) and CREDIT SUISSE FIRSTBOSTON (“CSFB”) as Co-Syndication Agents and CGMI and CSFB, as JointLead Arrangers and Joint Book Managers.

 

B. Capitalized terms used herein and not otherwise defined herein shallhave the meanings assigned to such terms in the Credit Agreement and theGuarantee and Collateral Agreement referred to therein.

 

C.  TheGuarantors have entered into the Guarantee and Collateral Agreement in order toinduce the Lenders to make Loans and each Issuing Bank to issue Letters ofCredit.  Section 7.15 of theGuarantee and Collateral Agreement provides that additional Subsidiaries maybecome Subsidiary Parties under the Guarantee and Collateral Agreement byexecution and delivery of an instrument in the form of this Supplement.  The undersigned Subsidiary (the “NewSubsidiary”) is executing this Supplement in accordance with therequirements of the Credit Agreement to become a Subsidiary Party under theGuarantee and Collateral Agreement in order to induce the Lenders to makeadditional Loans and each Issuing Bank to issue additional Letters of Creditand as consideration for Loans previously made and Letters of Credit previouslyissued.

 

Accordingly, the Collateral Agent and the NewSubsidiary agree as follows:

 

SECTION 1.                                Inaccordance with Section 7.15 of the Guarantee and Collateral Agreement,the New Subsidiary by its signature below becomes a Subsidiary Party and aGuarantor under the Guarantee and Collateral Agreement with the same force andeffect as if originally named therein as a Subsidiary Party and a Guarantor,and the New Subsidiary hereby (a) agrees to all the terms and provisionsof the Guarantee and

 

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Collateral Agreement applicable to it as a Subsidiary Party andGuarantor thereunder and (b) represents and warrants that therepresentations and warranties made by it as a Guarantor thereunder are true andcorrect, in all material respects, on and as of the date hereof.  In furtherance of the foregoing, the NewSubsidiary, as security for the payment and performance in full of theObligations (as defined in the Guarantee and Collateral Agreement), does herebycreate and grant to the Collateral Agent, its successors and assigns, for theratable benefit of the Secured Parties, their successors and assigns, asecurity interest in and Lien on all the New Subsidiary’s right, title andinterest in and to the Collateral (as defined in the Guarantee and CollateralAgreement) of the New Subsidiary.  Eachreference to a “Subsidiary Party” or a “Guarantor” in the Guarantee andCollateral Agreement shall be deemed to include the New Subsidiary.  The Guarantee and Collateral Agreement ishereby incorporated herein by reference.

 

SECTION 2.                                TheNew Subsidiary represents and warrants to the Collateral Agent and the otherSecured Parties that this Supplement has been duly authorized, executed anddelivered by it and constitutes its legal, valid and binding obligation,enforceable against it in accordance with its terms, subject to (i) theeffects of bankruptcy, insolvency, moratorium, reorganization, fraudulentconveyance or other similar laws affecting creditors’ rights generally, (ii) generalprinciples of equity (regardless of whether such enforceability is consideredin a proceeding in equity or at law) and (iii) implied covenants of goodfaith and fair dealing.

 

SECTION 3.                                ThisAgreement may be executed in two or more counterparts, each of which shallconstitute an original but all of which when taken together shall constitutebut one contract.  This Supplement shallbecome effective when (a) the Collateral Agent shall have received acounterpart of this Supplement that bears the signature of the New Subsidiaryand (b) the Collateral Agent has executed a counterpart hereof.

 

SECTION 4.                                TheNew Subsidiary hereby represents and warrants that (a) set forth on Schedule Iattached hereto is a true and correct schedule of the location of any andall Article 9 Collateral of the New Subsidiary, (b) set forth on Schedule IIattached hereto is a true and correct schedule of all the PledgedSecurities of the New Subsidiary and (c) set forth under its signaturehereto, is the true and correct legal name of the New Subsidiary, itsjurisdiction of formation and the location of its chief executive office.

 

SECTION 5.                                Exceptas expressly supplemented hereby, the Guarantee and Collateral Agreement shallremain in full force and effect.

 

**SECTION 6.****                            THISSUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SUPPLEMENTSHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OFNEW YORK.**

 

SECTION 7.                                Inthe event any one or more of the provisions contained in this Supplement shouldbe held invalid, illegal or unenforceable in any respect, the validity,legality and enforceability of the remaining provisions contained herein and inthe

 

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Guarantee and Collateral Agreement shall not in any way be affected orimpaired thereby.  The parties shallendeavor in good-faith negotiations to replace the invalid, illegal orunenforceable provisions with valid provisions the economic effect of whichcomes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

SECTION 8.                                Allcommunications and notices hereunder shall be in writing and given as providedin Section 7.01 of the Guarantee and Collateral Agreement.

 

SECTION 9.                                TheNew Subsidiary agrees to reimburse the Collateral Agent for its reasonable out-of-pocketexpenses in connection with this Supplement, including the reasonable fees,disbursements and other charges of counsel for the Collateral Agent.

 

IN WITNESS WHEREOF, the New Subsidiary andthe Collateral Agent have duly executed this Supplement to the Guarantee andCollateral Agreement as of the day and year first above written.

 
|   | FOUNDATION MINING, LP               |
|--------|-------------------------------------|
|   | By:                                 | Pennsylvania Services Corporation |
|   |                                | General Partner |
|   |                                |
|   | By:                                 | /s/ Frank J. Wood |   |
|   | Name:                               | Frank J. Wood |
|   | Title:                              | Vice President |
|   |                                |   |
|   | Legal Name: FOUNDATION MINING, LP   |
|   |                                |   |
|   | Jurisdiction of Formation: Delaware |
|   |                                |
|   | Location of Chief                   |
|   |                                | Executive Office: |
|   |                                | 158 Portal Road |
|   |                                | Waynesburg, PA 15370 |
|        |                                     |  |  |  |

 

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| CITICORP NORTH AMERICA, INC., as |   |                 |
|----------------------------------|--------|----------------------|
| Collateral  Agent                |   |                 |
|                             |   |                 |
|                             | By:    | /s/ Daniel J. Miller |   |
|                             | Name:  | Daniel J. Miller     |
|                             | Title: | Vice President       |

 

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