Exhibit 10.6
FORBEARANCE AGREEMENT, AMENDMENT
TO WAIVER AND
AMENDMENT NO. 5 TO CREDIT
AGREEMENT
This FORBEARANCE AGREEMENT,
AMENDMENT TO WAIVER AND AMENDMENT NO. 5 TO CREDIT AGREEMENT ,
dated as of July 11, 2008 (this “ Agreement
”), is by and among BOWIE RESOURCES, LLC , a Delaware
limited liability company (the “ Borrower ”),
COLORADO HOLDING COMPANY, INC. , a Delaware corporation
(“ CHC ”), BOWIE RESOURCES MANAGEMENT
PARTNER, LLC , a Nevada limited liability company (“
BRMP ” and together with CHC sometimes collectively
referred to as the “ Guarantors ,” and the
Guarantors, together with the Borrower, collectively, the “
Member Parties ”), and GENERAL ELECTRIC CAPITAL
CORPORATION , as lender (“ Lender ”) and as
Agent for Lender (in such capacity, the “ Agent
”).
RECITALS:
WHEREAS , Borrower, Guarantors, Agent and Lender are
parties to that certain Credit Agreement dated as of
December 20, 2006, as amended by that certain Amendment
No. 1 to Credit Agreement dated as of March 12, 2007, as
further amended by that certain Amendment No. 2 to Credit
Agreement and Limited Consent dated as of May 8, 2007, as
further amended by that certain Consent, Limited Waiver and
Amendment No. 4 to the Credit Agreement dated
August 2007, and as further amended by that certain Waiver and
Amendment No. 3 to the Credit Agreement dated October 23,
2007 (as further amended, restated or otherwise modified from time
to time, the “ Credit Agreement ”; capitalized
terms not otherwise defined herein shall have the meanings given
such terms in the Credit Agreement);
WHEREAS , pursuant to the Credit Agreement, Lender made
a Term Loan to Borrower in the aggregate principal amount of
$60,000,000.00. As security for the Term Loan and Borrower’s
obligations under the Credit Agreement, Borrower granted to Agent a
security interest in the Collateral. The Collateral includes, but
is not limited to, the Accounts, Chattel Paper, Contracts, Deposit
Accounts, Documents, Equipment, Fixtures, General Intangibles,
Goods, Instruments, Inventory and Investment Property of the Member
Parties, and Borrower’s Real Estate;
WHEREAS , pursuant to that certain Consent and Waiver
No. 5 to Credit Agreement dated as of May 8, 2008 (the
“ Waiver ”), Agent and Lender waived certain
mandatory prepayment requirements set forth
Section 1.3(b)(iii) of the Credit Agreement with respect
to a series of capital contributions to Borrower from CHC in the
aggregate amount of not more than Ten Million Dollars, on terms and
conditions set forth in the Waiver.
WHEREAS , Borrower has, on or prior to the date hereof,
failed to (a) make the February 29, 2008, March 31,
2008, April 30, 2008, May 31, 2008 and June 30, 2008
scheduled principal payments to Agent with respect to the Term Loan
pursuant to Section 1.1(a)(ii) of the Credit Agreement,
(b) comply with the minimum Fixed Charge Coverage Ratio
covenant set forth in Subsection (b) of Annex E to the Credit
Agreement during the Fiscal Quarter ending March 31, 2008, and
(c) meet the audited Financial Statement delivery requirements
contained in Subsection (d) of Annex D to the Credit Agreement
(Annual Audited Financials) for Fiscal Year
1
2007. Each such failure constitutes an Event of
Default under the Credit Agreement (each an “ Existing
Default ” and collectively, the “ Existing
Defaults ”);
WHEREAS , Borrower has informed Agent that Borrower
anticipates it will fail to (a) make the July 31, 2008
and August 31, 2008 scheduled principal payments to Agent with
respect to the Term Loan pursuant to
Section 1.1(a)(ii) of the Credit Agreement,
(b) comply with the minimum Fixed Charge Coverage Ratio
covenant set forth in Subsection (b) of Annex E to the Credit
Agreement during the Fiscal Quarters ending June 30, 2008,
September 30, 2008 and December 31, 2008, (c) comply
with the maximum Leverage Ratio covenant set forth in Subsection
(c) of Annex E to the Credit Agreement during the Fiscal
Quarters ending June 30, 2008, September 30, 2008 and
December 31, 2008, and (d) comply with the maximum
Capital Expenditures covenant set forth in Subsection (a) of
Annex E to the Credit Agreement during the Fiscal Year commencing
January 1, 2008. Each such failure will constitute an Event of
Default under the Credit Agreement (each an “ Anticipated
Default ” and collectively, the “ Anticipated
Defaults ”; the Existing Defaults and the Anticipated
Defaults are sometimes referred to collectively herein as the
“ Designated Defaults ”);
WHEREAS , by reason of the existence of the Designated
Defaults, Agent has full legal right to exercise its rights and
remedies under the Credit Agreement. Such remedies include, but are
not limited to, the right to repossession and sale of the
Collateral;
WHEREAS , Borrower has requested that Agent and Lender
forbear for a period of time from exercising its rights and
remedies under the Credit Agreement with respect to the Designated
Defaults, amend the terms of the Waiver and amend the terms of the
Credit Agreement as set forth herein; and
WHEREAS , Agent and Lender is willing to forbear in the
exercise of its remedies under the Credit Agreement, amend the
terms of the Waiver and amend the terms of the Credit Agreement,
both on the terms and conditions set forth herein.
NOW, THEREFORE
, in consideration of the premises
and the agreements, provisions and covenants herein contained, the
parties hereto agree as follows:
SECTION 1.
AGREEMENT TO
FORBEAR
A.
During the period commencing on the
date hereof and ending on the earlier of (a) January 1,
2009, and (b) the date that any Forbearance Default (as
defined below) occurs (the “ Forbearance Period
”), Agent, on behalf of Lender, will forbear in the exercise
of its rights and remedies under the Loan Documents with respect to
the Designated Defaults (the “ Forbearance ”).
Without limiting the generality of the foregoing, during the
Forbearance Period, Agent will not (i) accelerate the maturity
of the Term Loan or initiate proceedings for the collection of the
Term Loan; (ii) file or join in filing any involuntary
petition in bankruptcy with respect to Borrower, or otherwise
initiate or participate in similar insolvency, reorganization or
moratorium proceedings for the benefit of creditors of Borrower; or
(iii) repossess or sell, through judicial proceedings or
otherwise, any of the Collateral.
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SECTION 2.
DEFAULT RATE
Commencing on May 1, 2008,
interest at the Default Rate shall accrue on the Term Loan until
the Designated Defaults are cured or waived, and such interest
shall be payable upon demand.
SECTION 3.
FORBEARANCE FEE
In consideration of the Forbearance,
Borrower hereby agrees to pay to Agent, for the benefit of Lender,
a forbearance fee equal to $3,500,000 (the “ Forbearance
Fee ”), which fee is fully earned and payable as of the
date hereof.
SECTION 4.
CONDITIONS PRECEDENT TO
EFFECTIVENESS OF FORBEARANCE
The Forbearance set forth in this
Agreement shall not be effective unless and until each of the
following conditions shall have been satisfied in Agent’s
sole discretion:
A.
The Borrower, the other Member
Parties, the Lender and the Agent indicate their consent to such
Forbearance by executing and delivering the signature
pages hereof to the Agent.
B.
Borrower shall have paid to Agent,
for the benefit of Lender, the Forbearance Fee.
C.
Borrower shall have paid Agent, for
the benefit of the Lender, all of Lender’s costs and expenses
(including attorneys fees) incurred in connection with the
preparation of this Agreement and the documents and instruments
incidental hereto.
D.
Borrower and the other Member
Parties shall deliver such other certificates, documents, opinions,
agreements and information as Agent or any Lender may reasonably
request.
SECTION 5.
FORBEARANCE
DEFAULT
Each of the following shall
constitute a “ Forbearance Default ”
hereunder:
A.
The existence of any Event of
Default (other than the Designated Defaults) under the Credit
Agreement.
B.
Borrower shall fail to keep or
perform any of the covenants or agreements contained herein,
including but not limited to the payment of the Forbearance
Fee.
C.
Any representation or warranty of
Borrower herein shall be false, misleading or incorrect in any
material respect.
SECTION 6.
AMENDMENT TO
WAIVER
Upon the terms and subject to the
conditions set forth in this Agreement and upon satisfaction of
each of applicable conditions precedent set forth herein, Recital A
of the Wavier is hereby restated as follows:
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The Credit Parties have informed
Agent and Lender that CHC intends to make a series of capital
contributions to Borrower in the aggregate amount of not more than
Eleven Million Five Hundred Thousand Dollars (collectively, the
“ Contribution ”), and in consideration for the
Contribution, Borrower intends to issue additional Stock to
CHC.
SECTION 7.
AMENDMENTS TO CREDIT
AGREEMENT
Upon the terms and subject to the
conditions set forth in this Agreement and upon satisfaction of
each of applicable conditions precedent set forth herein, the
Credit Agreement is hereby amended as follows:
A.
The first recital to the Credit
Agreement shall be restated as follows:
WHEREAS, Borrower has requested that
Lenders extend (i) a term loan to Borrower on the Funding Date
for fifty million Dollars ($50,000,000) in the aggregate for the
purpose of refinancing certain indebtedness of Borrower and to
provide (a) working capital financing for Borrower,
(b) funds for other general corporate purposes of Borrower and
(c) funds for other purposes permitted hereunder, (ii) a
delayed draw term loan to Borrower for ten million Dollars
($10,000,000) for the purpose of funding the Debt Service Reserve
Account in an amount sufficient to cause the amount on deposit in
the Debt Service Reserve Account to equal the Debt Service Reserve
Amount and the making of a distribution to the Borrower’s
equity holders, and (iii) a term loan to Borrower on
July 11, 2008 for thirteen million five hundred thousand
Dollars ($13,500,000) to provide funds for (a) the restoration
of Borrower’s coal production operations with respect to the
Mine described in CDMG Permit No. C-1981-038, (b) the
payment of Borrower’s accounts payable, and (c) the
payment of certain Fees; and for these purposes, Lenders are
willing to make certain loans and other extensions of credit to
Borrower of up to such amounts upon the terms and conditions set
forth herein; and
B.
Section 1.1(a)(i) of the
Credit Agreement shall be restated as follows:
Subject to the
terms and conditions hereof, the Lender agrees to make (a) in
a single draw on the Funding Date a term loan (the “
Closing Date Term Loan ”) to Borrower in the amount of
the Lender’s Closing Date Term Loan Commitment, (b) in a
single draw on any Business Day requested by the Borrower in
writing to the Agent following the Audited Financial Statements
Approval Date, a delayed draw term loan (the “ Delayed
Draw Term Loan ”) which shall be part of the Term Loan
hereunder, in the amount of the Lender’s Delayed Draw Term
Loan Commitment, and (c) in a single draw on July 11,
2008, an additional term loan (the “ Term Loan B
”), in the amount of the Lender’s Term Loan B
Commitment. The obligations of each Lender hereunder shall be
several and not joint. The Term Loan shall be evidenced by
promissory notes substantially in the form of
Exhibit 1.1(a)(i)(1) (each a “ Term
Note ” and collectively the “ Term Notes
”), and, except as provided in Section 1.10 ,
the
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Borrower shall
execute and deliver the Term Notes to the applicable Lender. Each
Term Note shall be dated the Funding Date, or in the case of the
Delayed Draw Term Loan, the date the Delayed Draw Term Loan is
made. The Term Notes shall represent the obligation of the Borrower
to pay the Lender’s Term Loan Commitment, together with
interest thereon as prescribed in Section 1.5 . The
aggregate principal amount of the Term Loan advanced to the
Borrower shall be the primary obligation of the Borrower. The Term
Loan B shall be evidenced by promissory notes substantially in the
form of Exhibit 1.1(a)(i)(2) (each a “
Term B Note ” and collectively the “ Term B
Notes ”), and, except as provided in
Section 1.10 , the Borrower shall execute and deliver
the Term B Notes to the applicable Lender. Each Term B Note shall
be dated the date the Term Loan B is made. The Term B Notes shall
represent the obligation of the Borrower to pay the Lender’s
Term Loan B Commitment, together with interest thereon as
prescribed in Section 1.5 . The aggregate principal
amount of the Term Loan B advanced to the Borrower shall be the
primary obligation of the Borrower.
C.
Section 1.1(a)(ii) of the
Credit Agreement shall be restated as follows:
Borrower shall
repay the Term Loan in monthly installments on the last day of each
Fiscal Month commencing August 31, 2007, as
follows:
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Fiscal Months Ending During the Period:
|
|
Installment Amounts:
|
|
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August 31, 2007
|
|
$
|
2,000,000.00
|
|
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October 21, 2007
|
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$
|
2,000,000.00
|
|
|
November 30, 2007
|
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$
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3,000,000.00
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|
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December 31, 2007
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$
|
3,000,000.00
|
|
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January 31, 2008
|
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$
|
2,000,000.00
|
|
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February 29, 2008 through and
including the Commitment Termination Date”
|
|
$
|
1,000,000.00
|
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Notwithstanding
anything set forth in this Section 1.1(a)(ii) , the
aggregate outstanding principal balance of the Term Loan shall be
due and payable in full in immediately available funds on the
Commitment Termination Date, if not sooner paid in full. No payment
with respect to the Term Loan may be reborrowed.
D.
Section 1.1(a)(iii) of the
Credit Agreement shall be restated as follows:
The entire unpaid balance of the
Term Loan B shall be immediately due and payable in full in
immediately available funds on the earlier of (A) December 31,
2008, and (B) the date of termination of Lender’s
obligations to permit the Term Loan B to remain outstanding
pursuant to Section 8.2(b) , if not sooner paid in
full. No payment with respect to the Term Loan B may be
reborrowed.
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E.
Section 1.1(a)(iv) of the
Credit Agreement shall be restated as follows:
Each payment of
principal with respect to the Term Loan shall be paid to Agent for
the ratable benefit of each Lender making the Term Loan, ratably in
proportion to each such Lender’s respective Term Loan
Commitment. Each payment of principal with respect to the Term Loan
B shall be paid to Agent for the ratable benefit of each Lender
making the Term Loan B, ratably in proportion to each such
Lender’s respective Term Loan B Commitment.
F.
Section 1.3(a) of the
Credit Agreement shall be restated as follows:
Borrower may at any time on at least
five (5) days’ prior written notice to Agent
(i) voluntarily prepay all or part of the Term Loan;
provided that (A) any such prepayments or reductions
shall be in a minimum amount of $1,000,000 and integral multiples
of $250,000 in excess of such amount and (B) after giving
effect to such reductions, Borrower shall comply with
Section 1.3(b)(iv) , and (ii) voluntarily prepay
all or part of the Term Loan B; provided that (A) any
such prepayments or reductions shall be in a minimum amount of
$1,000,000 and integral multiples of $250,000 in excess of such
amount and (B) after giving effect to such reductions,
Borrower shall comply with Section 1.3(b)(iv) . Any
voluntary prepayment must be accompanied by payment of the Fee
required by Section 1.7(b) , if any, plus the payment
of any LIBOR funding breakage costs in accordance with
Section 1.11(b) . Any partial prepayments of the Term
Loan made by Borrower shall be applied, first , to any
currently outstanding Obligations due and payable pursuant to any
of the Loan Documents; second , to prepay the scheduled
installments of the outstanding Term Loan in inverse order of
maturity; and third , the balance, if any, of any
prepayments shall be distributed in accordance with
Section 5.1 of the Deposit and Disbursement Agreement. Any
partial prepayments of the Term Loan B made by Borrower shall be
applied, first , to any currently outstanding Obligations
due and payable pursuant to any of the Loan Documents;
second , to prepay the outstanding principal balance of the
Term Loan B; and third , the balance, if any, of any
prepayments shall be distributed in accordance with
Section 5.1 of the Deposit and Disbursement
Agreement.
G.
Section 1.3(c) of the
Credit Agreement shall be restated as follows:
Any prepayments made by Borrower
pursuant to Sections 1.3(b)(i), (b)(ii), (b)(iii),
(b)(iv) or 5.4 shall be applied as follows: first ,
to any currently outstanding Obligations due and payable pursuant
to any of the Loan Documents; second , to prepay the
outstanding principal balance of the Term Loan B, until such Term
Loan B has been prepaid in full; third , to prepay the
scheduled principal installments of the outstanding Term Loan in
inverse order of maturity, until such Term Loan has been prepaid in
full; fourth , the balance, if any, of any prepayment shall
be distributed in accordance with Section 5.1 of the Deposit
and Disbursement Agreement.
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H.
New Section 1.4(c) shall
be added to the Credit Agreement as follows:
Borrower shall
utilize the proceeds of the Term Loan B solely to (a) restore
Borrower’s coal production operations with respect to the
Mine described in CDMG Permit No. C-1981-038, (b) pay
Borrower’s accounts payable, and (c) pay certain
Fees.
I.
Section 1.5(a) of the
Credit Agreement shall be restated as follows:
Except as
otherwise provided in Section 1.5(d) , Borrower shall
pay interest to Agent, for the ratable benefit of Lenders, in
arrears on each applicable Interest Payment Date, (i) on the
principal amount of the Term Loan from time to time outstanding, at
the applicable LIBOR Rate plus the Applicable Term Loan LIBOR
Margin per annum, and (ii) on the principal amount of the Term
Loan B from time to time outstanding, at the applicable LIBOR Rate
plus 5.00%. The Applicable Term Loan LIBOR Margin is 6.00% during
the Audited Financial Statements Deficiency Period and 4.00%
thereafter.
J.
Section 1.9(a) of the
Credit Agreement shall be restated as follows:
So long as no
Event of Default has occurred and is continuing, (i) payments
matching specific scheduled payments then due shall be applied to
those scheduled payments; (ii) voluntary prepayments shall be
applied in accordance with the provisions of
Section 1.3(a) ; and (iii) mandatory prepayments
shall be applied as set forth in Section 1.3(c) . All
payments and prepayments applied to the Term Loan shall be applied
ratably to the portion thereof held by each Lender as determined by
its Pro Rata Share. As t
