Exhibit 10.1
______________________________________________________
LOAN
AGREEMENT
Dated as of
May 27, 2009
AMONG
DENLY UTAH COAL,
LLC
JOHN THOMAS BRIDGE AND
OPPORTUNITY FUND, L.P.
THOMAS MURCH
JAMES MOORE
and
JOHN MEEKS
(Lenders)
AND
AMERICA WEST SERVICES,
INC.
(Borrower)
and
AMERICA WEST RESOURCES,
INC.
(Guarantor)
_____________________________________________________
TABLE OF
CONTENTS
Page
Section 1
General Terms
1
1.1
Certain Definitions
1
1.2
Other Documents; Accounting
Terms
10
1.3
Use of Pronouns
10
1.4
Amendments, Etc.
11
Section 2
The Loans
11
2.1
Term Loans
11
2.2
Repayment of Loans
11
2.3
Pro Rata Treatment
11
2.4
Use of Proceeds
11
2.5
Interest Accrual
12
2.6
Default Interest
13
2.7
Accounts Stated
13
Section 3
Representations And Warranties
13
3.1
Authority, Etc.
13
3.2
Financial Condition
14
3.3
Debt, Liens, Liabilities
14
3.4
No Default
14
3.5
Governmental Permits
14
3.6
Taxes
15
3.7
Plan of Reorganization
15
3.8
Equipment Lease
15
3.9
Horizon Mine Lease
15
3.10
Material Agreements
15
3.11
No Consents Necessary
15
3.12
No Environmental Hazard
16
3.13
No Pending Litigation
16
3.14
Investment Company Act
16
3.15
Public Utility Holding Company
Act
16
3.16
Securities Acts
16
3.17
Full Disclosure
16
3.18
Survival of Representations and
Warranties
16
Section 4
Affirmative Covenants
17
4.1
Reporting Requirements
17
4.2
Liens and Security Interest
18
4.3
Coal Supply Contracts
19
4.4
Legal Requirements
19
4.5
Performance of Obligations; Payment of
Debt
19
4.6
Horizon Mine Lease
19
4.7
Maintenance of Purchased
Equipment
20
4.8
Future Permits
20
i
4.9
Payment of Taxes
20
4.10
Adequate Records; Inspection
Rights
20
4.11
Maintenance of Existence and
Business
20
4.12
Maintenance of Insurance
21
4.13
Further Assurances
22
Section 5
Negative Covenants
22
5.1
Senior or Pari Passu Debt
22
5.2
Contingent Liabilities
23
5.3
Fixtures
23
5.4
Liens
23
5.5
Dividends, Restricted Payments and
Restricted Purchases
23
5.6
Reorganization, Merger, Etc
23
5.7
Transactions with Affiliates
23
5.8
Prepayments of Other Debt
23
5.9
Fiscal Year
23
5.10
Limitation on Negative Pledge
Clauses
23
Section 6
General Conditions Of
Borrowing
24
6.1
First Closing Proceedings
24
6.2
Second Closing Proceedings
27
6.3
General Proceedings
29
6.4
Sole Benefit of Lenders
30
Section 7
Events Of Default And Remedies
30
7.1
Events
30
7.2
Remedies
32
7.3
Performance by the Lenders
33
7.4
Cumulative Rights
33
7.5
Waivers
33
Section 8
Collateral Agent
33
8.1
Appointment and Authority
33
8.2
Holding of Collateral
33
8.3
Compensation and Expenses
34
8.4
Exculpatory Provisions
34
8.5
Reliance by Collateral Agent.
35
8.6
Resignation of Collateral
Agent.
35
8.7
Indemnification.
36
8.8
Several Commitments
36
8.9
Exercise of Rights and
Remedies
37
8.10
Collateral Agent May File Proof of
Claim
37
8.11
Exercise of Powers; Instructions of
Required Lender
38
8.12
Remedies Not Exclusive
38
8.13
Waiver and Estoppel
39
8.14
Limitation on Collateral Agent's Duty in
Respect of Collateral
40
8.15
Limitation by Law
40
Section 9
Miscellaneous
40
9.1
Expenses; Indemnity; Damage
Waiver
40
ii
9.2
No Fiduciary Relationship
42
9.3
Survival of Various Matters
42
9.4
Notices
42
9.5
Amendments
44
9.6
Control
44
9.7
Successors and Assigns
44
9.8
Renewals
45
9.9
No Waiver
45
9.10
Governing Law
45
9.11
Non-Subordination
45
9.12
Exhibits and Schedules
45
9.13
Severability
45
9.14
Savings Clause
46
9.15
Counterparts
46
9.16
Limitation of Remedies
47
9.17
Headings
47
9.18
No Obligation to Make Advance
47
9.19
Role of Lenders
48
9.20
NO OTHER AGREEMENTS
48
9.21
WAIVER OF JURY
48
9.22
No Duty
48
9.23
Joint and Several Obligations
48
9.24
Representation by Attorney
49
Exhibits
Exhibit A -
Compliance Certificate
Schedules
4.2 -
Collateral
iii
LOAN AGREEMENT
THIS LOAN AGREEMENT is dated and
effective on and as of May 27, 2009, by and among Denly Utah
Coal, LLC , a Texas limited liability company (" Denly
"), John Thomas Bridge and Opportunity Fund, L.P. , a
Delaware limited partnership (" JTF "), Thomas Murch
(" Murch "), James Moore (" Moore ") and
John Meeks (" Meeks ") (Denly, JTF, Murch, Moore and
Meeks are hereinafter collectively referred to as the "
Lenders "), America West Services, Inc. , a Nevada
corporation (the " Borrower "), America West Resources,
Inc. , a Nevada corporation (the " Guarantor "), and
JTF as collateral agent for itself and the other Lenders (in
such capacity, together with its successors in such capacity, the "
Collateral Agent ").
RECITALS
The Borrower has requested loans from the
Lenders up to the aggregate principal amount of $4,000,000.00.
The Lenders are willing to make the loans to the Borrower in
reliance upon, and subject to, the representations, warranties,
terms and conditions of this Agreement.
AGREEMENTS
For and in consideration of the mutual
covenants and agreements herein contained, the Lenders and the
Borrower have agreed and do hereby agree as follows:
Section
1
GENERAL TERMS
1.1
Certain Definitions
: As
used in this Loan Agreement:
" Additional Equipment Memorandum
" shall mean a Memorandum of Additional Equipment in the form
attached to the Security Agreement as Exhibit A
.
" Advance " shall mean an advance
of proceeds of the Loans.
" Affiliate " shall mean with
respect to any Person (i) each Person that, directly or indirectly,
owns or controls, whether beneficially, or as a trustee, guardian
or other fiduciary 10% or more of the securities or interests
having ordinary voting power in the election of directors of such
Person, (ii) each Person that controls, is controlled by or is
under common control with such Person or any Affiliate of such
Person and (iii) each of such Person's officers, directors, joint
venturers and partners. For the purpose of this definition
"control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting
securities, by contract or otherwise. Anything herein to the
contrary notwithstanding, in no event shall any of the Lenders be
considered an "Affiliate" of the Borrower.
" Agreement " shall mean this Loan
Agreement, as the same may be modified, amended, restated or
replaced from time to time.
" AmWest Marketing " shall mean
America West Marketing, Inc., a Nevada corporation and wholly owned
Subsidiary of the Guarantor, its successors and assigns.
" AmWest Shares " shall mean the
Capital Stock of the Guarantor to be issued to the Lenders pursuant
to the provisions of the Stock Purchase Agreement.
" Assignment of Contracts " shall
mean an assignment, in Proper Form, executed by AmWest Marketing
and by which AmWest Marketing assigns its rights under the Supply
Contracts to the Lenders and the Collateral Agent.
" Assignment of Equipment Lease "
shall mean one or more assignments, in Proper Form, executed by the
Borrower and by which the Borrower assigns its rights under the
Equipment Lease to the Lenders and the Collateral Agent.
" Bankruptcy Code " shall mean
Title 11, United States Code, 11 U.S.C. 101 et seq., as the same
may be amended and in force and effect from time to time, or any
successor law.
" Borrower " shall mean America
West Services, Inc., a Nevada corporation, its successors and
assigns.
" Business Day " shall mean any
day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the laws of, or are in fact
closed in, the State of Utah or the State of Texas.
" Capital Stock " shall mean, as
to any Person, the equity interests in such Person, including,
without limitation, the shares of each class of capital stock of
any Person that is a corporation, membership interests in any
Person that is a limited liability company and partnership and
joint venture interests (general and limited) in any Person that is
a partnership or joint venture.
" Code " shall mean the Internal
Revenue Code of 1986, as amended, as now or hereafter in effect,
together with all regulations thereof or thereunder by the Internal
Revenue Service.
" Collateral " shall mean the
security for payment of the Indebtedness and performance of the
Obligations as contemplated by, and referred to in, Section
4.2 of this Agreement.
" Collateral Agent " shall mean
John Thomas Bridge and Opportunity Fund, L.P., a Delaware limited
partnership, and its successors in such capacity.
" Collateral Documents " shall
mean all security agreements, guaranties, collateral assignments,
pledge agreements, deeds of trust, mortgages and lien instruments
executed by the Borrower or others to secure, guarantee or
otherwise provide for payment of the Indebtedness or performance of
the Obligations, in favor of or for the benefit of the Lenders,
including those which have been previously executed or are executed
concurrently herewith or subsequently hereto. Without
limiting the foregoing, it is expressly agreed that the term
"Collateral Documents" shall include the Security Agreement, the
Assignment of Contracts and the Assignment of Equipment
Lease.
2
" Compliance Certificate " shall
mean a certificate substantially in the form of Exhibit
A attached and to be executed and delivered from time to
time as required by the provisions of Section 4.1(d) hereof
and to be signed by appropriate officers of the Obligated Parties
demonstrating, in reasonable detail, compliance with the covenants
set forth in Section 4.1(d) , and containing a statement
whether to the knowledge of such officer an Event of Default or
Default has occurred hereunder and, if so, whether it is continuing
and specifying the steps that are being taken by the Obligated
Parties to cure the same.
" Confirmation Order " shall mean
the order signed and entered of record on December 8, 2008, which
approves a plan of reorganization in the case of in re: Hidden
Splendor Resources, Inc., Case No. BI-N-07-51378-gwz, United States
Bankruptcy Court, District of Nevada.
" Contingent Liability " shall
mean, as to any Person, any Guaranty, and any obligation,
contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any Debt or obligation of any other
Person in any manner, whether directly or indirectly, including
without limitation any obligation of such Person, direct or
indirect, (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Debt or to purchase (or to advance
or supply funds for the purchase of) any security for the payment
of such Debt, (b) to purchase Property or services for the purpose
of assuring the owner of such Debt of its payment, or (c) to
maintain the solvency, working capital, equity, cash flow, fixed
charge or other coverage ratio, or any other financial condition of
the primary obligor so as to enable the primary obligor to pay any
Debt or to comply with any agreement relating to any Debt or
obligation.
" Debt " shall mean, as to any
Person, all indebtedness as determined in accordance with GAAP and,
in any event, shall include (a) all indebtedness secured by any
lien upon Property owned by such Person, even though such Person
has not assumed or become liable for the payment of such
indebtedness and (b) all indebtedness of such Person created or
arising under any conditional sale or other title retention
agreement with respect to Property acquired by such Person, even
though the rights and remedies of the seller or Lenders under such
agreement in the event of default are limited to repossession or
sale of such Property and (c) all capitalized lease obligations.
For all purposes of this Agreement, the Debt of any Person
shall include all recourse Debt of any partnership and joint
venture in which such Person is a general partner or a joint
venturer.
" Default " shall mean any
occurrence which, but for the passage of time or giving of notice
or both, or the happening of any further condition, event or act,
would be an Event of Default.
" Default Rate " shall mean a rate
of interest equal to twenty (20%) per annum.
" Dividend " shall mean, as to any
Person, (a) any declaration or payment of any dividend on, or the
setting aside or the creation of a sinking fund with respect to, or
the making of any pro rata distribution, loan, advance or
investment to or in any holder (in its capacity as a holder) of,
any Capital Stock of such Person (other than a dividend in, or
distribution of, Capital Stock of the same class and series or the
right to acquire Capital Stock of the same class and series), or
(b) any purchase, redemption or other acquisition or retirement for
value of any Capital Stock of such Person, or the setting aside of
funds or the creation of a sinking fund with respect
thereto.
3
" Environmental Laws " shall mean
any and all present and future federal, state, local and foreign
laws, rules or regulations, and any orders or decrees, in each case
as now or hereafter in effect, relating to the regulation or
protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or toxic or hazardous
substances or wastes into the indoor or outdoor environment,
including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals or toxic or hazardous substances or
wastes.
" Equipment Lease " shall mean one
or more equipment leases, in Proper Form, executed between the
Borrower, as lessor, and Hidden Splendor, as lessee, pursuant to
which the Borrower leases the Purchased Equipment to Hidden
Splendor for use solely in the operation of the Horizon
Mine.
" Event of Default " shall mean
any of the events specified or referred to in Section 7.1 of
this Agreement with respect to which any requirement in connection
with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act, has been
satisfied.
" First Closing Date " shall mean
the date of this Agreement or such later date as may be agreed to
in writing by the Lenders.
" GAAP " shall mean, as to a
particular Person and subject to the provisions of
Section 1.2 , such accounting practice as, in the
opinion of the independent accountants of recognized standing
regularly retained by such Person and acceptable to the Lenders,
conforms at the time to generally accepted accounting principles,
consistently applied. Generally accepted accounting
principles means those principles and practices (a) which are
recognized as such by the Financial Accounting Standards Board, (b)
which are applied for all periods after the date hereof in a manner
consistent with the manner in which such principles and practices
were applied to the most recent audited financial statements of the
Person furnished to the Lenders, and (c) which are consistently
applied for all periods after the date hereof so as to reflect
properly the financial condition, and results of operations and
changes in financial position, of such Person.
" Governmental Authority " shall
mean any governmental authority, including that of the United
States of America, any State of the United States, any foreign
country, and any political subdivision of any of the foregoing, and
any domestic or foreign agency, department, commission, board,
bureau or court having jurisdiction over the Borrower, the Horizon
Mine or any Affiliate of the Borrower.
" Governmental Permits" shall mean
all certificates, licenses, permits and no action letters from any
Governmental Authority required to evidence full compliance by the
Borrower and its Affiliates and conformance of their respective
Properties with all Legal Requirements applicable to the Borrower
and its Affiliates and the development, management and operation of
their respective Properties, including without limitation, the
Horizon Mine.
4
" Guarantor " shall mean America
West Resources, Inc., a Nevada corporation, its successors and
assigns.
" Guaranty " shall mean, as to a
Person, any agreement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes liable upon, the obligation of any
other Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person, or
otherwise assures any creditor or such other Person against loss,
including, without limitation, any agreement which assures any
creditor or such other Person payment or performance of any
obligation, or any take-or-pay contract and shall include without
limitation, the contingent liability of such Person in connection
with any application for a letter of credit (without duplication of
any amount already included in Debt).
" Guaranty Agreement " shall mean
a Guaranty, in Proper Form, to be executed and delivered by the
Guarantor, pursuant to which it guarantees the payment and
performance of the Indebtedness and Obligations, as well as the
obligations of Hidden Splendor pursuant to the Royalty
Agreement.
" Hazardous Material " shall mean,
collectively, (a) any petroleum or petroleum products, flammable
explosives, radioactive materials, asbestos in any form that is or
could become friable, insulation, transformers or other equipment
that in each case contains dielectric fluid containing
polychlorinated biphenyls, (b) any chemicals or other material or
substances which are now or hereafter become defined as or included
in the definition of "hazardous substances", "hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic
pollutants", recontaminants", "pollutants" or words of similar
import under any Environmental Laws and (c) any other chemical or
other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental
Laws.
" herein ," " hereof ," "
hereto ," " hereunder " and similar terms, shall
refer to this Agreement and not to any particular section or
provision of this Agreement.
" Hidden Splendor " shall mean
Hidden Splendor Resources, Inc., a Nevada corporation, and wholly
owned Subsidiary of the Guarantor.
" Horizon Mine " shall mean the
coal mine that is presently operated by Hidden Splendor in Carbon
County, Utah and which is commonly referred to as the "Horizon
Mine."
" Horizon Mine Lease " shall mean
that United States Department of the Interior Bureau Land
Management Coal Lease UTU-74804 dated September 1, 1998, as
amended, between the Bureau of Land Management, as Lessor, and
Horizon Mining, LLC as the lessee relating to the "Horizon
Mine."
" Impermissible Qualification "
shall mean, relative to the opinion or certification of any
independent public accountant as to any financial statement of any
Person, any qualification or exception to such opinion or
certification which relates to the limited scope of examination or
matters relevant to such financial statement not in accordance with
GAAP.
5
" Indebtedness " shall mean all
sums at any time and from time to time owed by the Borrower to the
Lenders under this Agreement, including principal and interest on
the Notes, and any and all other indebtedness now or hereafter to
become owing pursuant to any of the other Loan Documents.
" Indemnified Matters " shall have
the meaning given such term in Section 9.1(b) .
" Indemnitees " shall have the
meaning given such term in Section 9.1(b) .
" Legal Requirement " shall mean
any law, statute, ordinance, decree, requirement, order, judgment,
rule, or regulation (or interpretation of any of the foregoing) of,
and the terms of any license or permit issued by, any Governmental
Authority, including (without limitation) any order, writ,
injunction, award or decree of any court, arbitrator,
administrative agency or other Governmental Authority.
" Lenders " shall mean,
collectively, Denly, JTF, Murch, Moore and Meeks and their
respective heirs, successors and assigns.
" Liabilities " shall mean all
Debt and other items of indebtedness or liability (except capital
and surplus, but including reserves other than those deducted in
determining Tangible Assets) which in accordance with GAAP would be
included in determining total liabilities as shown on the liability
side of a balance sheet.
" Liens " shall mean any mortgage,
pledge, security interest, encumbrance, lien, or charge of any
kind, including without limitation any agreement to give or not to
give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the
filing of or agreement to give any financing statement or other
similar form of public notice under the laws of any jurisdiction
(except for the filing of a financing statement or notice in
connection with an operating lease).
" Litigation " shall mean any
proceeding, claim, lawsuit, arbitration, and investigation
conducted or threatened by or before any Governmental Authority,
including without limitation proceedings, claims, lawsuits, and
investigations under or pursuant to any environmental,
occupational, safety and health, antitrust, unfair competition,
securities, tax, or other law, or under or pursuant to any
contract, agreement, or other instrument.
" Loan Documents " shall mean this
Agreement, the Notes, the Collateral Documents, the Guaranty
Agreement, the Equipment Lease and all other documents, financing
statements, agreements, and certificates executed and delivered by
any Person in connection with any thereof. Anything herein to
the contrary notwithstanding, neither the Royalty Agreement nor the
Stock Purchase Agreement is, and neither shall be deemed to be, a
Loan Document.
" Loan Parties " shall mean,
collectively, the Borrower, the Guarantor, Hidden Splendor and
AmWest Marketing.
" Loans " shall mean the loans
referred to in Section 2.1 of this Agreement.
6
" Material Adverse Change " shall
mean any circumstance or event that (a) can reasonably be expected
to cause a Default or Event of Default, (b) otherwise can
reasonably be expected to (i) be material and adverse to the
continued operation of the Guarantor and its Subsidiaries either
severally or when taken as a whole, or (ii) be material and adverse
to the financial condition, business operations, prospects or
Properties of the Guarantor and its Subsidiaries either severally
or when taken as a whole, or (c) in any manner whatsoever does or
can reasonably be expected to materially and adversely affect the
validity or enforceability of any of the Loan Documents.
" Maturity Date " shall mean May
27, 2011.
" Maximum Lawful Amount " shall
mean the maximum amount of non-usurious interest, and " Maximum
Lawful Rate " shall mean the maximum rate of non-usurious
interest, permitted with respect to the indebtedness evidenced by
the Notes from time to time by applicable law after taking into
account any and all fees, payments, and other charges that
constitute interest under applicable law. Use of the term
Maximum Lawful Amount shall not be deemed to imply or affirm that
there is any Maximum Lawful Amount applicable to the
Notes.
" Notes " shall mean the
promissory notes evidencing the Loans and delivered or to be
delivered to the Lenders by the Borrower pursuant to this
Agreement, together with any and all renewals, extensions,
modifications and rearrangements thereof.
" Obligated Parties " shall mean,
collectively, the Borrower and the Guarantor.
" Obligations " shall mean any and
all of the covenants, conditions, warranties, representations and
other obligations (other than to repay the Indebtedness) made or
undertaken by the Borrower or the Guarantor as set forth in this
Agreement, the Notes and any other Loan Documents.
" Outside Closing Date " shall
mean May 31, 2010.
" Permitted Liens " shall
mean:
(a)
Liens on Property of the Guarantor
existing on the First Closing Date, provided that such Liens shall
secure only those obligations which they secure on the First
Closing Date;
(b)
Liens on Property of Hidden Splendor
arising from the Plan of Reorganization;
(c)
Liens for Taxes to the extent nonpayment
thereof shall be permitted by Section 3.6
hereof;
(d)
Carriers’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s,
landlord’s or other like Liens arising in the ordinary course
of business and securing obligations that are not due and payable
or are being contested in good faith by appropriate proceedings,
which proceedings have the effect of preventing the foreclosure or
sale of the property subject thereto, and in each case, so long as
adequate reserves in accordance with GAAP are being
maintained;
7
(e)
Deposits to secure the performance of
bids, trade contracts (other than for indebtedness), leases,
statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary
course of business;
(f)
Zoning restrictions, easements, licenses,
covenants, conditions, rights-of-way, restrictions on use of real
property and other similar encumbrances incurred in the ordinary
course of business and minor irregularities of title that, in the
aggregate, are not substantial in amount and do not materially
detract from the value of the Property subject thereto or interfere
with the ordinary conduct of the business of the
Borrower;
(g)
Liens arising out of judgments or awards
(other than any judgment that constitutes an Event of Default
hereunder) in respect of which the Borrower shall in good faith be
prosecuting an appeal or proceedings for review and in respect of
which it shall have secured a subsisting stay of execution pending
such appeal or proceedings for review, provided the Borrower shall
have set aside on its books adequate reserves with respect to such
judgment or award;
(h)
Deposits, liens or pledges to secure
payments of workmen’s compensation and other payments, public
liability, unemployment and other insurance, old-age pensions or
other social security obligations, or the performance of bids,
tenders, leases, contracts (other than contracts for the payment of
money), public or statutory obligations, surety, stay or appeal
bonds, or other similar obligations arising in the ordinary course
of business; and
(i)
Liens securing the payment of the
Indebtedness and performance of the Obligations.
" Person " shall mean any
individual, partnership, joint venture, corporation, limited
liability company, trust, unincorporated association, Governmental
Authority or any other form of entity.
" Phillips Machine Agreement "
shall mean that certain order confirmation dated January 16, 2009
from Phillips Machine to America West Resources.
" Plan of Reorganization " shall
mean the Plan of Reorganization which is the subject of the
Confirmation Order, as the same may be modified and
amended.
" Primary Committed Amount " shall
mean, as to all Lenders taken as a group, the aggregate principal
amount of $2,300,000.00, and as to the Lenders, individually, the
following amounts:
Denly, the principal amount of
$1,150,000.00;
JTF, the principal amount of
$805,000.00;
Murch, the principal amount of
$138,000.00;
Moore, the principal amount of
$115,000.00; and
8
Meeks, the principal amount of
$92,000.00.
" Proper Form " shall mean such
form as is satisfactory in form and substance to the Lenders and
legal counsel for the Lenders.
" Property " shall mean all types
of real, personal, tangible, intangible, or mixed property, whether
owned in fee simple or leased.
" Purchased Equipment " shall mean
equipment purchased or to be purchased by either the Guarantor or
the Borrower pursuant to the Phillips Machine Agreement or
otherwise with the proceeds, in whole or in part, of the Loans
.
" Required Lender " shall mean
Denly.
" Restricted Payments " shall mean
any Dividend or any direct or indirect distribution, dividend or
other payment on account of any general or limited partnership
interest in (or the setting aside of funds for, or the
establishment of a sinking fund or analogous fund with respect to),
or shares of Capital Stock or other securities of, the Guarantor or
any Subsidiary.
" Restricted Purchases " shall
mean any payments (or the setting aside of funds for, or the
establishment of a sinking fund with respect to) on account of the
purchase, redemption or other acquisition or retirement of any
general or limited partnership interest in, or shares of Capital
Stock or other securities of, the Guarantor or any of its
Subsidiaries.
" Royalty Agreement " shall mean
that certain Royalty Deed and Agreement of even date herewith among
Hidden Splendor and the Lenders, as the same may be modified or
amended.
" SEC " shall mean the United
States Securities and Exchange Commission.
" Secondary Committed Amount "
shall mean, as to all Lenders taken as a group, the aggregate
principal amount of $1,500,000.00, and as to the Lenders,
individually, the following amounts:
Denly, the principal amount of
$750,000.00;
JTF, the principal amount of
$525,000.00;
Murch, the principal amount of
$90,000.00;
Moore, the principal amount of
$75,000.00; and
Meeks, the principal amount of
$60,000.00.
" Second Closing Date " shall mean
the date that is the fifteenth (15 th ) day following
the last day of the month that all conditions set forth in
Section 6.2 have been satisfied (or if such date is not a
Business Day, then the next, succeeding Business Day).
" Securities Act " shall mean the
United States Securities Act of 1933, as amended.
9
" Security Agreement " shall mean
a Security Agreement, in Proper Form, executed by the Borrower and
delivered to the Lenders and the Collateral Agent.
" Stock Purchase Agreement " shall
mean that certain Common Stock Purchase Agreement of even date
herewith among the Guarantor and the Lenders, as the same may be
modified or amended.
" Supply Contracts " shall mean,
collectively, any and all contracts for the sale by AmWest
Marketing of coal and related products, both those contracts which
are presently in existence and those that are entered into after
the date hereof, together with all supplements, addenda,
modifications and amendments to each thereof.
" Taxes " shall mean all taxes,
assessments, imposts, fees, and other charges at any time imposed
by any laws or Governmental Authority.
" Total Committed Amount " shall
mean, as to all Lenders taken as a group, the total of the Primary
Committed Amount and the Secondary Committed Amount, and as to the
Lenders, individually, the following amounts:
Denly, the
principal amount of $1,900,000.00;
JTF, the principal amount of
$1,330,000.00;
Murch, the principal amount of
$228,000.00;
Moore, the principal amount of
$190,000.00; and
Meeks, the principal amount of
$152,000.00.
1.2
Other Documents; Accounting
Terms . All terms defined in this Agreement shall be
used with such defined meanings when used in any note, certificate,
schedule, report or other document made or delivered pursuant to
this Agreement, unless specifically required otherwise. Each
accounting term not specifically defined herein shall have the
meaning given in accordance with GAAP and, when applied to a
Person, shall mean such Person and its Subsidiaries on a
consolidated basis, unless otherwise expressly stated. If any
change in any accounting principle or practice is required by the
Financial Accounting Standards Board in order for such principle or
practice to continue as a generally accepted accounting principal
or practice and such change results in a change in the method or
calculation of financial covenants, standards or terms in this
Agreement, then the Borrower and the Lenders agree to enter into
negotiations in order to amend such provisions of this Agreement so
as to equitably reflect such change with the desired result being
that the criteria for evaluating the Borrower's financial condition
shall be the same after such change as if such change had not been
made. Until such time as such an amendment shall have been
executed and delivered by the Borrower and the Lenders, all
financial covenants, standards and terms in this Agreement shall
continue to be calculated as if such change had not
occurred.
1.3
Use of Pronouns . Terms
defined or used in the singular shall include the plural, and those
in the plural shall include the singular, unless the context shall
otherwise require, and the use of masculine, feminine and neuter
pronouns shall include each gender as the context may
require.
10
1.4
Amendments, Etc
.
Unless the context otherwise requires or unless otherwise
provided, the terms defined in Section 1.1 hereof which mean
or refer to a particular agreement, instrument or document shall
also mean, refer to and include when appropriate all amendments,
renewals, extensions, substitutions and modifications of such
agreement, instrument or document, provided that nothing contained
in this Section 1.4 shall be construed to authorize the
execution or entering into by any Person of any such renewal,
extension or modification except as may be permitted by other
provisions of this Agreement.
Section
2
The Loans
2.1
Term Loans .
(a)
Upon and subject to the terms and
conditions of this Agreement, each Lender severally agrees to
advance a loan to the Borrower in two advances in an aggregate
principal amount equal to the respective Lender's Total Committed
Amount for the purposes specified in Section 2.4 of
this Agreement.
(b)
The obligation of the Borrower to repay
each Lender for the Loans shall be evidenced by its 16% Secured
Promissory Note, in Proper Form, in the principal amount of such
Lender's Total Committed Amount and payable to the order of such
Lender. Except as otherwise provided herein and in the Notes,
the outstanding principal balance of each Promissory Note shall
bear interest at a rate equal to sixteen percent (16%) per annum
with all principal and interest outstanding under such Promissory
Note being due and payable in full on the Maturity Date.
Interim payments of interest shall be due and payable
monthly, beginning August 22, 2009, and continuing on the same day
of each succeeding month. While any Event of Default exists
and also following any acceleration of the maturity of the
Indebtedness, the Borrower shall pay interest (after as well as
before the entry of any judgment thereon to the extent permitted by
law) on all outstanding Indebtedness at a rate equal to the Default
Rate.
2.2
Repayment of Loans To the extent
not otherwise required to be paid earlier as provided herein, the
Borrower shall repay the aggregate principal amount of the Loans,
together with the accrued and unpaid interest, on the Maturity
Date.
2.3
Pro Rata Treatment Except to the
extent otherwise provided herein: (a) each Advance shall be
made by the Lenders under Section 2.1 pro rata according to
each Lender's Total Committed Amount; (b) each payment and
prepayment of principal of, or interest on, Advances by the
Borrower shall be made to the Lenders pro rata in accordance with
each Lender's Total Committed Amount; and (c) any and all other
monies received by a Lender in repayment of Advances from any other
source shall be for the pro rata benefit and account of, and shall
be shared by, the Lenders based upon each Lender's Total Committed
Amount. Any Lender receiving a payment in excess of its
respective pro rata share according to each Lender's Total
Committed Amount, shall immediately deliver to the other Lenders
such amounts as may be necessary to give effect to the pro rata
sharing required by the provisions hereof and the payments on the
Notes shall be determined based upon the shared amounts as shared
and adjusted by the provisions hereof.
2.4
Use of Proceeds . The proceeds
of the Loans shall be used solely as follows:
11
(a)
On the First Closing Date, subject to the
provisions of Section 6.1 hereof, the proceeds of the Loans
advanced on the First Closing Date shall be distributed pursuant to
a disbursement schedule substantially as follows:
|
|
|
Commissions
|
$325,000.00
|
|
Phillips Machinery (Remaining payment due for two shuttle cars and
one continuous miner)
|
$1,341,000.00
|
|
Quarterly Debt Service (Zions First National Bank, unsecured
creditors, and unsecured with preference)
|
$365,120.71 (i)
|
|
John
Thomas Bridge and Opportunity Fund, L.P.
|
$280,000.00 (ii)
|
|
Closing Costs
|
$80,000.00
|
|
Working Capital
|
$108,879.29
|
|
Total:
|
$2,500,000.00 (iii)
|
(i)
This value does not include $94,879.29
paid to Zions First National Bank on May 15, 2009 by wire transfer
from JTF.
(ii)
This value includes (i) $180,000 loaned
to the Company pursuant to that certain promissory note dated April
22, 2009 (“April Note”) and (ii) $100,000 loaned to the
Company pursuant to that certain promissory note dated May 15, 2009
(“May Note”). The outstanding but unpaid
principal due under the April Note and May Note will be converted
into the unpaid principal amount due under the promissory note,
dated as of the date hereof, issued pursuant to the Loan Agreement.
Accordingly, the amount of $280,000 will not be funded at
closing but rather the demand notes representing this amount will
be cancelled and such amount will be included in the new note
issued to JTF hereunder. The accrued and unpaid interest due
under the April Note and May Note will be paid out of the
Company’s working capital.
(iii)
This amount includes a total of
$200,000.00 to be funded from sources other than Advances under the
Loans. The amount of $150,000.00 shall be funded from the
purchase price for the AmWest Shares and the amount of $50,000.00
shall be funded from the purchase price for the Royalty.
(b)
On the Second Closing Date, if all
conditions to the second closing of the Loans as set forth in
Section 6.2 hereof have been satisfied, the proceeds of the
Loans advanced on the Second Closing Date shall be distributed
pursuant to a disbursement schedule agreed to by the
parties.
(c)
None of the proceeds of the Loans shall
be used for personal, household or agricultural
purposes.
2.5
Interest Accrual . Interest on
the Notes shall be calculated at a daily rate based on a year of
360 days, with the daily rate so determined being applied for the
actual number of days elapsed, provided that in no event shall the
amount of interest payable hereunder exceed the Maximum Lawful
Amount.
12
2.6
Default Interest . During the
continuation of (a) any Default or (b) any Event of Default, the
Borrower shall pay, on demand, at the option of the Required
Lender, interest on the principal amount of the Loans outstanding
and on all other Obligations due and unpaid hereunder or under any
other Loan Document at a per annum rate equal to the Default Rate.
Following the maturity of the Loans, whether by acceleration
or otherwise, the Borrower shall pay, on demand, at the option of
the Required Lender, interest (after as well as before judgment to
the extent permitted by applicable law) on the principal amount of
the Loans outstanding and on all other Obligations due and unpaid
hereunder or under any other Loan Document at a per annum rate
equal to the Maximum Lawful Rate.
2.7
Accounts Stated . All
statements of account rendered by the Lenders to the Borrower
relating to any Obligation or Indebtedness, including without
limitation all statements of principal, interest, expenses and
costs owing by the Borrower to the Lenders, shall be presumed
correct and accurate and shall constitute an account stated between
the Borrower and the Lenders unless, within thirty (30) days after
receipt thereof by the Borrower, the Borrower shall deliver to the
Lenders written objection thereto, specifying the error or errors,
if any, contained in such statement.
Section
3
Representations And Warranties
The Obligated Parties represent and
warrant to the Lenders that:
3.1
Authority, Etc. The Borrower and
each of its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization. The Guarantor and each of its Subsidiaries
is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization.
Hidden Splendor and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. AmWest
Marketing and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization. The Borrower, Hidden
Splendor and AmWest Marketing are wholly owned Subsidiaries of the
Guarantor. The Loan Parties have full legal right, power and
authority to carry on their respective businesses as presently
conducted and to execute, deliver, and perform their respective
obligations under the Loan Documents, and all necessary corporate
action has been taken (including any necessary shareholder
approvals) for the execution, delivery and performance of their
respective obligations under this Agreement, the Notes, the
Guaranty Agreement, and the other Loan Documents to which a Loan
Party is a party and the performance by the Loan Parties of their
respective obligations hereunder and thereunder and each thereof is
the valid and binding obligation of the Loan Parties, enforceable
in accordance with their respective terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally
and principles of equity. All outstanding Capital Stock of the
Guarantor and each of its Subsidiaries is validly issued and fully
paid and nonassessable. The Guarantor and each of its
Subsidiaries is duly qualified to do business in and is in good
standing in each jurisdiction in which the nature of the business
it conducts makes such qualification necessary. The Borrower
has no Subsidiaries.
13
3.2
Financial Condition
. The
financial statements of the Guarantor which are on file with the
SEC as of the First Closing Date are true, complete and correct in
all material respects, have been prepared in accordance with GAAP,
and fully and accurately reflect the financial condition of the
Guarantor, as of the dates and for the periods stated. No
Material Adverse Change has occurred since the date of the most
recent thereof.
3.3
Debt, Liens, Liabilities
. The
Guarantor and its Subsidiaries have no outstanding Debt, Liens, or
Contingent Liabilities except as reflected in the Guarantor's
financial statements included in its Form 10-Q for the quarterly
period ended March 31, 2009 which is on file with the SEC, other
than Liabilities incurred in the normal course of business and not
material in amount (either individually or in the aggregate).
3.4
No Default . As of the
First Closing Date, no Event of Default nor Default exists and
neither the Guarantor nor any of its Subsidiaries is in default in
any respect under any Legal Requirement binding upon or affecting
the Guarantor or any of its Subsidiaries or by which any of the
Properties of the Guarantor or any of its Subsidiaries may be bound
or affected, or under any agreement or other undertaking or
instrument to which the Guarantor or any of its Subsidiaries is a
party or by which it is bound, and nothing has occurred which would
adversely affect in any material respect the ability of the
Guarantor or its Subsidiaries to carry on their respective
businesses or perform their respective obligations under any Legal
Requirement or other undertaking or agreement. The execution
and delivery of this Agreement, the Notes, the Guaranty Agreement,
and the other Loan Documents by the Loan Parties, and the
performance of the obligations and consummation of the transactions
contemplated herein and therein do not and will not conflict with
or result in a breach of any of the terms, conditions or provisions
of, or constitute a default under, (i) the articles of
incorporation or bylaws of any of the Loan Parties, or (ii) any
bond, debenture, note or other evidence of indebtedness of any of
the Loan Parties, or (iii) any contract, indenture, mortgage, loan
agreement, lease, joint venture or other agreement or instrument to
which any of the Loan Parties is a party or by which any of the
Loan Parties or any of their respective Properties are bound, or
result in any violation by any of the Loan Parties of any Legal
Requirement. Neither the Guarantor nor any of is Subsidiaries
is in violation of, and the execution, delivery and performance by
the Loan Parties of the Loan Documents to which each, respectively,
is a party will not result in violation of, any Legal Requirement
to which the Guarantor or any of the Guarantor's Subsidiaries may
be subject.
3.5
Governmental Permits
. To
the best of the Obligated Parties' knowledge, no claim has been
asserted by any Person with respect to the use of any of the
Guarantor's or any of its Subsidiaries' Governmental Permits.
The Obligated Parties know of no impediments to the granting
to the Guarantor and its Subsidiaries, as the case may be, of any
future Governmental Permits reasonably anticipated to be necessary
for the conduct of its respective business as presently conducted
and as proposed to be conducted, and expects to receive the same at
such time as required for the Guarantor or its Subsidiaries, as the
case may be, to carry on their respective businesses as presently
conducted and as proposed to be conducted.
14
3.6
Taxes . The
Guarantor and its Subsidiaries have filed all federal, state and
other tax returns that are required to be filed by any of them,
except (as to Hidden Splendor) as provided for in connection with
the Plan of Reorganization. The Guarantor and its
Subsidiaries have paid all Taxes as shown on any such returns, as
well as all other Taxes, to the extent due and payable by any of
them and except as otherwise provided for and permitted by the
terms of the Plan of Reorganization. All liabilities for
Taxes of the Guarantor and its Subsidiaries are adequately provided
for on their books, including interest and penalties, and adequate
reserves have been established therefor in accordance with GAAP.
No liability for income Taxes, state or federal, has been
asserted by taxing authorities for Taxes in excess of those already
paid and no taxing authority has notified the Guarantor or any of
its Subsidiaries of any deficiency in any tax return.
3.7
Plan of Reorganization
. The
Guarantor has delivered to the Lenders true, correct and complete
copies of the Confirmation Order and the Plan of Reorganization.
The Confirmation Order and the Plan of Reorganization are
valid and subsisting with no default existing and, to the best of
the knowledge of the Obligated Parties, no default threatened.
Neither the execution and delivery by Hidden Splendor or any
other Loan Party of any of the Loan Documents to which it is a
party, nor the performance of its obligations thereunder, violates
or is inconsistent with any provision of the Confirmation Order or
the Plan of Reorganization.
3.8
Equipment Lease . The Borrower
has delivered to the Lenders true, correct and complete copies of
the Equipment Lease. The Equipment Lease is valid and
subsisting with no default existing and, to the best of the
knowledge of the Obligated Parties, no default
threatened.
3.9
Horizon Mine Lease . The
Obligated Parties have delivered to the Lenders true, correct and
complete copies of the Horizon Mine Lease and all documents and
instruments representing and describing its coal reserves, the
value thereof and the title thereto which are in the possession of
the Guarantor or any of its Subsidiaries or otherwise known by the
Guarantor to exist. The Horizon Mine Lease is valid and
subsisting with no default existing and, to the best of the
knowledge of the Obligated Parties, no default threatened.
Hidden Splendor has good and indefeasible leasehold title to
the Horizon Mine pursuant to the Horizon Mine Lease, subject to no
Liens other than Permitted Liens. The Horizon Mine Lease
contains no provision which materially adversely affects the
ability of Hidden Splendor to develop, manage and operate the
Horizon Mine.
3.10
Material Agreements
.
There are no material agreements entered into by or affecting
the development, management and operation of the Horizon Mine,
other than the Horizon Mine Lease and contracts for the sale of
coal and related products.
3.11
No Consents Necessary
. No
consent or approval of any third party, including, without
limitation, any Governmental Authority, is required in connection
with the execution, delivery or performance by the Loan Parties of
this Loan Agreement, the Notes, the Guaranty Agreement, or any
other Loan Document, other than such consents and approvals as have
been obtained and which continue to be in effect.
15
3.12
No Environmental Hazard
. The
Guarantor and its Subsidiaries are in compliance with all
Environmental Laws applicable to them and the development,
management and operation of their respective Properties including,
without limitation, the Horizon Mine, and there is not now pending,
nor, to the best knowledge of the Obligated Parties, threatened,
any action, suit, investigation or proceeding against the Guarantor
or any of its Subsidiaries seeking to enforce any right or remedy
under any of the Environmental Laws. No notice has been
served on the Guarantor or any of its Subsidiaries from any entity,
Governmental Authority, or individual claiming any violation of any
Environmental Laws, or demanding payment or contribution for
environmental damage or injury to natural resources.
3.13
No Pending Litigation
. No
Litigation is pending or, to the knowledge of the Obligated
Parties, threatened against or affecting the Guarantor or any of
its Subsidiaries, except as set forth in the Guarantor's filings
with the SEC, and none of such pending litigation involves any of
the transactions contemplated by this Agreement or could, if
adversely determined, cause a Material Adverse Change.
3.14
Investment Company Act
.
Neither the Guarantor nor any of its Subsidiaries is an
investment company within the meaning of the Investment Company Act
of 1940, as amended, or, directly or indirectly, controlled by or
acting on behalf of any Person which is an investment company,
within the meaning of said Act.
3.15
Public Utility Holding Company
Act . Neither the Guarantor nor any of its
Subsidiaries is an "affiliate" or a "subsidiary company" of a
"public utility company," or a "holding company," or an "affiliate"
or a "subsidiary company" of a "holding company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as
amended (" PUHC Act "). Further, none of the
transactions contemplated under the Loan Documents shall cause or
constitute a violation of any of the provisions, rules, regulations
or orders of or under the PUHC Act and the PUHC Act does not in any
manner impair the legality, validity or enforceability of the
Notes, the Guaranty Agreement, or the liabilities of any of the
Loan Parties under any of the Loan Documents or any liens created
under the Collateral Documents.
3.16
Securities Acts . The
Guarantor has not issued any unregistered securities in violation
of the registration requirements of Section 5 of the Securities
Act, or any other law, and is not violating any material rule,
regulation or requirement under the Securities Act, or the
Securities and Exchange Act of 1934, as amended. The
Guarantor is not required to qualify this Agreement or any other
Loan Document as an indenture under the Trust Indenture Act of
1939, as amended, in connection with the Borrower's execution and
delivery of the Notes.
3.17
Full Disclosure . Neither this
Agreement nor any certificate or statement or any other data
furnished by the Obligated Parties in connection with the
negotiation of this Agreement or the transactions contemplated
hereby contains any untrue statement of a material fact or omits a
material fact known to the Obligated Parties necessary to make the
statements contained herein or therein not materially
misleading.
3.18
Survival of Representations and
Warranties . All representations and warranties contained
in this Agreement and any other Loan Documents shall survive, and
not be waived by, the execution hereof by the Lenders, any
investigation or inquiry by the Lenders, or by the making of the
Loans.
16
Section
4
Affirmative Covenants
Until all Indebtedness has been paid and
all Obligations performed, the Obligated Parties covenant and agree
with the Lenders as follows:
4.1
Reporting Requirements
. The
Obligated Parties will promptly furnish to the Lenders from time to
time the following information regarding the business affairs and
financial condition of the Guarantor:
(a)
As soon as possible and in any event
within five (5) days after the occurrence of any Event of Default
or Default, the Obligated Parties will give a written statement to
the Lenders of the default, setting forth details of such Event of
Default or Default, the period of existence thereof and the action
which the Obligated Parties have taken and propose to take with
respect thereto.
(b)
As soon as available and in any event
within 45 days after the end of each fiscal quarter, make available
via the internet with notice to the Lenders or deliver, (x)
unaudited financial statements (balance sheet and the related
statements of consolidated and consolidating income and retained
earnings and of cashflows, setting forth in comparative form the
figures for the previous fiscal year) of the Guarantor (covering at
least the statements mentioned above) for the fiscal quarter then
ending, and for the year to date.
(c)
As soon as available and in any event
within 90 days after the end of each of the Guarantor's fiscal
years, make available via the internet with notice to the Lenders
or deliver, audited financial statements (balance sheet and the
related statements of consolidated and consolidating income and
retained earnings and of cashflows, setting forth in comparative
form the figures for the previous fiscal year) of the Guarantor
certified without any Impermissible Qualification by an independent
accountant satisfactory to the Lenders that such financial
statements fairly present the financial position of the Guarantor
in conformity with GAAP.
(d)
Promptly, and in any event within 30 days
after the end of each calendar month, the Obligated Parties shall
deliver to the Lenders a Compliance Certificate.
(e)
Subject to the execution by the Lenders
of a confidentiality agreement in Proper Form, promptly upon
receipt thereof, copies of all material reports or letters
submitted to the Guarantor or any of its Subsidiaries by any
accountants in connection with any annual, interim, or special
audit, including without limitation the comment letter submitted to
management in connection with any such audit.
(f)
Subject to the execution by the Lenders
of a confidentiality agreement in Proper Form, as soon as possible
and in any event, within 10 days after either Obligated Party
obtaining notice thereof, the Obligated Parties shall give a
written report to the Lenders of all Litigation to which the
Guarantor or any of its Subsidiaries is a party (other than
Litigation being defended by an insurance carrier without
reservation as to coverage and seeking recovery of amounts within
the limits of said coverage), together with a statement of the
Guarantor's president or vice president describing the allegations
of such Litigation, and the action being taken or proposed to be
taken with respect thereto.
17
(g)
Promptly upon their becoming available,
the Guarantor shall make available via internet with notice to the
Lenders or deliver to the Lenders copies of all press releases and
other statements made available generally by the Guarantor to the
public concerning material developments in the business of the
Guarantor.
(h)
Promptly upon preparation thereof, the
Guarantor shall make available via internet with notice to the
Lenders or deliver to the Lenders copies of all material reports or
financial statements that the Guarantor files with any state or
federal regulatory agency, including (without regard to the
materiality thereof) copies of all filings made with the
SEC.
(i)
Subject to the execution by the Lenders
of a confidentiality agreement in Proper Form, such other
information as the Lenders may reasonably request from time to
time.
4.2
Liens and Security Interest
.
(a)
To secure payment of the Indebtedness and
performance of the Obligations, and as a condition of any approval
by the Lenders of the Loans, the Borrower shall grant and create
(or cause to be granted and created) in favor of the Lenders a
first, prior and perfected security interest in and to, and Lien
upon, and assignment of, all collateral which is described on
Schedule 4.2 attached hereto. The Borrower
shall execute and deliver (or cause to be executed and delivered)
from time to time the Collateral Documents to the Lenders together
with all such other instruments, documents, certificates,
assignments, financing statements, and other items as required by
the Lenders to create and perfect the Liens, security interests and
assignments described herein and shall cause such of the Collateral
Documents as the Lenders may require to be filed or recorded and
shall pay all costs and expenses of doing so.
(b)
With respect to any Property of the types
defined as Collateral that are acquired or created after the First
Closing Date or in which a first-priority lien in favor of the
Lender has not been granted as of the First Closing Date, the
Borrower shall promptly grant or cause to be granted to the Lenders
a Lien on all such Property and interests, free of all Liens except
those expressly permitted hereby. The Borrower, at its own
expense, shall execute, acknowledge and deliver, or cause the
execution, acknowledgment and delivery of, and thereafter register,
file or record, or cause to be registered, filed or recorded, in an
appropriate governmental office, any document or instrument
reasonably deemed by the Lender to be necessary or desirable for
the creation, perfection, renewal and continuation of the foregoing
Liens and shall pay, or cause to be paid, all Taxes, fees and
reasonable legal expenses related to such registration, filing or
recording. All such Collateral Documents shall be in Proper
Form.
18
4.3
Coal Supply Contracts
.
Pursuant to an integrated business plan intended for the
combined benefit of the Guarantor and its Subsidiaries and
Affiliates, the Guarantor intends to cause AmWest Marketing to
enter into all future contracts for the sale of coal and related
products to third parties and for AmWest Marketing to enter into
contracts with Hidden Splendor (BUT, AS TO COAL AND RELATED
PRODUCTS PRODUCED BY HIDDEN SPLENDOR, ONLY FOLLOWING THE PAYMENT OF
ALL OBLIGATIONS OWING UNDER THE PLAN OF REORGANIZATION TO CLASS 1
AND CLASS 7 CREDITORS AS REQUIRED BY THE PROVISIONS OF THE PLAN OF
REORGANIZATION) , the Guarantor and other producers of such
coal for the purchase of such coal and related products by AmWest
Marketing for the purpose of re-sale to the third parties with
which it contracts. Accordingly, the Obligated Parties shall
cause all contracts for the sale of coal and related products which
are entered into on or after the Closing Date with respect to coal
produced by the Guarantor or any of its Subsidiaries and Affiliates
to be entered into with AmWest Marketing as the seller of such coal
and related products (BUT, AS TO COAL AND RELATED PRODUCTS
PRODUCED BY HIDDEN SPLENDOR, ONLY FOLLOWING THE PAYMENT OF ALL
OBLIGATIONS OWING UNDER THE PLAN OF REORGANIZATION TO CLASS 1 AND
CLASS 7 CREDITORS AS REQUIRED BY THE PROVISIONS OF THE PLAN OF
REORGANIZATION) , except for such contracts that AmWest enters
into as the purchaser of such coal from an Affiliate. All
such contracts must be assignable and otherwise in Proper Form and
no contract for the sale of coal or coal products which exists on
the Closing Date may be amended, modified, renewed or extended
without the prior written consent of the Lenders.
4.4
Legal Requirements . The
Guarantor will (and will cause its Subsidiaries to) comply in all
material respects with all Legal Requirements applicable to it and
its Subsidiaries.
4.5
Performance of Obligations; Payment of
Debt . The Borrower will pay the Notes according to
the reading, tenor and effect of each thereof and will perform and
discharge or cause to be performed and discharged the obligations
provided to be performed and discharged under this Agreement and
the other Loan Documents. The Guarantor shall, and shall
cause each of its Subsidiaries to, pay its Debt as and when due (or
within any applicable grace period), unless payment thereof is
being contested in good faith by appropriate proceedings, action to
foreclose on any Properties of the Guarantor or its Subsidiaries,
as the case may be, is properly stayed, and adequate reserves have
been established for the payment thereof. The foregoing
notwithstanding, the Lenders acknowledge that Hidden Splendor is
bound by the terms of the Plan of Reorganization and any conflict
between this Agreement and such confirmed Plan of Reorganization,
insofar only as Hidden Splendor is concerned, will be in favor of
such confirmed Plan of Reorganization; provided, however, that the
provisions of Section 3 are true and correct in all material
respects.
4.6
Horizon Mine Lease . The
Guarantor shall cause Hidden Splendor to faithfully and timely
perform it's obligations under the Horizon Mine Lease and shall not
permit Hidden Splendor to amend, modify or terminate the same, nor
suffer or permit anything to occur, which may cause the
modification or termination or expiration of the Horizon Mine
Lease, or of any obligations of any party thereunder, or which may
diminish or impair the value thereof.
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4.7
Maintenance of Purchased
Equipment . The Obligated Parties shall cause Hidden
Splendor and AmWest Marketing to maintain the Purchased Equipment,
and all other equipment used in the operation of the Horizon Mine,
in good order and repair, such that all of the Purchased Equipment
shall be in good operating condition for at least ninety percent
(90%) availability as determined by customary industry standards.
In the event any part of the Purchased Equipment fails to
satisfy the requirements of this Section 4.7 , then (in
addition to the other remedies set forth in Section 7
hereof, the Guarantor shall issue to the Lenders, pro rata
(calculated on the basis of the Lenders' respective Total Committed
Amounts), one hundred thousand (100,000) shares of its common stock
for each thirty day (30) period, or portion thereof, until such
Default is cured for a period of at least thirty (30) consecutive
days.
4.8
Future Permits . The
Guarantor and its Subsidiaries will use their best efforts to
obtain, as needed, all Governmental Permits from each Governmental
Authority necessary for the development, management and operation
of their respective Properties, including (without limitation) the
Horizon Mine.
4.9
Payment of Taxes The Guarantor
will and will cause each of its Subsidiaries to, promptly pay and
discharge all lawful Taxes imposed upon it or upon its income or
profit or upon any Property belonging to it, unless such Tax shall
not at the time be due and payable, or if the validity thereof
shall currently be contested on a timely basis in good faith by
appropriate proceedings (provided that the enforcement of any Liens
arising out of any such nonpayment shall be stayed or bonded during
the proceedings) and adequate reserves with respect to such Tax
shall have been established. The foregoing notwithstanding,
the Lenders acknowledge that Hidden Splendor is bound by the terms
of the Plan of Reorganization and any conflict between this
Agreement and the Plan of Reorganization, insofar only as Hidden
Splendor is concerned, will be in favor of the Plan of
Reorganization; provided, however, that the provisions of
Section 3 are true and correct in all material
respects.
4.10
Adequate Records; Inspection
Rights . The Guarantor shall keep (and shall cause
each or its Subsidiaries to keep) adequate records and books of
account, in accordance with GAAP, of all of its transactions so
that at any time, and from time to time, its true and complete
financial condition may be readily determined. The Guarantor
shall, and shall cause each of its Subsidiaries to permit the
Lenders, to examine and make copies or any abstracts from their
records and books of account, to visit and inspect their Properties
and to discuss their affairs, finances, and accounts with any of
their directors, officers, employees, accountants, attorneys and
other representatives, all as the Lenders may reasonably
request.
4.11
Maintenance of Existence and
Business . The Guarantor shall, and shall cause its
Subsidiaries to:
(a)
Preserve and maintain, or timely obtain
and thereafter preserve and maintain (i) material rights,
authorizations and consents, privileges and all material
Governmental Permits which in the good faith judgment of it's board
of directors is deemed necessary or desirable to conduct its
business in the ordinary course, and (ii) its existence;
and
(b)
Qualify and remain qualified and
authorized to do business in each jurisdiction in which the
character of its Properties or the nature of its business requires
such qualification or authorization.
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4.12
Mainten
