LOAN AGREEMENT Dated as of October 9, 2008 AMONG DENLY ACI PARTNERS, LTD. AND THE VON WAADEN 2004 REVOCABLE TRUST (Lenders) AND AMERICA WEST RESOURCES, INC. (Borrower)
______________________________________________________
Dated
as
of
October
9, 2008
AMONG
DENLY
ACI
PARTNERS, LTD. AND
THE
VON
WAADEN 2004 REVOCABLE TRUST
(Lenders)
AND
(Borrower)
_____________________________________________________
980722v4
TABLE
OF
CONTENTS
Page
|
Section
1
|
General
Terms [INSERT PAGE
NUMBER]
|
|
1.1
|
Certain
Definitions [INSERT PAGE NUMBER]
|
|
1.2
|
Other
Documents;
Accounting Terms [INSERT PAGE
NUMBER]
|
|
1.3
|
Use
of
Pronouns [INSERT PAGE NUMBER]
|
|
1.4
|
Amendments,
Etc. [INSERT PAGE
NUMBER]
|
|
Section
2
|
The
Loans
[INSERT PAGE NUMBER]
|
|
2.1
|
Term
Loans [INSERT PAGE NUMBER]
|
|
2.2
|
Use
of
Proceeds [INSERT PAGE NUMBER]
|
|
2.3
|
Interest
Accrual [INSERT PAGE NUMBER]
|
|
2.4
|
Default
Interest [INSERT PAGE NUMBER]
|
|
2.5
|
Accounts
Stated [INSERT PAGE NUMBER]
|
|
Section
3
|
Representations
And
Warranties [INSERT PAGE NUMBER]
|
|
3.1
|
Authority,
Etc. [INSERT PAGE NUMBER]
|
|
3.2
|
Financial
Condition [INSERT PAGE NUMBER]
|
|
3.3
|
Debt,
Liens,
Liabilities [INSERT PAGE NUMBER]
|
|
3.4
|
No
Default [INSERT PAGE NUMBER]
|
|
3.5
|
Governmental
Permits [INSERT PAGE NUMBER]
|
|
3.6
|
Taxes
[INSERT
PAGE NUMBER]
|
|
3.7
|
Columbia
Mine
Lease [INSERT PAGE
NUMBER]
|
|
3.8
|
Material
Agreements [INSERT PAGE NUMBER]
|
|
3.9
|
No
Consents
Necessary [INSERT PAGE NUMBER]
|
|
3.10
|
No
Environmental
Hazard [INSERT PAGE NUMBER]
|
|
3.11
|
No
Pending
Litigation [INSERT PAGE NUMBER]
|
|
3.12
|
Investment
Company
Act [INSERT PAGE NUMBER]
|
|
3.13
|
Public
Utility Holding
Company Act [INSERT PAGE NUMBER]
|
|
3.14
|
Securities
Acts [INSERT PAGE NUMBER]
|
|
3.15
|
Full
Disclosure [INSERT PAGE NUMBER]
|
|
3.16
|
Survival
of
Representations and Warranties [INSERT PAGE NUMBER]
|
|
Section
4
|
Affirmative
Covenants [INSERT PAGE NUMBER]
|
|
4.1
|
Reporting
Requirements [INSERT PAGE NUMBER]
|
|
4.2
|
Legal
Requirements [INSERT PAGE NUMBER]
|
|
4.3
|
Performance
of
Obligations; Payment of Debt [INSERT
PAGE NUMBER]
|
|
4.4
|
Columbia
Mine
Lease [INSERT PAGE NUMBER]
|
|
4.5
|
Future
Permits [INSERT PAGE NUMBER]
|
|
4.6
|
Escrow
Agreement [INSERT PAGE NUMBER]
|
|
4.7
|
Payment
of
Expenses [INSERT PAGE NUMBER]
|
|
4.8
|
Liens
and Security
Interest [INSERT PAGE NUMBER]
|
|
4.9
|
Payment
of
Taxes [INSERT PAGE NUMBER]
|
|
4.10
|
Adequate
Records;
Inspection Rights [INSERT PAGE
NUMBER]
|
|
4.11
|
Maintenance
of
Existence and Business [INSERT PAGE
NUMBER]
|
|
4.12
|
Maintenance
of
Insurance [INSERT PAGE NUMBER]
|
|
4.13
|
Indemnity [INSERT
PAGE
NUMBER]
|
|
4.14
|
Further
Assurances [INSERT PAGE NUMBER]
|
|
Section
5
|
Negative
Covenants [INSERT PAGE NUMBER]
|
|
5.1
|
Senior
or Pari Passu Debt [INSERT
PAGE
NUMBER]
|
|
5.2
|
Contingent
Liabilities [INSERT PAGE NUMBER]
|
|
5.3
|
Liens
[INSERT
PAGE NUMBER]
|
|
5.4
|
Operating
Agreements [INSERT PAGE NUMBER]
|
|
5.5
|
Dividends,
Restricted
Payments and Restricted Purchases [INSERT PAGE NUMBER]
|
|
5.6
|
Reorganization,
Merger, Etc [INSERT PAGE NUMBER]
|
|
5.7
|
Transactions
with
Affiliates [INSERT PAGE NUMBER]
|
|
5.8
|
Prepayments
of Other
Debt [INSERT PAGE NUMBER]
|
|
5.9
|
Fiscal
Year [INSERT PAGE NUMBER]
|
|
5.10
|
Limitation
on Negative
Pledge Clauses [INSERT PAGE NUMBER]
|
|
Section
6
|
General
Conditions Of
Borrowing [INSERT PAGE NUMBER]
|
|
6.1
|
Escrow
Closing
Proceedings [INSERT PAGE NUMBER]
|
|
6.2
|
Final
Closing
Proceedings [INSERT PAGE NUMBER]
|
|
6.3
|
General
Proceedings [INSERT PAGE NUMBER]
|
|
6.4
|
Sole
Benefit of
Lenders [INSERT PAGE NUMBER]
|
|
Section
7
|
Events
Of Default And
Remedies [INSERT PAGE NUMBER]
|
|
7.1
|
Events
[INSERT
PAGE NUMBER]
|
|
7.2
|
Remedies
[INSERT PAGE NUMBER]
|
|
7.3
|
Cumulative
Rights [INSERT PAGE NUMBER]
|
|
7.4
|
Waivers
[INSERT PAGE NUMBER]
|
|
Section
8
|
Miscellaneous
[INSERT PAGE NUMBER]
|
|
8.1
|
Survival
of Various
Matters [INSERT PAGE NUMBER]
|
|
8.2
|
Notices
[INSERT PAGE NUMBER]
|
|
8.3
|
Control
[INSERT PAGE NUMBER]
|
|
8.4
|
Successors
and
Assigns [INSERT PAGE NUMBER]
|
|
8.5
|
Renewals
[INSERT PAGE NUMBER]
|
|
8.6
|
No
Waiver
[INSERT PAGE NUMBER]
|
|
8.7
|
Governing
Law [INSERT PAGE NUMBER]
|
|
8.8
|
Non-Subordination
[INSERT PAGE NUMBER]
|
|
8.9
|
Exhibits
and
Schedules [INSERT PAGE NUMBER]
|
|
8.10
|
Severability
[INSERT PAGE NUMBER]
|
|
8.11
|
Savings
Clause [INSERT PAGE NUMBER]
|
|
8.12
|
Counterparts
[INSERT PAGE NUMBER]
|
|
8.13
|
Limitation
of
Remedies [INSERT PAGE NUMBER]
|
|
8.14
|
Headings
[INSERT PAGE NUMBER]
|
|
8.15
|
No
Obligation to Make
Advance [INSERT PAGE NUMBER]
|
|
8.16
|
Role
of
Lenders [INSERT PAGE NUMBER]
|
|
8.17
|
NO
OTHER AGREEMENTS [INSERT PAGE
NUMBER]
|
|
8.18
|
WAIVER
OF JURY [INSERT PAGE NUMBER]
|
|
8.19
|
No
Duty
[INSERT PAGE NUMBER]
|
Exhibits
Exhibit
A
-
Compliance Certificate
Schedules
1.1
-
Related Party Debt
4.8
-
Collateral
980722v4
THIS
LOAN
AGREEMENT is dated and effective on and as of October 9, 2008, by and among
Denly ACI Partners,
Ltd., a Texas limited partnership (the "Partnership"),
and
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, and
▇▇▇▇▇
▇. ▇▇▇ ▇▇▇▇▇▇, as Co-Trustees ofThe von Waaden 2004
Revocable
Trust (the "Trust"),
and America West Resources,
Inc.,
a Nevada corporation (the "Borrower"). The
Partnership and the Trust are hereinafter collectively referred to as the
"Lenders").
RECITALS
The
Borrower has requested loans from the Lenders up to the aggregate principal
amount of $2,800,000.00. 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:
"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 either 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.
"Bankruptcy
Code"
shall mean ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ 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 Resources, Inc., a Nevada corporation, its successors and
assigns.
"Bridge
Shares" shall
mean the Capital Stock of the Borrower to be issued to the Lenders pursuant
to
the provisions of the Stock Purchase Agreement.
"C&P"
shall mean
C&P Coal Associates, LLC, a Utah limited liability company, and its
successors and assigns as the "Lessor" under the Columbia Mine
Lease.
"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 4.8
of this
Agreement.
"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.
"Columbia
Mine" shall
mean the coal mine that is the subject of the Columbia Mine Lease.
"Columbia
Mine Lease"
shall mean that certain Coal Mining Lease and Option to Purchase dated July
2,
2008 between C&P, as Lessor, and the Borrower as the lessee relating to that
certain coal mine located in Carbon County, Utah and commonly referred to
as the
"Columbia Mine."
"Committed
Amount"
shall mean, as to the Partnership, the principal amount of $1,866,666.66
and, as
to the Trust, the principal amount of $933,333.33.
"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 an appropriate officer of the Borrower 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 Borrower to cure the
same.
"Confirmation
Order"
shall mean an order signed and entered of record which approves a plan of
organization in the case of in re: Hidden Splendor Resources, Inc., Case
▇▇.
▇▇-▇-▇▇-▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 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.
"Credit
Limit" shall
mean the principal amount of $2,800,000.00, being the aggregate Committed
Amount
of each of the Lenders.
"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.
"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.
"Escrow
Agent" shall
mean the Person named as Escrow Agent in the Escrow Agreement.
"Escrow
Agreement"
shall mean the escrow agreement described in Section 4.6
hereof.
"Escrow
Funds" shall
mean the "Escrow Property" as that term is defined in the Escrow
Agreement.
"Escrow
Closing Date"
shall mean the date of this Agreement or such later date as may be agreed
to in
writing by the Lenders.
"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.
"Final
Closing Date"
shall mean the date that a Confirmation Order becomes a Final Confirmation
Order, but no earlier than fifteen (15) days after the entry of the Confirmation
Order and no later than December 5, 2008.
"Final
Confirmation
Order" shall mean a Confirmation Order with respect to which there is no
pending motion for reconsideration, rehearing or the like, and no pending
appeal, and the time for filing any such motion or appeal has
expired.
"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 or the Columbia Mine.
"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 Subsidiaries and conformance of their respective Properties with all
Legal
Requirements applicable to the Borrower and its Subsidiaries and the
development, management and operation of their respective Properties, including
without limitation the Columbia Mine.
"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).
"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 Borrower.
"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 (a) which
is of
a "going concern" or similar nature; (b) which relates to the limited scope
of
examination or matters relevant to such financial statement not in accordance
with GAAP; or (c) which relates to the treatment or classification of any
item
in such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
a
Default or Event of Default.
"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 4.13(a).
"Indemnitees"
shall
have the meaning given such term in Section 4.13(a).
"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, the Partnership and the Trust, and their respective 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 Escrow Agreement,
the Subordination Agreements, the Tri-Party Agreement 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, the Stock Purchase Agreement is not, and shall
not be
deemed to be, a Loan Document.
"Loans"
shall mean the
loans referred to in Section 2.1
of this
Agreement.
"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
Borrower and its Subsidiaries taken as a whole, or (ii) be material and adverse
to the financial condition, business operations, prospects or Properties
of the
Borrower and its Subsidiaries 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 October 9, 2009.
"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.
"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 as set forth in this Agreement, the Notes and any other Loan
Documents.
"Operating
Agreement"
shall mean one or more agreements executed by the Borrower prior hereto,
contemporaneously herewith or at any time hereafter and pursuant to which
the
Borrower contracts with another Person for any or all of the development,
management or operation of the Columbia Mine.
"Permitted
Liens"
shall mean:
(a)
Liens on Property of the Borrower existing on the Escrow Closing Date, provided
that such Liens shall secure only those obligations which they secure on
the
Escrow Closing Date;
(b)
any Lien existing on any Property of the Borrower prior to the acquisition
thereof by the Borrower, provided that: (i) such Lien is not created in
contemplation of or in connection with such acquisition, and (ii) such Lien
does
not apply to any other Property of the Borrower;
(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;
(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)
Purchase money security interests in real property, improvements thereto
or
equipment hereafter acquired (or, in the case of improvements, constructed)
by
the Borrower, provided that (i) such Liens secure Debt permitted by the terms
of
this Agreement, (ii) such Liens are incurred, and the Debt secured thereby
is
created, within 90 days after such acquisition (or construction), (iii) the
Debt
secured thereby does not exceed 85% of the lesser of the cost or the fair
market
value of such real property, improvements or equipment at the time of such
acquisition (or construction), and (iv)such Liens do not apply to any other
Property of the Borrower;
(h)
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;
(i)
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;
(j)
Deposits, Liens or pledges made in connection with any equipment leasing,
provided that (i) such Liens secure Debt permitted by the terms of this
Agreement, (ii) the Debt secured thereby does not exceed 85% of the lesser
of
the cost or the fair market value of the equipment being lease at the time
such
lease is entered into, and (iii)such Liens do not apply to any Property of
the
Borrower other than the equipment being leased; and
(g)
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.
"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. The term "Property" shall include, but
shall not be limited to, the Columbia Mine Lease and the Columbia Mine, together
with all rights appurtenant to each thereof.
"Related
Party Debt"
shall mean Debt owing by the Borrower to related parties described on Schedule
1.1
attached.
"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 Borrower 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 Borrower or any
of
its Subsidiaries.
"SEC"
shall mean the
United States Securities and Exchange Commission.
"Securities
Act" shall
mean the United States Securities Act of 1933, as amended.
"Stock
Purchase
Agreement" shall mean that certain Common Stock Purchase Agreement of
even date herewith among the Borrower and the Lenders, as the same may be
modified or amended.
"Subordination
Agreements" shall mean subordination agreements in Proper Form among the
Borrower, the Lenders and the holders of the Related Party Debt pursuant
to
which the payment of the Related Party Debt is subordinated to the payment
of
the Indebtedness and performance of the Obligations.
"Taxes"
shall mean all
taxes, assessments, imposts, fees, and other charges at any time imposed
by any
laws or Governmental Authority.
"Tri-Party
Agreement"
shall mean an agreement among the Borrower, the Lenders and C&P (together
with the mortgagee of the Columbia Coal Mine, if any), in Proper Form, and
pursuant to which C&P (and its mortgagee, if any) agree, among other things,
(i) to give the Lenders notice of any default under the Columbia Mine Lease
and
a reasonable opportunity to cure the same, (ii) not to terminate the Columbia
Mine Lease because of an uncurable default, such as a bankruptcy proceeding
or
failure to comply with applicable laws) so long as the Lenders cause all
monetary obligations to be satisfied and are proceeding in good faith to
foreclose their Liens upon the Columbia Mine Lease, (iii) to recognize the
Lenders or their nominee or assigns as the lessee under the Columbia Mine
Lease
upon the foreclosure or assignment thereof to the Lenders, their nominee
or
assigns, (iv) that the interests of the Borrower and the Lenders will not
be
disturbed so long as the lease obligations are performed, subject to the
Lenders' right to maintain the Columbia Mine Lease without curing uncurable
defaults as provided herein, and (v) that the Liens of such mortgagee, if
any,
upon the Columbia Mine or Columbia Mine Lease, or both, will be released
upon
the closing of the option to purchase set forth in the Columbia Mine
Lease.
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.
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 agrees
to
advance a loan to the Borrower in a single advance equal to the respective
Lender's Committed Amount for the purpose specified in Section 2.2
of this
Agreement.
(b) The
obligation of the Borrower to repay the Loans shall be evidenced by its 17%
Secured Promissory Notes, in Proper Form, and payable to the order of the
Lenders. 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 seventeen percent (17%) per annum with all principal and interest
outstanding under such Promissory Note being due and payable in full on the
Maturity Date. 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 Use
of
Proceeds. The proceeds of the Loans shall be used solely as
follows:
(a) On
the
Escrow Closing Date, subject to the provisions of Section 6.1
hereof,
$2,250,000.00 of the proceeds of the Loans shall be deposited with the Escrow
Agent to be held in escrow in accordance with the terms of the Escrow
Agreement. The balance of the proceeds will be deposited to the
Escrow Agent at the Final Closing Date, subject to the provisions of Section 6.2
hereof.
(b)
On the
Final Closing Date, if all conditions to the final closing of the Loans as
set
forth in Section
6.2
hereof have
been satisfied and remain satisfied and the Lenders have not previously
instructed the Escrow Agent to deliver the Escrow Funds to the Lenders pursuant
to Section 7.2(e)
hereof,
then the Escrow Funds shall be distributed by the Escrow Agent (and the Borrower
and the Lenders shall so instruct the Escrow Agent) in accordance with the
terms
of the Escrow Agreement, as follows:
(i) $2,250,000
shall be distributed to Hidden Splendor, debtor in possession, to pay off
obligations of Hidden Splendor pursuant to Hidden Splendor’s Plan of
Reorganization as confirmed by a Final Confirmation Order;
(ii) upon
Hidden Splendor’s emergence from bankruptcy, (a) $300,000 shall be distributed
by the Escrow Agent as commissions to Riverstone Wealth Management;
and
(iii) the
remaining funds shall be distributed by the Escrow Agent to pay the Borrower’s
obligations under the Columbia Mine Lease.
(c)
On the
Final Closing Date, if all conditions to the final closing of the Loans as
set
forth in Section
6.2
hereof have
not been satisfied or the Lenders have not previously instructed the Escrow
Agent to deliver the Escrow Funds to the Lenders pursuant to Section 7.2(e)
hereof,
then the Escrow Funds shall be distributed by the Escrow Agent to the Lenders
in
accordance with the terms of the Escrow Agreement.
(d) None
of
the Proceeds shall be used for personal, household or agricultural
purposes.
2.3 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.
2.4 Default
Interest. During the continuation of (a) any Default or (b)
any Event of Default, the Borrower shall pay, on demand, at the Lenders'
option,
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 Lenders' option, 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.
2.5 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
Borrower represents and warrants 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 Borrower has full legal right, power and authority
to carry on its business as presently conducted and to execute, deliver,
and
perform its 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 its obligations under this Agreement,
the
Notes and the other Loan Documents to which the Borrower is a party and the
performance by the Borrower of its obligations hereunder and thereunder and
each
thereof is the valid and binding obligation of the Borrower, enforceable
in
accordance with its 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 Borrower and each of its Subsidiaries is validly issued
and
fully paid and nonassessable. The Borrower 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.
3.2 Financial
Condition. The financial statements of the Borrower which are
on file with the SEC as of the Escrow Closing Date are true, complete and
correct, have been prepared in accordance with GAAP, and fully and accurately
reflect the financial condition of the Borrower, as of the dates and for
the
periods stated. No Material Adverse Change has occurred in the
condition, financial or otherwise, of the Borrower since the date of the
most
recent thereof.
3.3 Debt,
Liens,
Liabilities. The Borrower and its Subsidiaries have no
outstanding Debt, Liens, or Contingent Liabilities except as shown on its
financial statements on file with the SEC as of the Escrow Closing
Date. Except for Liabilities incurred in the normal course of
business and not material in amount (either individually or in the aggregate),
the Borrower and its Subsidiaries have no liabilities, direct or contingent,
that have arisen or been incurred or accrued subsequent to the date of the
most
recent thereof.
3.4 No
Default. As of the Escrow Closing Date, no Event of Default
nor Default exists and neither the Borrower nor any of its Subsidiaries is
in
default in any respect under any Legal Requirement binding upon or affecting
the
Borrower or any of its Subsidiaries or by which any of the Properties of
the
Borrower or any of its Subsidiaries may be bound or affected, or under any
agreement or other undertaking or instrument to which the Borrower 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 Borrower
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
and the other Loan Documents by the Borrower, 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 the Borrower or (ii) any bond, debenture, note
or
other evidence of indebtedness or (iii) any contract, indenture, mortgage,
loan
agreement, lease, joint venture or other agreement or instrument to which
the
Borrower is a party or by which the Borrower or any of its Properties are
bound,
or result in any violation by the Borrower of any Legal
Requirement. Neither the Borrower nor any of is Subsidiaries is in
violation of, and the execution, delivery and performance by the Borrower
of the
Loan Documents will not result in violation of, any Legal Requirement to
which
it or any of its Subsidiaries may be subject.
3.5 Governmental
Permits. To the best of the Borrower's knowledge, no claim has
been asserted by any Person with respect to the use of any of the Borrower's
or
any of its Subsidiaries' Governmental Permits. The Borrower knows of
no impediments to the granting to the Borrower and its Subsidiaries, as the
case
may be, of any future Governmental Permits and expects to receive the
same at such time as required for the Borrower or its Subsidiaries, as the
case
may be, to carry on their respective businesses as presently conducted and
as
proposed to be conducted.
3.6 Taxes. The
Borrower and its Subsidiaries (except as provided for in connection with
Hidden
Splendor's Plan of Reorganization as confirmed by a Final Confirmation Order)
have filed all federal, state and other tax returns that are required to
be
filed by any of them. The Borrower 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. All liabilities for Taxes of the
Borrower 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 Borrower or any
of
its Subsidiaries of any deficiency in any tax return.
3.7 Columbia
Mine
Lease. The Borrower has delivered to the Lenders true, correct
and complete copies of the Columbia Mine Lease and all documents and instruments
representing and describing its coal reserves, the value thereof and the
title
thereto which are in the Borrower's possession or otherwise known by the
Borrower to exist. The Columbia Mine Lease is valid and subsisting
with no default existing and, to the best of the knowledge of the Borrower,
no
default threatened. The Borrower has good and indefeasible leasehold
title to the Columbia Mine pursuant to the Columbia Mine Lease, subject to
no
Liens other than Permitted Liens. The Columbia Mine Lease contains no
provision which materially adversely affects the Borrower's ability to develop,
manage and operate the Columbia Mine. To the best of the Borrower's
knowledge, C&P owns good and indefeasible title to the Columbia Mine free
and clear of all Liens other than the Columbia Mine Lease and Permitted
Liens. As of the Escrow Closing Date, there are no Operating
Agreements.
3.8 Material
Agreements. There are no material agreements entered into by
or affecting the development, management and operation of the Columbia Mine,
other than the Columbia Mine Lease.
3.9 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 Borrower of
this
Loan Agreement, the Notes or any other Loan Document.
3.10 No
Environmental
Hazard. The Borrower 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
Columbia Mine, and there is not now pending, nor, to the best knowledge of
the
Borrower, threatened, any action, suit, investigation or proceeding against
the
Borrower 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
Borrower 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.
3.11 No
Pending
Litigation. No Litigation is pending or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries, except as set forth in the Borrower'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.
3.12 Investment
Company
Act. Neither the Borrower 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.
3.13 Public
Utility Holding
Company Act. Neither the Borrower 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 liabilities of the Borrower under any of the Loan Documents
or
any liens created under the Collateral Documents.
3.14 Securities
Acts. The Borrower 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 Borrower 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 its execution and delivery of
the
Notes.
3.15 Full
Disclosure. Neither this Agreement nor any certificate or
statement or any other data furnished by the Borrower 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
Borrower necessary to make the statements contained herein or therein not
misleading.
3.16 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.
Section
4
Affirmative
Covenants
Until
all
Indebtedness has been paid and all Obligations performed, the Borrower covenants
and agrees with the Lenders as follows:
4.1 Reporting
Requirements. The Borrower will promptly furnish to the
Lenders from time to time the following information regarding the business
affairs and financial condition of the Borrower:
(a)
As soon
as possible and in any event within five (5) days after the occurrence of
any
Event of Default or Default the Borrower 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 Borrower
has
taken and proposes to take with respect thereto.
(b) As
soon
as available and in any event within 45 days after the end of each fiscal
quarter, (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 Borrower (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
Borrower's fiscal years, 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 Borrower certified without any Impermissible
Qualification by an independent accountant satisfactory to the Lenders that
such
financial statements fairly present the financial position of the Borrower
in
conformity with GAAP.
(d)
Promptly, and in any event within 30 days after the end of each calendar
month,
the Borrower shall deliver to the Lenders a Compliance Certificate.
(e) Promptly
upon receipt thereof, copies of all material reports or letters submitted
to the
Borrower 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) As
soon
as possible and in any event, within 10 days after the Borrower's obtaining
notice thereof, the Borrower shall give a written report to the Lenders of
all
Litigation (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 Borrower's president or
vice
president describing the allegations of such Litigation, and the action being
taken or proposed to be taken with respect thereto.
(g) Promptly
upon their becoming available, the Borrower shall deliver to the Lenders
copies
of all press releases and other statements made available generally by the
Borrower to the public concerning material developments in the business of
the
Borrower.
(h) Promptly
upon preparation thereof, the Borrower shall deliver to the Lenders copies
of
all material reports or financial statements that the Borrower files with
any
state or federal regulatory agency, including (without regard to the materiality
thereof) copies of all filings made with the SEC.
(i) Such
other information as the Lenders may reasonably request from time to
time.
4.2 Legal
Requirements. The Borrower will (and will cause its
Subsidiaries to) comply in all material respects with all Legal Requirements
applicable to it and its Subsidiaries.
4.3 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
Borrower 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 Borrower 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 Hidden Splendor's Plan of
Reorganization, as confirmed by a Final Confirmation Order, 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.
4.4 Columbia
Mine
Lease. The Borrower shall faithfully and timely perform it's
obligations under the Columbia Mine Lease and shall not amend, modify or
terminate the same, nor suffer or permit anything to occur, which may cause
the
modification or termination or expiration of the Columbia Mine Lease, or
of any
obligations of any party thereunder, or which may diminish or impair the
value
thereof. Following any election of the Borrower to exercise its
option to purchase the Columbia Mine, the Borrower shall consummate such
person
in accordance with the provisions of the Columbia Mine Lease.
4.5 Future
Permits. The Borrower 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 Columbia
Mine.
4.6 Escrow
Agreement. The Borrower shall enter into the Escrow Agreement
on the Escrow Closing Date with the Lenders and an escrow agent satisfactory
to
the Lenders, which Escrow Agreement shall be in Proper Form and pursuant
to
which the Borrower shall agree to escrow the funds received from the Loans
and
make certain other deposits as provided herein and therein. Pursuant
to the Escrow Agreement, the Borrower agrees that the funds shall be disbursed
as follows: (i) $2,250,000 shall be used to pay the obligations of Hidden
Splendor, pursuant to Hidden Splendor’s Plan of Reorganization as confirmed by a
Final Confirmation Order; (ii) upon Hidden Splendor’s emergence from bankruptcy,
(a) $300,000 shall be paid as commissions to Riverstone Wealth Management;
and
(b) the remaining funds shall be used to pay the Borrower’s obligations under
the Columbia Mine Lease as the same become due and
payable. Pursuant to the Escrow Agreement, the Borrower agrees
to pay $35,000 per month (or such greater amount as may be necessary to make
payments due under the Columbia Mine Lease) to the Escrow Agent (as defined
in
the Escrow Agreement) to be used to make payments of the Borrower pursuant
to
the Columbia Mine Lease. The payments shall begin on November 1, 2008
and each subsequent month thereafter for as long as the Indebtedness remains
unpaid and the Obligations remain outstanding.
4.7 Payment
of
Expenses. To the extent not prohibited by applicable law and
subject to the provisions of Section 8.11
hereof, the
Borrower will pay all costs and expenses and reimburse the Lenders for any
and
all expenditures of every character incurred or expended from time to time
by
the Lenders to third parties for services rendered in connection with the
Lenders' negotiation, documenting and closing the transactions reflected
by the
provisions of this Agreement and any amendments, modifications, replacements
and
additions hereto and to the other Loan Documents, as well as evaluating,
monitoring, administering and protecting the Loans and the Collateral and
creating, perfecting and realizing upon the Lenders' security interest in
and
liens upon the Collateral, and all costs and expenses incurred or expended
by
the Lenders to third parties for services rendered and related to the Lenders'
exercising any of its rights and remedies hereunder, under this Agreement,
the
Notes, or any of the other Loan Documents, or at law, including, without
limitation, all appraisal fees, consulting fees, filing fees, Taxes, brokerage
fees and commissions, fees incident to security interests, liens and other
title
searches and reports, escrow fees, attorney's fees, legal expenses, court
costs,
auctioneer fees and expenses, other fees and expenses incurred in connection
with liquidation or sale of the Collateral and all other professional
fees. Any amount to be paid hereunder by the Borrower to the Lenders,
to the extent not prohibited by applicable law, shall bear interest from
the
date of expenditure until reimbursed to the Lenders by the Borrower at the
Default Rate.
4.8 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
4.8
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 Escrow Closing Date or in which a first-priority lien in
favor
of the Lender has not been granted as of the Escrow Closing Date, the Borrower
shall promptly grant or cause to be granted to the Lender 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.
4.9 Payment
of
Taxes The Borrower 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 Hidden Splendor's Plan of Reorganization, as confirmed by
a
Final Confirmation Order, 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.
4.10 Adequate
Records; Inspection
Rights. The Borrower 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
Borrower 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 Borrower 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.
4.12 Maintenance
of
Insurance. The Borrower shall, and shall cause its
Subsidiaries to, maintain insurance from responsible companies in such amounts
and against such risks as shall be customary and usual in the industry for
responsible companies, but in no event less than the amount and types insured
as
of the Escrow Closing Date. Each insurance policy with respect to the
Columbia Mine or potential liabilities arising from the development, management
and operation thereof shall name the Lenders as additional insureds, or loss
payees, as appropriate, and provide for at least 30 days' prior notice to
the
Lenders of any proposed termination or cancellation of such policy, whether
or
account of default or otherwise.
4.13 Indemnity.
(a)
The
Borrower agrees to defend, protect, indemnify and hold harmless the Lenders,
their respective Affiliates, and each of their respective (including such
Affiliates') trustees, officers, directors, employees, agents, attorneys,
shareholders and consultants (including, without limitation, those retained
in
connection with the satisfaction or attempted satisfaction of any of the
conditions set forth herein) of each of the foregoing (collectively, "Indemnitees") from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any
kind
or nature whatsoever (including, without limitation, the reasonable fees
and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitees shall be designated a party thereto or such proceeding shall
have
actually been instituted), imposed on, incurred by, or asserted against such
Indemnitees (whether direct, indirect or consequential and whether based
on any
federal, state, or local laws and regulations, under common law or at equitable
cause, or on contract, tort or otherwise), arising from or connected (a)
with
the past, present, or future operations of the Borrower, any of its
Subsidiaries, any Affiliate or any predecessors in interest, or (b) with
the
management, operation and conduct of the business and affairs of the Borrower
and any of its Subsidiaries, or as a result of any assertion or claim of
any
liability or responsibility of the Lenders for the payment or performances
of
any indebtedness or obligation of the Borrower or any of its Subsidiaries,
or
(c) with the past, present or future environmental condition of the Property
of
the Borrower, any of its Subsidiaries, any Affiliate or any predecessors
in
interest, or (d) in any way relating to or arising out of this Agreement,
the
Loan Documents, or any act, event or transaction or alleged act, event or
transaction relating or attendant thereto, including in connection with,
or as a
result, in whole or in part, of any negligence of the Lenders, or based upon
or
asserted on the basis of strict liability, or the use or intended use of
the
proceeds of the Loans hereunder, or in connection with any investigation
of any
potential matter covered hereby, but excluding any claim or liability that
arises as the result of (i) the gross negligence or willful misconduct of
any
Indemnitee, as finally judicially determined by a court of competent
jurisdiction, and (ii) the act, omission, event or circumstances (including,
without limitation, a violation of any Environmental Law) taken, or caused,
solely by the Lenders at any time after the Lenders takes possession of,
or
otherwise forecloses upon, any Collateral (collectively, "Indemnified
Matters"). In addition, the Borrower shall periodically, upon
request, reimburse each Indemnitee for its reasonable legal and other actual
expenses (including the cost of any investigation and preparation) incurred
in
connection with any Indemnified Matter.
(b) The
reimbursement, indemnity and contribution obligations under this Section
shall
be in addition to any liability which the Borrower may otherwise have, shall
extend upon the same terms and conditions to each Indemnitee, and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Borrower, the Lenders, and all other
Indemnitees. The obligations of the Borrower under this Section shall
survive (i) the execution of this Agreement and (ii) any termination of this
Agreement and payment of the Obligations.
(c) THE
INDEMNITY IN THIS SECTION WILL APPLY
EVEN IF THE LOSS OR DAMAGE IS CAUSED IN WHOLE OR IN PART BY THE ORDINARY
NEGLIGENCE OR STRICT LIABILITY OF THE INDEMNITEE BUT WILL NOT APPLY TO THE
EXTENT THE LOSS OR DAMAGE IS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE INDEMNITEE.
4.14 Further
Assurances. The Borrower shall perform or cause to be
performed any and all things the Lenders may hereafter request to protect,
perfect or more fully evidence the rights and agreements established or
contemplated by this Agreement.
Section
5
Negative
Covenants
Until
all
Indebtedness has been paid and all Obligations performed, the Borrower covenants
and agrees with the Lenders as follows:
5.1 Senior
or Pari Passu
Debt. The Borrower shall not incur, create, assume, guarantee
or permit to exist any Debt that ranks senior in priority to, or pari passu
with, the Indebtedness or Obligations, except for (i) Debt existing on the
Escrow Closing Date and only to the extent that such Debt ranks pari passu
with,
but not senior to, the Indebtedness and Obligations, and (ii) Debt created
as a
result of a subsequent financing if the gross proceeds to the Borrower of
such
financing are equal to or greater than the aggregate principal amount of
the
Loans and the Indebtedness is repaid in full upon the closing of such
financing.
5.2 Contingent
Liabilities. The Borrower shall not incur, create, assume,
become or be liable in any manner in respect of, or suffer to exist, any
Contingent Liabilities, except Contingent Liabilities in existence on the
Escrow
Closing Date and only to the extent that such Contingent Liabilities rank
pari
passu with, but not senior to, the Indebtedness and
Obligations. Anything herein to the contrary notwithstanding, the
Borrower may guarantee Debt of Hidden Splendor up to the principal amount
of
$1,500,000.00 so long as such guaranty is unsecured and is required by the
terms
of a plan of reorganization as confirmed by a Final Confirmation Order and
only
to the extent that such Contingent Liabilities rank pari passu with, but
not
senior to, the Indebtedness and Obligations.
5.3 Liens. The
Borrower shall not create or suffer to exist any Lien upon any of its
Properties, except Permitted Liens. The foregoing notwithstanding,
the Borrower shall neither create, incur, assume nor permit to exist any
Lien
upon the Columbia Mine Lease, other than Liens in favor of the
Lender.
5.4 Operating
Agreements. The Borrower shall not enter into any Operating
Agreements without the prior written consent of the Lenders. All
Operating Agreements shall be assigned to the Lenders as Collateral in
accordance with the provisions of Section 4.8(b)
hereof.
5.5 Dividends,
Restricted
Payments and Restricted Purchases. The Borrower shall not
declare or pay Dividends, or make any Restricted Payments or Restricted
Purchases.
5.6 Reorganization,
Merger,
Etc. The Borrower will not reorganize, merge or consolidate
with or acquire all or substantially all of the assets or Capital Stock of
any
Person, convert its organizational structure to a different form of entity,
enter into any joint ventures, create subsidiaries, or make any other
substantial change in its capitalization, organizational structure, or character
of its business.
5.7 Transactions
with
Affiliates. Any other provision of this Agreement
notwithstanding, the Borrower shall not carry on any transaction with any
Affiliate, except at arm's length on terms no less favorable to the Borrower
than otherwise obtainable in the marketplace generally.
5.8 Prepayments
of Other
Debt. The Borrower will not at any time prepay any Debt which
it may owe to parties other than the Lenders and shall make no payments with
respect to Subordinated Debt, except as otherwise set forth in Subordination
Agreement, which provides that Borrower may make payments on the Related
Party
Debt at any time so long as the Borrower has raised the aggregate of
$3,000,000.00 in equity financing by December 31, 2008.
5.9 Fiscal
Year. The Borrower shall not, and shall not permit any of its
Subsidiaries to, change its fiscal year.
5.10 Limitation
on Negative
Pledge Clauses. The Borrower shall not enter into any
agreement, other than this Agreement and the other Loan Documents, or any
purchase money mortgages or financing leases permitted by this Agreement
(a)
which prohibits or limits the ability of the Borrower to create, incur, assume
or suffer to exist any Liens upon the Columbia Mine Lease, or (b) which
prohibits or requires the consent of any Person to any amendment, modification
or supplement to this Agreement or any of the other Loan Documents.
Section
6
General
Conditions Of
Borrowing
6.1 Escrow
Closing
Proceedings. The making of the first Advances in the aggregate
principal amount of Two Million Two Hundred Fifty Thousand and 00/100 Dollars
($2,250,000.00) on the Escrow Closing Date to the Escrow Agent shall be subject
to the following conditions, in addition to those stated in other provisions
of
this Agreement (the Lenders having no obligation to make such Advances in
the
event any one or more of such conditions has not been satisfied, or having
previously been satisfied does not remain satisfied, on the Escrow Closing
Date):
(a) This
Agreement shall have been duly and validly executed and delivered by the
Borrower and the Lenders.
(b) The
Notes
shall have been duly and validly executed and delivered by the Borrower to
the
Lenders.
(c) The
Escrow Agreement shall have been duly and validly executed and delivered
by the
parties thereto.
(d) The
Borrower shall have duly and validly executed and delivered or caused to
be
executed and delivered to the Lenders a collateral assignment of the Escrow
Agreement in Proper Form.
(e) The
Borrower shall have delivered or caused to be delivered to the Lenders an
officers' certificate in Proper Form certifying the following matters to
the
Lenders:
(i) Resolutions
of its Board of Directors, which resolutions shall authorize the execution,
delivery and performance by the Borrower of this Agreement, the Notes, and
the
other Loan Documents to which the Borrower is a party and which shall authorize
the consummation and performance of the transactions contemplated hereby
and
thereby;
(ii) The
incumbency of its officers with specimen signatures of its President, Vice
President, Treasurer, Secretary and other officers who will sign this Agreement,
the Notes or any of the other Loan Documents in connection herewith and
delivered pursuant hereto;
(iii) Articles
of Incorporation of the Borrower certified as of a recent date by the Secretary
of the State of its incorporation; and
(iv) By-laws
of the Borrower.
(f) The
Borrower shall have delivered or caused to be delivered to the Lenders
certificates of the appropriate government officials of the states of Nevada
and
Utah each bearing a recent date, to the effect that the Borrower is (as the
case
may be) a corporation, duly incorporated, validly existing, qualified to
transact business and in good standing under the laws of the respective
states.
(g) No
event
shall have occurred and be continuing (or would occur after giving effect
to the
Loans) which constitutes (or would constitute after giving effect to the
Loans)
an Event of Default or Default under this Agreement as of the Escrow Closing
Date and a certificate to such effect signed by the President or a Vice
President of the Borrower shall be delivered to the Lenders.
(h) Each
and
all of the representations and warranties of the Borrower in this Agreement
and
the other Loan Documents shall be true, correct and accurate as of the Escrow
Closing Date and a certificate to such effect signed by the President or
a Vice
President of the Borrower shall be delivered to the Lenders.
(i) The
Borrower shall have duly and timely performed each and all of its agreements
and
undertakings contained in this Agreement.
(j) The
Lenders shall have received payment of all fees and reimbursement of all
reasonable attorneys’ fees and expenses incurred through the Escrow Closing Date
by the Lenders in connection with the preparation, negotiation and consummation
of the loan transaction evidenced by this Agreement and the other Loan
Documents.
(k) The
Lenders shall have completed all due diligence deemed necessary in their
sole
discretion, and all such information revealed in connection with such due
diligence shall be acceptable to the Lenders in their sole
discretion.
(l) The
Borrower shall have furnished to the Lenders one or more opinions of counsel
acceptable to the Lenders as of the Escrow Closing Date, that:
(i) The
Borrower is a corporation duly organized and validly existing in good standing
under the laws of the State of Nevada;
(ii) The
execution and delivery of this Agreement, the Notes, and the other Loan
Documents executed on or before the Escrow Closing Date, the making of the
borrowings contemplated hereby, and the granting of security as herein
contemplated have been duly and validly authorized by the Borrower;
(iii) This
Agreement, the Notes and the other Loan Documents have each been duly and
validly executed and delivered by the parties thereto; and this Agreement,
the
Notes, and the other Loan Documents executed on or before the Escrow Closing
Date are the legal, valid and binding obligations of the Borrower, under
federal
laws and regulations, and applicable laws and regulations of the State of Utah,
and are enforceable in accordance with their terms, subject to such
qualifications as the Lenders may approve;
(iv) The
Collateral Documents executed on or before the Escrow Closing Date are effective
to create valid, legal and enforceable Liens upon the Collateral described
in
each thereof.
(v) The
Loans, as reflected in the Loan Documents executed on or before the Escrow
Closing Date, are not usurious under applicable laws.
(vi) No
approval of any Governmental Authority is required to enable the Borrower
to
consummate any transactions contemplated in this Agreement, the Notes, and
other
Loan Documents.
6.2 Final
Closing
Proceedings. In the event the following conditions, in
addition to those stated in other provisions of this Agreement, shall each
have
been and remain satisfied by the Borrower on the Final Closing Date or waived
in
writing by the Lenders, and the Lenders have not previously instructed the
Escrow Agent to deliver the Escrow Funds to the Lenders, then (a) the Lenders
shall make Advances in the aggregate amount of Five Hundred Fifty Thousand
and
00/100 Dollars ($550,000.00) on the Final Closing Date to the Escrow Agent
and
(b) the Borrower and the Lenders shall jointly instruct the Escrow Agent
to
disburse the Escrow Funds in accordance with the terms of the Escrow Agreement
as described in Section 2.2(b)
hereof
(the Lenders having no obligation to make such Advances or to give such
instructions in the event any one or more of such conditions has not been
satisfied, or having previously been satisfied does not remain satisfied,
on the
Final Closing Date, in which case the Escrow Funds shall be distributed to
the
Lenders upon their written instructions to the Escrow Agent as provided in
Section 2.2(c)
hereof):
(a) A
Confirmation Order shall have been entered and shall have become a Final
Confirmation Order.
(b) The
Borrower shall have duly and validly executed and delivered or caused to
be
executed and delivered to the Lenders the Collateral Documents, and all other
Loan Documents, and each Collateral Document which is to be filed or recorded
shall have been properly filed or recorded and the fees and Taxes, if any,
for
filing or recording the same shall have been paid by the Borrower.
(c) The
Borrower, the Lenders and C&P (and its mortgagee, if any) shall have
executed and delivered to the Lenders the Tri-Party Agreement.
(d)
The
Borrower, the Lenders and the holders of the Related Party Debt shall have
executed and delivered the Subordination Agreements to the Lenders.
(e) The
issuance of the Bridge Shares to the Lenders shall have occurred, or shall
occur
simultaneously on the Final Closing Date with the closing of the transactions
hereunder, in accordance with the provisions of the Stock Purchase
Agreement.
(f) There
shall have occurred no Material Adverse Change since the date of the most
recent
financial statement of the Borrower on file with the SEC.
(g) No
event
shall have occurred and be continuing (or would occur after giving effect
to the
Loans) which constitutes (or would constitute after giving effect to the
Loans)
an Event of Default or Default under this Agreement as of the Final Closing
Date
and a certificate to such effect signed by the President or a Vice President
of
the Borrower shall be delivered to the Lenders.
(h) Each
and
all of the representations and warranties of the Borrower in this Agreement
and
the other Loan Documents shall be true, correct and accurate as of the Final
Closing Date and a certificate to such effect signed by the President or
a Vice
President of the Borrower shall be delivered to the Lenders.
(i) The
Lenders shall have received (i) evidence satisfactory to it that the Collateral
is all owned by the Borrower free and clear of any Liens (other than Permitted
Liens) and, in the event any such Liens do exist, then the Lenders shall
have
received written releases or subordination agreements in Proper Form executed
by
each Person in whose favor a Lien exists and (ii) evidence satisfactory to
it
that the Columbia Mine is owned by C&P free and clear of any Liens and, in
the event any such Liens do exist, then the Lenders shall have received written
estoppels and agreements in Proper Form executed by each Person in whose
favor a
Lien exists.
(j) The
Borrower shall have delivered or caused to be delivered to the Lenders an
officers' certificate in Proper Form certifying the following matters to
the
Lenders:
(i) Resolutions
of its Board of Directors, which resolutions shall authorize the execution,
delivery and performance by the Borrower of this Agreement, the Notes, and
the
other Loan Documents to which the Borrower is a party and which shall authorize
the consummation and performance of the transactions contemplated hereby
and
thereby;
(ii) The
incumbency of its officers with specimen signatures of its President, Vice
President, Treasurer, Secretary and other officers who will sign this Agreement,
the Notes or any of the other Loan Documents in connection herewith and
delivered pursuant hereto;
(iii) Articles
of Incorporation of the Borrower certified as of a recent date by the Secretary
of the State of its incorporation; and
(iv) By-laws
of the Borrower.
(k) The
Borrower shall have delivered or caused to be delivered to the Lenders
certificates of the appropriate government officials of the states of Nevada
and
Utah each bearing a recent date, to the effect that the Borrower is (as the
case
may be) a corporation, duly incorporated, validly existing, qualified to
transact business and in good standing under the laws of the respective
states.
(l) The
Borrower shall have duly and timely performed each and all of its agreements
and
undertakings contained in this Agreement.
(m) The
Lenders shall have received payment of all fees and reimbursement of all
reasonable attorneys’ fees and expenses incurred through the Final Closing Date
by the Lenders in connection with the preparation, negotiation and consummation
of the loan transaction evidenced by this Agreement and the other Loan
Documents.
(n) The
Borrower shall have obtained and furnished to the Lenders evidence of the
existence of insurance and endorsements thereto as required pursuant to the
provisions of Section
4.12
hereof and
shall have paid all premiums therefor.
(o) The
Lenders shall have completed all due diligence deemed necessary in their
sole
discretion, and all such information revealed in connection with such due
diligence shall be acceptable to the Lenders in their sole
discretion.
(p) The
Borrower shall have furnished to the Lenders one or more opinions of counsel
acceptable to the Lenders as of the Final Closing Date, that:
(i) The
Borrower is a corporation duly organized and validly existing in good standing
under the laws of the State of Nevada;
(ii) The
execution and delivery of this Agreement, the Notes, and the other Loan
Documents executed on or before the Final Closing Date, the making of the
borrowings contemplated hereby, and the granting of security as herein
contemplated have been duly and validly authorized by the Borrower;
(iii) This
Agreement, the Notes and the other Loan Documents have each been duly and
validly executed and delivered by the parties thereto; and this Agreement,
the
Notes, and the other Loan Documents executed on or before the Final Closing
Date
are the legal, valid and binding obligations of the Borrower, under federal
laws
and regulations, and applicable laws and regulations of the State of Utah,
and
are enforceable in accordance with their terms, subject to such qualifications
as the Lenders may approve;
(iv) The
Collateral Documents executed on or before the Final Closing Date are effective
to create valid, legal and enforceable Liens upon the Collateral described
in
each thereof.
(v) The
Loans, as reflected in the Loan Documents executed on or before the Final
Closing Date, are not usurious under applicable laws.
(vi) No
approval of any Governmental Authority is required to enable the Borrower
to
consummate any transactions contemplated in this Agreement, the Notes, and
other
Loan Documents.
(vii) A
Confirmation Order has been entered and has become a Final Confirmation
Order.
6.3 General
Proceedings. All proceedings to be taken in connection with
the transactions contemplated by this Agreement and the other Loan Documents
and
all documents incident hereto or thereto, and all actions necessary to evidence,
create, and perfect the security interests contemplated hereby, shall have
been
taken and be in Proper Form and the Lenders shall have received copies of
all
documents which it may reasonably request in connection with such transactions
and all corporate proceedings with respect thereto, in Proper Form.
6.4 Sole
Benefit of
Lenders. All conditions precedent to the obligation of the
Lenders to make the Loans are imposed hereby solely for the benefit of the
Lenders and no other party may require satisfaction of any such condition
precedent or be entitled to assume that the Lenders will refuse to make the
Loans in the absence of strict compliance with such conditions
precedent. Any requirement of this Agreement may be waived by the
Lenders, in whole or in part, at any time. Any requirement herein of
submission of evidence of the existence or non-existence of a fact shall
be
deemed, also, to be a requirement that the fact shall exist or not exist,
as the
case may be, and without waiving any condition or obligation of the Borrower,
the Lenders may at all times independently establish to its satisfaction
such
existence or non-existence.
Section
7
Events
Of Default And
Remedies
7.1 Events. Any
of the following events which shall occur and be continuing for any reason
whatsoever, whether voluntary or involuntary, by operation of law or otherwise,
shall be considered an Event of Default as that term is used
herein:
(a) The
Borrower shall fail to pay any principal, interest, fees, or any other amounts
payable under the Loan Documents when due.
(b) The
Borrower shall fail to perform or observe any other term or covenant contained
in any Loan Documents, other than those described in subsection (a), and
such
failure shall not be remedied within 5 days following the earlier of knowledge
thereof by an officer of the Borrower or of written notice by the Lenders
to the
Borrower.
(c) Any
representation or warranty made or deemed made by the Borrower or any of
its
Subsidiaries (or any of their officers) under or in connection with any Loan
Documents shall have been materially incorrect or misleading in any material
respect when made or deemed made.
(d) Any
default shall occur in the performance of, or compliance with, any obligation
of
any party under the Columbia Mine Lease; or the validity or enforceability
of
the Columbia Mine Lease or any material provision thereof shall be contested
by
any party thereto; or any party to the Columbia Mine Lease shall deny that
it
has any or further liability or obligation thereunder or shall revoke or
terminate or attempt to revoke or terminate the same.
(e) Any
of
the Loan Documents or any provision thereof shall, for any reason, not be
valid
and binding on the Borrower or any other party thereto; or any of the above
shall not be in full force and effect, or shall be declared to be null and
void;
or the validity or enforceability of any of the Loan Documents shall be
contested by the Borrower or any of its Subsidiaries or any Affiliate of
any
thereof, or any other party thereto; the Borrower or any of its Subsidiaries
or
other party to any thereof shall deny that it has any or further liability
or
obligation under its respective Loan Documents or shall revoke or terminate
or
attempt to revoke or terminate the same; or any default or breach under any
provision of any Loan Documents shall continue after the applicable grace
period, if any, specified in such Loan Documents.
(f) The
Borrower or any of its Subsidiaries (including Hidden Splendor from and after
the date a Confirmation Order has been entered) or C&P shall (i) make a
general assignment for the benefit of creditors, or (ii) apply for or consent
to
the appointment of, or allow to be appointed, a custodian, receiver, a trustee
or liquidator of itself or of all or a substantial part of its assets, or
(iii)
file a petition for relief under or be the subject of an order for relief
entered pursuant to a petition filed under, any bankruptcy or similar statute
(whether Federal or State) relating to relief of debtors; or (iv) be the
subject
of any petition for relief filed against it under any bankruptcy or similar
statute (whether Federal or State) relating to relief of debtors which shall
not
be vacated or dismissed within thirty (30) days after the filing thereof;
or (v)
dissolve, liquidate, reorganize, or be acquired by any Person(s).
(g) The
Borrower or any of its Subsidiaries (including Hidden Splendor from and after
the date a Confirmation Order has been entered) shall fail to pay any Debt
or
Contingent Liability when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise), and such failure, shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt or Contingent Liability; the Borrower
or any
of its Subsidiaries shall fail to perform or observe any term or covenant
contained in any agreement or instrument relating to any such Debt or Contingent
Liability, when required to be performed or observed, and such failure shall
continue after the applicable grace period, if any, specified in such agreement
or instrument, or can result in acceleration of the maturity of such Debt
or
Contingent Liability; or any such Debt or Contingent Liability shall be declared
to be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity
thereof.
(h) Any
party
shall commence any action, suit or proceeding against or affecting the Borrower
or any of its Subsidiaries or any part of the Collateral or involving the
validity or enforceability of this Agreement or any of the other Loan Documents
or the priority of the Liens created by any of the other Loan Documents,
at law
or in equity, or before any governmental authority, which in the reasonable
judgment of the Lenders materially impairs or would materially impair its
interest in any part of the Collateral, the enforceability of this Agreement
or
any of the other Loan Documents or the Lenders' ability to collect the
Indebtedness when due or to enforce the Obligations.
(i) The
Borrower or any Subsidiary shall be required under any Environmental Law
(i) to
implement any remedial, neutralization, or stabilization process or program,
the
cost of which would constitute a Material Adverse Change, or (ii) to pay
any
penalty, fine, or damages in an aggregate amount of $100,000.00 or
more.
(j) There
shall occur judgments or fines (including, without limitation, pursuant to
any
civil or criminal action brought by any Governmental Authority) against the
Borrower or any Subsidiary in the aggregate in excess of $100,000.00 at any
one
time outstanding that are either uninsured or for which the insurer fails
to pay
for more than 60 days and which are either final and unappealable or remain
uncontested by such Person;
(k) Any
lease, contract, permit, license or authorization of the Borrower or any
of its
Subsidiaries shall terminate or cease to be effective, which termination
or
cessation would be a Material Adverse Change.
(l) A
Confirmation Order shall not have been entered and become a Final Confirmation
Order by the Final Closing Date.
7.2 Remedies. Upon
the happening of any Default, the Lenders may, at their option and without
notice, suspend any agreement to advance funds hereunder, without limiting
its
rights set out elsewhere in this Agreement as to the Loans
hereunder. Upon the happening of any Event of Default, Lenders may,
at their option and without further notice:
(a) Cancel
any agreement to advance funds hereunder without limiting its rights set
out
elsewhere in this Agreement as to loans hereunder;
(b) Declare
the entire outstanding aggregate principal amount of the Notes (or any thereof)
then outstanding hereunder, and the unpaid interest accrued thereon, immediately
due and payable without notice and without presentment, demand, protest,
or
other notice, whether of default, intent to accelerate, acceleration or
dishonor, or of any kind, all of which are hereby expressly waived by the
Borrower;
(c) Pursue
any other right or remedy pursuant to this Agreement, the Notes, the other
Loan
Documents or provided by law;
(d) Foreclose
or seek to foreclose, by private or public sale, or by judicial or non-judicial
means, any Collateral;
(e)
If any
of the Escrow Funds are still held by the Escrow Agent, the Lenders may
unilaterally instruct the Escrow Agent to release the Escrow Funds held in
Escrow to the Lenders; and
(f) Exercise
or pursue any one or more of the foregoing rights or remedies at any time
or
times, without prejudice to (or election as to) the exercise of any other
rights(s), remedy or remedies thereafter, or concurrently
therewith.
7.3 Cumulative
Rights. All rights available to the Lenders under the Loan
Documents shall be cumulative of and in addition to all other rights granted
thereto at law or in equity, whether or not amounts owing thereunder shall
be
due and payable, and whether or not the Lenders shall have instituted any
suit
for collection or other action in connection with the Loan
Documents.
7.4 Waivers. The
acceptance by the Lenders at any time and from time to time of partial payment
of any amount owing under any Loan Documents shall not be deemed to be a
waiver
of any Event of Default then existing. No waiver by the Lenders of
any Event of Default shall be deemed to be a waiver of any Event of Default
other than such Event of Default. No delay or omission by the Lenders
in exercising any right under the Loan Documents shall impair such right
or be
construed as a waiver thereof or an acquiescence therein, nor shall any single
or partial exercise of any such right preclude other or further exercise
thereof, or the exercise of any other right under the Loan Documents or
otherwise.
Section
8
Miscellaneous
8.1 Survival
of Various
Matters. All covenants and agreements herein not fully
performed before the date of this Agreement shall survive such
date.
8.2 Notices. All
notices, requests and communications hereunder shall be in writing and shall
be
deemed to have been duly given to a party when delivered in person (including
delivery by an express delivery service or by facsimile transmission during
the
recipient's regular business hours) to the officer of the Borrower or of
the
Lenders, respectively, named below, or two calendar days after such notice
is
enclosed in a properly sealed envelope, certified or registered, and deposited
(postage and certification or registration prepaid) in a post office or
collection facility regularly maintained by the United States Postal Service
and
addressed as follows:
If
to
Lenders:
Denly
ACI
Partners, Ltd.
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attn:
D.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Fax:
512.
401.6551
and
The
von
Waaden 2004 Revocable Trust
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attn:
D.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Fax:
▇▇▇.▇▇▇.▇▇▇▇
With
a
copy (which shall not constitute notice) to:
Graves,
Dougherty, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
If
to
Borrower:
▇▇
▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇
Attn:
▇▇▇
▇. ▇▇▇▇▇, CEO
Fax:
▇▇▇.▇▇▇.▇▇▇▇
With
a
copy (which shall not constitute notice) to:
▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, P.C.
▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax:
▇▇▇.▇▇▇.▇▇▇▇
Either
party may, by proper written notice hereunder to the other party, change
the
address or the officer to which notices shall thereafter be sent to
it.
8.3 Control. None
of the covenants or other provisions contained in this Agreement shall, or
shall
be deemed to, give the Lenders rights to exercise control over the affairs
or
management of the Borrower or any of its Subsidiaries, the power of the Lenders
being limited to the rights to exercise the remedies provided in the Loan
Documents; provided, however, that if the Lenders becomes the owner of any
stock
or other equity interest in any Person, whether through foreclosure or
otherwise, it shall be entitled to exercise such legal rights as it may have
by
being an owner of such stock or other equity interest in such
Person.
8.4 Successors
and
Assigns. All covenants and agreements herein contained by or
on behalf of the Borrower and the Lenders shall bind their respective successors
and assigns and shall inure to the benefit of the Borrower and the Lenders
and
their respective successors and assigns; provided, however, that the Borrower
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Lenders. The Lenders
reserves the right to sell or assign all or any portion of the Indebtedness
and
Obligations and to grant one or more participations or interests in the
Indebtedness and Obligations. The Lenders may, in connection with any
participation or proposed participation, disclose to the participant or proposed
participant any information relating to the Borrower furnished to the Lenders
by
or on behalf of the Borrower and its Subsidiaries.
8.5 Renewals. All
provisions of this Agreement relating to the Notes shall apply with equal
force
and effect to each and all promissory notes hereafter executed which in whole
or
in part represent a renewal, extension, consolidation or rearrangement of
any
part of the indebtedness originally represented by the Notes.
8.6 No
Waiver. No course of dealing on the part of the Lenders or its
trustees, officers or employees or any failure or delay by the Lenders with
respect to exercising any right, power or privilege of the Lenders under
this
Agreement, the Notes or other Loan Documents shall operate as a waiver
thereof. The rights and remedies of the Lenders shall be cumulative
and the exercise or partial exercise of any such right or remedy shall not
preclude the exercise of any other right or remedy.
8.7 Governing
Law. This Agreement, the Notes and the other Loan Documents
shall be deemed to be contracts made under and shall be construed in accordance
with and governed by the laws of the State of Utah, except as federal law
may
apply. The Borrower irrevocably agrees that any cause of action
brought to enforce or interpret the provisions of this Agreement, the Notes
or
any of the other Loan Documents shall be brought in the district courts of
Salt
Lake County, Utah, or in the United States District Court for the Central
District of Utah.
8.8 Non-Subordination. The
Notes shall never be in a position subordinate to any indebtedness owing
to any
other creditor of the Borrower.
8.9 Exhibits
and
Schedules. The Exhibits and Schedules attached to this
Agreement are incorporated herein for all purposes and shall be considered
a
part of this Agreement. In the event of any conflicts or
inconsistencies, the terms and provisions of this Agreement shall
control.
8.10 Severability. In
the event any one or more of the provisions contained in this Agreement or
in
the Notes, or in any of the other Loan Documents or any other instrument
referred to herein or executed in connection with or as security for the
Notes
shall, for any reason, be held to be invalid, illegal or unenforceable in
any
respect, such invalidity, illegality or unenforceability shall not affect
any
other provision of this Agreement, the Notes, the other Loan Documents or
any
other instrument referred to herein or executed in connection with or as
security for either of the Notes. Furthermore, in lieu of such an
illegal, invalid or unenforceable provision, there shall be added automatically
as part of this Agreement, the Notes or any other Loan Document, as the case
may
be, a provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid or enforceable.
8.11 Savings
Clause. It is not the intention of any party to any of the
Loan Documents to make an agreement violative of the laws of any applicable
jurisdiction relating to usury. Regardless of any provision in any of
the Loan Documents, the Lenders shall never be entitled to receive, collect
or
apply, as interest on the Indebtedness or Obligations, any amount which would
cause the interest paid or payable thereon to exceed the Maximum Lawful
Amount. If the Lenders ever receive, collect or apply, as interest,
any such excess, such amount which would be excessive interest shall be deemed
a
partial repayment of principal and treated hereunder as such; and if principal
is paid in full, any remaining excess shall be paid to the
Borrower. In determining whether or not the interest paid or payable,
under any specific contingency, would cause the interest to exceed the Maximum
Lawful Amount, the Borrower and the Lenders shall, to the maximum extent
permitted under applicable laws, (i) characterize any nonprincipal payment
as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effect thereof, and (iii) amortize, prorate, allocate
and
spread in equal parts, the total amount of interest among all of the Loans
throughout the entire contemplated term of the Loans so that the interest
rate
is uniform throughout the entire term of the Loans; provided that if the
Indebtedness or Obligations are paid and performed in full prior to the end
of
the full contemplated term thereof, and if the interest received for the
actual
period of existence thereof would cause the interest to exceed the Maximum
Lawful Amount, the Lenders shall refund to the Borrower the amount of such
excess or credit the amount of such excess against the total principal amount
owing, and, in such event, Lenders shall not be subject to any penalties
provided by any laws for contracting for, charging or receiving interest
in
excess of the Maximum Lawful Amount. This Section 8.11
shall
control every other provision of all agreements among the parties to this
Agreement pertaining to the transactions contemplated by or contained in
any of
the Loan Documents.
8.12 Counterparts. To
facilitate execution, this Agreement and the other Loan Documents may be
executed in any number of counterparts as may be convenient or necessary,
and it
shall not be necessary that the signatures of all parties hereto or thereto
be
contained on any one counterpart hereof or thereof. Additionally, the
parties hereto agree that for purposes of facilitating the execution of this
Agreement and the other Loan Documents, (a) the signature pages taken from
separate individually executed counterparts of this Agreement and the other
Loan
Documents may be combined to form multiple fully executed counterparts and
(b) a
facsimile transmission shall be deemed to be an original
signature. All executed counterparts of this Agreement and the other
Loan Documents shall be deemed to be originals, but all such counterparts
taken
together or collectively, as the case may be, shall constitute one and the
same
agreement.
8.13 Limitation
of
Remedies. Anything contained in this Agreement and anything
contained in the other Loan Documents to the contrary notwithstanding, in
the
event that the Lenders (i) fails or refuses to grant consent or approval
when
required by applicable law or when required hereunder or under any of the
other
Loan Documents for any matter or (ii) acts unreasonably or unreasonably
withholds or delays acting in any circumstances where by law or hereunder
or
under any of the other Loan Documents there is an obligation to act reasonably
or promptly (it being agreed that no such obligation is implied) the parties
agree that the damages which might arise as a result of any such actions
or
inactions are incapable of accurate determination. Accordingly, the
parties agree that the remedies of specific performance and injunctive relief
are and shall be the sole and exclusive remedies and relief of the Borrower
with
respect to such actions against the Lenders, and the Borrower hereby irrevocably
and unconditionally waives all claims for damages with respect
thereto. Neither the Lenders, nor any Affiliate, trustee, officer,
director, employee, attorney, or agent of the Lenders shall have any liability
with respect to, and the Borrower, hereby waives, releases, and agrees not
to
▇▇▇ any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by the Borrower or any Subsidiary
of
the Borrower in connection with, arising out of, or in any way related to,
this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement, any of the other Loan Documents. The
Borrower hereby waives, releases, and agrees not to ▇▇▇ the Lenders or any
of
the Lenders' Affiliates, trustees, officers, directors, employees, attorneys,
or
agents for punitive damages in respect of any claim in connection with, arising
out of, or in any way related to, this Agreement or any of the Notes, or
any of
the other Loan Documents.
8.14 Headings. The
headings of the sections of this Agreement are inserted for convenience only
and
shall not be deemed to constitute a part hereof.
8.15 No
Obligation to Make
Advance. No advances need be made by the Lenders under this
Agreement or the Notes if such loan or advance should cause the Lenders to
be in
violation of any law, rule, regulation or interpretation of a governmental
body
applicable to the Lenders.
8.16 Role
of
Lenders. Any term or condition hereof, or of any of the other
Loan Documents to the contrary notwithstanding, the Lenders shall not have,
and
by their execution and acceptance of this Agreement hereby expressly disclaim,
any obligation or responsibility for the management, conduct or operation
of the
business and affairs of the Borrower and its Subsidiaries, and any term or
condition hereof, or of any of the other Loan Documents, permitting the Lenders
to disburse funds, whether from the proceeds of the Loans, or otherwise,
or to
take or refrain from taking any action with respect to the Borrower, the
Collateral or any other security for repayment of the Loans, shall be deemed
to
be solely to permit the Lenders to audit and review the management, operation
and conduct of the business and affairs of the Borrower and its Subsidiaries,
and to maintain and preserve the security given by the Borrower to the Lenders
for the Loans and may not be relied upon by any other
person. Further, the Lenders shall not have, has not assumed and, by
their execution and acceptance of this Agreement, hereby expressly disclaim
any
liability or responsibility for the repayment or performance of any indebtedness
or obligation of the Borrower or its Subsidiaries, and no condition hereof,
or
of any of the other Loan Documents, shall be construed so as to deem the
relationship between the Borrower and the Lenders to be other than that of
borrower and lender, and the Borrower shall at all times represent that the
relationship between the Borrower and the Lenders is solely that of borrower
and
lender. No provision in this Agreement or of any of the other Loan Documents
and
no course of dealing between the parties shall be deemed to create any fiduciary
duty by the Lenders to the Borrower or any of its Subsidiaries.
8.17 NO
OTHER
AGREEMENTS. THIS AGREEMENT,
THE
NOTES AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.
8.18 WAIVER
OF
JURY. THE LENDERS AND THE BORROWER HEREBY IRREVOCABLY WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTER-CLAIM, ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS
OR
THE ACTIONS OF THE LENDERS IN THE ENFORCEMENT THEREOF OR WITH RESPECT TO
THE
TRANSACTIONS CONTEMPLATED BY THE PROVISIONS THEREOF.
8.19 No
Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Lenders shall have the
right to act exclusively in the interest of the Lenders and shall have no
duty
of disclosure, duty of loyalty, duty of care, or other duty or obligation
of any
type or nature whatsoever to the Borrower or any of the Borrower's shareholders
or Subsidiaries.
IN
WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed in multiple counterparts, each of which is an original instrument
for
all purposes, all as of the day and year first above written.
Signature
Pages Follow
980722v4
COUNTERPART
SIGNATURE PAGE FOR ATTACHMENT TO LOAN AGREEMENT AMONG DENLY ACI PARTNERS, LTD., A
TEXAS LIMITED PARTNERSHIP (THE "PARTNERSHIP"), AND
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, AND
▇▇▇▇▇
▇. ▇▇▇ ▇▇▇▇▇▇, AS CO-TRUSTEES OFTHE VON WAADEN 2004
REVOCABLE
TRUST (THE "TRUST"),
AND AMERICA WEST RESOURCES,
INC.,
A NEVADA CORPORATION (THE "BORROWER").
Denly
ACI Partners,
Ltd.,
a
Texas limited
partnership
By:
Denly ACI Mgt., LLC,
a
Texas limited liability
company
By:
▇▇▇▇▇▇
▇. ▇▇▇ ▇▇▇▇▇▇,
Manager
By:
▇▇▇▇▇
▇. ▇▇▇ ▇▇▇▇▇▇,
Manager
▇▇▇▇▇▇
▇. ▇▇▇ ▇▇▇▇▇▇, Co-Trustee of The von Waaden 2004 Revocable Trust, created
under
agreement dated May 13, 2004
▇▇▇▇▇
▇. ▇▇▇ ▇▇▇▇▇▇, Co-Trustee of
The
von
Waaden 2004 Revocable Trust, created under agreement dated May 13,
2004
COUNTERPART
SIGNATURE PAGE FOR ATTACHMENT TO LOAN AGREEMENT AMONG DENLY ACI PARTNERS, LTD., A
TEXAS LIMITED PARTNERSHIP (THE "PARTNERSHIP"), AND
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, AND
▇▇▇▇▇
▇. ▇▇▇ ▇▇▇▇▇▇, AS CO-TRUSTEES OFTHE VON WAADEN 2004
REVOCABLE
TRUST (THE "TRUST"),
AND AMERICA WEST RESOURCES,
INC.,
A NEVADA CORPORATION (THE "BORROWER").
a
Nevada corporation
By:
▇▇▇
▇. ▇▇▇▇▇,
Chief
Executive Officer
ATTEST:
______________________________
▇▇▇▇
▇▇▇▇▇▇, Secretary
COMPLIANCE
CERTIFICATE
Date: _________________
TO:
Denly ACI Partners, Ltd.
The
von Waaden 2004 Revocable
Trust
In
accordance with the provisions of
Section 4.1(d)
of that
certain Loan Agreement (as modified, amended, restated or replaced from time
to
time, the "Loan
Agreement") dated as of October 9, 2009 by and among Denly ACI Partners,
Ltd., a
Texas limited partnership (the "Partnership"), and
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, and
▇▇▇▇▇
▇. ▇▇▇ ▇▇▇▇▇▇, as Co-Trustees ofThe von Waaden 2004
Revocable
Trust (the "Trust"),
and America West Resources,
Inc.,
a Nevada corporation (the "Borrower"), the
undersigned, as the chief financial officer of the Borrower, hereby certifies
as
of ____________, 200__ (the "Certification Date") to the best of [his/her]
knowledge to the following:
1.
As of the Certification Date, no Default or Event of Default had occurred
[other
than. Such Default or Event of Default is not continuing or, if continuing,
the
Borrower is taking the following steps to cure the same:.]
3.
Terms used herein and not otherwise defined are used with the same meanings
given such terms in the Loan Agreement.
By:
Name:
Title:
EXHIBIT A
TO
LOAN
AGREEMENT
980722v4
|
Document
|
Date
Issued
|
Principal
Amount
|
Party
|
Interest
Rate
|
Due
Date
|
|
▇▇▇▇
▇▇▇▇▇▇ Bridge
loan
agreement 2 –
June
08
|
6/25/08
|
$250,000.00
|
▇▇▇▇
▇▇▇▇▇▇ Bridge & Opportunity Fund
|
10%
|
12-31-08
or the closing of a
$10
mill equity financing,
whichever
is earlier.
|
|
Promissory
Note –
▇▇▇
▇▇▇▇▇ –
Sept
08
|
9/30/08
|
$
50,000.00
|
▇▇▇
▇▇▇▇▇
|
10%
|
12-31-08
or the closing of a
$10
mill equity financing,
whichever
is earlier.
|
|
Promissory
Note –
▇▇▇▇▇▇
▇▇▇▇▇▇▇ –
Sept
2008
|
9/30/08
|
$
70,000.00
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
10%
|
12-31-08
or the closing of a
$10
mill equity financing,
whichever
is earlier.
|
|
Promissory
Note –
Jarkesy
Foundation –
Sept
2008
|
9/12/08
|
$ 20,000.00
|
The
Jarkesy Foundation
|
10%
|
12-31-08
or the closing of a
$10
mill equity financing,
whichever
is earlier.
|
|
Promissory
Note –
▇▇▇▇
▇▇▇▇▇▇ Fund –
Sept
2008
|
9/12/08
|
$100,000.00
|
▇▇▇▇
▇▇▇▇▇▇ Bridge & Opportunity Fund
|
10%
|
12-31-08
or the closing of a
$10
mill equity financing,
whichever
is earlier.
|
|
Promissory
Note –
▇▇▇▇
▇▇▇▇▇▇ Fund –
Sept
2008 - no 2
|
9/26/08
|
$100,000.00
|
▇▇▇▇
▇▇▇▇▇▇ Bridge & Opportunity Fund
|
10%
|
12-31-08
or the closing of a
$10
mill equity financing,
whichever
is earlier.
|
|
Promissory
Note –
▇▇▇▇
▇▇▇▇▇▇ Fund –
Sept
2008 - no 3
|
9/30/08
|
$ 50,000.00
|
▇▇▇▇
▇▇▇▇▇▇ Bridge & Opportunity Fund
|
10%
|
12-31-08
or the closing of a
$10
mill equity financing,
whichever
is earlier.
|
|
10/2/08
|
$100,000.00
|
▇▇▇▇
▇▇▇▇▇▇ Bridge & Opportunity Fund
|
10%
|
12-31-08
or the closing of a
$10
mill equity financing,
whichever
is earlier.
|
COLLATERAL
1.
The Columbia Mine Lease and all rights appurtenant thereto.
2.
The Escrow Agreement and Escrow Funds held by the escrow agent under the
Escrow
Agreement.
3.
All Operating Agreements.