AMENDMENT TO BUSINESS LOAN AGREEMENT AND COMMERCIAL SECURITY AGREEMENT
EXHIBIT 10.5
AMENDMENT TO
BUSINESS LOAN AGREEMENT
AND
COMMERCIAL SECURITY AGREEMENT
BUSINESS LOAN AGREEMENT
AND
COMMERCIAL SECURITY AGREEMENT
This Amendment dated October 16, 2008, to Business Loan Agreement and Commercial Security
Agreement, each dated October 29, 2007, is entered into by FIRST INTERSTATE BANK (the “Lender”) and
XXXXXXXXXXXX RESOURCES, INC., a Delaware corporation (the “Borrower”).
RECITALS
WHEREAS, Lender and Borrower are parties to a Business Loan Agreement (the “Loan Agreement”)
providing for an $8,500,000 term loan, evidenced by a promissory note (the “Term Note”) and a
$20,000,000 revolving loan, evidenced by a promissory note (the “Revolving Note”); and
WHEREAS, the obligations under the Loan Agreement, the Term Note and the Revolving Note are
secured by the inventory, chattel paper, accounts, equipment and intangibles of Borrower (the
“Collateral”) pursuant to a Commercial Security Agreement (the “Security Agreement”); and
WHEREAS, Borrower desires to enter into a series of transactions (the “Tax Credit
Transactions”) which will involve the transfer of certain contracts and agreements comprising a
portion of the Collateral to a newly formed limited liability company, Absaloka Coal, LLC (the
“LLC”), the goal of which Tax Credit Transactions is to increase the cash flow of Borrower; and
WHEREAS, Borrower has requested that Lender amend certain provisions of the Loan Agreement,
the Security Agreement and the Related Agreements to accommodate the Tax Credit Transactions, and
Lender has agreed to such Amendment on the terms, and subject to the conditions, set forth herein.
Defined terms not defined herein shall have the meanings ascribed thereto in the Loan Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be
legally bound, the parties hereto agree as follows:
1. Amendment of Definition of Collateral; Pledge of Agreements.
(a) The Collateral securing Borrower’s obligations under the Loan Agreement and the
Related Agreements, and as pledged in the Security Agreement, is
hereby amended to exclude therefrom the following agreements providing for the sale of
coal by Borrower and proceeds derived therefrom:
(i) Coal Purchase Agreement dated August 27, 1986 between Borrower and Western
Fuels Association, Inc.;
(ii) Coal Supply Agreement dated January 1, 2005 between Borrower and Midwest
Energy Resources Company;
(iii) Coal Supply Agreement dated as of June 16, 2005, as amended, among
Borrower, Xxxxxxxxxxxx Coal Sales Company (“WCSC”), and Rocky Mountain Power, Inc.;
and
(iv) Coal Supply Agreement dated February 1, 2007, and Master Coal Supply
Agreement dated October 23, 2007, each as amended by Confirmation Notices, and each
between Borrower and Northern States Power Company
(collectively, the agreements referred to in this Paragraph 1 are referred to as the
“Assigned Coal Sales Agreements.”)
(b) The Collateral securing Borrower’s obligations under the Loan Agreement and the
Related Agreements, and as pledged in the Security Agreement, is hereby amended to exclude
therefrom Borrower’s limited liability company interest in the LLC.
(c) Borrower hereby pledges and grants a security interest to Lender, to secure its
obligations under the Loan Agreement and Related Agreements, in all of its rights, including
rights to payment, arising under the following agreements, and agrees that they shall
constitute Collateral governed by and subject to all terms of the Security Agreement:
(i) Coal Mining Sublease Agreement between Borrower and Absaloka Coal, LLC;
(ii) Contract Mining Agreement dated October 15, 2008 between Borrower and
Absaloka Coal, LLC;
(iii) Fixed Payment Note dated October 16, 2008 payable to Borrower; and
(iv) Contingent Payment Obligation dated October 16, 2008 payable to Borrower.
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2. Amendment of Negative Covenants. Lender agrees that the provisions of the Loan
Agreement appearing under the caption “Negative Covenants” and the provisions of the Security
Agreement specified below shall be amended as follows:
(a) Clause (2) of the Negative Covenant in the Loan Agreement captioned “Continuity of
Operations” and the provisions of the Security Agreement appearing under the caption
“Transactions Involving Collateral” shall be amended to add at the end thereof the
following:
Notwithstanding the foregoing:
(i) Borrower and Absaloka Coal, LLC may enter into the Coal Mining Sublease
Agreement (the “Sublease”), pursuant to which Borrower will sublease to Absaloka
Coal, LLC the right to mine up to 40 million tons of coal from the Absaloka Mine;
(ii) Borrower and Absaloka Coal, LLC may enter into Assignment and Assumption
Agreements transferring to Absaloka Coal, LLC the Assigned Coal Sales Agreements;
and
(iii) Borrower may enter into the Membership Interest Purchase Agreement dated
October 16, 2008 pursuant to which it will transfer its interest in Absaloka Coal,
LLC to Feedstock Investments IV, LLC.
(b) Clause (1) of the Negative Covenant in the Loan Agreement captioned “Continuity of
Operations” shall be amended as follows:
(i) During the duration of the Sublease, new agreements providing for the
supply and sale of coal from the Absaloka Mine, as well as renewals and amendments
of the Assigned Coal Sales Agreements, shall be entered into by Absaloka Coal, LLC,
and not by Borrower, and the accounts related to the sale of coal from the Absaloka
Mine under such agreements will be accounts of Absaloka Coal, LLC and not of
Borrower;
(ii) During the duration of the Sublease, WCSC will suspend the sale of coal on
behalf of Borrower under its Sales Agency Agreement with Borrower, and coal sales
from the Absaloka Mine that are arranged through WCSC will be made by Absaloka Coal,
LLC rather than Borrower.
(c) The Negative Covenant captioned “Loans, Acquisitions and Guarantees” shall be
amended to add the following at the end thereof:
; provided, however, that for so long as Absaloka Coal, LLC is
in existence and no Event of Default has occurred and is continuing,
Borrower may engage in the transactions with Absaloka Coal, LLC,
including loans and advances from Borrower to Absaloka Coal, LLC,
contemplated by the Membership Interest Purchase Agreement dated as
of October 16,
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2008 and the Amended and Restated Limited Liability Company
Agreement of Absaloka Coal, LLC (collectively, the “Transaction
Agreements”).
3. Amendment of Affirmative Covenants. Lender agrees that the provisions of the Loan
Agreement appearing under the caption “Affirmative Covenants” shall be amended as follows:
(a) The Affirmative Covenant captioned “Inspection” shall be amended to add the
following:
Borrower, in its capacity as manager of Absaloka Coal, LLC, shall
make the books, accounts and records of Absaloka Coal, LLC available
for inspection and copying by Lender.
4. Consent to Transaction Agreement and Tax Credit Transaction. Lender hereby agrees
that Borrower may enter into the Transaction Agreement and the Tax Credit Transactions on
substantially the terms set forth in the documents listed on Exhibit A hereto and agrees
that the proceeds from the Tax Credit Transactions are not required to be held in trust for Lender.
5. No Recourse Against Feedstock Investments IV, LLC. Lender agrees that Feedstock
Investments IV, LLC, in its capacity as a member of Absaloka Coal, LLC, shall have no liability for
the obligations of Borrower under the Loan Agreement and the Related Agreements.
6. Ratification. All terms of the Loan Agreement and the Related Documents that are
not contrary to, or inconsistent with the terms and conditions of this Amendment shall remain in
full force and effect and are hereby reaffirmed, ratified, confirmed as of the date hereof and are
incorporated herein by reference; and each of the representations, warranties, covenants, and
agreements of Borrower and Guarantor, as set forth in the Loan Agreement and Related Documents are
true today, to the same extent as if made today, and are incorporated herein by reference as though
more fully set out, except as modified herein.
7. Guaranty. By its approval of this Agreement, Xxxxxxxxxxxx Coal Company consents to
the terms herein contained, and ratifies and confirms that its Commercial Guaranty and Commercial
Pledge Agreement remain in full force and effect and constitute a continuing guaranty of the Loan
Agreement and the Related Documents.
8. Counterparts. This Amendment may be executed in any number of counterparts and all
of such counterparts taken together shall be deemed to constitute one and the same instrument.
9. Binding Effect. This Amendment shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors and assigns.
10. Severability. Any provision of this Amendment held by a court of competent
jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this
Amendment.
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11. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MONTANA, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered as of the date first above written.
| XXXXXXXXXXXX RESOURCES, INC. | ||||||
| By: Name: |
/s/ Xxxxxx X. Xxxxxx
|
|||||
| Title: | Vice President and General Counsel | |||||
| FIRST INTERSTATE BANK | ||||||
| By: Name: |
/s/ Xxxxx Xxxxxxxxx
|
|||||
| Title: | Vice President | |||||
| Guarantor hereby consents to this
amendment and ratifies its obligations as provided in Paragraph 7 hereof |
||||
| Date: October 16, 2008 | ||||
| XXXXXXXXXXXX COAL COMPANY | ||||
By: Name: |
/s/ Xxxxxxx X. Xxxxxx
|
|||
Title:
|
Vice President, Finance and Treasurer | |||
